Apple Incorporation Strategic Management - Assignment Example

RUNNING HEAD: Apple Inc. in 2010 Student Name Matriculation Number Degree Title Module Code Q1 The chief elements of strategy adopted by Apple include performance, position in the market, and innovation. These strategies have been the reason behind Apple’s success. In the case of performance, Apple values its performance and appreciates the fact that there is no place for under-performance in its industry of operations owing to the increased levels of competition with the possibility of competitors copying innovative ideas with ease. From the case study, it is evident that Apple continued making some considerable amount of losses for a few quarters (Thompson, et al., 2011). The various causes of the experienced losses could be pointed at products introduced to the market with low level of sales or high cost of producing such products as Apple Lisa. It is evident from the case that the excessive cost associated with Lisa resulted in its poor performance that fell quite below Apple’s expectation and resulted in its eventual withdrawal from the market. Furthermore, Apple kept on changing its CEO from time to time during the period of market instability and this led to improved productivity and the introduction of new products such as the iPod, iMac, and the iPhone. In the year 2000 for instance, Steve Jobs returned to the company as its new and permanent CEO with an idea of how to improve the company’s productivity and turn it around the right path. This became evident with sustained success that the company realized since then (Thompson, et al., 2011). Being the company’s new CEO, Jobs introduced quite a number of ideas and innovative measures alongside some structural changes. Innovation coupled with the broad differentiation strategy that the Apple Company is currently pursuing ensures that innovation of new ideas and products puts the company at a better competitive advantage in the market. For instance, due to the company’s innovation strategy, the realization of the iPod that was new in the market was possible. However, in the industry, copying technology and innovation is at its peak but still the Apple innovation strategy is unparalleled. These elements of Apple competitive strategy fit together quite well as they make the company seem more like three independent companies to enable growth and success of the company (Thompson, et al., 2011). With these three pieces of strategy fitting together, the company’s market share keep on improving. However, it is important to note that the constant change in technology forces the company to change its strategy constantly to fit the prevailing economy and customer buying behavior. As for whether the strategy is evolving, the answer is a definite yes. Just like any other company, Apple started as a very small company with ambitious innovation strategies. However, the company stayed behind the competition in its early stages of operation. The introduction of such ideas of first color display and the user-friendly graphical user interface appeared in the market courtesy of Apple. Thereafter, the company followed a broad differentiation strategy that enabled it to compete in a broader market and wide range of products while at the same time retaining loyal customers with their ability to specialize in certain types of products (Thompson, et al., 2011). The evolution of the strategy further improved in the early 1980's when Apple decided to put more focus on personal computers. A decade later, the company introduced high-end products such as tablets and notebooks in the market due to improved innovation. Additionally, the company adopted a radical management change to bring on board efficient leaders to steer its success. This saw the company turning profits in areas where competitors failed (Thompson, et al., 2011). Therefore, the company’s strategy has been constantly evolving it shift from its main revenue stream being computers to non-computer products. This indicates that the company pays considerable amounts of attention to trends and patterns in the market to ensure that it stays ahead of the game. Q2 The main components of Apple’s strategy in computers include style, proprietary capabilities, and limited product line breadth. When it comes to style, Apple Inc. carved a niche that attracts its customers in appearance and fashion. This implies that the design of Apple products aims at improving the appearance of and fashion. Secondly, the company applies a high proprietary strategy to ensure that their computers, smart phones, and personal media players use unique technology and programs (Thompson, et al., 2011). Finally, the Apple Inc. ensures limited product line breadth as its core strategy in its computers, personal media players, and smart phones. This implies that the company offers its customers with a limited number of computer and smart phone models as a competitive strategy. Combining these strategies offers Apple the success it needs to remain viable and competitive in the market. Personal media players and Smartphones, Apple's strategy includes market innovation, fashionable perception, music store support, and first mover advantages. In essence, apple Inc. was the first to market innovation single-handedly and consequently shaped other companies to compete in this market. Their innovation continues to evolve to bring about features such as touch screen technology in personal media players and thus beating the competition (Charles & Gareth, 2009). Additionally, Apple turned the personal media player into a fashion statement in the market. Most of the consumers believe that digital music is more than it is- a sign of status symbol. Finally, music store support is a strategy used by Apple to ensure that such products as iTunes to integrate high-speed downloading capabilities. It is likely that the current strategies will enable Apple to realize continued success because of its increased market share and customers wanting to integrate their iPhones and iPods. However, it is not clear why Apple failed to make some inroads into business buyers. This idea does not pose any serious threat to Dell and HP in their market dominance. The main reasons for this would be Apple’s loss of ground in the introduction of its first computers, poor price competitiveness, and excessive devout commitment to intellectual property by Apple. Q3 The table indicates that Dell and HP remain among the top players in the computer industry as per the results of the market share statistics. On the contrary, Acer is presented as the weakest player in the market due to its overreliance on poor quality and low priced personal computers. However, Acer’s acquisition of Packard Bell and Gateway improves the company’s sales in various geographical segments with more emphasis on Africa, Europe, and Middle East. It is also evident that Apple has a strong competitive position in the personal media player industry than in the computer industry. In 2010 for instance, the company held 73% of the market share in the digital music industry when there was no even one single competitor managing 5% share. The company’s iTunes also controlled 69% of the US digital music market and managed to hold 27% overall music sales (Thompson, et al., 2011). This is a sterling performance since Amazon came second for market held with 8% in the US and tied with Walmart in the second position of market share of the US music sales at 12%. It is also important to note that RIM Blackberry was the market leader in 2010 with a total share of 41.7% while at the same time, Android operating system phones saw an increased growth from 2.5% market share in September 2009 to 13% market share in May 2010. However, Apple’s market share and the company’s competitive strength will most likely increase the even greater heights once the company introduces iPhone to more network carriers. Q4 It has made quite a considerable measure of strategic sense for Apple Inc. to compete in computer, smart phones, and personal media player industries. The synergy for instance that comes with digital music players and mobile phone industries is an evident reason supporting this point suggesting a good strategic soundness. However, it may not make strategic sense for the company to participate in the computer industry even though its core business, designing, and manufacturing of computers played a critical role in ensuring the company’s success in other divisions. A good example of this point is the development of the touchscreen technology for iPhone was discovered when Apple was exploring new technologies for its computer manufacturing (Constanini, et al, 2007). Additionally, the initial need and purpose was in the Apple’s computer but quickly adapted by the company to enhance the performance of iPods that resulted in their eventual dominance in the market in the industry of digital music player. Despite these benefits, however it is still questionable why Apple decided to compete in the computer industry. The main reason behind the thought of Apple involvement in computer industry making no strategic sense lie along the lines of limitations by developers to produce software that is compatible with Apple computers due to the company’s high level of secrecy and protection (Charles & Gareth, 2009). As for value chain activities, there are numerous similarities when comparing Apple computer, digital media player, and mobile phone activities. Activities such as product R&D, HR, and general administration and management are very similar. Among the mentioned supporting activities, R&D is of most importance in competing along the lines of differentiation with innovation and style. For instance, a greater part of the technology used in developing one product is useful in developing the popularity of another product. It is also important to note that there is a similarity in the company’s primary activities that include management of the supply chain, sales and marketing, distribution, and operations. However, there are fewer variations when it comes to primary activities (Thompson, et al., 2011). Because of specific differences in product specification, Apple decides to make operations and service of its products different. This implies that the value chain of computer and non-computer products is different. For Apple’s future growth and profitability, personal media player industry could be viable. The company’s strong dominance despite market stiff competition on a personal media player could be important for Apple to attain long-term success. However, although lower-end media player market may be experiencing downfall, Apple’s products such as the iPod Touch is gaining quite success in the marketplace while at the same time, the company’s iTunes Sore remains one of the most important contributors of the company’s sales and profits (Charles, et al. 2010). Furthermore, Apple could consider the mobile phone industry were it not because of the high competition in the market. Such competition can be evident with the company’s contract with AT&T at a $199 price for two years for 16GB iPhone. This might not support the company’s long-term profitability and growth. On the other hand, the company could also consider making its involvement in the computer industry its core business. However, the industry is not much promising in the international stage (Charles & Gareth, 2009). Therefore, it is my judgment that the personal media player industry would be the most viable in sustaining the Apple’s long-term growth and profitability. Q5 From table 4.1, it is important to identify at a glance that the financial performance for Apple before the 2008-2009 financial recession was quite stable as evidenced by its revenue growth from 24.3% to 38.7% annually. It is also easy to identify that although sales for the company decreased during the 2009 financial year, the company’s profitability measures remained strong. Additionally, the table indicates that the company’s R&D when converted to a percentage of the company’s sales remained between 3% and 4% during the period between 2005 and 2009. The company also enjoyed the best-ever quarterly profitability and results of $15.5 billion in fiscal 2010as compared to the first quarter of 2009 that reported $8.34 billion (Constanini, et al, 2007). The company also shipped 3.4 million Macs in the 2010 quarter as compared to 2.9 million shipped in the same quarter of 2009. The same quarters indicate that the company sold 8.4 million iPhones in 2010, 60% increase of what was sold in 2009. Another variation between the two quarters indicate the company’s revenue from iPod in 2010 increased by 4% of what the company reported in 2009 to see the company record $1.5 billion revenue from iPod (Thompson, et al., 2011). The strength of Apple’s strategy and products played an important role in enabling the company to recover swiftly from the recession of 2008-2009. Apple recovered from the recession more swiftly than its competitors in all the industries it operates in did. Q6 As for computer industry market, the above analysis provides a clear knowledge that the shortcomings in its computer business result from the lack of compatibility with some business software poor price competition, and lack of customization. It is therefore recommendable for Apple to take appropriate actions aimed at eliminating the above problems. In tackling customization issues, Apple should enable their users to design their own computers. This will help Apple to offset the competitive advantage enjoyed by Dell. By allowing the customers to decide on issues such as amount of RAM, processor speed, peripherals, and amounts of the memory could be useful in supporting the strategy by creating a perception of fashion and style. The company should also consider adopting lower production costs to come up with low-cost models of computers (Thompson, et al., 2011). Providing low-cost computers could allow the company to attract first-time buyers. Finally, the company should consider advertising aggressively. Although the Apple brand is more compatible with products such as Office, few customers in the market are aware of this idea. Advertising heavily provides an opportunity for the company to offset the notion of incompatibility. On the personal media player industry, Apple’s business and brand are well established since 2001. Innovation, iTunes compatibility, and partnerships make the company’s strategy a success to realize the company’s 73 percent market share by 2010. However, it is not enough to appreciate this performance. Instead, the company should consider strategies to ensure that the best performance continues (Charles, et al. 2010). Among the appropriate recommendations for Apple to continue innovation with product features to ensure that iPods continue being on the lead through innovation of features and capabilities. Apple should also consider enhancing the expansion of iPod’s utility to fit some users through offering new types of apps that are compatible with other products such as iPad, iPod, and iPhone. Secondly, Apple should keep improving the stylish marketing that has been on improving trend. Differentiating iPod not only based on innovation but also on the basis of style to increase consumer perception of improved fashion and status identity. Finally, another important industry to company involves itself in is the mobile phone industry. It is evident that since its launch in 2007, Apple’s iPhone has remained in the lead by putting pressure on other mobile phone companies to enhance the features of their products. The company should appreciate the fact that the rise of the android operating system provides an opportunity for other mobile phones like LG, Samsung, Motorola, and Nokia to match certain features of its iPhones and thus the need to put on more improvements (Robert, 2005). To remain in the lead therefore, Apple should maintain its innovative trends, enable its iPhone to be compatible with most carrier networks, increase the product line to come up with more models of iPhone, and develop more valuable apps. Q7 Apple’s vision statement states that “Apple is committed to bringing the best personal computing experience to students, educators, creative professionals, and consumers around the world through its innovative hardware, software, and internet offerings”. Q8 (Robert, 2005) Strengths Customer loyalty Increased innovation Brand reputation Strong marketing teams Weaknesses High prices Incompatibility with different OS Constant changes of management Opportunities High demand for products ITV launch Growth of tablet and Smartphone market Increased demand for cloud based services Increased need for mobile advertising Threats Rapid changes in technology Tax increase Breached IP rights Growth of Android OS Online music marketing Reference List Charles, E. et al. (2010). Strategic Management. Canada: South-Western Cengage Learning. Charles, H. and Gareth, R. (2009). Strategic Management: An Integrated Approach : Theory. Canada: South-Western Cengage Learning. Constanini, M., et al, (2007). Apple Inc. Corporate Report - Industry Mega Trends. Unpublished manuscript of The Pennslyvania State University Robert, M. (2005). Contemporary Strategy Analysis, 5th Ed. Cornwall: Blackwell Publishing. Thompson, A., Peteraf, A., Gamble, J., and Strickland, J. (2011). Crafting and executing strategy. New Jersey: McGraw-Hill Read More