Understanding Business Strategy of Apple Inc - Case Study Example

Internal Environment of Apple Inc Name: Lecturer: Course: Date: Internal Environment of Apple Inc Apple Resources Tangible resources Product resources: Apple’s ranges of products include iPod digital music players, which gained the global share of the first portable digital music player. Next is the iTune music download store, which enabled the company to gain a stable position in the music market. Other flagship products include the iPhone series of smartphones, which are currently the market leaders in the smartphone market after Samsung (Battaglia, 2013). Financial resources: Apple has a relatively stable financial base due to its innovative product resources. For instance, the company’s net income is rapidly from $42,905 in 2009 to $170,920 in 2013 (Fig 3), which implies that the company has the ability to obtain credit (Hoovers, 2013). Physical resources: Apple is headquartered in California and has offices distributed globally. The offices aim to make and sell innovative computers, software and smartphones. Technology: The Company has invented thousands of patents, such as graphical user interface (GUI) for personal computers, a laser printer, iTunes and iPod. The company has gained a reputation for innovative products. For instance, Apple invented the Macintosh in 1984, which became the first computer with a GUI and a mouse for user-friendly navigation (Fadaei, 2013). The innovative patents have given Apple a differential advantage. For instance, since they are protected by the law from imitation, Apple’s competitors cannot acquire Apple’s iPod interface because of the copyrights and patents. Apple’s products are generally user-friendly, which has made them appeal to users of all ages and education backgrounds. Intangible resources The company’s human resources management has been instrumental in enhancing innovation through talent management. This has enabled the company to have a valuable capability since it enabled the company to generate brand new strategy and to design the latest technologies (Jinjin 2013). Core competencies Apple’s competences facilitate cost advantage and differentiation. The company has core competencies such as efficiency, class, superiority and customer responsiveness, which achieve cost advantage and differentiation (Jinjin 2013). The company’s capacity to create and market user-friendly personal computers and software in addition to miniaturisation of components, such as brand new Apple tablet and Apple iPod Nano. Apple’s core competency lies within value chain analysis. Its continuous innovation is enhanced by its core philosophy the “Think Different” (Fadaei 2013). The philosophy is encouraged in every sector of the company’s support and primary activities. These link Apple’s innovation with a range of new products. Hence, Apple has taken the lead in consumer electronics markets, customer-focused services, build-to-order model and exceptional “store-in-store” program. Apple’s brand power is a core competence. The Apple brand has earned a global reputation for reliability, consistency and innovativeness. Hence, the company has managed to maintain a loyal customer base. Additionally, with its super-eminent customer-focused strategy and an aggressive advertising strategy, the company has been able to establish exceptional reputation and goodwill among its customers (Fadaei, 2013). Value Chain Through delivery of value to customers, Apple has strived to undertake the activities that create value to its products. The company’s infrastructure handles planning and control systems, such as corporate strategy and finance strategy (Russel 2011). The human resource management deals with employee training and recruitment, as well as, employee development. Technology development is concerned with the technology side of the company. It aims at enhancing innovation and knowledge flow. The company owns thousands of patents. It considers the importance of enabling protection of its technology (Ireland, Hoskisson & Hitt 2008). The procurement function deals in buying resources needed for operation of the company at low cost. At this stage, the company’s primary activities include inbound logistics, which deal with receiving raw materials. The company operations deal with designing products internally, using a highly skilled team of designers (Jinjin 2013). Through the outbound logistics, Apple gets to sell its products through authorised retailers and first-party retailers to uphold the standards and the brand image. Marketing and sales are accountable for advertisements to create value to the customers and to create a strong brand image. Effective management of supplies has boosted the company’s success. The company allows suppliers to keep in inventory particular “industry standard” components. Additionally, Apple’s precarious alliance with Microsoft in the software sector in addition to collaborative relationship with Dell in the field of distribution, sustains a “win-win strategy” among its competitors (Fadaei 2013). The customer service is another vital value chain, which Apple use to facilitate interaction with the customers, on a one-on-one basis, as well as, in the form of booked appointments. Overall, Apple’s value chain activities when combined enable the company to gain a competitive advantage. The company’s value chain connects the downstream and upstream buyers, as a result, enabling a greater activity stream, called the value stream (Ireland, Hoskisson & Hitt 2008). Core competencies The company has concentrated on own particularity. Rather than the use of industry-specific strategies, employed by its competitors, the company has often explored own multi-business solutions, an example being its "Think Different" philosophy (Jinjin 2013). Think different The company’s core competence is technology and innovative design. This core competence is consistent with its “Think Different” marketing campaigns, where the company produced electronic products that create a market paradigm, or revolutionise the market (Jinjin 2013). To this end, the core competence entails innovative operating system development, innovative technology design and high performance display and computer design. By focusing on its core competencies, the company has been able to develop innovative products that revolutionised the electronic market, such as iMac, iPhone, Macbook, Apple TV and Apple Display (Fadaei 2013). Buy different Apple’s innovative marketing designs are also its core competencies. Apple has aimed at enabling its customers to redefine their buying experience. The marketing capabilities have enabled the company to market and deliver its products (Jinjin 2013). When the company entered into the smartphone market with its iPhones, it ran massive marketing campaigns to introduce its debut product. The hype created by the company made buyers to wait in line for more than two days to get an iPhone at $500 (Jinjin 2013). Apple’s current financial position Analysis of Apple’s financial figures shows that the company has a very good financial position. The company’s financial results compared to past financial performance shows that its financial performance has improved consistently since 2009 except for 2013 when the company realised a fall in profits (Fig 1). In 2009, the company reported a net income of $8,235 million and a gross profit of $17,222. The net income and gross profit increased rapidly until 2012, when the company witnessed a net income $41,733 and Gross profit of 68, 662 (Hoovers 2013). Figure 1: Apple Gross Profits (2009-2013) Figure 2: Apple net income 2009-2013 However, in 2013, Apple witnesses a decrease in net income by $37,037 and gross profit of $63,304. Despite the rise between 2009 and 2012, analysis of the company’s increasing liabilities indicates a bad financial situation in the long run. This is evidenced by the sudden fall in 2013. In 2009, the company’s liabilities were estimated at $15,861 million, which further increased to $27,392 in 2010 (See Table 1). The company’s revenues have however increased rapidly from 42,905 in 2009 to $170,920 in 2013, showing the company has a stable revenue base. Table 1: Financials Information for Apple Inc (Hoovers, 2013). As shown in the figures in Table 2, it is clear that the company’s financial performance has been on the rise over the years. The Return on Assets (ROA) ratios often shows after tax per dollar for the assets. The company’s return on equity has also constantly increased over the past 5 years showing consistent income as compared to equity held by the stakeholders. In regards to the return on total assets, it is indicated that the company has gained a strong position since the figures have constantly increased over the past five years, with that of 2009 being 12.29 while that of 2012 being 21.74 (Hoovers, 2013). Apple’s financial ratio analysis is shown below in comparison to industry figures Table 2. Table 2: Apple financial ratio Apple’s dominance and stability as a producer and market of innovative ICT solutions has sustained the value of the company’s products. Table 3: Apple revenues 2009-2013 The company has also indicated high liquidity and financial stability. In regards to the share market, the company has remained stable and worth investing in the eyes of prospective investors. Current strategies and objectives Apple’s uses differentiation strategy to improve its sales, revenues and profits. Apple’s objective is to expand product sale to customers who are yet to own Apple products (Jinjin 2013). A related strategy in this respect is to expand its distribution network eliminate the need for customers to visits stores. Examples include Causeway Bay and DGA-Design. Another objective is to produce user-friendly products that offer service and entertainment to. The key strategy in this respect is to invest further in Research and Development to reach more customers. The key tactics used for this objective include distribution through flagship, third party stores and internet providers. For instance, various Internet Service Providers such as Smarton sell Apple’s iPhone smartphones. The tactics include inventing and generation of products. Conclusion To conclude, Apple has depended on its core competencies, such as a distinct brand image, to become a market leader in the electronics market. The value chain and marketing strategies have been generally developed from the companies’ philosophies of organizational cultures. Apple has aimed to put quality and safety first and hence has concentrated on product differential rather than price. References Battaglia, R 2013, The Smartphone Industry Towards A Dominant Design: An Empirical Analysis, viewed 26 April 2014, Fadaei, R 2013, Marketing Management: Apple iPhone Marketing Analysis, viewed 26 April 2014, Read More