Strategic Choice and Evaluation - Apple - Essay Example

? Strategic Choice and Evaluation – Apple of the of Introduction All business firms seek competitive advantage over their competitors. Competitive advantage can basically be of two types: low cost and differentiation (IFM, n.d.). When these competitive advantages are combined with competitive scopes, the three generic strategies are developed (Porter, 2008). These strategies are cost leadership, differentiation, and focus. The focus strategy can be classified into two sub categories, namely, “cost focus and differentiation focus” (IFM, n.d.). These strategies are adopted by the firm to achieve better performance help the firm to deliver a better than average performance. Cost leadership A business firm following cost leadership strategy aims at beating its competitors by producing at the lowest cost in the entire industry. The producer can now produce at a large scale and at a very low cost, thereby, enjoying huge economies of scale. The producer exploits the economies of scale which allows the company to maintain competitive pricing (Richardson & Dennis, 2003). Differentiation Under differentiation strategy the company focuses on the products that it offers for sale. It aims at making the products unique by identifying specific product dimensions, which are found to be most valued by its customers. The company develops its marketing strategies in such a manner that it would be able to satisfy the demand of its customers to the most desired level and therefore receive premium price due to the uniqueness of these products (Thompson & Martin, 2010). Focus Focus strategy is followed by a firm when selects one or multiple segments within the single in industry in which it operates (Dinitzen, 2010). The company aims at optimizing its product and marketing strategies to cater to these segments in the most efficient way, such that, it might gain competitive advantage over all other firms that competes with the particular firm. Focus strategy can be applied by the firm by following either of the following strategies; creation of cost advantage within a targeted segment (cost focus) or development of a differentiation strategy within a targeted segment (differentiation). Differentiation Strategy followed by Apple Apple Inc. follows the differentiation strategy in order to achieve competitive advantage over its competitors in the technology service industry. Differentiation makes its products (or services) unique. By following this strategy, Apple can make its products different from the products or service offerings of its competitors and makes the products of this company highly appealing to its customer base. However, the fact that the company has become one of the most successful companies in the world and that the customer preference for this company is significantly high compared to the rest of the companies in this market, is established by a number of internal and external factors. Performance of the company with regard to these factors has led it to the current level of success. These factors are environment of the industry, customer service, market segmentation and nature of products or services offered to the target market and its global presence. The company’s innovativeness makes its products as well as technology services shine among the crowd of modern technology industry. There are certain negative sides or risks of following the differentiation strategy. Companies that pursue differentiation strategy can command a price that is higher than the prices of similar products offered in the market by other firms. The differentiation factor allows the firm to command this premium price. It eventually increases per unit sales for the company and also improves loyalty of the buyer. Differentiation is the right strategy to follow only when the target market segment has customers with specific needs, but, are not adequately served. Also, the differentiation strategy focuses on bringing premium price for the firm. This implies that the strategy would be successful if the firm operates in a market in which the customers are not sensitive to product price. Apple offers products and services that are generally categorized as luxury products. All products offered by Apple are made with high technology. The targeted customers are the ones belonging to the range of middle income to high income. The young generation forms a major portion of the target market. This generation is technologically literate and nurtures deep interest in the modern high tech devices. This generation is willing to offer premium price for acquiring such products that are elegant and advanced. Therefore, the company is able to earn high profit by selling its products to these customers. Value discipline Value discipline refers to the desirable ways in which an organization might combine its value propositions and operating models so as to become the best firm in the market. The three value disciplines are operational excellence, product leadership and customer intimacy (Griffiths, 2012). The best value discipline for Apple is product leadership. This company produces technologically most advanced and superior products, which makes its products the most sought after items in the high tech market. The grand strategy The grand strategy selection matrix is a tool used by business firms for making strategic business planning. This tool focuses on two specific issues. The first issue corresponds to the question whether strategy makers in the organization should pay more attention at present on overcoming the weakness of the organization or on building up the present strong positions so as to improve company performance on the basis of these strengths. The second issue is that whether strategists should put more effort to organize all issues that are internal to the organization or should simultaneously concentrate on the issues occurring in the external environment. The grand strategy matrix has been illustrated by the following graph. Figure: Grand strategy matrix (Source: Rothwell & Kazanas, 2003) Apple’s Grand strategy matrix In the Grand strategy matrix, Apple lies in the third cell. In this zone, strategists of the company concentrate on the banking on the internal strengths of the firm (Pearce, 2009). They choose such organizational strategies that enhance the strengths internal to the firm. These strategies allow the firm to concentrate on talent development, which sharpens the skills of the workers. Apple has some of the most skilled employees in the world. Constant up-gradation of their skills and updating their knowledge base is essential for proper functioning of the firm. It also depends heavily on market development. It follows the process of educating its consumers and increasing their awareness. The company aims at developing new markets so that it might grab a greater share of this market before its competitors set their foot on these markets. The third point in this strategy refers to product development. Apple follows the strategy of introducing new products to the market. Consumers are made aware of these products well ahead of the launch of these products through the means of promotional campaigns and advertisements. Therefore, the new products are generally received well by the customers that have long waited for these items (Rothwell & Kazanas, 2003). Conclusion The key factor that allows the firm to follow differentiation strategy is that the company has a long history of making ground breaking innovations for a period of the last three decades. As a part of its grand strategy, Apple keeps its research and development department strong. It has made huge investments in the research and development sector and has some of the most skilled workers around the world as a part of its employee base. They help the company to deliver high quality products and cater to the needs of the customers. Backed by its unique product range, Apple takes the first step to build customers’ preference rather than following customer’s demand. It introduces its new products into the market after making extensive campaigning about the products. The company follows aggressive marketing policies to develop awareness among the target audience, create a desire for its products in the customer base and thereby increase sales. All these create a tough competition for its competitors. It is difficult for its rivals to match up to the level of technological advancement reflected by the operations of Apple. It is also very expensive to adopt such high end technology. Therefore, rivals of Apple find it difficult to replicate the services or products offered by apple. References Dinitzen, H. B. (2010). Organisational theory. Bredebro: Hans Reitzels Forlag. Griffiths, P. (2012). Strategy-technology alignment: Deriving business value from ICT. Berkshire: Academic Conferences Limited. IFM. (n.d.). Porter's generic competitive strategies (ways of competing). Retrieved from http://www2.ifm.eng.cam.ac.uk/dstools/paradigm/genstrat.html . Pearce, J. A. (2009). Strategic management. New York: Tata McGraw-Hill Education. Porter, M. E. (2008). Competitive advantage: Creating and sustaining superior performance. New York: Simon and Schuster. Richardson, O. & Dennis, C. (2003). UK vineyard sector case study. British Food Journal, 105(9), 634-652. Rothwell, W. J. & Kazanas, H. C. (2003). The strategic development of talent. Massachusetts: Human Resource Development Press. Thompson, J. L. & Martin, F. (2010). Strategic Management: Awareness & Change. Connecticut: Cengage Learning EMEA. Read More