Business Process of Apple - Focusing on Leveraging the Brand Value in the International Market Place - Report Example

EXTERNAL AND INTERNAL ENVIRONMENTS: ANALYSIS OF APPLE INC of Table of Contents Table of Contents 2 Introduction 3 1.0 General Environment 3 2.0 Porter’s Five Forces 4 3.0 Strategic options 5 4.0 External opportunities and threats 6 5.0 Strength and Weaknesses of the company 7 6.0 VRIO 7 7.0 Value Chain 8 Conclusion 9 References 10 Introduction Business environment is formed with the internal and external factors which influence the operations of an organization. In the words of Newburry (2010), the environmental factors influencing the business processes have increased with the changes in the business process and the nature of the market. This report will focus on analyzing the influence of the environmental factors on the business functions of American technology firm Apple Inc in context of their business practices, strategic planning and decision making and the organizational growth and development. 1.0 General Environment The environmental factors influencing the business operations can be segmented into six groups according to the PESTLE framework namely, political, economical, social, technological, legal and environmental. In relation to the present operations of Apple Inc in the international market, the two most influencing factors for Apple would be technological and legal factors. Apple being an information and technology based firm is engaged with continuous innovation and creativity in their functional processes for improving the utility of the products and services (Akgun, Kocoglu & Imamoglu, 2013). The changes in technological environment have increased the pressure on the company for upgrading their performance and productivity to meet the customer demands. Increasing number of service providers in the industry and diversification of other technological giants in the mobile phone and computer segment has reduced the scope of operations for Apple. However, Apple itself is engaged in diversifying its product and service range so that they can enhance the market opportunities in the international processes. In respect of the legal influence, Apple has been consistently in and out of the legal complicacies with its competitors and internal stakeholders. The legendary battle over the iPhone and Samsung Galaxy phone features had a huge impact on the brand image of both the organizations. Both the companies have claimed that the other had used their designs without appropriate authority (Keller, Parameswaran & Jacob, 2011). Apart from this, Apple had also faced serious problems in relation to their labor management practices in China. Apart from this, the relationships between the top management of the company had also from time to time challenged the legal policies of the company. 2.0 Porter’s Five Forces Threats of new entrants (High): The barriers to entry in the technological segment have reduced in the past decade mainly owing to the exceptional reduction in the capital expenditure and the government policies. In the mobile phone industry, new firms have made a huge impact on the global sales of Apple, especially in the Asian markets. Threats of Substitute Products (High): In the words of Richardson & Jain (2009), the technology industry faces the risk of similar products rather than that of substitute products. However, the Android OS from Google Plc and Windows OS from Microsoft are the primary substitutes for Apple products. These two product ranges are enforcing a cost competitive strategy to gain on Apple. Bargaining Power of Suppliers (Low): The bargaining power of the suppliers for Apple is restricted because of their vertical integration strategy which has enabled them to develop their business functions in a streamlined manner. Apart from this the huge brand equity of Apple is one primary factor in reducing the supplier bargaining power (Buckingham, 2011). Bargaining Power of Customers (Moderate): The bargaining power of the customer is moderate considering the fact that number of options for the customers are increasing along with the increase in the number of substitute products (Akgun, Kocoglu & Imamoglu, 2013). On the other hand, the brand loyalty towards Apple products also has restricted a major segment of the consumers from switching their brand. Competitive Rivalry (High): The competitive rivalry in the technological industry is extremely high given the present scenario of the industry. Companies such as Microsoft and Google are trying to increase their market operations by acquiring other firms. Apart from this continuous diversification in the product and service structures of the competitors is also increasing the level of competition in the industry (Dawar & Philip, 2008). Based on the above analysis, the two selected variables that are most influencing on Apple’s operation are the treats of substitute products and customer bargaining power. 3.0 Strategic options The strategic options for Apple are mainly related with the enhancement of the product and service structure and also to improve their activities in the emerging markets of the world. The product and service structure of Apple is still continuing on the innovational passage developed by Late CEO Steve Jobs. Since the launch of iPhone, iPad and iPod, the changes in their succeeding models have not been very vibrant. This shows that Apple has not been able to maintain their high market share in the global market. Apple can acquire other smaller firms that have the potential to innovate new products and services and help the company enhance their differentiation advantage in the market (Kourdi, 2009). Relating to the aspect of customer bargaining power, the brand equity of Apple has been able to prevent their customer base from switching on to other brands. However, as the number of substitute firms and the new entrants in the market are increasing, the customer loyalty may shift in the long run (Keller, Parameswaran & Jacob, 2011). Based on this, Apple should try to develop customer offerings with high rarity and also identify the unique selling points which will help them in engaging the customers with their brand. The primary aim of Apple for both the threats should to enhance the sustainability of their practices in terms of customer relationship and operational efficacy. 4.0 External opportunities and threats The involvement of technological resources in the social sphere has increased rapidly and this has also increased the demand for new equipments for the company. The demand for smart phones and tablets are extremely high and this has also attracted new firms for entering the market. Another opportunity for Apple has been created by the firm itself (Besharat, 2010). The increasing sales of the Apple products have allowed them to maintain the integration uniqueness of their products. Nevertheless, former opportunity of an open market structure which is ready to try out new products is the ultimate factor which can enhance the scope of operations of Apple. In terms of threats, the largest factor is the growing competition in the smart phone market where availability of cheaper alternatives has reduced the brand switching cost of the customers and also impacted the sales of the Apple products. Apart from this, the customization aspects in the products of Apple are limited in comparison to other similar products in the market which is a disadvantage of the Apple products (Akgun, Kocoglu & Imamoglu, 2013). The innovation in the product and service base of Apple has also dried down after Steve Jobs retired from the company (Keller, Parameswaran & Jacob, 2011). Other threats includes the instable economic scenario of the global market which can hamper the sales of high priced products and services. 5.0 Strength and Weaknesses of the company The core strength of Apple is their high brand image and equity in the international market place. The marketing processes of Apple are one of the key functional segments of their business and include innovative strategies for launching their products and services (Akgun, Kocoglu & Imamoglu, 2013). Apple has always tried to reflect their core values in their promotional strategies so that they can engage the customer with the business development process and hence generate brand loyalty. The supply chain process of Apple is another crucial strength factor for the company (Investor.apple.com, 2014). They have always focused on streamlining the activities of the business so that the operational expenses can be reduced and greater control can be generated over the business functions. The primary weakness of Apple is their rigid product chain that is extremely high priced I comparison to other alternatives available in the market and the inability of the products to sync with other devices from different operational platform. This limited product range can also urge customers with specific needs to divert towards other cheaper brands and hence reduces the overall revenue generation and market activities of Apple. 6.0 VRIO In order to assess the resource, capability and core competencies of Apple, the VRIO framework has been used. Resource and Competencies Value Rarity Imitability Organizational support Competitive Advantage Brand Name Yes Yes Yes Yes Sustainable Technological Superiority Yes Yes Yes Yes Sustainable Human Resource Yes Yes No No Temporary Supply chain Yes Yes Yes Yes Sustainable The above given table shows the VRIO framework for identifying the resource base and the ability of the company to generate competitive advantage. The four core resource segments of Apple were the branding process, the technological superiority, human resource management and their supply chain management process. With exceptional marketing strategies the brand image of Apple has reached a position where it is not possible to imitate by other firms (Keller, Parameswaran & Jacob, 2011). The technological genius of Apple can be reflected with the quality products and service base of the firm. However, the human resource aspects of the company have to be developed given the extreme pressure on the employees they often migrate to competitor companies (Investor.apple.com, 2014). Finally the supply chain functions of Apple have been designed with vertical integration which has reduced their operational cost and increased their operational control over their functions. These factors form the competitive advantage of Apple. 7.0 Value Chain The value chain analysis of Apple reflects their ability to merge their activities and functions and derive the desired outcome of a successful functional process. The value chain process of Apple is mainly based on sustainable practices for reducing their environmental impacts. This is supported by the strong capital structure of the company (Keller, Parameswaran & Jacob, 2011). The human resource functions of the company are very selective and ensure that only committed and loyal people constitute the employee base. The technological superiority has always been a strong point for Apple (Investor.apple.com, 2014). The vertical integration influences the procurement and other activities of the value chain process. Moving on to the primary activities, entire supply chain of Apple has been linked with the vertical integration process which increases accuracy in the supply chain functions and also boosts their ability to present the products with suitable marketing and sales strategy in the target market. Conclusion The study showed that the business process of Apple has focused on leveraging the brand value in the international market place. The company has already established itself as a pioneer of the technology industry but has to ensure its sustainability in the future days. Apple has a strong resource base and their perfectly controlled operational functions should help them remain at the top of the international market place. References Akgun, A.E., Kocoglu, I. & Imamoglu, S.Z., (2013). An Emerging Consumer Experience: Emotional Branding. Report Submitted from 9th International Strategic Management Conference, 503- 508. Besharat, Al., (2010). How co-branding versus brand extensions drive consumers evaluations of new products: A brand equity approach, Industrial Marketing Management, 39(8), 1240-1249. Buckingham, I. P., (2011). Brand Champions: How Superheroes Bring Brands to Life. 3rd ed. London: Harvester Wheatsheaf. Dawar, N. & Philip P., (2008). Marketing Universals: Consumers Use of Brand Name, Price, Physical Appearance, and Retailer Reputation as Signals of Product Quality. Journal of Marketing, 58, 81-95. Investor.apple.com (2014). Leadership & Governance Retrieved from: http://investor.apple.com/corporate-governance.cfm, Keller, K. L., Parameswaran, M. G. & Jacob, I., (2011). Strategic Brand Management: Building, Measuring, and Managing Brand Equity. 4th ed. New Jersey: Pearson Education. Kourdi, J. (2009) Business Strategy: A Guide to Taking Your Business Forward (5th ed.). Oxford: Blackwell Publishing. Newburry, W. (2010). Organisational attractiveness is in the eye of the beholder: the interaction of demographic characteristics with foreignness. Journal of International Business Studies, 37, 666-686. Richardson, P. S. & Jain, A., (2009). Extrinsic and Intrinsic Cue Effects on Perceptions of Store Brand Quality, Journal of Marketing, 58, 28-30. Read More