Apple - Company's Current Position, Strategic Choices Supporting Apple's Sustainability - Example

Apple’s Case Study Name of Student: Name of Course: Name of Instructor: Date of Submission: Executive Summary Apple Inc is home to some of the reputable electronics in the world. Additionally, Apple is one of the most valuable brand names in the world. in fact, it stands out as number on in the May 2013 Forbes rankings. Its current success in the consumer electronics is something to marvel about since the company has been able to emerge this way in the wake of stiff competition and economic crisis. The following report will evaluate ways in which Apple can be able to sustain its current success in the consumer electronics market. The first section will discuss about the current state of the company. The second section will discuss strategic decisions while the lass section will discuss their implementation. The conclusion will highlight the main points discussed in the report and give the conclusive statement. Table of Contents Executive Summary 1 Table of Contents 2 1.0Introduction 4 2.0The Current Position of Apple- Company Information 5 2.1Apple’s Values and Purpose 5 2.2 First Mover Advantage 6 2.2.3 Three Dimensional: Financial Strength, Relative Market Share & Relative Market Strength 7 3.0Strategic Choices Supporting Apple’s Sustainability 12 3.1Product/ process Innovation 12 3.2 Product Diversification 14 3.3 Understanding Critical Success Factors 14 3.4 Sustaining Competitive Advantage 15 4.0Implementation: Putting Strategy into Action 16 4.1SWOT Analysis 16 4.1.1 Strengths 16 4.1.2 Weaknesses 17 4.1.3 Opportunities 17 4.1.4 Threats 17 4.2Developing and Maintaining a Good Organizational Culture 18 4.3Strategic Decision Making Post Steve Jobs – Leadership 18 5.0Conclusion 19 References 20 Table of Figures Figure 1 The financial stability of the company is of key importance in enabling the company stays sustainable in the future (Apple 2013a, p.1). 8 Figure 2Market share of iOS in comparison to other operating systems (Hong 2013, p.1). 10 Figure 3 Apple’s Share (Market Watch 2013, p.1) 11 Figure 4 Apple’s Share (NASDAQ:AAPL 2013, p.1) 12 Apple’s Case Study 1.0 Introduction Apple is one of the most reputable brands in the world. According to the Forbes magazine rankings as at May 2013, the company stood at number one as the globe’s most valuable brands (Forbes 2013, p.1). The company was established in 1976 by its founder the late Steve Jobs. Over the years, Steve Jobs built the company into a giant communication and electronics manufacturer in the world. The company places a lot of importance on quality and constant product development so as to create a new market for itself in addition to expanding its current market shares. Over the last decade, Apple has been able to withstand stiff competition and emerge a winner in the consumer electronics market in the globe. Its success can be attributed to product/ process development, product diversification, the first mover advantage, the three dimensional strategic analysis, the ability of the company to understand the critical success factors, strategic decision making post Steve Jobs and the ability to of the company to sustain competitive advantage in the market. According to Forbes rankings as at May 2013, the company is ranked second in the world with respect to profits and fifteenth with respect to sales (Forbes 2013, p.1). The following report will use the above seven factors to analyze how well Apple is placed to sustain its recent success in the consumer electronics industry. 2.0 The Current Position of Apple- Company Information As outlined earlier, Apple Inc. is one of the largest consumer electronics manufactures in the world. The company has specialized in the production of communication devices, entertainment devices, software development and computer manufacturing. As per the rankings of the Forbes magazine, Apple tops the list in the most valued brands in the world (Forbes 2013, p.1). The following section will analyze Apple’s current position with respect to the company’s values and purpose, SWOT analysis, the three dimensional model. 2.1 Apple’s Values and Purpose Apple has a high regard for quality products. Its commitment to customer satisfaction has led it to embrace innovation to the highest degree. A look at its websites and publications, one cannot be able to get clear vision and mission statements. Neither is one able to see the values of the company at a glance. However, its values can be deduced from the speeches made by its leaders, products and press releases made by the company. Its mission statement gives an insight into what Apple does. It outlines that the company strive is to make the best PCs on the globe, Operating System X, iwork, professional software and ilife. It also gives an insight into its interest into digital music with its ventures in itunes and ipods, its venture in mobile phones (smart phones)with its ipad and computing gadgets with its ipad (Apple 2013, p.1).The company’s values are to make high quality products, simplicity and not complexity, ownership of technologies on which their products operate, venturing into markets where they can be able to make significant impacts, collaboration and cross pollination which encourages group work and a high regard for excellence. Under the leadership of its founder Steve Jobs, Apple has been able to develop into a reputable brand in all its business ventures. 2.2 First Mover Advantage Although Apple’s products are not usually the first in the market; the company has a way of investing in product design, making its products to seem like the first in the market (Ashcroft 2012, p.677). Taking an example of personal computers, it can be acknowledged that IBM preceded Apple in their manufacture, same case with iPod and iPhone. However, Apple’s innovativeness empowers the company it set the standards in the market; hence enjoying the benefits of being the owners of a first of a kind product in the market. This has given the company the so called first mover advantage. This has given the company a competitive advantage over its competitors, enabling it to lead the players in the market. 2.2.3 Three Dimensional: Financial Strength, Relative Market Share & Relative Market Strength 2.2.3.1 Financial Strength The company is strong finically. According to Forbes, it has a market capitalization of $416.62 billion which is relatively high as compared to other players in the market. The company’s sales have been increasing by the years; hence an increased profit margin which further strengthens the company’s financial position (Apple 2013, p.1). The following table shows the company’s financial records for the last three years. Figure 1 The financial stability of the company is of key importance in enabling the company stays sustainable in the future (Apple 2013a, p.1). 2.2.3.2 Relative Market Share The relative market share of Apple in the digital music market is still high. With Apple still controlling more than half of the market; it has great opportunities in sustaining its success in that line. However, its market share in the phone market has been rather shaky. The company is facing stiff competition from Windows and Android operated phones which are manufacture by its competitors. The following figure shows the market share of iPhone Operating system n comparison to others in selected countries worldwide. 2.2.3.3 Strong Financial Position Apple also has a strong financial potion which enables it to invest in product diversification and development. With the company was ranked 1st by Forbes in May 2013 as the company with the highest market capitalization and 2nd with respect to profitability. The company’s market capitalization is $ 416.62 billion (Forbes 2013, p.1). This is an illustration of the commitment of the company to the production of a diverse range of high quality products. Additionally, the company has 72,000 employees. On this point, it is worth noting that the workforce provides an organization with the much needed competitive advantage to manage in a competitive environment. Apple has a high regard for talent since it is key to its innovation. This explains the reason as to why the company has invested heavily in the workforce; a factor which is due to support its innovations hence enabling it sustain it success in the consumer electronics industry. Figure 2Market share of iOS in comparison to other operating systems (Hong 2013, p.1). This has placed the company on a rather tough position. However, the company controls about 25 % of the market in the United States and Europe; hence its high amount of revenue as compared to its competitors. The recent release of the iPhone 5 has enabled the company increase its markets share. The cheaper model of iPhone 5, the iPhone 5 c has been able to reach out to the low income earners; hence enabling apple to increase its market share by a small percentage. 2.2.3.3 Relative Market Strength The relative market strength of Apple is high. The market strength of the company can be accessed by evaluating the value of its shares in the stock exchange. The current price of the share is $570. 09. The price of the share has been going up in the recent past as seen in the figure below with its lowest being $400. Figure 3 Apple’s Share (Market Watch 2013, p.1) From the figure above, it can be seen that the price of the share has increased tremendously since the release of iPhone 5 into the market; giving an insight into the importance of product development. Comparing the trend of Apple’s share with Samsung’s, which is the main competitor to Apple, it can be acknowledged that the company is doing relatively better; giving an insight into Apple’s strength in the market. Figure 4 Apple’s Share (NASDAQ:AAPL 2013, p.1) 3.0 Strategic Choices Supporting Apple’s Sustainability Apple has been able to stay afloat in the market successfully since 1976. Over that time, it has been able to sustain its growth; venturing into products ranges which it would be able to make significant impacts in. The following section will analyze key factors which are considered key to Apple’s sustainability in the future of the consumer electronics market. 3.1 Product/ process Innovation Product innovation enables an organization to be able to keep up with the ever changing demands of the market (Copper 2007, p.5). An organization which strives to be sustainable in the market must hold product and process innovation key to its values (Lin & Chen 2008, p.87). The success story of Apple can be traced back to product innovation. from the case study, it can be acknowledged that product and process innovation should be done strategically so as to be able to provide solutions to the ideal challenges / demands of the consumers; a process which the late Steve Jobs referred to as understanding the critical success factors. Apple’s product and process innovation is in line with the aim of tapping into four distinct markets namely business, education, high end consumers and creative professionals (Ashcroft 2012, p.67). The development of the iPod is one of the processes which can be best used to analyze the influence of product innovation and sustainability. Apple ventured into the manufacturing of iPods in a move aimed at capturing the digital music market. The launch of the iPod was in line with the popular marketing strategy of the digital music ‘music on the move’ with Apple talking about ‘1000 songs in your pocket’. Apple introduced the iPod into the industry, beating its main rivals Sony who were enjoying the success associated with the Discman and the walkman. The company launched its first iPod which had a 64MB memory in 1999. Two years later, the company had made innovations on the iPod and it now had GBs of storage capacity. The development of the itunes product line was in line with the need to provide iPod users with an online store from which they could download their songs legally (Ashcroft 2012, p.679). The key features in the product innovation cycle of the iPod were the size, the design, software, download ability, memory and battery life. With this, the company was able to sell about 50,000,000 units annually enjoying a 75% market in the United States and 87% of all legal digital music online stores in the country (Ashcroft 2012, p.679). The iPod gave way to the iPad which is currently enjoying success in the Smartphone market and more recently the iPad which is enjoying success in the computer tablets market. From the above, it can be acknowledged that the product and process innovation will be key to the ability of Apple to sustain its success in the consumer electronics market. 3.2 Product Diversification Product diversification is the continuous increase of an organization’s product range by coming up with new products (Osorio, Guerras-Martín & Zuñiga-Vicent 2012, p. 326). Product diversification enables an organization to tap into a completely new market. In line with Apple’s value of upholding the need for venturing into markets which it would be able to make significant impacts in, the company made strategic decisions on to which products in the consumer products it would manufacture. Its experience in the 1980s with the Personal Digital Assistant and the Apple Pippin games console in 1990 gave the company the much needed caution into venturing into the consumer electronics market (Ashcroft 2012, p.677). From the case study, it can be acknowledge that the company evaluated the options of venturing into various product lines such as CD & DVD players, Cameras and Camcorders among other consumer electronics strategically. Key to the concerns of Apple was to venture into a product line in which it would be able to make significant impacts. With its strategic product differentiation process, the company has been able to reach out to various market segments for instance the digital music industry with the iPod, the Smartphone market with the iPhone, the computing devices market with the iPad, online digital music market with the itunes and the laptop market with the Mac (Apple 2013, p.1). Apple also has prospects in manufacturing smart TVs with the development of the Apple TV. 3.3 Understanding Critical Success Factors Critical success factors are those factors about the market and the product which an organization must take into consideration so as to emerge successful. From the case study, it can be acknowledged that Apple knew its critical success factors (Ashcroft 2012, p.678). The reason as to why Apple has been able to make it big in the consumer electronics market is owing to its in depth understanding of the key success factors which are required in the specific markets which it ventures in. The company understood that relative price performance, design innovation, reliability, product quality, software availability, product features, distribution and marketing, corporate image, internet connectivity, service and support and constant development are key features necessitated by the market for the success of an organization (Ashcroft 2012, p.677). Looking at Apple’s product range, it can be acknowledged that they are a mark of the several factors identified above; hence the company’s ability to manage in turbulent economic times and still emerge successful as compared to its competitors. From this, it can be acknowledged that by Apple understanding its key success factors, it can be able to remain sustainable in the consumer electronics market. 3.4 Sustaining Competitive Advantage The competitive advantage of Apple in the market is a product of many factors. Key to the competitive advantage is any company’s products innovation (Higgins 2007,p. 31). With innovation, Apple has been able to create a digital hub which is home to some of the reputable brands in the world (Ashcroft 2012, p.677) Therefore, to remain sustainable in the market, the company should uphold innovation in all its consumer electronics product range. Additionally, a strong brand name has been key to the competitiveness of Apple. The strong brand name is as a product of high product quality, high features, availability of supporting software, among other features which have maximized on products’ ability to offer utility to the consumers. From the discussion above, it can be acknowledged that the Apple’s success can remain sustainable if it upholds innovation and brand strengthening. 4.0 Implementation: Putting Strategy into Action A swot analysis on Apple identifies the company’s strengths, weaknesses, opportunities and threats; hence assessing the company’s position in being able to sustain its success. The following section will give a SWOT analysis of Apple and give two important strategies which are critical for the sustainability of Apple’s success in the consumer electronics market. 4.1 SWOT Analysis 4.1.1 Strengths Strong Brand Apple is a strong brand in the world. Apple is often used as a mark of innovation, excellence, quality and reliability (Ashcroft 2012, p.677). As a result of this, the imac, the iphone, the ipad and the itunes among other products manufactured by Apple are normally the best products in their category. As a result of this, Apple can rest assured that their strong brand name has given them a competitive advantage over its competitors in the market. From the case study, it can be seen that the company has sold about 250,000,000 iPods and has been offer about 140,000 apps from its iTunes store; thereby generating about 3,000,000,000 USD. A strong brand is a key aspect in the sustainability of any organization. The strength of a brand in the market is usually used as a measure of how much the consumers have placed their trust on the specific product being manufactured/ produced by an organization. Key features which show that an organization have a great brand are the sales of an organization. Apple was ranked 15th globally by Forbes with respect to its total sales (Forbes 2013, p.1). Consumer royalty to a brand is also an indicator of the strength of a brand in the market. According to the case study, Apple was able to gain success in the market by being able to provide quality products which were able to satisfy the specific needs of a customer. This was the growth of brand Apple to its current degree; one which has propelled it to the success in the consumer electronic industry. The company should strive to maintain a string brand name in the market; hence be able to sustain it success. 4.1.2 Weaknesses The company’s main weakness is the inability to target low income consumers. The company’s manufacturing process is targeted at high profile consumers. As a result of this, the company’s products are often termed expensive for many consumers. In a bid to counter this challenge, the company manufactured the iPad which was retailing at $560 in the US market (Ashcroft 2012, p.679). The company is also recovering from the loss of the Steve Jobs, the former inspirational leader to the company. On this point, it s worth noting that Apple was founded on the vision of Steve Jobs whose entrepreneurial and ideology to business helped build Apple into a strong brand. 4.1.3 Opportunities The company has big opportunities in taping into untapped markets. The success story of the company in the last decade is base n the ability f the company to create new markets; for instance in the iPod and iTunes market case (Ashcroft 2012, p.679). There lies an untapped market in the smart phone and digital music among other consumer electronics market which Apple can tap into. 4.1.4 Threats The main threat to Apple is competition. The company is currently facing stiff competition from other smart phone and tablet manufacturers specifically Android and Windows operated devices. As seen in the markets share of various operating systems in selected countries iOS sits back at the third position behind other operating systems. The company must therefore take some caution so as to repel off the competition which is a threat to the sustainability of its current success. 4.2 Developing and Maintaining a Good Organizational Culture A good organizational culture is important in enabling an organization maintain a desirable trend. An organizational culture is made up of strategic values, beliefs and practices which are regarded highly in an organization (Smith & Sharicz 2011, p.80). It has been identified above that the company has a high regard for innovation, product quality, reliability among other factors which together comprise the company’s key success factors. For this reason, the company should set in place good measures which will enable it to sustain its great organizational culture which has landed it to its current success. This is in the wake of concerns about the likelihood of the dilution of values after the death of its founder Steve Jobs. 4.3 Strategic Decision Making Post Steve Jobs – Leadership Steve Jobs is credited to having brought Apple to its present successful state. Steve Jobs was a strategic decision maker, a great entrepreneur, a high risk taker in addition to being highly flexible. From the case study, it can be appreciated that he did not want to venture into the manufacturing of a specific product just for the sake of doing it. Instead, he wanted to venture in product lines in which he would be able to make significant impacts in; hence being able to make great product developments such as the legendary iPod, iPhone and itunes. The strategic decision making after Steve Jobs continued when Apple released the iPad instead of the much predicted game console (Ashcroft 2012, p.677). For this reason, the sustainability of Apple’s success rests upon the ability of the current management to make strategic decisions, just like Steve Jobs was able to do. Strategic decision making would enable the company to be able to take care of the future by taking care of the present; hence attaining sustainable success. The success at Apple is partly because of the great leadership by Steve Jobs, who is also the founder of the company. Shortly after his death, the share price of Apple’s stocks fell; giving an insight into the level in which the market had confidence in Steve Jobs. Steve Job’s transformational leadership was able to steer Apple through the competitive market and the global economic crisis. Although it is not possible to get a leader who will be equal to Steve, the sustainability of Apple lies within the ability of the current leadership to steer the company towards the right direction. This leadership will be guided by the great organizational culture of the organization. 5.0 Conclusion Concluding, it can be appreciated from this paper that Apple has a daunting task to stay sustainable in the wake of increased competition. The report has given an analysis of the company’s current situation in the market, it was identified that it strong brand, its financial might and first mover advantages are the strengths of the company. The major weakness of the company is the inability to reach out to the middle and low income earners owing to their highly priced products. he main threat to the company is stiff competition from other players in the market. On this point, it was identified that windows and android operating systems have been major competitors to Apple. The options of tapping into new markets with the current or new products are an opportunity to the company. It was outlined that the company’s success is based on great values and practices which it has developed over time. Its commitment to innovation and high quality products specifically stood out. From the three dimensional framework analyses, it was seen that the company is stable financially, has a stable though falling market share and strength. The strategic choices which the company should consider adopting in order to remain sustainable include product innovation, product diversification, understanding its critical success factors and maintaining a sustainable competitive advantage. The company should aim at maintaining a good organizational culture which upholds its organizational beliefs and practices and adopting a strategic post Steve Jobs decision making strategy. From this report, it can be concluded that although maintaining sustainable success in the consumer electronics market is a hard task; it is achievable with a strategic approach in place. 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