Apple : Function and Form - Essay Example

?Apple Inc. Business Level Strategy by :________________ [Department Contents ExecutiveSummary 3 Introduction 3 Business level strategy & the competitive advantage 4 Generic Strategy & Strategy Clock 4 Which strategy is Apple inc. following? 5 Advantages & Disadvantages 8 Conclusion about Apple Inc.’s competitive strategy 9 Recommendations for Apple Inc. 10 Bibliography 11 Executive Summary This is a paper on Apple Inc.’s competitive strategy and the actions the company takes to sustain its position competitively. Furthermore, this paper explores and analyzes the competitive strategy of Apple Inc and makes a few recommendations. To explore this topic and make the research reliable a number of sources were used, for which the reference list has been attached. Articles from Forbes, academic journals and case studies including a case study by the Harvard Business Review and a case study by the Pandora Group were used to evaluate Apple Inc.’s competitive position in the market. Furthermore, case studies from academic sources like Organization of Economic Co-operation and Development and International Journal of Business Administration were taken. Introduction Apple Inc. is an American corporation and it manufactures and designs consumer electronics and computer software products. The most prominent products include the Macintosh Computers, iPhone and iPod and the software range includes Mac OS X operating system, iTunes media browser, Final Cut Studio, and many more. The company has more than 250 retail store under its name in nine countries and it also manages an online store for software and hardware. (Forbes, 2013) Apple Inc. was established in California in 1976 and it was called Apple Computer, Inc. in its first 30years, but the word computer was eliminated in 2007 since it expanded into the consumer electronics .It has annual sales of roughly around US$ 32.48 billion. (Mirabal, 2009). The basic objective of Apple Inc. was summarized in its mission statement, which was to design Mac as the best personal computer, design OS X, iLife and iWork software for professionals and to lead the digital music market by bringing a revolution. Revolution is a key objective Apple Inc. has and which is integrated in its business strategy as well. Business level strategy & the competitive advantage Business level strategies are strategies which focus on specific function to increase Company’s market share and profitability. These strategies integrate the economic resources to improve the production efficiency, and they outline the core competencies of the company. Core competencies are the company’s strengths which helps them in creating the market share in the business environment. A core competency can be anything from good customer services to a unique product that competitors may not be able to duplicate or the supply chain involved. The core competencies are integrated in the business level strategy to achieve a sustainable competitive advantage. (Porter, 1985) A competitive advantage is an advantage which is gained by offering greater value through either lower prices than competitors or by providing any additional extra benefits or services. The essence of competitive advantage is in the question that “why should the consumer purchase this product rather than the competitor’s product”? Answering this question is a major challenge. (He, 2012) Generic Strategy & Strategy Clock Before we begin to examine Apple Inc.’s competitive strategy, we need to outline two major competitive themes; Generic Strategy or Clock Strategy. Generic Strategy is a model by Michael Porter, which can be applied to organization of any size, operating in every industry. The model is divided into Cost Leadership, Differentiation (creating desirable products which are unique) and Focus (specializing in a niche market). The model is then sub divided into “cost focus” and “differentiation focus” as explained in the diagram. While Clock Strategy is a lesser known strategy and it based on the principle that every organization achieves competitive advantage by providing exactly what the customer needs. The basic assumption here is that consumer will buy a product based on the “perceived value for money” of it. It holds a different perception of the product against the price line. Which strategy is Apple inc. following? Analyzing apple’s strategy will gives the impression that it uses a broad differentiation strategy to achieve the competitive advantage. It differentiates on the basis of high quality, exceptional and innovative designs and experience of personalized services for the consumers. For value creation they outsource their basic production for cost saving.  Apple’s recent records for third quarter show that revenue has gone up by 82% and profits have gone up by 125%. It is on its way to become larger than IBM, and the most remarkable fact is that this was considered unthinkable a few years ago. A distinctive feature about Apple’s competitiveness is that it holds a unique and limited product range compared to a wide variety provided by the competitors. It says no to the volume and makes a difference in its current product line, even in the lean years. This approach of Apple has proved to be highly profitable. Secondly, Apple has organized itself differently from the competitors. The consumer electronics are organized in the business units and they are fully integrated with the research and development departments. The result is obvious, the business units themselves are in competition with each other, and every product is compatible with one another because they share a central R&D and they create a combined experience for their customers. The accessories can be used on more than one product and consumers enjoy a brand experience with Apple. This helps it earn the trust of its customers and the trust is so high that everyone runs to grab an Apple product even before it is launched. Most Consumer Electronics (CE) organizations have divided P&L into diverse classifications, so every item's promotion as a rate of its sales for the most part is rather low since Consumer Electronics is a low edge industry. An item is started, and just assuming that it rapidly produces a lot of deals, is it set to have a continued and generous advertising. In the event that the item doesn't instantly take off, there is a reasonable chance that its advertising will rapidly be lessened or vanish. Likewise, CE organizations regularly have an exceptionally short concentration on any given item. They deal with an exceptionally short item reinstatement cycle, and continue starting new items at regular intervals or a year. These items, with a couple of exemptions, are related to a serial number, not a name, thus at regular intervals CE organizations need to revamp practically without any preparation customers' consciousness and investment around new items. Now considering Apple's methodology, they start item families that stay for a long period of time (iPhone, ipod, ipad, and so forth). They value them at the right cost to produce aggressive promotion and they fabricate long haul start arranges. They are ready to be patient and offer opportunity to another thought to secure itself in buyer minds. (Pandora Group, 2006). Apple is moderately uninterested in rivalry. Clearly Apple needs to succeed in the commercial center and beat rivalry, yet the organization's perception of triumph is connected to purchaser reaction, considerably more than to the effect and admiration that they produce around their rivals. An exceptional illustration is their methodology to industry fairs. All CE organizations hurry to show new notions at the different CE fairs in Las Vegas or Berlin, and take extraordinary pride in "being first" instead of "being correct." A CE organization will be content with demonstrating another notion to contenders six - nine prior months it is set to be accessible in sales. Thereby giving an amazing preference to contenders to make up for lost time and kill their effect in the commercial center. Apple doesn't head off to industry fairs, rather it forms Apple occasions and events right before or much after the industry fairs. Yet throughout these occasions it demonstrates new ideas that are set to be accessible to people "quickly." (Forbes, 2013) Apple values the entire buyer experience more than the real specialized execution. A hefty portion of Apple's rivals take pride in making items that characterizes a prevalent specialized execution. As it were, they esteem what's inside more than what is outside. The essential premise is that shoppers have a commitment to comprehend and acknowledge incredible innovation and shouldn't be disturbed by some absence of value in the development of items, awful configuration or lumbering client interfaces. Essentially CE organizations are controlled by the mentality of specialists who look down to shoppers and accept that it is their deficiency in the event that they don't comprehend the stunning innovation that they offer. Apple rather puts an immense premium on the overall buyer experience; beginning with the nature of the assemble, the quality and tangible advance of materials, and the energy and usability of the client interfaces. Apple items are frequently portrayed as "spellbinding," and its clients speak more about this sexiness than they discuss immaculate innovation emphasizes. Generally, Apple has comprehended the specialty of keeping the relationship of buyers with engineering simple and energizing, while even now upholding a firm hold on the "engine's" execution. Advantages & Disadvantages Advantages: 1. The simple advantage of these strategies for Apple is that they have a sustainable competitive advantage, and they maintain a handsome profit margin which is ever increasing 2. Apple enjoys an exclusive rating in the consumer electronic market. Apple enjoys an international network of distribution and reaches out a huge market. 3. Apple enjoys high price premium, as Apple is named Rolls Royce of technological world, it enjoys a high premium on its branding which is truly its competitive edge. 4. Apple has a lot of cost saving technique integrated in its competitive strategy since both the software and the hardware are manufactured by the company; as a result Apple enjoys brand power, customer loyalty and increased profits as every part is the best fit for their products. Disadvantages: 1. While there may be a few disadvantages, like Apple may be losing out on a lot by having a narrow focus to maintain the differentiation, there may be a lot more unexplored potential and categorized in the niche market, which is why a huge market is left out. 2. Another disadvantage is that since Apple is not interested in rivalry, it is losing its market share by not taking into account the fierce competition, and new products by Samsung and other enterprises are overtaking the market in some countries. 3. Apple does not have a share as big as Microsoft in both home computers and business computers. Other disadvantage associated to using Apple’s computers is that they are not easy to upgrade or customize once they are purchased due to its limited focus. 4. Lastly, too much hardware integration makes it a disadvantage for Apple Inc. as their hardware are not compatible with Windows operating system and since those are the more easily available ones, the consumers may prefer buying the alternate brands which are easier and cheaper to monitor and use. Conclusion about Apple Inc.’s competitive strategy We see the strategic issues applied to three fundamental ranges. Firstly it involves answering the question as to what are the fundamental methodologies to guarantee that Apple proceeds to develop and advance in its current markets, producing consistent incomes and high edges for the long haul. Second question that must be answered is whether it is vital to investigate the key alternatives outside of natural development that Apple can seek after, incorporating and securing an alternate organization or broadening. And third aspect which must be explored is that what strategic choices can Apple make to control requires as the organization proceeds to develop. Apple's prosperity is all in all traced to its capacity to develop and enhance. It has been an immensely fruitful organization the most recent five years due in expansive part to the dangers it has taken in improving another item and promoting it adequately. Key hypothesis says that there are three phases of an item influencing the ipod or itunes: Product Force, Position Power and Process Power. In each stage, force is characterized by two viewpoints, profit and boundary. In the initial stage, Apple picked up a noteworthy item power with the presentation of the ipod which went hand in hand with itunes programming. In view of the nature of item, convenience, and snappy advertising, Apple had a first mover advantage in this market. As the ipod and itunes developed, Apple picked up position power in the business sector. These item advancements had profit because bargains were high and Apple's name was picking up brand faithfulness and recognition around non-Apple clients. As the ipod got popular in society, it turned into a trend and this made it challenging for Sony and different organizations in the digital music player industry to leap forward and pick up pieces of the overall industry. In this way, Apple had both item and position power and saw its most noteworthy deals, edges and stock cost in organization history. Picking up the third and last force which is the process force, we can see that this force is what will confirm if Apple's has the ability to proceed to make maintained natural development, which is the to start with the venture in guaranteeing proceeded business power. Recommendations for Apple Inc. Concerning the analysis which is made; there are a few inferences and recommendations for Apple which can be convenient in instructively scale. 1. IPhone Operating System: It is a benefit that Apple has its own particular working system for iPhone, however in regards to open source working frameworks like Android, there could be a slip for Apple in the future. 2. IOS has a great deal of exceptional characteristics that recognize it from different OS’s. Now and then IPhone clients say they cannot switch to whatever IOS they prefer. Open source OS are developing rapidly and Android is catching a larger market share.. 3. There are frequently pricey provisions in the App Store which causes annoyance to the consumers. Even some key programming for information archiving has a cost in the IOS. Apple should break or take out some of these and let the clients like from free or low cost sources if they prefer. 4. Cell phone industry is a profoundly magnetic industry.. According to the Ansoff network we are to face both existing markets and new markets. The more innovation and development, the more interest will be generated and the market share would expand. Apple might as well play with costs warily as it already has a premium cost methodology. Innovatively Apple is on top yet R&D may as well ascent due to competition. R&D up keep expanded $952 million or 39% in 2012. The development in R&D cost was determined by an increment in headcount and identified expenditures to underpin extended R&D activities. Although complete R&D expenditure expanded 39% and 36% in 2012 and 2011, respectively, it remained reasonably dependable as a rate of net deals. (Apple Inc., 2012) statistics shows Apple doing this system exceptionally well. The Company proceeds to accept that centered ventures in R&D are discriminating to its future development and focused position in the commercial center and are specifically identified with auspicious advancement of new and improved items that are vital to the Company's center business technique. Thusly, the Company hopes to make further speculations in R&D to remain aggressive. (Apple Inc., 2012) . Bibliography Apple Inc. in 2010 (2010) David B. Yoffie, Renee Kim. Bajarin, B., 2011. Tech Opinions. [Online] Available at: http://techpinions.com/apples-competitive-advantage/5 Bajarin, T., 2011. PC Mag. [Online] Available at: http://www.pcmag.com/article2/0,2817,2380962,00.asp Cohan, P., 2013. Forbes. [Online] Available at: http://www.huffingtonpost.com/2013/04/19/apple-worse-off_n_3117237.html Enderle, R., 2004. Tech News World. [Online] Available at: http://www.technewsworld.com/story/33061.html Financial Post, 2013. Financial Post. 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