Strategic Management in Apple Company - Case Study Example

Strategic management in Apple Company Introduction Apple Inc. is an America based multinational company headquartered in California. It developsdesigns and sells computer software, consumer electronics, personal computers and online services. It is a public limited company. The company was founded in 1976. Founders of the company were Steve Jobs Steve Wozniak Ronald Wayne. The organization has 425 retail stores worldwide. The company has almost 80,000 employees worldwide. According to the annual report of 2013 revenue of the company was US$ 170.91 billion. Net income in 2013 was US$ 170.91 billion. Present CEO of the company is Tim Cook. This paper will discuss about the strategic management of Apple. 2 SWOT 3 External Analysis 3.1 Political Apples business practices are managed all over the world. As far the financial report of 2013, maximum business or revenue of Apple comes from the other countries apart from America. There are lots of issues which are above the control of company. Issues like War against terrorism, public health issues, volatile geopolitical situations and financial sanctions against different countries. These kinds of issues have great effects on the sales of Apple Product worldwide. 3.2 Economic The world’s economic conditions are recovering from Global Financial Crisis of 2007-09. As oil prices have increased considerably inflation also increased in global economy. It has reduced purchasing powers of global customers (McLoughlin and Aaker, 2010). Reduced purchasing power has significant influences on the revenue of Apple. In last few years unemployment rates were increased in USA and Europe. Increased unemployment rate has great negative impacts on Apple’s business. 3.3 Social Education level of people, technical awareness, life styles, buyer’s habit, health consciousness, growth rate of population in different countries these are the social factors influences the business of Apple heavily. All these factors are inseparable social parts as far as business of the Apple is concerned (Hill and Jones, 2009). Different global social factors have great impacts on the business of the company. 3.4 Technological Technologies are changing day by day. To cope with changing technological trends the company spends lots of money for research and development purposes. The organization has full control over its overall production process. Basic infrastructure of the company is very suitable. The company believes in continuous technological innovations. Technological advancement of the company has made it a global technological benchmark in the global mobile phone industry. 3.5 Legal The organization is facing problems with patent and copyright laws and facing serious issues from Samsung. Consumer protection act is also a very serious legal matter that the company has to abide by (Jenster, Hayes and Smith, 2005). Health and safety law is also a legal factor that influences the business of the company. 3.6 Environment Carbon foot print is a very serious environmental issue. In its business practices the organization always gives focus towards reducing carbon emission. The organization is recycling their wastes very tactically and saving energy and power by conscious usage of their office computers and laptops. 4 Competitive Environment 4.1 Intensity of rivalry among competitors Competitive rivalry among existing competitors is very high. The company is operating in mobile phone market, personal computers and music player market. Existing competitors like Dell, Samsung, HP, Compaq and HTC make Apple run for their money (Reuvid, 2012). All the other existing competitors of different industries are having global brand values and offers almost similar products to their customers. In some cases prices of other global brands are less in compare to Apple. 4.2 The threat of new entrants Threat from new entrants into this industry is low. Entry barriers are quite substantial. It requires huge investments from the side of a new company. It requires skilled and capable work forces and technological advancement to enter into the industry. Different legal bindings are there. Achieving patents and copyright is not a very easy thing to do in this industry. It is very difficult to switch customers from an existing brand to a new brand in the industry (Fitzroy and Herbert, 2007). 4.3 The threat of substitute products Threats from substitute products are very high. Different products of Apple like computer and iPod already been substituted by IBM’s Think Pad. Different series of Think Pad like R series, T series and X series have captured the market significantly. Android phones of Samsung are challenging heavily iPhone in the global Smartphone market. In case of laptop, Dell also has customized their products according different needs of the customers. 4.4 Bargaining power of suppliers Apple is offering very complex devices in the industry and it is not producing every part by itself. Apple has many numbers of suppliers like Western Digital, Hitachi Global Storage Technologies and Seagate. For reducing bargaining powers of suppliers, Apple did not entered into any agreement with single company. It always remains open for lots of vendor options. Therrfore, Bargaining power of suppliers is low. 4.5 Bargaining power of customers Apple operating system is the only substitute OS of Microsoft operating system. In this case Apple enjoys lower bargaining power of customers. Apple enjoys very strong customer loyalty across the world. All of its products are sold in same price in every part of the world. So, bargaining power of customers is on the lower side. 5 Internal environment analysis 5.1 Resource Type Resources of the company can be divided into two types tangible and intangible. Over the years tangible assets of the company have increased, in 2012 Property Equipment and Plant were there worth of 15,452,000 $. In 2013 it became 16,597,000 $. Cash and cash equivalent assets also increased in 2013 and it became 14,259,000 $ and in 2012 it was 10,746,000 $ (Abraham, 2 012). The organization has very advanced research and development centre in USA. It is a very significant tangible resource for the company (Hill and Jones, 2012). Global brand image is a significant intangible resource for the organization. Over the years this particular resources is on growing track. The organization enjoys huge customer loyalty. Loyal customers often act like an advocate for the brand. It is a great intangible resource for the company. According to the balance sheet of the company Goodwill of the company also increased in 2013. It was worth 1,135,000 $ in 2012 and became 1,577,000 $ in 2013 (Marr and Gray, 2012). 5.2 Firm’s capabilities Over the years the company has increased its functional capabilities. Good management is a suitable functional capability of the firm. The organization successfully maintains the teamwork environment which always provides more innovation and creation of ideas, strategies and products. Employees are very well trained and always are encouraged to think out of the box. It has good relationship with its suppliers, helps the organization to operate very smoothly (Cunningham and Harney, 2012). The whole value chain of the Apple can be described by different steps (Hill and Jones, 2011). Those steps are Design of the products, Procurement of raw materials, Manufacturing of the new products, Distributions and Logistics management and Sales in the market. Conclusion Modern day business is ever-changing. Change is the only constant thing in this industry. Apple has managed its brand image globally very carefully. Over the years it has enjoyed superior customer’s loyalty. Innovation and creativity is a very important attribute for the organization. It has given significant focused towards the research and development. The company is facing cut throat competitions from other players in the industry. It has global present and the management of the organization has managed their global businesses pretty well. Due to its strategic management the organization has able to create a unique image about the brand in the minds of the customers. Recommendations Business level strategy The organization should follow differentiation strategy. Prices of the Apple products are high than other competitors in the market. But customers still buys Apple products. It means customers are attracted by the unique features of the company. This strategy should be focused upon. The organization must go for unique products and prices of those products can be high. Due to this strategy customers will feel that they are paying extra bit of money and are getting some unique advantages in compare to other brands. Product differentiation strategy will be suitable with company’s brand image. Corporate level strategy Concentric diversification will be suitable for the organization as corporate level strategy. With this kind of diversification risk level will be less. In this diversification company can acquire any related company which will provide extra bit of competitive advantage to the organization. It will help Apple to further strengthen its position in the market. It will help them to create product differentiation in the market. Operating system compatibility is an issue for Apple; it may go for any OS company to resolve this age old problem. This corporate level strategy might increase market share of the company. 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