Apples Business Strategy - Essay Example

? Apple's Business Strategy of the Contents Contents 2 Answer 3 Answer 2 3 Answer 3 4 Answer 4 5 Answer 5 6 Answer 6 6Answer 7 7 References 8 Answer 1 Apple Inc. falls in the category of consumer electronics. Prior to recession, the industry was expected to grow at a rate of 5-7 percent annually. By the end of 2010, Apple Inc. was growing at a rate of 13.6 percent annually. Various factors define the nature, characteristics and fate of this high technology industry. In order to survive, companies in this industry need to be innovative and knowledge based. Being the first to apply latest information technologies, while keeping in mind consumer perception and demand also defines the overall business of organizations. Many economic characteristics define a high technology industry. These are the overall technology consumption of a nation’s economy. It is seen that brand loyalty is less in developed countries compared to new emerging countries. Product life is also a factor which varies in different economies. Answer 2 Apple Inc. has placed itself in a premium position in the consumer electronics market. Most of its products are placed as premium and high priced owing to its superior technology and unique designs. As a result of its successes including the iPods, Apple Inc. has been able to increase its market share in United States as well as other parts of the globe. The competition in Apple Inc. can be understood through Porter’s five forces model analysis. Suppliers- the bargaining power of suppliers is low as Apple Inc. does not have too many suppliers in order to leverage the benefit. Music labels have started giving pressures to the company which might result in high cost Buyer- Those who are loyal to Apple Inc. do not see the price tag. To attract the rest of the segment, Apple Inc. will have to make strategies. Substitute products- Threat from substitute products is high. E-books and other reading gadgets such as Kindle and Nook, substitute models throughout tablet, PC and phone industry are making customer decision making difficult (Corrocher & Zirulia, 2010). New Entrants- Threat from new entrants is high. Threat from low PC and phone manufacturers is low as Apple Inc. has a niche set of customer with more specific demands. However, existing competitors have started making close copies of Apple Inc. products increase overall competition for Apple Inc. Rivalry among Sellers- Rivalry among sellers is the highest. Apple Inc. operates in multiple industries thus it has multiple competitors which results in fierce battles. While Apple Inc. is outright leader in tables and has a strong position in personal media, it faces stiff competition in the PC and smartphone category. Overall strength of competition in video game consoles can be considered as fierce. The gaming industry is filled with intense competitors like Sony, Xbox etc. though Apple Inc. has launched its own brand of gaming console, owing to its high price it is has still a long way to go in terms of market leadership. Answer 3 Business crisis The recent meltdown of major financial institutions and process is causing us all pain, and finally forcing change. Maybe we haven’t seen the results yet, but there are thousands of startup opportunities to offer new products and services, to replace those in crisis Global instability Unpredictable forces such as bubble bust, Middle East crisis can have a quick impact on cost or critical product’s availability. Riots and shutdown in various regions may also force Apple Inc. to change its strategies in these affected areas. Lack of effective coalition with government may also lead to change of strategies in Apple Inc. Organizational restructuring After the death of Steve Jobs, Apple Inc. has been though a lot of restructuring in the organization. With the appointment of new CEO, changes were likely to occur. This caused both positive as well as negative responses. It can be seen that these changes are making the competition more intense. Even though Apple Inc. has done a good job, many issues still exist. There are limited number of distribution channels, narrow group of customers and low market entries in emerging and developing countries. While it is very difficult to maintain leadership and employee morale in IT and consumer electronics industries, continuous development in product accessories in order to match other products and narrow customer group is another tough task. Even though expanding group of customers can have a positive impact on the company’s profit and sales, most of the Apple Inc.’s products are placed in premium price level making it unavailable for many consumer segments. Answer 4 While it is difficult to elaborate the various strategies adopted by Apple Inc. over time, few of the factors that have determined the success of Apple Inc. are: 1. Demographics Apple Inc. has always been successful in targeting the right group of early adopters, though Apple Inc. products are not for all sectors, consumers purchasing in the premium segments keep Apple Inc. as their first preference (Guerzoni, 2010). 2. User Preference Understanding and meeting the exact preferences of their target segment has been one of the key factors for Apple Inc.’s huge success. The company has achieved an extremely successful position in the consumer electronics market by providing unique designs, technology and features (Guenzi & Troilo, 2006). Apple Inc. also keeps identifying untapped markets based on various user preferences. 3. Business Model Apple Inc.’s business model has always relied on its core competencies. Strong value chain, innovation and cutting edge technology has been basis for new products and services (Atuahene-Gima, 2005). 4. Marketing and Servicing Apple Inc. is known to provide great in-store experiences as well as excellent customer services. The marketing strategy of Apple Inc. has always been focusing on filling consumer needs. Fulfilling the final consumer needs is the key to success and Apple Inc. has completely embarked onto this strategy. They are very strict about providing few special features including providing security which makes Apple Inc. highly competitive. 5. Keeping things simple One of the features that make Apple Inc. front-runner in technology is keeping its products and services simple. Apple Inc. tries to make most of its products simple and user friendly, so then even people who are non-tech savvy do not find any difficulty in using Apple Inc. products. Answer 5 In terms of financial performance, Apple Inc.’s strategies are working well. There has been a steady rise in operating income as well as overall profit. The company has been able to keep its brand equity intact by continuously delivering innovative services and products. However, the financial data shows some good news for the shareholders. Total shareholder’s equity has increased over the past few years and this means that Apple Inc. has been more engaged in internal financing rather than taking debts from outside. However, total liabilities are also rising over the years and this poses serious threat for the company. The company’s profit is dropping as a result of declining iPhone sales which are a concern for future. Answer 6 One of the biggest strengths of Apple Inc. is its brand recognition. Apple Inc. is regarded as one of the most innovative companies around the globe. Starting with Macintosh Personal Computer, Apple Inc. has been continuously producing market disruptive and innovative products like iPhone, iPad, iPod. Apple Inc.’s current situation is also its current weakness. Apple Inc. has been facing changes in its management structure and strategies since 2011. The new management team has got mixed responses so far and it is continuously trying to put up with the high expectations of the company as well as its customers (Holberton, 2004). Market opportunity for Apple Inc. lies in increasing Smartphone’s demand. Another opportunity for Apple Inc. lies in capitalizing its huge reserve which can be used for acquisitions and patents of its unique offerings. The operating system of Google’s Android poses a major threat for Apple Inc. Also with latest launches and unique designs in its smartphone operating systems, Blackberry is becoming a tough competition for Apple Inc. The SWOT analysis reveals that through Apple Inc. has been market leader in many categories of consumer electronics, serious threats lies in future for Apple Inc.’s competitiveness. However, company has got a sustainable competitive advantage as a result of great leadership by Steve jobs and its unique technological adaptations to suit exact customer needs. Clearly, these advantages will keep the company in a distinct position for many years. Answer 7 In order to improve its competitiveness in the industry and to maintain its favorable positioning, Apple Inc. can adopt various strategies. Majority of Apple Inc. services are established in developed countries. With rising income and standard of living, Apple Inc. can introduce its offering in various emerging countries. Customizable products will keep customers needs satisfied and increase positive word of mouth advertising. Another approach which can be followed by Apple Inc. is intensifying corporate social responsibility. Improving factory conditions especially in developing countries should be on the priority list of Apple Inc.’s CSR strategies. Apple Inc. has been many times accused of not using the right methods of waste disposal causing hazardous waste materials open to humans. Minimizing the impact of Apple Inc. on environment and natural resources will not only increase its brand value among consumers but will also build trust and confidence among shareholders and investors (Hansen, 2005). In order to expand its customer group in the more developed regions, Apple Inc. can set up new pricing strategies to reach greater penetration. Customer’s benefit and product usage are important factors which effect the decision making process. Apple Inc. should make sure that all of its products are compatible as well as user friendly. References Atuahene-Gima, K. (2005). Resolving the capability rigidity paradox in new product innovation. Journal of Marketing, 34(3), 375-409. Corrocher, N., & Zirulia, L. (2010). Demand and innovation in services: The case of mobile communications. Research Policy, 39, 945-55. Guenzi, P., & Troilo, G. (2006). Developing marketing capabilities for customer value creation through marketing-sales integration. Industrial Marketing Management, 35, 974-88. Guerzoni, M. (2010). The impact of market size and users’ sophistication on innovation: The patterns of demand. Economics of Innovation and New Technology, 19(1), 113-26. Hansen, T. (2005). Perspectives on consumer decision making: An integrated approach. Journal of Consumer Behaviour, 4(6), 420-37. Holberton, P. (2004). The leadership journey: Becoming an enlightened leader. Handbook of Business Strategy, 5(1), 53-58. Read More