Strategic management: Apple Inc
Introduction
Apple Inc is founded by Steve jobs, Ronald Wayne, and Steve Wozniak in 1976. It is an American multinational technology organization headquartered in California, US. The firm designs, manufactures, develops, and markets potable digital players of music, personal computers, and related products. The company is considered as the most valuable organization of the world as it has beaten the Google, Microsoft, and Samsung in term of sales, market capitalization, profitability, and assets. The sales of the company top in April 2015 with $200 billion. The company became public as it has registered common stocks listed in NASDAQ national market. Now the firm has gained the first position as a publicly traded company with the exceeding value of $700 billion. The success of the iPhone product in the United States and China contributed immensely in raising the shares of the California based company (Spickernell, 2015). The portfolio of the company include iPad, iPhone, apple watch, iOS, Mac products, software, apple TV, iPod & iTunes, Apple music, and iCloud & Apple Pay. The company also runs apple retail stores (Apple Press Info, 2015).
General environment’s segments
The aim of general environment is to assess the trends that are expected; these factors have dramatic affects over the strategy of the firm. The general environment consists of segments external to the organization. Such as the demographic segment, the economic segment, socio-cultural segment, technological segment, global, and political/legal segment (Hickman, 2009).
Demographic segment
All the segments of general environment have considerable effects on Apple. However, the two major factors that could have immense impact over the company include technological segment and demographic segment. The reason behind the selection of the demographic segment is that it helps organizations in deciding the most suitable target audience for their product. The company targets the unique blend of people of all age regardless of their genders and the placement of retail stores in California and New York clearly demonstrates that the firm targets high-income people. Changes in the demographic segment or in the preferences of customers can have a substantial impact on sales of the organization. Change in revenue must have an impact on the product strategy because companies introduce products to customers with the objective of making profit.
Technology segment
Technological factors have significant impact over the practices and strategies of technology companies. Technology has been an ever-growing industry; the demand of smart and efficient technological advancement has been a part of the business world and now it is apparent in all over the worlds. Everything from tablets and phones to the personal computers is changing rapidly. These changes played immense role in the success of the company as the firm always tried to overcome these changes and be an innovator. The organization has been successful in its aims and has been an initiator in introducing new technology. For example, the competitors of the organization have strong ability of imitating the products and services of Apple that forces company to come up with unique solutions. Increased demand of portability and ease encouraged the company to make innovations in Smartphone and tablets.
Two most influential forces of competition and the company’s way of addressing them
The five area of competitor’s analysis that helps companies in shaping their strategies is identified as the five competitive forces. These five forces include bargaining power of buyer, bargaining power of supplier, competitive rivalry, threat of new entrant, and the threat of substitute. The two most common areas that have massive influence over the organization include bargaining power of supplier and competitive rivalry.
Competitive rivalry
The competition in the technology industry is high; the company is facing tough competition from its competitors. The biggest rivals of the organization include Google, Samsung, Motorola, Microsoft, and Sony. The company to deal with its competitors is engaged in aggressive advertisement and rapid innovation. The company addresses the competition through making it irrelevant. For example, the move of the firm to enter in a smart watch industry differentiates it from competitors. The company introduced the iPhone 6 and 6 plus that brought record breaking sales for the firm. According to the news, now the organization is considering to come up with iPhone 7 that would have more feature and enough capability to beat the competition (Blanc, 2015).
Bargaining Power of Suppliers
According to the personal analysis, bargaining power of the supplier is the second most important force that can put a noteworthy effect on the business of apple. If the suppliers do not supply appropriately the required material on time then the firm cannot produce the product amount that can fill the customer demand. The company for addressing this issue has made contracts with several suppliers (Apple Inc, 2015). Moreover, the company through the designing of the chips reduced the power of chip suppliers, and through Apple stores reduced the power of distributors. The association can make contracts with more suppliers with the purpose of lower their product prices as globalization has made this possible through the outsourcing of cheap material from other companies.
Company initiatives for remaining competitive
It is clear from the history of the company that the organization has been an innovator and always come up with better and unique solutions. Therefore, it is obvious that the firm will continue its strategy and keep diversifying for making the competition irrelevant. However, to deal with the bargaining power of suppliers, the company might increase its number of suppliers and start producing its major materials that are available from some specific suppliers. In this way, they will be able reduce the suppliers’ bargaining power as the material that is commonly available does not give much power to supplier due to the lower cost of switching to the firm.
Threat and opportunities for the organization
SWOT analysis is the best way to assess the internal and external environment of the company. Therefore, for analyzing the most serious threat and the biggest opportunities SWOT analysis is used.
The biggest threat to the company is it competitors; the organization competes with firms like Samsung, Microsoft that are also involved in rapid innovation. The company can avoid this threat by innovating sustainable solution based on research and development. The corporation through diversifying the product portfolio can make the competition irrelevant as the firm has experience in doing that. The apple watch is the example of the organization’s diversity.
The biggest opportunity of the company is to expand its operation in emerging countries where the demand of Smartphone and tablets is high. The example is India where the sale of Smartphone has tripled (Savov, 2015). Therefore, the company through expanding its operation in high demand markets of its products can gain sufficient market share.
The greatest strength and the most significant weakness of the enterprise
The brand is considered the world’s most valuable and strong brand. The innovation process of the company has been the biggest strength of the firm as it always helps the organization in keeping itself ahead from competition. Therefore, the company is suggested to maximize its capabilities in creating new products. However, it has been determined that the products of the company are imitable. The firm for making its innovation sustainable should acquire patent for its offerings so they can sustain for long with a product. Moreover, they can start producing some specific parts for their new products so they are not easily available in market. In this way, they can prevent their innovation from rapid imitation (Satell, 2013).
The major weakness of the company is its limited distribution network. The limited distribution network limits the access of customers to the product and despite having interest they do not buy the brand. If the company overcomes this weakness, it can have a significant positive impact over the profitability of the corporation. Therefore, it is suggested to the firm that it should expand its distribution network and ought to provide easy access to its customers.
Apple’s resources, capabilities, and core competencies
The resources of the company that contribute in forming the companies capabilities include its highly skilled, knowledgeable, and experienced workforce, superior technological resources, and creative business model. The most important resource of the company is its chief executive offices, Steve jobs. These resources contributes immensely in the success of the organization Capabilities are the result of the integration of several resources that are used to complete any specific job or a series of tasks. Research and development, innovation, and marketing and development are some of the capabilities of the company. The core competencies of the company refer to the capabilities the company pays special focus on them and perform them well with the aim of pursuing its vision. The core competencies are the particular activities that the company performs better than its competition with the aim of creating value for its customers. The core competencies of the organization include creativity in designing innovative products, marketing them to high-end segment, and excellent customer services. The commitment culture of the company towards innovation allows employees to innovate products on constant basis, which is also a core competency of the organization (Ireland, Hoskisson & Hitt, 2008).
Value chain of the company
The company has presence in 18 countries with 481 retail stores and its online stores are available in up to 39 countries. The structure of the organization is unique as its manage the integration between employees and management.
(Supplychain Opz, 2016)
The company known for its wider network of suppliers for the management of sophisticated supply chain as has been mentioned in the above diagram. The company can use its human and technological resources and capabilities in its supply chain to make the process of innovation smoother. Operations refer to the process of production and the way services are handled. The company has the wider number of full time and part time employees. The company’s software are majorly produced by its outsourcing partners who are primarily situated in Asia. The company through its capabilities of managing innovative culture can add value as it can train these employees to produce other products at lower cost as well. The company in its marketing and sale and in its services can use its intellectual human resource that will help in making the distribution process more efficient.
Conclusion
The two major factors demographic segment and technology segment has the major influence on the activities of the organization. The two most influential competitive forces that can have huge impact over the practices and strategies of the company include competitive rivalry and bargaining power of suppliers. The company can overcome the competition through its constant innovation and reduce bargaining power through making contract with suppliers that are more global. The major threat to the organization is its competitors and the biggest opportunity for the organization is to expand its business in emerging countries. The biggest strengths of the company is its image and the weakness is its limited distribution network that affects the profitability pessimistically. The company has human and technological resources that contribute in its core competencies and capabilities. The overall paper presents the brief look of strategic management of the company.
References
Apple Inc. (2015). Supplier List 2015. Retrieved January 19, 2016, from https://www.apple.com/supplier-responsibility/pdf/Apple_Supplier_List_2015.pdf
Apple Press Info. (2015). Product Images & Info. Retrieved January 19, 2016, from http://www.apple.com/pr/products/
Blanc, M. (2015). iPhone 7: How Apple Inc Aims To Brush Off Competition. Bidness. Retrieved January 19, 2016, from http://www.bidnessetc.com/iphone-7-how-apple-inc-aims-to-brush-off-competition/
Hickman, G. R. (2009). Leading Organizations: Perspectives for a New Era. USA: SAGE.
Ireland, D., Hoskisson, R., & Hitt, M. (2008). Understanding Business Strategy: Concepts and Cases. Canada: Cengage Learning.
Satell, G. (2013). How to Manage Innovation. Forbes. Retrieved January 19, 2016, from http://www.forbes.com/sites/gregsatell/2013/03/07/how-to-manage-innovation-2/#2715e4857a0b7776323833d9
Savov, V. (2015). India remains Apple's great untapped opportunity. The Verge. Retrieved January 19, 2016, from http://www.theverge.com/2015/11/24/9790810/apple-iphone-india-smartphone-market-share
Spickernell, S. (2015). Apple becomes most valuable publicly traded company ever. Retrieved January 19, 2016, from http://www.cityam.com/209131/apple-becomes-most-valuable-publicly-traded-company-ever
Supplychain Opz. (2016). Is Apple Supply Chain Really the No. 1? A Case Study. Retreived January 19, 2016, from http://www.supplychainopz.com/2013/01/is-apple-supply-chain-really-no-1-case.html
