ASSIGNMENT 5: CAPSTONE
ASSIGNMENT 5: CAPSTONE
Impact of Company’s Vision and Mission on Success
Vision statement
Apple lives this vision through the technologies it develops for consumers and corporations. Apple does not simply make a statement. It lives it by ensuring that its employees understand the vision and strive to reach it. By producing the high-quality products they satisfy their consumers in a great manner. Thus, it plays a major role in company’s overall success. Their success lies in achieving their goals, satisfying their customers and above all generates huge revenues.
Mission statement
“Apple is committed to bringing the best personal computing experience to customers, students, educators, creative professionals, and consumers around the globe through its innovative software, hardware, and Internet offerings.”
They provide the best quality software and hardware facilities to their consumers just because that they have Cleary defined mission statement. Every employee working in Apple knows his job very well. They know where their contributions best fit in. They do their work with a great deal and able to provide the best quality products to their customers. It has a great impact on company’s overall success (Wagner and Schaltegger, 2004).
Primary Stakeholders
Primary stakeholders include customers, employees, stockholders, creditors, suppliers or anyone else with a financial or functional interest in the product or situation. These stakeholders are indirectly running the company. If they are not present, then the company stands nowhere. Consumers through their buying adding value to the company, employees are working by putting their 100% efforts, their stockholders are the backbone of the company. In short they are playing an important role in company’s overall success (Wagner and Schaltegger, 2004).
Porter’s Five Forces Analysis
Through its Macintosh computers and operating systems, the iPad, iPhone and other products, Apple Inc. has achieved great success as a company despite going through some up and down. In 2014, it was succeeded in earning the market capitalization of $700 billion. A five forces analysis of Apples’ position in the technology sector shows industry competition and the bargaining power of buyers as the two strongest marketplace forces that can impact Apple’s profitability (Freeman, 2010).
Industry competition
The different companies that compete directly with Apple in the technology sector are high. The indirect competitors of Apple Inc. are Google Inc., Samsung Electronics, Amazon Inc., all of these companies just like Apple spend their significant amount of capital on research and development department and marketing departments. However, Apple is keeping its position at number 1 by providing the innovative and unique products to the consumers (Freeman, 2010).
Bargaining power of buyers
The element of low switching cost referred to above strengthens the bargaining power of buyers as an important force for Apple to consider. There is two bargaining power of buyers.
Individual bargaining power
Collective bargaining power
The individual barraging power of buyers is the weak force for Apple. If one customer is stop using iPhone products, then it has no effect on the company. The collective power of buying is the strong force as it affects the company’s revenues. That is why Apple spends a significant on R and D department so that they provide unique quality featured products like Apple watch and apple pay.
Threats of new entrants to marketplace
The threat of new entrants to the marketplace that could seriously threaten the apple’s market share is very low because for any new company to enter in the market require a huge capital. The cost of developing the new company will be very high. The second thing is that Apple has many brand loyal customers. So the new entrants in the market will not affect the company (Freeman, 2010).
Bargaining power of suppliers
The bargaining power of suppliers is the weak force within the marketplace for Apple’s product. It is weakened by the number of potential suppliers and a significant amount of supply. Apple is a big company, so it has many suppliers. It is free to choose any supplier to get the components for their product. So it is not the major force for Apple and so does for its competitors (Freeman, 2010).
Threat of buyers for opting the substitutes
There are no products that can compete directly with Apple’s product but possible substitutes for them. The substitute force is weak because all the other products have limited capabilities as compared to the Apple’s product (Freeman, 2010).
SWOT Analysis
The SWOT analysis of Apple Inc. is as follow.
Strengths
The strengths of Apple Inc. are listed below:
They have faithful customers.
Apple is a leading motivator in the technology industry.
They have shown Strong financial performance.
They have a great brand reputation.
They have millions of loyal customers.
Weaknesses
The weaknesses of the company are listed below:
Their products are highly priced.
They are facing the decreasing market share.
They are in need of further change in management.
Long-term gross margin decline is a weakness of the company.
Opportunities
The opportunities for Apple Inc. are given in this section
High demand of iPhone 6 and IPad mini.
ITV launch, Apple watch, IPhone 7
The growth of tablets and smartphones market.
Strong growth of mobile advertising market.
Threats
The threats faced by the company are listed below
There is a rapid change in technology
Terms and conditions of government taxation
Exchange rate variations
Rising pay levels.
Capitalization of strengths and opportunities
They are good at selling many their products so they should increase the production of that specific product which sells like hot cakes. As it will increase their revenues and will add value to the consumer as well as to the company. They should work on more innovation, spend more money on research and development department so that they bring innovation in the technology and thus more satisfied their customers the more loyal they will be to their brand (Montgomery, 2008).
The company’s reputation is very high, and it is all because of their innovative products, their soft wares are different from others, and they are reliable. That is why they have a good reputation. So, they need to focus on this area more to keep this reputation maintained. As the market for tablets and IPad is increasing so, they should make a lot of them. People love technologies so they should set a team of expertise in their research and development department who indulge their selves in making of new technology based products.
With the help of marketing advertisements by spending more money in this department, they can achieve their targets and goals in a fine manner. As it is an era of technology so the best advertisements should be displayed to convince the audience who are not using Apple.
Minimization of weaknesses and threats
Apple products are highly priced in the market. They should compensate the price with the innovative features so that people will ready to pay the price which they demand. By lowering the price will decrease the standard so they should add an extra feature which is not available in other company’s products. So that people do not hesitate in spending their money.
They must change their management. They should eliminate the employees from their company who are not working properly and hire the intelligent and hardworking employees who can drive the company in a great manner. The more innovative employee is present in R and D department, the more they will be able to produce the innovative products.
They must keep their self up to date with the consumers taste. Although they are considered to be the trendsetters as a consumer is the king of the market so they should keep their selves up to date with the current technologies and the consumers’ tastes and mindset. They can do this through surveys and questionnaire.
Maximization of competitiveness and profitability
Apple Inc. can use following strategies for the maximization of wealth of its stakeholders. The implementation of these strategies will ensure increased profitability of the business.
Low cost production strategy
Lost cost production strategy leads to the cost leadership in the market. It is efficient in those industries facing intense competition, and the businesses need to create the competitive advantage by remaining a low-cost producer. The competitive nature discussed earlier reveals that the competition is increasing in the technology industry. Therefore, Apple needs to focus on the low-cost production for decreasing the costs. The low-cost production strategy suggests that:
The company should source the inputs at relatively lower costs. The management should invite bids from more suppliers. It will reduce the supplier power and will lead to sourcing of supplies at competitive rates.
The production activities can be outsourced to the countries with less expensive human and other resources. It will lead to the less production cost. Apple is already following this tactic and has outsourced its activities to Foxconn in China and other Asian countries. The production activities have been shifted to China. The reason for this action is to control the production costs of the company. Another important aspect to be discussed here is that the company needs to focus on Total Quality Management Techniques like six-sigma and just in time. These techniques will give the business close monitoring over the supplies and will reduce the cost as well (Montgomery, 2008).
Differentiation strategy
The differentiation strategy is used to cater to the diverse needs of the consumers. The business environment is changing due to the increased competition and the global trends. Now the standardized products are not a solution to the diverse needs of the customers. The consumers want tailored products to suit their needs. Therefore, the businesses are moving towards the differentiation and the customization in their products. Apple Inc. has introduced the concept of differentiation in its products by assembling product solutions that are closely attached to the software platform created by the company. However, there is a downside to this differentiation as well. The products of the company have limited support for the other technological equipment. For example, devices running on Android have a greater compatibility for the third party vendor gadgets as compared to the products running on iOS. It leads to secure user experience as the devices are less prone to the security attacks. However, it reduces the consumer choices. Therefore, the differentiation should be at the heart of the business operations, but it should not reduce the user experience and choices (Montgomery, 2008).
Focus on niche strategy
Niche marketing strategy has gained much familiarity in recent years. The companies are focusing on the better understanding of the Niche and then directing strategies to target and reach out the segments falling under the Niche. It requires much market insight that is gathered through the extensive market and consumer research programs. The company is already investing necessary resources and has an R&D in place that assumes the role of marketing and consumer research as well. Based on the outcomes of this market insight, Apple needs to tap the untapped areas where the operations are limited or extinct. It will add a lot of new customers into the consumer base of the company leading to the increased profitability. Apple has ignored its niche segments in certain economies. For example, the business has not official distribution channels in many countries of Asia where currently consumer rely on gray channels for acquiring the products. These gray channels do not add to the profitability of the business. Therefore, the company needs to invest in the niche marketing strategy in these areas as well (Montgomery, 2008).
Communication plan
The purpose of the effective communication plan is to ensure the dissemination of information within and outside the organization to meet the information needs of all the stakeholders. Apple Inc. can use the following mode for the effective communication.
Meetings
The formal business meeting between the stakeholders is an effective method of sharing information among the stakeholders. It is rated highest on the affectivity. However, it is time-consuming and adds to the cost (Vos and Vos, 2004).
Website pages
The dot-com revolution requires having a presence through websites not for the customer only but the employees as well. The web pages for sharing the company policy and information regarding business activities is a cost effective and fast medium of sharing information. The company can use web portal for employees to keep them updated regarding the news related to their job (Vos and Vos, 2004).
Intranet
An intranet is a private network within the organization that can be accessed by the internal stakeholders of the firm. It is a secure network, and the access is through authentication. It is extremely vital for sharing and storing information regarding vital business operations and strategies. The information flow can be endless and beyond the boundaries through intranet network if it is connected to the wireless cloud (Vos and Vos, 2004).
Corporate governance mechanism
The corporate governance mechanism used by Apple is discussed below
Internal mechanism
The internal mechanism is used for monitoring the strategic implementation and control. Apple uses an internal mechanism to monitor the performance of its employees and the objectivity of the business operations. The internal mechanism works on clearly defined hierarchy and the lines. The information flows from the top management to the line managers and in the opposite direction. The two-way information flow ensures strategic implementation and the control in an effective way (Montgomery, 2008).
External mechanism
External mechanism of corporate governance satisfies the needs of the external stakeholder of the Apple Inc. These stakeholders are the regulators, debtors, financial institutions and the trade unions. It takes input from the internal mechanism and then sorted information is made available to the public. The company has a dedicated PR department working independently to ensure this purpose.
Effectiveness of leadership
The success of the Apple Inc. is largely associated with the visionary leadership of Steve Jobs. The leadership framework in place is closely tied to the vision, mission and the core values of the business. It makes this framework the most effective strategic tool for achieving the objectives of the firm. In past, the leadership style of the management at Apple was charismatic leadership. However, now they are following participative leadership style to include their employees and the stakeholders as well through decentralization of the decision making. The result of this leadership is satisfied internal and external stakeholders of the business. The effective leadership framework opted by the management makes Apple Inc. a goal oriented organization striving continuously towards the innovative solutions provider.
Recommendations
In light of the above discussion the recommendations for the business are given below:
The element of the team play and team building had been less under the leadership of Steve Jobs. Now the time and the conditions are changing. The company is already striving for effective team building and management. However, the efforts should be increased, and more focus should be placed on team building.
The operations of the business are limited in certain areas where customers rely on gray channels for the products. The company should expand into the untapped areas of Asia to cater to the needs of the customers and to capitalize on the increasing popularity.
Apple Inc. should provide increased compatibility and support for the third party vendor applications and gadgets. It will risk the functionality of the devices, but the user experience will be enhanced by many folds
There is a need to increase efforts in the supply chain management. The suppliers of the Apple are other business that can assume more control of the business due to increasing dependence. Therefore, the management should consider backward integration to decrease the supplier’s power.
Corporate Social Responsibility
There has been a big question mark on the social responsibility of the Apple under the leadership of Steve Jobs. Jobs was not known as a philanthropist, and his actions as giving back to the society were limited. However, Tim Cook is trying hard to false this notion and trying to state that Apple is a socially responsible business. They have a well formed environmental policy report released yearly to make the people aware of the CSR initiatives of the business. The business is supporting the local communities through “Global Volunteer Program.” The company is working continuously to come up with energy efficient products and claims that they have reduced the energy consumption by 57% through the innovative products. The other CSR endeavors include gender equality, decreasing carbon footprint and the sensible sourcing (Truesdale, 2015).
References
Freeman, R. E. (2010). Strategic management: A stakeholder approach. Cambridge University Press.
Montgomery, C. A. (2008). Putting leadership back into strategy. harvard business review, 86(1), 54.
Truesdale, P. (2015). Apple Corporate Social Responsibility: Seven lessons for CSR professionals - Corporate Citizenship. Corporate Citizenship. Retrieved 7 March 2016, from http://corporate-citizenship.com/2015/07/13/apple-corporate-social-responsibility-seven-lessons-for-csr-professionals/
Vos, M., & Vos, O. (2004). Setting up a strategic communication plan. Boom Koninklijke Uitgevers.
Wagner, M., & Schaltegger, S. (2004). The effect of corporate environmental strategy choice and environmental performance on competitiveness and economic performance:: an empirical study of EU manufacturing. European Management Journal, 22(5), 557-572.
