Innovation and Risk Management
Innovation and Risk Management
Introduction
This report aims at producing a strategic growth report for Apple Inc. Apple Inc is a telephony company that provides innovative products to suit customer’s needs. The innovativeness of Apple Company is a significant factor in steering its growth in the international market. The paper delivers the strategic growth plan in four parts. The first part is an overview of Apple Inc and why it is innovative. The second part contains the strategies that Apple can adopt to realize the proposed growth. Third is the components of New Product Development and how it can be integrated into the strategic growth plan. Lastly, the paper recommends two integrative growth strategies for Apple Company.
Overview of Apple Inc
Apple Inc is among the most innovative companies in the world. In 2015, Apple Inc was ranked as the most innovative company by BCG (Adams, 2015). Its innovation strategy is to develop high-end products as well as the creation of innovative business structures. Apple is keen on delivering intuitive software engraved in aesthetic hardware to ensure consumer satisfaction. Also, the company focuses on R&D to maintain its innovation at the peak. The management and development team endeavors to venture into new niches by developing high-end gadgets such as the iPhone and iTunes. Apple holds that an innovative company should be very diverse (Inclusion & Diversity, 2016). Employees have a chance to venture into research, and new ideas are tested and incorporated into the company’s products. Ideally, the innovation attitude in Apple is cultural and not procedural. The company embraces creativity in various segments of its operation.
Products
Apple delivers premium gadgets to suit diverse tastes and preferences. The objective is to develop user-friendly and helpful products through teamwork. The developers at Apple strive to add new features to every new product to make it more attractive and relevant.
Price
Apple plans to utilize various business models to maintain constant prices. Since the products are innovative, Apple plans to keep its premium prices as well as retain the profit margins.
Promotion
The next product by Apple is always a highly guarded affair between the management and developers. Nevertheless, the company releases several leaks about the next product which keeps customers anticipating. Evidently, Apple fans keep guessing of how the next product will unveil the innovative nature of the company’s developers.
Market niche
Apple targets high-end consumers and hopes to supply them with innovative products that can simplify their work. Most gadgets are sold to students and business people who want creative ways to manage their inventories.
Growth strategies
Market penetration
Market penetration is a plan that entails selling the existing products to the current market to get a larger market share. According to Arkolakis (2010), market penetration involves focusing on selling the current products to a target niche to achieve a superior market value. The strategy may include the development of structures to increase the purchasing ability of the customers or even acquiring clients from the competitors. The aspects that influence market penetration includes holding prices, growing inventory and technology (Huson and Nanda, 1995). Apple should adopt various options to realize market penetration. The company can develop new marketing strategies to encourage customers to continue buying its products. For instance, the implementation of loyalties or points for loyal clients can inspire users to purchase the company products. Also, Apple can consider adjusting its prices to become more competitive. It is notable that Apple maintains high prices for its gadgets; thus, lowering the prices would attract more purchases. Affordable prices will also ensure Apple competes favorably with companies that produce Windows and Android products. Additionally, the company can implement special promotions such as the end of year sales to attract more customers. Before deciding on the favorable strategies for market penetration, Apple should determine the strategies of the competitors. That way, the company will be in a position to implement deliverable and efficient strategies.
Market development
Market development involves identifying and creating new market niches for the existing goods. This approach may also focus on non-buying clients in the previously targeted niches. Nevertheless, this strategy can also target customers in diverse niches. Market development expands the potential market for a product by acquiring new clients and new application of the current product. Apple should consider creating strategies to broaden the market reach of the iPhone. The company should focus on driving sales by targeting Android and Windows users. Hence, it should introduce new functionalities in the iPhone to make it more relevant than the competing gadgets. Apple should also consider making their devices friendlier to suit new market segments. For instance, the company should focus on developing a device that can replace a laptop. New customers will be willing to purchase the product since they want to work in a flexible manner without having to carry a laptop around. However, Apple should first analyze the risks of adopting these strategies of market development. Possible threats include the loss of focus on creating innovative products and originality. The company may also face stiff competition from other players who offer comparable products. In the long-run, Apple may also lose the current market share as it strives to reach new segments.
Alternative channels
Market channels are the connections that link the producers and the final users. The channels influence how products reach the consumers. Thus, a marketing channel can impact the volume of sales and market share. It can also affect consumer awareness and change customer perception of a particular product. Ideally, distribution channels also influence market penetration. Apple should consider strengthening its retail division as one of the alternative marketing channels. The retail division ensures that more products reach customers in efficient ways. Also, customers get an opportunity to purchase new releases immediately. The Internet inventory is another channel that Apple should consider promoting. Many users like the convenience of ordering products online. Hence, Apple will realize increased sales if it improves the Internet inventory. The company will also have a chance to monitor the flow of sales and determine customer satisfaction levels. Currently, Apple serves its customers through several established centers. Setting headquarters in more countries around the world will also stimulate growth. Importantly, these new distribution channels will make the product more available to customers who may change the perception that Apple targets high-end users only.
Product development
Product development entails creating new products to suit the current and new clients. The process of product development is steered by a manager who introduced the concept of Product Lifecycle Management (PLM). PLM entails controlling the whole procedure of product creation from discovery, through designing and development, to testing (Kurkin and Januška, 2010).
Components of New Product Development (NPD) process
Inception or Innovation
The initial stage of product development is innovation. In this step, the inventor defines the invention in details including how it will address consumer needs and what the development requires (Handfield and Schannell, 2000). Additionally, the inception stage involves the identification of the technologies required to actualize the product creation. The relevance, innovativeness, and rationale of the new product are determined in the first stage.
Design
The design is the second stage in product development and the most fundamental step. There is the assembly of all the materials and technologies required for the creation of the product. The step may also involve the hiring of additional skills needed in product development. The design may entail redesign or improvement of a current product to make it more useful and aesthetic (Cooper, 2010). For instance, in the case of Apple, design mostly involves improving the existing products to make them relevant. Thus, it includes updating both the hardware and software of the existing iPhone and iPads. The aim of product designing is to create a product that will suit the needs of the modern consumers as well as attract new users.
Testing
Essentially, every product should undergo a screening process before it is cleared for use. Testing aims at validating that the product function and is technically sound (Handfield and Schannell, 2000). Another objective of the testing process is to determine if a product is relevant and suitable to meet the needs of users. Some companies release products through a Beta program. Apple distributes several gadgets to consumers for testing purposes. This process helps to collect consumer views on the new product. After the testing process, companies tend to redesign and reconstruct the product to meet the tester recommendations.
Service
This process entails aspects such as releasing the product to the market, offering support, future redesign and lastly disposal. The product is sold to the target market through selected channels. Most companies are keen to offer after sale services to the customers such as free repair and upgrades. Finally, the product is disposed when it ends its life.
How the NPD process can be integrated into the strategic growth report
The NPD can be integrated successfully into the various segments of the strategic growth report. Market penetration may rely on the NPD process. Ideally, as Apple seeks to expand the target niche to include Android and Window phone users, it should be very creative. The innovation stage should aim at creating a product that will not only compete with the competitors but also outdo them. Additionally, Apple should integrate new functionalities to its products during the NDP process to ease market penetration. Notably, the NPD process is also very fundamental to the market development. Apple should focus on developing products that will attract the non-buying customers. Convincing the non-buying clients that the new product will suit their needs is a strategy of growth. In the NPD process, Apple should also focus on creating products that will substitute other gadgets such as laptops to help in market development. The NPD process can also influence the distribution channels. Apple may consider developing products that reach users efficiently.
Integrative growth strategy
Apple should consider employing integrative growth strategy to boost its market share. This strategy may involve forming partnerships with suppliers or competitors. It can also entail acquisition of competing companies with an aim of getting a large market value. Notably, Apple is only keen on acquiring businesses that threaten its market share. However, Apple does not focus on merging with relatively large telephony firms that may pose a threat in the future. In integrative growth plan, Apple can consider forward and backward strategies. Essentially, backward integrative growth plan can be more advantageous compared to the forward strategy.
Forward
Forward growth strategy involves acquiring other companies to gain a competitive advantage. Acquisition helps a company to gain more infrastructures, customers and distribution contracts (Meyer and Tran, 2006). Apple should consider acquiring some of its distribution channels in China and Middle East. This strategy will help Apple to control and dominate the operations of these distribution channels. Apple will be in a position to increase the market share of its products at the expense of the competitors. The acquisition will also improve customer satisfaction as well as trust.
Backward
Backward integrative growth plan entails purchasing the suppliers to control the supply chain. This strategy helps a company to develop products faster and cheaply. Apple acquires most of its resources from outside the US. For instance, it imports microchips and semiconductors from China. Apple can consider acquiring these companies to streamline production processes. This strategy can also low the cost of manufacturing a single gadget. Consequently, Apple can be in the position to adjust the price of its products to attract more users.
Conclusion
A strategic growth plan aims at developing innovative ways to increase market share and outdo competitors. A solid growth plan should evaluate an organization’s current products and market to determine the right course for growth. The innovativeness of a company is determined by its ability to meet market needs while managing possible risks. Evidently, Apple Inc is among the most innovative companies in the globe due to its ability to create relevant products. Also, Apple employs innovative marketing structures to reach its customers. The company should consider penetrating the market to encourage the users to buy more. Also, it should consider developing products that attract non-buying consumers. Applying alternative marketing channels and new product development will also help the company to realize international growth. Finally, Apple should consider adoption forward and backward integrative growth strategies.
Bibliography
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