Apple Inc. is a multinational company with headquarters in Cupertino, California, and deals with the designing, development and selling of computer software, consumer electronics, and online services. The company has managed to create value in an industry that is highly competitive by differentiating its products and focusing on stylish and quality designs, and superior customer service. Apple has formulated its strategy to ensure value creation and to have the best competitive position in the industry.
The business strategy of Apple Inc. is to bring innovative products to its customers so as to ensure the best user experience. The business strategy is influenced by the company’s ability to design and develop their products such as hardware, application software, and operating system. With a market that is highly competitive and faced with rapid technological advancements, the company has been aggressive in setting their products and services apart from their competitors so as to create value and improve its competitive position ("Apple - Annual Report", 2016). The business level strategy of the company is reflected in their latest annual report that shows increased spending on research and development. In 2015, the expenses on research and development increased to $8.1 billion up from $6.0 billion in 2014 ("Apple - Annual Report", 2016). Investing in research and development has been critical in the growth of the company over the years.
Research and development allows a company to create value for its customers, increase sales and improve its competitive position in the market. The traditional method of understanding value creation was that a business creates value when its revenues exceed expenses (Lagunes, 2012). However, in the modern world, value creation is increasingly being defined in terms of intangible drivers such as innovation and ideas (Jacobides, Knudsen, & Augier, 2006). Over the years, Apple Inc. has created substantial value in an industry that has been highly competitive. The company has been able to achieve this by investing heavily in research and development hence ensuring design and development of innovative products ("Apple - Annual Report", 2016). Most people recognize the company from its unique and defining products hence being a testimony of its ability to be on the right path of innovation. Rather than focusing on volume, the company has done very well in increasing sales by offering feature packed and powerful devices and seamless integration in ensuring a compelling user experience. In turn, this ensures that their consumer electronics product attract a large customer base.
The value proposition of a company assists in determining its competitive strategy. With Apple taking a different path from that of competitors, it has been able to offer exceptional, and high-quality products and hence maintain its market share. Previously, the industry had few large companies which produced expensive products. However, nowadays, the market has been saturated by many manufacturers pursuing the increasing numbers of electronic device consumers worldwide (Sodhi & Lee, 2007). Penetration of electronic devices to the day to day operations of many individuals has made the products a necessity. There now exists a range of options at different price levels hence increasing the competition in the industry. However, with the stylish and elegant designs, Apple has been able to maintain a premium price point and still have a better competitive position in the market.
A business strategy allows a company to have a competitive advantage in the industry. One of the ways of ensuring a good competitive position is by having a good value proposition. Apple has been able to do this by investing heavily in research and development and differentiating its products which make them attractive to consumers. The company has been able to focus on customers who are willing to pay a premium price for stylish and elegant products. All of this have allowed Apple Inc. to create value for their customers and in turn, have a better competitive position.
References
Apple - Annual Report. (2016). Investor.apple.com. Retrieved 30 July 2016, from http://investor.apple.com/secfiling.cfm?filingid=1193125-15-356351&cik=320193#D17062D10K_HTM_TOC17062_27
Jacobides, M. G., Knudsen, T., & Augier, M. (2006). Benefiting from innovation: Value creation, value appropriation and the role of industry architectures. Research policy, 35(8), 1200-1221.
Lagunes, S. G. (2012, July). Value creation and competitive advantage. In 2012 Proceedings of PICMET'12: Technology Management for Emerging Technologies (pp. 531-540). IEEE.
Sodhi, M. S., & Lee, S. (2007). An analysis of sources of risk in the consumer electronics industry. Journal of the Operational Research Society, 58(11), 1430-1439.
