Assessment task 1
Reference: iPad Support, 2013, viewed 19th March 2013,
Apple iPad
1. Introduction
1.1. Purpose
The main or purpose of this report is to analyse and evaluate the overall business strategy formulated and implemented by Apple for iPad. For this purpose the report uses different strategic management tools and methods in order to explore the business strategy of Apple with regard to iPad.
1.2. Scope
In order to evaluate and explore the business strategy adopted by Apple for iPad, the report has analysed the overall competitive environment along with other external factors. Apart from this the report also presents the analysis of the internal competencies and resources of the organisation under investigation. This in turn has resulted in understanding and comprehending the strategy adopted by the company.
1.3. Limitations
There are no considerable limitations as Apple is a renowned multinational organisation and all required data and information is available online. However, the report does not incorporate any primary research or data.
2. Product background
iPad was first lunched in the internal industry in March 2010 (Smith & Evans, 2010). It has been considered as an innovative new product which has been able to gain considerable market share and position in the overall industry of tablet PCs. The company has created one of the most famous and successful product; supported by the fact that around 120 million iPad have been sold since its launch (Pope & Muller, 2013).
3. Strategy positioning – Porter’s Generic Strategies
It is important for the organisations to come up with effective and efficient strategies in order to create a competitive advantage over other competitors in the industry. The organisations should carefully decide for any one strategic positioning and should strive to achieve that by all possible means and methods. The Ansoff matrix provides the organisations with four market development strategies namely; product development, market development, market penetration, and diversification (Aburto, 2010). At the same time, the four main strategic positions or options have been provided by Porters; known as Porter’s generic strategies as presented in the figure below:
(MindTools, 2013)
According to Porter’s generic strategies the organisations can compete on the basis of cost leadership, differentiation, cost focus, and differentiation focus. In the case of iPad, the management of Apple has focused on the differentiation strategy along with market competitive prices. The company has provided the customers with high value at relatively less prices. Apple from the start has been working on the strategy of creating high value for the customers and differentiating the product from the other competitors. This is reflected by the slogan of Apple ‘Think Different’. This along with market competitive pricing strategy has allowed the company to create a sustainable competitive advantage (Brownlee, 2011). Although iPad is not the first tablet in the industry but has been able to grab huge market share as compared to other products (Brennan, 2012). This has been because of the ‘think different’ strategy of the company. The management of Apple targeted broad market with the help of the low cost producers and creating differentiation with the help of creating value for the customers.
Owing to increasing competition in the industry, the company has adopted blue ocean strategy of reinventing the tablet in the form of ipad and have used the mobile phone operating system in order to provide the customers with ease to use and fun product. This has allowed the company to create a whole new market with no immediate competitors and market. At the same time this strategy of value innovation tactic has allowed the company to become leader in the market with the help
Apple has further incorporated value with the help of different value added features and services for example iTunes. iPad is providing the customers with the value which is beyond the normal tangible dimension. The product has been marketed as easy and fun to use devise with design, hardware, and software that is user friendly. At the same time the ipad provides the customer with a good balance of overall value and experience by providing positive overall perceived quality (Bajarin, 2012).
The differentiation strategy of iPad is reflected by the way the company has lunched the new version of the product recently (Bedigian, 2013). Also the same is reflected by the advertising and marketing strategy of the company (Rhoads, 2007). The company has been able to create sustainable competitive advantage with the help of the integration of different value added services along with horizontal and vertical integration in the supply chain (MarketLine, 2012).
4. Differentiating in positioning compared to competitors - THE VALUE CURVE
iPad has been differentiated from other compared products in the market on the basis of the high value creation and strong brand management. As mentioned above the company has focused more on the external features and design of iPad and has provided the customers with easy to use devise. The value curve of the iPad is given in the image below:
5. The strategy – the business model
In order to come up with the sustainable business model it is important for the organisations to understand the actual meaning of the strategy. According to Porter (1996) the strategy is not the name of the operational efficiency and effectiveness; it involves consideration of different factors including preferences of the customers, the competitive landscape, and the internal competencies. This in turn results in the creation of the business model for the company which answers important questions like who will be served by the product, what are the specific needs and preferences, and how these needs will be fulfilled (Magretta, 2002).
(Adapted from: Magretta, 2002; Hitt et. al., 2003)
Apple has been able to create efficient and effective business model with the help of the well thought and well planned value creation strategy. The company has identified the target market of the iPad along with their specific needs and preferences (Bajarin, 2012). This in turn has allowed the company to come up with appropriate strategies and methods to satisfy the needs and demands of the target market.
6. Porter 5 forces model
(Porter, 2008)
Threat of substitutes – product or services
Apple faces moderate threats from substitute products. Garter (2011) has said that iPad has significantly influence the sales of the laptops and PCs. However there would be a significant portion of people that would still like to use PCs and laptops.
Bargaining power of suppliers
The bargaining power of suppliers is low because Apple is a famous brand and has high bargaining power over consumers as well. Moreover the products of Apple particularly iPad are though standard products but these are not easily customizable. Apple has a large number of suppliers and having a large number of suppliers helps Apple in manufacturing and assembling the products with high quality.
Threat of new entrants
The threat of new entrant is low as high investment is required. Moreover, continuous investment in the research and development is also required to manage such a business. Therefore it can be said that the threat of new entrant is low (Pringle, 2010). However some Chinese firms have entered in the industry in the last few years though with inferior quality, Apple faces little threats from these firms.
Bargaining power of customers
Customers have low bargaining power as Apple is one of the pioneers of the industry. Moreover, Apple enjoys the first mover advantage when it comes to iPad and therefore it has high bargaining power over consumers. Apple started offering iPads in Asian countries at a higher price than US but still consumers having low bargaining power could not do much (Shin, 2010).
Industry Competition - Rivalry Intensity
With the entrance of different companies like Google, LG along with previously operating companies in the industry like Samsung, Acer the rivalry can be said as high. Moreover, some Chinese companies have also entered the market but there has been a question mark regarding their quality of products. Though, Apple being the pioneer would always be able to enjoy a significant market share (Shin, 2011; Kotler, 2010).
7. How the competitive forces might change
PESTLE Analysis:
8. Conclusion
Apple iPad has been able to create sustainable competitive advantage in the industry with help of the well through and well planned strategy and business model. The company has carefully analysed and explored the overall industry and market and has come up with high value creation for the customers. This in turn has translated in the increasing success and popularity of iPad all over the globe.
9. References
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