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Comprehensive Analysis: The Case of Apple

Comprehensive Analysis: The Case of Apple

A strategic ability of an organization is the adequacy of the company`s resources and competencies that can help it to service and prosper. In any company, adequate resources and competence are significant elements in achieving a competitive edge. Having adequate resource sis barely enough by itself but the approach that the company takes in the deployments of these resources is crucial to attaining a competitive edge. Arguably; in the current economy, firms are striving to compete in the developing markets to meet customers’ needs so that they can survive. Companies need to know how to manage the resources needed to achieve their strategies. These thresholds are important for companies such as Apple to compete in the software and electronics market.

This individual project will explore Apple and its publicly available databases and establish an analysis of the business strategy and its capability to develop its competitive edge. The paper will explore the company’s industry, its market levels through a series of reports and databases. Further, the paper will explore the strategic capability of apple, its core competencies in the maintenance of its business success. Using secondary data from the company`s databases and published materials include a detailed analysis of Apple’s latest SEC Form-10k Annual Report and Forms DEF-14A Proxy Statement. The report will start with an analysis of Apple`s performance, its business model and portfolios. Beyond that, the analysis will explore both the internal and external business environments of the company, a review of its primary resources, competencies, and abilities that highlight its critical success factors and competitive advantage.

Reasons for Selecting Apple

Gouillart (2014) noted that Apple is just not like any other company. The reason for choosing Apple for this coursework include the company`s big size, a significant role in the industry and the availability of company information.  The company has been noted as a market leader in the technology industry and has won its competitions through innovative approaches (Gouillart et al., 2014). Despite a series of structural and economic changes, the company has made dramatic developments in the demands of its product and services. Pointedly, Apple strives to gain its competitive advantage through finding new ways to offer innovative products to its customers and trying to increase their market presence (Jones, 2013).

Company Background

Apple is one of the largest and first American multinational corporations dealing in software and personal computers. With its head offices in Cupertino, California, the firm was founded in 1976 by Steve Jobs and Steven Wozniak and was later re-introduced in 1980 with a better achievement. The corporation manufactures, designs and markets computer software, personal computers, computer hardware and different mobile devices such as iPhone and iPods (Form 10-K, 2018). Similarly, the company also deals in other products and peripheries such as storage devices, printers, headphones and speakers that are compatible with Apple products. Reportedly, the company has its operations in various segments such as America, Europe, Japan and Retail operations (Press Release, 2018)). Similarly, the Asian Pacific is also an operating segment of the company including Australia and Asia.

Apple designs and manufactures, and sells media and mobile communication devices and personal computers. The firm also sells related software, accessories and third-party digital contents and applications. The products and service offering include iPhone, iPad, Apple smartwatch, AirPods, Apple tv, HomePad, professional and personal software, Mac OS, iOS, watch OS and tvOS, iCloud, Apple Pay and other accessory, services and support applications. According to Abraham (2013) and Edwards (2013), the success of the company is also attributed to the integration of its stakeholders within the organization and outside. As of September 29, 2018, Apple had a workforce of about 132,000 full-time equivalent employees (Apple – Investor Relations – Financial Information, 2018).

Market and Revenues

Apple`s customers are mainly in the consumer, small and medium-sized businesses, educational institutions, enterprises and government markets. The company distributes its products and services through wholesaling, reselling, national and regional retailing and cataloging. It is also noted to sell its products to direct customers using online and offline retailing, the company sells its products and services to different consumer categories.

The company released a Q3 2018 report noting $11.5 billion profit from a $53.3 billion revenue after the sale of and 3.7 million Macs, 11.55 million iPads, and 41.3 million iPhones (Press Release et al., 2018). The company had offered a revenue guide between $51.5 billion and $53.5 billion. These results come after a $45.4b in revenue, $8.72 billion profit, 41 million iPhones, 11.4 million iPads, and 4.29 million Macs sold in the third quarter of 2017; and $61.1 billion in revenue, $13.8 billion in profit, 52.2 million iPhones, 9.1 million iPads, and 4.07 million Macs sold in 2016. Apple projected revenue between $60 billion and $62 billion for the fourth quarter of 2018.

Corporate Strategy

Apple’s organizational commitment is to offer a top-notch consumer experience to its clients through the delivery of innovative products and services. Their corporate strategy takes advantage of their uniquely designed capabilities to design and develop their own operating systems, hardware and applications to give their clients customized designs, easy to use and seamlessly integrated services.

Competition

Pointedly, the company made attempts to emerge in the highly competitive computer market with the new versions of the Apple iii but faces a series of challenges and was unable to compete with IBM PC (Heracleous, 2013). According to Belk and Tumbat (2005), the introduction of Macintosh was a revolutionary product and the first one to use a mouse and other advanced graphical features. The period was followed by a series of structural and organizational challenges that saw Steve Jobs contract terminated and later reconsidered focus on new designs and innovative products. The company also introduced an innovative computer product referred to as the iMac that sold more than 800,000 units within its initial five months (Thomke and Feinberg, 2012). On May 2001, the company opened its doors to retail stores introducing portable digital music players called iPhone that sold more than 100, 000 units within the first year (Thomke, et al 2012).The most common hardware products include the Macintosh line of personal computers, the iPad tablet computers, the iPhone and the iPod line of portable media players. Apple`s software products include the Mac OS X operating systems, creativity software and the iLife suites of multimedia, the Final Cut Studio and suites of professional film and audio industry software products.

Ability to Increase Competitive Advantage

Business strategy involves a series of decisions that are structured to meet certain objectives. In any organization, strategies involve a detailed master plan that states the way the organization achieves its missions and objectives. According to Barney (1995), the strategic approach involves the development of the goals and objectives of the institution and the uptake of courses of action and allocation of necessary resources that are necessary for seeing through these goals. Madsen and Walker (2015) noted that a strategy mediates between the organization and their environments through a series of patterns in streams or institutional decision making that deal with the various environmental issues. Gamble, Thompson and Peteraf, (2013) noted that competitive advantage involves maintaining a better performance than your peers. He further noted that strategic approaches minimize competitive advantage and enhances the organization’s competitive advantage.

Rationale for Expansion

One of the company’s strategic approaches to global expansion is the joint venture. Apple has singed trademarks including the joint venture in China; though this agreement, Apple provides technical support, maintenance and training services (Lashinsky, 2012). Pointedly, another significant strategic approach is the acquisition. This approach has enabled apple come up with a competitive advantage. Through the acquisition of various companies, the company has been increasing its growth in sales through a diversification of its various consumer needs. In 2010, the company acquired Siri, a software company that develops voice command technologies that are used to make conversational interfaces in their iPhone products. The appeal of the new technology has grasped the attention of Apple consumers and allowed it to compete with Google Applications.

Corporate Performance: SWOT Analysis

SWOT analysis is an acronym for Strengths, Weaknesses, Opportunities and Threats (Khan, Alam & Alam, 2015). The approach is used to compare the external and internal abilities and challenges and capabilities for the growth of an organization.

Strengths

Strong brand image

According to Heracleous et al., (2013), Apple has gained a high reputation and brand image through its innovative products and services that are coupled with high quality and design. The annual ranking report of 2010 by inter-brands ranking noted that the firm`s brand value is the fastest growing in the world. Currently, Apple is the leading company the world in terms of market value with a net worth of $ 927 billion (Press Release et al., 2018).

Innovation Spirit

Arguably, Apple has focused on the creation of quality, innovative products and designs (Dustin, Bharat & Jitendra, 2014). This approach has helped the company develop itself as a powerful brand in the market and to emerge among the top in the electronics market. The innovation sprite has immensely contributed to the creation of the apple development of the apple chain world-class retail, the revolutionary iTunes store and other online store features. The Helft and Vance (2010) noted that Apple was the number one innovative company in the world.

 Product diversity

Diversity in an organization concerns its corporate strategy that intends to increase profits by increasing its sales volume. The increased sales volume is facilitated by the development of new product lines and identification of new market segments (Thomke, et al., 2012). The company has diversified its product from computer devices to digital music through an introduction of a revolutionary portable music player like iTunes, iPod and iPhone. (Helft et al., 2010) noted that the company easily drew a strong attention of the software and electronic industry. The diversification of its products has helped the company understand the needs of its consumers in the modern time market and maintain loyalty.

Weaknesses

Dependency on the Launching of New Products and Services

Analysis by Kane (2015) noted that the company is highly dependent on developing new products and services in order to remain top in the market. Apple maintains its profitability through the provision of innovative products such as the iPhone, iPod and iMac. The electronic market has a series of alternative companies that can substitute Apple. These include Google and Android mobile designs that can be used instead of iPhone and sonny that launched new music and video download services similar to that of iTunes.

Opportunities

Market Growth

Google is currently the dominant search engine on smartphones (Nasution, 2017). The development of a better search engine that offers better features than Google is a great opportunity that Apple can use to attract its consumers. Apple analyst Gene Muster of Piper Jaffray noted that there is a 70% chance that Apple will come up with a search engine for iPhone and iMac (Nasution, et al., 2017). The introduction of Apple`s search engine will help the company enhance the security of data that is generated on iPhone and maintain the sustainability of its products and superiority over its competitors hence the opportunity for growth in the market.

Increased Exposure in the Market

The introduction of Apple products and services in developing markets such as Asia and South Africa is arguably a good opportunity for the company to grow in the emerging market (Duhigg and Barboza, 2012). The demand for technologies like notebooks, mobile phones and related accessories is significantly growing in the developing markets. However, issues to do with content, intellectual property and significant a proportion of low revenue clientele may constrain the impact of Apple products and services in these emerging markets. Making a consideration of all the factors in these emerging markets can help the company make strategies that can fit in the developing markets.

Threats

Strong Competition

The current business environment is full of threats from competition. Alternative products and services are always being developed. Being one of the company’s innovative technologies that has revolutionized the music industry, iPod and iTunes are some of the company’s products that has significantly contributed to the company’s brand image; however, there exist other competitive products that have entered the music player market and offered products and services of similar nature including Sony, Samsung, SanDisk and iRiver. Pointedly, the launching of Zune by Microsoft was a significant threat to apple since the product has similar features with that of iPods (Arthur, 2014).

One of the primary threats for Apple is the availability of substitute products and services (Gallo, 2012). For example, Samsung phones can easily be substituted for Apple iPhone and some reviews have argued that the Samsung has unique features compared to iPhone, this includes 4-inch touchscreen that offers better image and video viewing. Similarly, it has a large storage and can be used as a substitute for iPhone.

Overview of Growth, Development and Challenges

Apple began its journey in personal computing in 1977; however, the changes in management structures and varying opinions coupled with missed opportunities made it lose its competitive advantage to alternatives like Dell, Microsoft and Gateway. The company is involved in different lines of computer and music industry and its operations are not only limited by designing but also manufacturing and selling its computers and software. Although the company has continued to pursue its computer market, it has not been as intense as the years before. The company has since transformed its operations and diversified the venture to music through iPod and iTunes. Venturing into new frontiers including Japan has precipitated the moves by the company into the new world. The company has continued to provide innovative products to its customers; however. Marketing to these smaller markets has resulted in a series of challenges. Their marketing share has dropped to below 5% and their operating system differs significantly from the Wintel operating system that is used by Microsoft (Arthur, et al., 2014).

The case and situational analysis have encompassed the industry structure, competitive and self-analysis. The analysis has also provided insights into the opportunities and threats faced by apple. The economies of scale and key success factors have also been listed among the summaries of financial and management’s directions.

 Competitive Strength Assessment

The primary feature of the company’s overall competitive strategy underlies several features including innovation, sustainable competitive advantage, product differentiation, innovation, and vertical integration. Product differentiation concerns the manufacturing of unique personal computers and software. According to (Khan et al., 2015) Apple has made significant innovative strategies with their three primary products, computers, mobile phones and personal media.

Pointedly, the company has mastered the art of designing, manufacturing and selling a wide range of personal computers media and mobile communication devices, and portable digital music players. The company also deals in a series of related software, peripherals and services, networking solutions and third-party digital applications and contents. Additionally, the firm also markets third party Mac, iPad and iPhone compatible products and services including software and other hardware devices. The company sells its products globally through various channels; both offline and online. The company’s sustainable competitive strategy is focused on the development of a strong customer loyalty through the effective satisfaction of customer needs with innovative products and unique designs. The competitive strategy has set Apple apart fork its competitors and has also kept them ahead in the market in the introduction of new products and updating the existing ones. The company has been practicing horizontal and vertical integrations that gave its dual advantage of notable significant cost reductions in costs as well as in their creation. The company’s sustainable market share has successfully connected its devices from each other through processes from hardware to software that facilitated high customer loyalty. According to Dustin et al., (2014) the company has been able to build a strong competitive advantage that is hard to replicate. A notable piece of this strategy encompasses the conversation of physical products and virtually converting them to make use of the network knowledge in ways that no one has tried.

The analysis noted that some of Apple’s capabilities that drive their competitive advantage include unique design and capabilities, innovative capabilities and powerful branding. Similarly, the report noted that the companies critical factor, including differentiation, inventiveness, ease of use and consistency. Beyond that, the reports make a conclusion that the company’s core competencies for opportunity creation in different arenas include its differentiated strategic approach that focuses on value creation and product differentiation.

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