AppleCorporation is an American transnational technology company thatdesigns, creates, and sells online services, computer software, andconsumer electronics. Its industrial products are based on computerhardware, Software, digital distribution, Fabless Silicon Design,Consumer Electronics, Corporate venture capital, and energyproduction. The primary products include Mac, iPod, iPhone, iPad,Apple Watch, Apple TV, OS X, iOS, iLife, watchOS, and iWork. Theservices include Apple Pay, iCloud, iBooks Store, Apple Store, iTunesStore, Apple Music, Mac App Store, and online Apple Store. AppleCorporation is the globe’s largest IT Company by revenue and totalassets, and the second largest mobile phone manufacturer. Thefinancial accounts are quite stable with an annual income of $233.715billion in 2015. The operating income was $71.230 billion, net incomeof $53.394 billion, total assets of $305.277 billion (2Q2016), with atotal equity of $174.820 billion (2Q2016). By July 2015, thecorporation had around 115,000 employees. In this paper, thecompany’s strategic plan will be outlined. That includes originalstrategy, financial targets, underlying assumptions, and subsequentdecisions. The paper will also delve into Apple’s corporatestrategies and decision making. In combination with this, we will beexpounding on their overall company structure via SWOT, internal andexternal assessments, financial records, and business strategies.
Apple’svision statement broadly covers its intention they believe in makinggreat products by consistently focusing on innovation. By controllingonly the technologies they are involved in, the company wants to makeconsiderable contributions in the markets. It also focuses on vitaland meaningful projects rather than indulging in thousands ofprojects with no significant effect. By indulging in collaborationand cross-pollination among its groups, the company can innovate in adistinctive way. It does not condone anything less than excellence,championing honesty and courage in their daily undertakings. Thebroad vision has been a driving force that has propelled the companyto greater heights.
Intheir mission statement, Apple designs iWork and professionalsoftware, iLife, OS X, and Macs, which are the best PCs in the globe.It is also a leader in the digital music revolution with its iPods aswell as iTunes online store. The company’s reconstruction of theiPhone and App Store has reinvented the mobile phone thus outliningthe future of computing devices and mobile media.
Theirfounders envisioned the vision and mission of this company andinstilled in their employees as well as top management. As a coreleader in technological matters, channels resourcestowards security. Their research and development team is tasked withchampioning fresh ideas. The team ensures implementable ideas aredirectly related to the public.
Strong market position and consumer trustworthiness
A variety of products, software, and applications that are interlinked
High-quality consumer experience
Strong financial performance
Pricing is considerably high
Decreasing market share
Long-term gross margin decline
Further changes in management
Has the potential to dominate the globe, especially Asia, which is dominated by Sony and Samsung
Partnerships can propel the brand even further
High demand of iPad and iPad mini
The growth of tablet and smartphone markets
Damages from patent infringements
Increased demand for cloud-based services
Strong development of the mobile advertising markets
Increased competition from other companies, e.g. Samsung
Rapid technological changes
Rising annual taxes
Android OS growth
Competitors move in the online market
Appleis a powerful brand with an excellent reputation. The tendency ofadmitting mistakes when they happen draws many customers. Since itsinception into the global markets, the uniqueness of its products andservices has enabled it to be an IT mainstay. The research anddevelopment team is well managed, hence leading to the emergence ofunique goods and services. In that regard, Apple is the leadinginnovator in mobile device technology. The corporation has over 478retail stores in around 17 countries. The number of stores broadenstheir marketability across the globe. The company has a strongfinancial performance due to its extensive markets. Withapproximately $300k per minute earnings and a brand worth 118.9billion, Apple boasts of healthy finances. Statistics also show ithas more operating cash than the U.S. Treasury.
Thecompany’s products and services are quite expensive as compared totheir partners. Though goods are unique and attractive to thecustomers, the corporation’s strength in the market may lessen dueto high prices. Many companies are indulging in technology products,decreasing Apple’s market share. In other words, technology isquite broad, and some companies come up with even better products andservices, thereby reducing Apple’s dominance in the markets. As aresult, gross margins are bound to decline in the long-term.Management is another crucial aspect in the success of any company.Therefore, altering the administration tends to have an adverseimpact on the continuity of the enterprise. The changes in managementat Apple could derail its dominance.
Applecan increase their dominance as well as the financial status due tothe increasing demands of iPad and iPad mini. There is also a risingdemand for cloud-based services across the globe. Companies areappreciating cloud-based services leading to an increased demand forthe same. can stamp their supremacy in IT byventuring more into the Asian markets. In a market that is purelydominated by its competitors such as Samsung and Sony, Apple’sproducts have a propensity of attracting customers from this region.Mobile advertising is another area that has seen considerable growthover the years. People are now more reliant on mobile advertisementsthan television or radio adverts. With the continual rise of socialplatforms such as Facebook and Twitter, advertisers have embracedmobiles as the core medium to expand their businesses. In thatregard, Apple can take advantage of this growth to increase theirproducts to meet the ever-increasing demands for mobiles.
Competitionwithin the technology sector is continually growing. Competitors suchas Samsung are consistently improving the quality of their products,thus attracting many customers. The continuous strengthening of thecompetitors could harm the future progress of . Infact, Apple faces a challenge of limited market share in future.Technology is changing rapidly across the globe. It is harmfulespecially if the company’s research and development team cannotcope with the changes. Customers have a tendency of testing noveltiesas they come. The annual taxes is another significant threat. Theyare increasing yearly thus affecting the company’s annual income.
Analysisof Apple (Internal Analysis)
Accordingto the geographical settings, the company has seen considerablegrowth across the globe. 1/3rd of their sales are from Asia andanother 1/3rd from the United States. The two regions have thehighest market share as compared to Europe that accounts for only 22percent. Since 2011, the Asian market has doubled due to sales inApple iPhone that accounts for 58% of the total revenues. The iPhonemarkets grew by 85%. Moreover, iPad growth rose by 17 percent,meaning the income increased by 132%. However, Mac and iPod were lesson growth. Apple’s shares in the tablet and mobile market haveimproved considerably typically from 48% to 60%, which is greaterthan their competitors Google Android.
Themain strength of Apple is its market position and consumertrustworthiness that increases because of the company’s ecosystemwhich in turn raises its competitive advantage. Apart from that, thecompany has a broad variety of software, products, and applicationsthat are interlinked to maintain each other. High-quality consumerexperience is another fundamental aspect of Apple’s retail storethat increases brand awareness.
Highpricing involved in Apple products is a major weakness. With theincreasing level of competition, consumers can get products similarto those of Apple at favorable prices. In addition to that, thecompany is less dominant, hence causing less influence on itsconsumers to utilize the closed ecosystem of Apple. The gross profitsare also bound to decrease due to the level of competition and theirconstant high prices.
Theintensity of rivalry within the industry
Accordingto Porter`s model, the intensity of rivalry within the industry isthe first force. The provides adequate technicalsupport, creates consumer loyalty, and produces products. Therefore,the company is not threatened by this factor since it maintains theproductivity levels by producing superior goods like Android Phones,tablets, and eReaders that gain considerable market share with lowerprices.
Thebargaining power of suppliers
Thecompany continues to look for new suppliers since it is stillgrowing. New suppliers would reduce the bargaining power byregistering online on the Apple’s website. Therefore, Apple candecrease their bargaining power by being more competitive among alarge number of suppliers.
Thebargaining power of the buyer
Thecompany ought to meet the consumers’ expectations to achievemajority market share in the different segments that include age,income, and educational level. Buyers are more sensitive to prices,and they can switch to other retailers if the products are notdifferentiated. However, Apple holds about 75% of the profits in theindustry hence customers are less likely to shift to other brands,which is a show of loyalty.
Thethreat of new entrance
Asmore companies venture into this industry, they tend to decrease themarket share. The company can maintain its market share bydifferentiating their brand and products. In other words, Apple oughtto widen the range of goods to remain competitive. A new companyentering this market might find it difficult competing with Apple,which has a strong brand image, perceived value, innovation, andexcellent customer services.
Thethreat of a substitute product
Anew product that can act as a substitute may lessen market share. Thethreat is in two forms i.e. price and performance. If the freshproduct is much cheaper, then buyers can shift. For instance, if acompany produces substitutes of iPhones that are cheaper, then it maysway the customers. Therefore, companies should be aware of existingcompetitor products to ensure they remain in the market. The threatcan be minimized by enticing the company’s customers to remainloyal. In fact, no company can present an “ecosystem” that wasdeveloped by Apple.
Porter’sFive Generic Strategies
Itcan be achieved through two main ways, i.e. increasing profits byreducing costs, while charging average industry prices and increasingthe market share by charging lower prices, while still makingreasonable profits on each sale.
Companiesthat utilize this strategy to concentrate on certain niche marketsand understand the dynamics involved, unique customer requirements,then develop distinctive low-cost products for that market. It iseasier to build strong brand loyalty amongst the customers.
Inthis technique, a company makes its goods and services different fromand more attractive than the competitors. The most important aspectsinvolved are durability, features, support, functionality, and brandimage that are valued by the customers. To ensure the differentiationstrategy is successful, companies need Good research, developmentand innovation, the capability to deliver high-quality goods andservices, and Effective sales and marketing for the market tounderstand the advantages offered by the differentiated products andservices. The utilizes the differentiationstrategy. As stated by its CEO Tim Cook, “the company never had anobjective to sell low-cost phones. The fundamental goal is to sellgreat phones and provide an abundant experience, using their way at alower cost.” In that regard, they offer a small number of products,focusing on premium devices, prioritizing profits over market share,and making people want new Apple products. They also manage to stayagile with their novel products and services to avoid the risk ofbeing attacked by competitors especially those indulging in focusdifferentiation strategies in various market segments.
Thecooperative approach is a trial by a company to realize its goalsthrough coordination with other firms, in partnerships, and strategicalliances, rather than competition. The companies join hands topursue certain aspects of the market to realize particular goals. Thebenefits of cooperation, in this case, tend to outweigh the cost ofindividual efforts. Apple indulges in such activities to improve itscustomer base as well as heighten its profits. In 2006, the companyentered into an alliance with Nike to launch Nike + iPod productsthat combined the athletics world and music. The benefits wereimmense for the two companies since athletic lovers could now connectwell with the iPods. In addition to that, athletes were encouraged toconduct their training while using the iPods. For example, if anathlete was practicing long distance running, while doing it on Nikeclothing, they could also run while listening to music via iPods.Another cooperative technique entails outsourcing of manufacturing.In this mechanism, companies can design a product in one country andmanufacture it in another. Due to cultural diversity, sometimes goodsor services that suit one country are not suitable for another one.Outsourcing of manufacturing can help alleviate such issues. It alsochampions coordination since manufacturing is done by the natives ofthat country. indulges in such practices to improveits productivity. For instance, some of its products are designed inCalifornia and manufactured in Mongolia, Taiwan, and China amongothers. The practice fastens the human resource processes as well asensuring immediate access to the majority of the resources needed formanufacturing.
Applehas a unique way of improving its competitive position with itscurrent products.
Productdevelopmentis one such aspect. The company is known to produce high-qualityproducts that are appealing to the customers. Once they produce theproducts, it continuously develops features to improve it making itmore appealing to the customers. The company’s research anddevelopment team are also knowledgeable enough to conduct marketstudies that can be used to improvise the current products. In thatregard, there is a considerable investment in this team. The designis one key area the company puts many emphases. They dedicate much oftheir resources towards designing and implementation of newtechnologies.
Iteration– before launching a product, it is designed, reviewed, andadjusted consistently until the company is satisfied.
Launch– the company delivers the latest device to the customers
Marketpenetration– It is the second intensive strategy. The company focuses oncurrent markets, i.e. selling up-to-date products such as iPhones,iPods, and iMacs. They also increase the number of authorized sellersto impact on a wider market.
Marketdevelopment– In this strategy, the company dwells in venturing into newmarkets. It is the least significant of the strategy since Applebelieves in strengthening their current products. New productsdeveloped include Apple Watch.
Thestrategies include horizontal and vertical integration. Theactivities ensure Apple expands.
Horizontalintegration – The integration venues include iOS APP Store, iTunes,iCloud Store, iBooks. As a result, it provides production of anelectronic ecosystem of stores and resources baked into hardware. Theproducts are also accessible directly from almost every Apple deviceand indirectly from non-Apple devices.
Verticalintegration – The venues include Hardware Company, software,services, and retail. As a result, the venues can supply profitindependently while simultaneously supporting each other.
Inthis technique, each branch of technology targets new markets. Thedifferent models and options then maximize the profitability ofentrance into a novel market by expanding the consumer requirementsin the market.
Computersi.e. desktop and Laptop variants
Musicplayers, e.g. various iPod models
Phoneslike the different iPad models
AppleWatch i.e. multiple aesthetic options
Thecompany pursues a defensive mechanism focused on features offeredfrom their devices following both software capability and physicaldesign.
Applevs. Samsung regarding patent exhaustion, design copy, and wirelessstandards misconduct
Applevs. Microsoft regarding software updates
Thecompany extensively utilizes this technique to broaden their markets.In fact, it has more than 50 mergers/acquisitions that are utilizedas a tool to inject new software/hardware offerings into the Appleecosystem
Thestrategies include Transnational, Multi-Domestic, and Standardized. utilizes the standardized technique whereOne-Size-Fits-All. Therefore, the software operation and hardwarequality are identical regardless of the location.
Thoughthe future looks even brighter for Apple, they must be carefulregarding legal and political issues. Outsourcing to differentcountries is risky especially when the political atmosphere seemsheat.
Apple Inc. (2016). Apple Info. Retrieved from Apple Info: http://www.apple.com