Course Project
Business and Management
[Name of the institution]
[Date]
Course Project
COMPANY NAME, WEBSITE, AND INDUSTRY
Apple
https://www.apple.com/
Technological industry dealing with computer electronics. Computer hardware and computer software.
BACKGROUND AND HISTORY
Starting from the computer electronics in 1976 by college dropouts with an idea to change the way people observed computers, Apple Inc. soon took over the world of technology with the exclusive focus on the innovations and creativity in its products (Linzmayer, 2004). The company which is now known as one of the big fours in the technological world is leading by example in the business of personal computers and mobile gadgets for which it was established. In the past, computers were gigantic and occupied the space of more than one room. Steve Jobs along with his senior Steve Wozniak took an interest in making the computer as small as possible to fit in the daily lives of people. This led to intervention and changed the dynamics of the world by the arrival of user-friendly personal computers in the market. The vision was to create a personal computer for the individuals that can also be, but it soon surpassed and went on achieving so much (Linzmayer, 2004). Steve Jobs played an influential role in bringing Apple to the top more than once whenever extraordinary efforts were needed from him. He left the company in 1985 after having contradictions with the PepsiCo president John Sculley whom he hired for the Apple as CEO. However, this departure didn’t stop Jobs from following his dreams, and he went on establishing another company Next (Linzmayer, 2004).
Meanwhile, on the other side, Apple did excellent business and eared it is highest profits yet in 1990. After witnessing a boom in the 1990s, the company started to slow down as they needed an operating system. To add more to the deteriorating state of Apple, Microsoft was there to push Apple even harder with the toughest competition in the market. Experts started anticipating the shutdown of Apple, but then Steve Jobs interfered. Apple bought the next with the agreement that Jobs will come back to Apple Inc. and will take charge of the messed up situation (Beahm, 2011). This was the turning point for Apple, and since then Apple never faced the same downfall again even after Steve's death of 2011. The company is currently in the safe hands of CEO Tim Cook and is still doing wonders in technology. In 2018, the profit margin of Apple was 22.41 % and the total revenue generated was $ 265.59B, the highest to date. Apart from this, gross profit was $101.83B, and the loss is $70.898B. In 2018, iPhone contributed the most in the annual sales of the company as it generated $218B worth sales making it approximately 82 percent of the total company's sales in 2018 globally.
ANALYSIS VIA PORTER’S FIVE FORCES MODEL FOR APPLE
Below is the graphical presentation of the five porter forces that exist in a competitive market for Apple.
206692553341The threat of New Entrants (Weak)
A massive amount of time and cost
Hard work on Brand recognition from new entrants
Enormous amount of capital needed for R&D
Needs innovation
00The threat of New Entrants (Weak)
A massive amount of time and cost
Hard work on Brand recognition from new entrants
Enormous amount of capital needed for R&D
Needs innovation
left256540The Bargaining Power of Suppliers (Weak)
Presence of potential suppliers for Apple
Excessive supply
Strong position of Apple in choosing its suppliers.
Shifting cost of Apple is low
High competition within suppliers
00The Bargaining Power of Suppliers (Weak)
Presence of potential suppliers for Apple
Excessive supply
Strong position of Apple in choosing its suppliers.
Shifting cost of Apple is low
High competition within suppliers
421005040640The Bargaining Power of Buyers (High)
Individual bargaining power is low
Collective bargaining power is relatively high
Large customer base
Low switching cost of customers
Products costly for some buyers
00The Bargaining Power of Buyers (High)
Individual bargaining power is low
Collective bargaining power is relatively high
Large customer base
Low switching cost of customers
Products costly for some buyers
309562568580
229552553340The intensity of Rivalry among Competitors (High)
Intense competition with Samsung, Google, Huawei, Sony, etc.
00The intensity of Rivalry among Competitors (High)
Intense competition with Samsung, Google, Huawei, Sony, etc.
244792560960
00
390525082550186690082550
3095625239395
205740017780The Threat of Substitute Products and Services (Moderate)
Availability of more substitutes in the market
Limited features
Average quality
Lacks Specialization
00The Threat of Substitute Products and Services (Moderate)
Availability of more substitutes in the market
Limited features
Average quality
Lacks Specialization
To enter any business, five competitive forces are suggested by the Porter. They include the threat related to the new entrants, the bargaining power of the suppliers, the bargaining power of the customers, the threat of the substitutes and the intensity of rivalry other competitors have to offer for that particular business. These five forces might affect the performance and the profitability of that business under consideration. For Apple, the list of these five forces is mentioned in the above figure.
Analyzing the position of Apple with these five forces model of Porter, it can easily be said that Apple is in a much stronger position as far as bargaining of suppliers is concerned. This competitive force of the bargaining power of suppliers is weak because many potential suppliers in the market are ready to become a part of Apple business. There is high competition among them to lower the costs and provide better quality for Apple so Apple should be at ease in this domain.
Entry of new competitors in the same business is a weak force for Apple because it will require a considerable amount of time and cost investment at this point in the industry where the market is almost saturated. It took many years of struggle for Apple to reach the top and this achievement cannot be attained overnight by any business. Many factors are there for the validation that involves significant investment in research and development, creativity, innovation when Apple is already there and brand recognition (Kim & Jun, 2017). Brand recognition needs time as people hesitate to experiment on new brands and always prefer the brands they have good experience with. These factors make the new entry a weak force for Apple in this competitive environment (Khan, Alam & Alam, 2015).
However, the bargaining power of the buyers of Apple cannot be ignored as it can be proven a powerful force to affect the business of Apple in the coming years. Not anyone can afford the expensive products of Apple; therefore, the customers can easily switch to other brands if they provide the same features in less price with a compromising quality. Many competitors took advantage of this element and stolen many customers from Apple. Collective bargaining can change the status of Apple in the global market. Therefore, Apple should not take any risk in the quality assurance of the products. The company should also launch some products for the working class so that the customers' base can be expanded.
The force threatening the Apple by its substitutes is moderate. It should be mentioned here that the alternatives includes all the products and services that can replace the Apple products in any aspect including the camera, making calls feature or the listening music feature, etc. Those substitutes that offer the same features like Apple in one way or another are behind Apple in quality and have limited features. But they are still available in the market in great number so acts as a moderate competitive force for the Apple.
Looking at the strong competitors that are giving Apple a strong competition are too many, and they are increasing every day. Top examples include Samsung, Google, Huawei, Sony, and Oppo, etc. In recent years, Apple has lost a vast market to the brands emerging from the developing countries providing the duplicate facilitates. Mobile phones like Vivo, Xiaomi, One plus, and HTC are affecting the business of iPhone badly. This is why Apple should take a proactive approach to save its marketing and sales in the market.
STRATEGY USED BY APPLE
Looking at the strategic management of Apple Company, it will be surprising to see Apple used the approach quite well to increase its profitability. The company revolutionized the technology with great innovation and setting the benchmark for its competitors (Kodama, 2018). Apple is famous for creating the demands and then promoting them in its customer's base. The company has a competitive advantage in the markets with its high-quality products and premium pricing strategy. Apple used the product differentiation strategy correctly to make its products appear different than other products in the viewer's eyes (Tian & Da, 2016). Not all companies can use the differentiation strategy like Apple (Dess, Lumpkin & Eisner, 2016). Apple enhanced the approach with its tactic of high pricing which enabled the customers to go for its products. Apple also applied the differentiation strategy in its brand recognition which further boosted the business for the company.
SPECIFIC STRATEGIES
Below are the six strategies that are chosen for the discussion on the Apple Company.
Turnaround Strategies
Apple is an excellent example of the turnaround in the history of the corporate world. When Jobs left the company in the 1990s, the company immediately started suffering loss after the peak period of success. The comeback of Steve was a U-turn for the Apple as he broad along amazing business ideas for the new products which lifted the company from drowning. iPhones and MacBooks were introduced along with the software of iTunes etc. The company was in loss previously due to the manufacturing of many products that led to the criticism from the audience like the Macintosh Portable. They also required an operating system for their products which was resolved intellectually by Steve. He started rebranding of the company differently that time and earned huge profits for the company with the inclusion of new successful products like IPads and Phones (Fetscherin, 2015). After Steve's death, it was assumed that Apple would be doomed again, but this time it was saved by the current CE Tim Cook by changing the organizational culture as another turnaround strategy and making the workplace more friendly and comfortable for the employees (Piao & Kleiner, 2015). This led to an increase in the productivity of workers and enhanced the innovation (Rai, Kasturi & Huang, 2018).
Vertical Integration
Apple was successful in its efforts to apply the vertical integration in the products by launching different kinds of products gradually. Other companies can use the same tactics to their business models, but they will not receive the same results like Apple as it takes a lot of time and experimentation. Many companies in a rush to follow vertical integration end up creating a mess for its business. But as competitiveness is increasing every day, this strategy can still be used by companies.
Strategic Alliances and Joint Ventures
Apple does not frequently go for alliances and joint ventures, therefore, the examples in this area are limited for apple. Recently Apple reached for a partnership with IBM to attain specific common goals, but Apple is still independently running its business. Their alliance was named as an exclusive partnership by the top management of both the companies. Apple also made a strategic partnership with many other companies like Disney, HP, Microsoft for different reasons related to software and hardware enhancement. Apple also acquired more than 20 companies that were mainly software oriented organizations.
Related Diversification
Apple is wise enough to know when to involve in diversification phase. Apple takes its time to ensure the diversification does not turn out to be a failure for the company, unlike its competitors. Apple is confident about its products and avoids unnecessary diversification (Hickman & Silva, 2018). The objective of the company is to provide something unique to the customers that are not previously presented by other companies, and this is very Apple is very selective and careful.
Achieving Competitive Advantage
Apple has a competitive advantage in the differentiation of its product with high quality no other competitor can provide. Apple is different than the rest of the rivals as the company has its hardware and software for the products. The retail strategy of Apple is quite impressive as the company is very concerned about the way its products are reached to the customers. The wholesale price is kept fixed by the company so that there should be consistency in the rates around the globe (Blenko, Waldron, Cornelius, Nespoli & Lee, 2016). Using differentiation business model, Apple allows the profits to increase by premium pricing strategy and innovation in products. The products are unique which makes Apple have an additional competitive advantage in the market.
Leadership
Applying cost leadership strategy to the business, Apple has secured a stable position in the global market of technology. This strategy is extensively implemented by Apple to ensure its competitive advantage and profitability in the industry. Apple is the producer and manufacturer of its all the products which makes the costs low for the company (Heracleous & Papachroni, 2016).
COURSE OF ACTION RECOMMENDED
If there is an advice that Apple would like to consider then my opinion would be to try economy pricing on some products in the future to target the middle class so that they can also experience the high quality of Apple products at low prices. High prices are very problematic for the working class as they cannot afford the products despite the strong desire and want.
OPINION
After reviewing all the aspects of this case study of Apple, it will not be wrong to say that Apple is an inspiration for all the business leaders that want to bring a change in the world through their products. There are many lessons in the life cycle of this company for the world that should be learned and can be implemented in their businesses. The primary experience is that vision is fundamental in the corporate sector. If you have an idea of where you want to reach, the paths will automatically be formed for your business. However, no company ever achieved success overnight, and this is why hard work with consistency is very important with an element of differentiation than the rest of the world.
REFERENCES
Beahm, G. (2011). I, Steve: Steve Jobs in his own words. Agate.
Blenko, D., Waldron, K., Cornelius, J., Nespoli, G., & Lee, D. (2016). ORGANIZATIONAL ANALYSIS: APPLE RETAIL STORES.
Dess, G., Lumpkin, G., & Eisner, A. (2016). Strategic Management (8e). Boston: McGraw-Hill Irwin.
Fetscherin, M. (2015). The CEO branding mix. Journal of Business Strategy, 36(6), 22-28.
Heracleous, L., & Papachroni, A. (2016). Strategic Leadership and Innovation at Apple Inc. SAGE Publications Ltd.
Hickman, C. R., & Silva, M. A. (2018). Creating excellence: Managing corporate culture, strategy, and change in the new age. Routledge.
Khan, U. A., Alam, M. N., & Alam, S. (2015). A critical analysis of internal and external environment of Apple Inc. International Journal of Economics, Commerce and Management, 3(6), 955-961.
Kim, J. M., & Jun, S. (2017). Integer-valued GARCH processes for Apple technology analysis. Industrial Management & Data Systems, 117(10), 2381-2399.
Kodama, M. (2018). Apple versus Sony: strategy transformation by capabilities congruence through asset orchestration: Driving Congruence in Capabilities. In Sustainable Growth Through Strategic Innovation. Edward Elgar Publishing.
Linzmayer, O. W. (2004). Apple confidential 2.0: The definitive history of the world's most colorful company. No Starch Press.
Piao, M., & Kleiner, B. (2015). Excellence in the Electronics Industry: The Comparison of the Organizational Culture among Apple Inc., Samsung Electronics and Google Inc. Conflict Resolution & Negotiation Journal, 2015(1).
Rai, B., Kasturi, M., & Huang, C. Y. (2018, August). Analyzing Stock Market Movements Using News, Tweets, Stock Prices and Transactions Volume Data for APPLE (AAPL), GOOGLE (GOOG) and SONY (SNE). In Proceedings of the International Conference on Pattern Recognition and Artificial Intelligence(pp. 109-112). ACM.
TIAN, S. B., & Da, C. H. E. N. (2016). “Hunger Marketing” Strategy and Its Application Research—Based on Apple Products. DEStech Transactions on Economics, Business, and Management, (icem).
