Strategic Business Units for Apple Inc.

This article discusses the sustainable competitive advantage of Apple Inc. business units, including the non-substitutable, valuable, rare, and costly to imitate capabilities. It also explores the factors that contribute to Apple's success, such as its protected ecosystem, brand appeal, and high-quality hardware and software combination.

STRATEGIC BUSINESS UNITS FOR APPLE INC.
May 25, 2018
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Introduction: Corporation Identification
A Business Strategic Unit is a complete unit of a business corporation or a company that is fully
functional on its own, although it is still part of the main company. There are companies that deal
with a wide range of products or services, with different units operating on their own. This paper
focuses on the Apple Inc.
This American company is an example of a corporation dealing with design, manufacture, and
the supply of music players, computer software, personal computers, media devices, and mobile
accessories. Some of these products include the iPhone smartphone, the Mac personal computer,
the iOS operating system, the iPad tablet computer among other products. It operates
internationally, covering a wide geographical area. These products operate independently and
each represents a business unit within the Apple Corporation.
Figure 1: Revenue by product (Ryan, Lyle & Urs, 2012)
Figure 1 shows the relationship among different Apple Inc. products in terms of
percentage revenue out of sales. iPhone is the biggest selling product compared to other
products. iPod and other music-related products are the lowest selling. iPad is also a good seller
after the iPad. Although Apple Inc. has a good brand name, the iPhone is the most popular
compared to other products. The iPod and Macintosh desktops also have high-quality attractive
features, but they cannot be compared to the iPhone’s popularity in the market (Muhammad,
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Shamsudin & Ul Hadi, 2016). Still, iPhone occupies the largest space on the chart, followed by
the Macintosh brand. Peripherals are the lowest selling in this particular year.
Sources of Sustainable Competitive Advantage
According to Binod & Devi (2013), a sustainable competitive advantage refers to the special
distinctive but high-quality features, characteristics or abilities of a product that cannot be
duplicated by other companies, giving it a long-term competitive advantage in the market. The
Apple Company has multiple business units, each striving on the market competition on its own.
For example, the iPhone smartphone competes with phones from other companies while the Mac
personal computer competes with personal computers from other companies.
For the business units under Apple Company, each has their own source of competitive
advantage. As a corporation, Apple has its own general competitive advantages, which include a
protected ecosystem and a brand which is very appealing. Regarding the protected ecosystem,
the Apple devices run on the iOS operating system, unlike other manufacturers whose devices
run on Google Android. Over the years, the corporation has really built a brand name for itself
(Fleming & Stanway, 2014).
The iPhone has advantages that give it a competitive advantage over Android phones.
First, it is easy to use and is created for any kind of user. Second, its physical appearance is a lot
more welcoming and attractive. It has sleek edges and clean lines, making it more appealing to
the eye. Furthermore, it has a reasonable screen size; not too small and not too big. Its size is
comfortable and easier to carry around. One does not need to struggle holding it to make a call.
The iPhone also has numerous peripherals of high quality (Deepika, Chandan & Rajiv, 2011).
Moreover, the consistent experience received by customers from using the Apple iPhone
gives it an advantage over Android phones. Most of the users love the experience and would
always wait for the latest brand to be launched in the market for them to upgrade to it. Another
thing is the customer care and technical support offered by Apple Inc. Company. The Apple
team offers good help whenever a consumer approaches them for support. Also, iPhone offers a
variety of nice apps which can only be supported by the iOS software. Apple iPhones also
integrates easily with other Apple devices like computers among others.
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In addition, Apple’s software and hardware combination are of high quality. Most
companies can make quality hardware and fail in the software part, or vice versa. Some cannot
make anything good at all. Nevertheless, this company specializes in creating good hardware to
run their software, a feature that has not yet been outdone by any other company. Apple Inc. The
company is also very good at marketing. The company delivers exactly what the consumer is
waiting for. This makes the reason for the high demand for this company’s products, unlike its
competitors.
Figure 2: Apple Inc. eco-system to ensure a Competitve Advantage (Natschläger & Geist, 2013).
The Mac computer is a great innovation, easier to use and highly attractive. It also
practices both horizontal and vertical integration instead of the open system. iPod also has a user-
friendly interface, portable, well-designed and has a large storage space. iPad is an integration of
iPod and iPhone technologies. It has a good storage and special features making internet surfing
an easy task. iPad Mini is just a smaller-sized version of iPad. It is cheaper and smaller but has
the same features as the iPad.
The wide range of products and consumer response has created a good brand name for
Apple Inc. products. The good name alone attracts both new and old customers, making it a
reliable source of sustainable competitive advantage (Hidetaka & Hideaki, 2012).
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Factors of Sustainable Competitive Advantage for the Apple Inc.
a) Non-substitutable Capabilities
These are capabilities that allow Apply Inc. to have a competitive advantage because there are no
strategic equivalents. The closest competitor of iPhone is Samsung S8. Thus, just one brand is
strategically equivalent. Apple Inc. was ranked as the top company with the best management
consistently for three years (2010-2013) by Gartner, a research firm. Their products range from
raw material sourcing, manufacturing, warehousing, distribution, and return.
From their manufacturing branches located in the United States, China, Europe, and other Asian
countries, different parts are assembled in China. From the assembly point, some products are
taken to intermediate warehouses while others are to a warehouse facility in California. Those
from the intermediate warehouses are sold through the online store. The rest is distributed to
consumers through retailers, directed sales and wholesalers. All the products are registered under
warranty, return trade in program or recycle/reuse program.
b) Valuable
Valuable capabilities often come about through product differentiation. It involves comparing a
company’s products and other similar products produced by competitors and identifying the
differences besides making them more valuable. On the other hand, innovation is the process by
which a company strives to outdo its competitors through improvement of quality and standard
of their products. Innovation usually results when a company identifies the major differences
between its products and that of the competitors and aims at improving its products to remain
high in the competitive market (Natschläger & Geist, 2013).
Apple has applied this strategy by differentiating the features between its products from those of
competitors. It has created products more appealing to customers and offering distinctive
features like the iOS software. Its prices are also on the high end, basing on the Macworld brand
of products. The price strategy is innovative as it prevents other competitors from directly
competing with them, hence ensuring a sustainable competitive advantage (Philip & Inga, 2015).
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c) Rare Capabilities
This refers to the capacity of an organization to be different but rare in the outside surroundings
or forces in the most appropriate manner. The outside environment could be competition, entry
of a new product in the market, the rise in market share of another competitive product, demand
curve fluctuation and supply curve fluctuation.
Apple Inc. organizational culture is highly based on the employees’ performance, whereby they
are required to work hard with or without supervision through self-motivation. It also involves its
lowest level employees in making decisions of the company. The work of the corporate
headquarters is just to formulate policies and supervise other activities, while it is the work of the
employees to make decisions. Moreover, unavailable Apple products in some countries has led
to rapid growth of the Apple Inc. both in the market share and competitive advantage. The speed
of responsiveness of this company is good. The company received much attention from its
responsive nature, developed by the employees who were flexible to change and self-driven.
Being able to quickly respond to the outside environment has created a good rapport with the
company (Ryan, Lyle & Urs, 2012).
d) Costly to Imitate
Costly to imitate abilities are the ones that other competitors cannot eadsily copy. For instance,
Satish & Rajesh (2014) argue that cost leadership is a situation whereby a company presents
itself as the cheapest supplier or the lowest cost producer in the market to generate a competitive
advantage for itself. Mostly, such companies need to extremely minimize their production costs
so as to remain profitable. Therefore, it is costly to imitate for them.
Apple Inc. has practiced cost leadership as a strategy to influence its sustainable competitive
advantage. Policies have been formulated, aiming at lowering the cost of production. This has
been successful in lowering of manufacturing costs, distribution costs, storage costs and labor
costs. Apple Inc. has been able to determine its own market price as a result of this strategy.
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