Business Strategy: Analysis of Apple's Macro and Micro Environment

This study analyzes the impact of macro and micro environmental factors on Apple's business strategy. It explores the competitive landscape using Porter's five forces model and identifies strategic directions for the company.

Business Strategy
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1) Application of appropriate frameworks to analyse the impact and influence of the macro
environment on an organization.............................................................................................3
2) Internal environment & strategic capabilities of Apple by utilizing models.....................6
3) Porter’s five forces model in regard to competitive analysis.............................................9
4) Strategic directions available to Apple............................................................................10
5) Recommendation and justification of appropriate strategic direction accessible for chosen
firm.......................................................................................................................................11
6) Strategic management plan with objective & priorities based on analysis......................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................16
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INTRODUCTION
Business strategies refer to adjustments and actions that a company takes in order to gain
its business aims and objectives & to be competitive in its industry. This term define what a
company need to do to reach set goals, which could aid guide decision making for resource
allocation, hiring etc. The current assignment will be based on Apple, which falls under category
of leading technology organizations in the whole world. This study will explore macro and micro
environmental analysis by using strategic models such as PESTLE, stakeholder analysis, value
change analysis, and VRIO framework. Furthermore, this report will explain competitive
analysis in context of chosen company by utilizing Porter’s five forces models and will also
justify strengths, weaknesses, opportunities and threat of organization.
Moreover, this study will clarify strategic directions accessible to Apple with the help of
Porter’s generic tactics, Ansoff matrix and Bowman’s strategy clock models. It will describe
appropriate suggestions and strategic direction for firm. In this report strategic management plan
will be discussed that has tactical and tangible strategic objectives and priorities based on overall
analysis presented in this assignment.
MAIN BODY
1) Application of appropriate frameworks to analyse the impact and influence of the macro
environment on an organization.
PESTLE analysis
Apple Company is one of the high performance company and is considered to be as one
of the most recognizable consumer brand. The PESTLE analysis will be useful in examining the
key macro- environmental factors which can adversely influence the operations of the company.
Political factor: There are range of political factors like terrorism, trading restrictions,
labour laws, government policy, foreign trade policy, etc. which has impacted the working of the
Apple company during this COVID- 19 pandemic. Apple Company is immensely dependent on
the China for the low degree of labour cost (Yoosefi Lebni and et.al., 2020). However, this
COVID- 19 pandemic has affected the relationship with China. Social and political unrest with
the China can leads to high degree of increased manufacturing cost and disrupt manufacturing
process for the company. The impact of Brexit is high and largely influences the operations of
business. It increases uncertainty for the firms. There are variation stock prices because of
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Brexit. Brexit has also lead to the weakening of the Europe both politically and economically. It
is also likely to lower the productivity of company which hampers its future growth.
Economic factor: COVID- 19 has severely affected the economy of the country. Due to
lockdown, most of the countries were not into operations which has severely affected the GDP of
the country. This has led to the stagnant growth within the economy (Zhang and et.al., 2020).
Due to lockdown there seems to be low degree of disposable income of the consumers and
business which has also affected the operations of the Apple Company. Increased level of labour
cost can affect the cost advantage benefit of the Apple Company.
Social factor: Major issue is linked with the wages and salaries (Shtal and et.al., 2018).
There is a high degree of negative impact on the working of the Apple Company because it has
led to significant number of lay- off within the organization. Growth within the population and
age distribution has severely affected the individuals because of COVID- 19 and this in turn has
affected the working of the Apple Company.
Technological factor: Rise in the price of the advanced technology is one of the major
issue of COVID-19 on the operational efficiency and performance of the organization
(Nandonde, 2019). Maturity of the technologies, potential return on the investment, emergence
of the new advanced technologies, etc. are the major factors which influence the operations of
the Apple Company. The Coronavirus has significantly affected the business because it has led
to high cost to the company and has impacted the business operations.
Environmental factor: There seems to be decline in the availability of the raw material
which has adversely influenced the working of the Apple Company (Albuquerque and et.al..,
2020). Low degree of access to the geographical location and climatic impact has severely
influenced the performance of company during the COVID-19 pandemic. High degree of
competition is another major threat to the company.
Legal factor: Complying with the legal legislation associated with health and safety
standards, labour laws, etc. are the health and safety, competitive legislations, consumer rights
and laws, advertising standards, etc. are of key significance importance especially during this
time of COVID- 19 pandemic. Any sort of legal challenge against the practices and policies of
the Apple Company is considered to be as a major threat to the business.
Stakeholder analysis-
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It considered as procedure of determining people who are interested and not interested in
specific tasks or project of company (Noto and Noto, 2019). It help to identify these individual
before specific work begins; grouping them accordant to their degrees of interest, influence &
participation in particular thing and determine how best to communicate and include each of
these shareholders units throughout. This analysis includes different key elements; determining
major shareholder, investigating their roles, relative power, interests and desire to participate.
Keep satisfied- (High power and interest)
Government in this category is most important stakeholder for Apple and they should
prioritize keeping them happy with business project progress and success (Greco, Locatelli and
Lisi, 2017). Government is one of the stakeholders who have high power and are highly
interested in growth of firm because company by managing and operating their business
operations at global level help to increase GDP. Firm always needs to satisfied local and national
authority, which is quite beneficial and important for Apple.
Manage closely- (High power and low interest managers)
Suppliers are other stakeholders of Apple Company who are able to influence decision
making and business productivity in positive manner (Giglio and et.al., 2019). Because of their
influence in firm, organization should work to keep manager satisfied. They have power to make
change in supply activities and increase price that impact success of firm. On the other hand,
suppliers are less interested in progress of company because accessibility of better brands
opportunities will drive them towards greater success.
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Figure 1Stakeholder Analysis
(Source: Stakeholder Analysis, 2020)
Monitor- (Low power and high interest)
Apple Company needs to monitor current needs and requirements of their customers
because they are other stakeholder who have low power and are highly interested to purchase
quality items from big brands (Grewal and et.al., 2017). It can be said that consumers have low
power to influence business growth, but they are interested to buy advanced technology phones
and gadgets which make work so easy to do. Apple should monitor trends in market and
changing needs of buyers.
Keep informed- (Low power and low interest)
Organization keep workers informed about any change and action taken by management
because it help to retain them and increase their interest towards increasing productivity and
sales of company (BHATTACHARYA and KORSCHUN, 2019). Employees in company are
less interested in growth of business, because they know availability of better career
opportunities in market. Firm keep this stakeholder informed periodically, but not over does it.
They are not able to influence existing and further plans in company as they have low power.
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2) Internal environment & strategic capabilities of Apple by utilizing models
VRIO framework-
It is an acronym for a four question model of value, rarity, Imitability and organization. It
is one of the best strategic models that can be used in order to identify internal environment and
capabilities of Apple (Ariyani and Daryanto, 2018).
Value-
Non core competencies of Apple Company include business procedure automation,
which is valuable for firm but common throughout its sector and even in other sectors and
markets. Competitive employee compensation packages are also included in list of valuable
resources of organization that helps its business and management to maintain a highly skilled
team at workplace that support and contributed rapid innovation. Human resource capabilities
can make firm able to gain competitive edge in effective manner by innovating something new
and unique from other technology companies.
Rare-
Competitive employee compensation packages as key resource are included in category
of rare in VRIO framework because not other firms can offer this thing to people who are
working with them. It can help manager to retain skilled and talented applicants with company
for longer period of time who are capable to increase productivity and sales of business rather
than last few years or months. Human resource capabilities for innovation are also rare resources
that can aid firm to drive attention of new buyers towards purchase.
Imitability-
Apple is able to increase diversity of product mix that is a sign of strategic attempts of
management to reduce per market risk exposure of venture (Fontagné, Secchi and Tomasi,
2016). This resource and capability of firm is important. It can be said that, organization is able
to satisfy its buyers because they have set up systems for rapid innovation, which is quite
beneficial for company growth and better success in market where they operate since for so long.
Ecosystem of complementary goods and artificial intelligence capabilities are included in
internal abilities of Apple, which they can use to gain several benefits.
Organization-
With the help of VRIO framework, it has been analysed that Apple is able to manage
their sales and distribution network at global level in effective manner. With this capability
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company can gain competitive advantages. Apple’s internationally popular brand is a core
competency because it is rare, valuable and difficulty to imitate and venture is organized around
utilise of this brand as a major competitive power. Company also has their systems set up for
innovation, which is important success factor of Apple. These resources or capabilities of
corporation make them able to maintain high rate of innovation, which is especially notable in
hardware items like iPhone.
Value chain analysis-
It is another strategic tool utilized to analyse internal activities of company and
capabilities (Rosales and et.al., 2017). This framework permits firm to examine their practices
and find competitive chances. Value chain analysis is a procedure where organization determines
their supportive and primary activities that add value to their core products and then examine
these things to reduce costs and maximize differentiation.
Primary activities-
Inbound logistics-
Apple has a quite big supply chain and when it comes to getting raw materials, it has
different options before it (Jeble and et.al., 2018). With large supply chain and several options,
organization is capable to deliver quality products to its consumers.
Operations-
Manufacturing of organization items takes position different countries. This is mainly
China where Apple goods are assembled and that is why varied of them bear tag made in nation.
Company is able to engage in Indian government in talks and producing may shortly begin from
there. They effectively manage operations of its business across America and all over the world.
Outbound logistics-
It analyse that Apple as compare to their competitors has effectively managed very big
distribution source combining of direct & indirect channels. From its retail outlets to digital retail
& Apple branded outlets; firm has well managed a wide channel for distribution of their items to
consumers.
Marketing and sales-
Apple marketing department is able to generate brand awareness in all over the world
(Wichmann, 2019). Firm is well known company whose goods are known for unique design,
features, quality and technical creation. Any new item from chosen organization is like news that
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is widen not only by media but different other channels including large websites. Apart from
online and television commercials, firm also make utilise of print advertisement for promotion
and marketing of its brand, which increases its sales.
Products and services-
Organization is effectively providing inclusive after sales support and help to their
potential buyers. Most of its items come with a minimum 90 days complementary support and a
one era limited warranty that provide appropriate satisfaction to customers and assure about
products quality.
Supportive activities-
Firm infrastructure-
Apple infrastructure has a key role in its success and growth of company. From top
authority to marketing and other assets plus culture and structure, all these things from
infrastructure of company. Firm has better management that higher its ability of creating profits.
Technology and research and development-
Company spends heavily on research and development and technology utilization in their
products. Apple in all over the world is known for technological innovation and for excellent
quality and unique design of their items. In order to gain competitive advantages and its
competitive position this brand is able to highly invest in research and development and
technological innovation.
Human resource management-
HRM is one of Apple’s strength which makes its business more stronger to beat their
competitors. It is a key part of value chain activity of company, form totally concentrate on
paying well and hiring new applicants.
Procurement-
This is also a key focus area at company. Procurement has managed better relation with
its suppliers. These suppliers are needed to cater works with safe and protective working
environment and to provide services and goods as per standards.
3) Porter’s five forces model in regard to competitive analysis
Bargaining power of suppliers-
Apple organization experiences low force of this factor, because its suppliers have a weak
bargaining power based on certain external elements such as moderate to high number of
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suppliers, moderate to high overall supply and high ratio of company concentration to supplier’s
concentration. International supply chain of Apple allows them to access many suppliers around
the world and this can lower down suppliers bargaining power (LI, 2019).
Bargaining power of consumers-
The bargaining power of buyers is strong force as it affects Apple venture and existing
plans. Customers have power to low costs and change products quality as well as feature
according to their needs and preferences (Phillips, 2017). It can put negative impact on decision
making and current strategies of company.
Threat of substitute products or services-
The degree of this forces is weak because Apple products substitutes has low
performance and low buyer propensity. Many people instead of apple products use digital
cameras to take picture, but these are not that much clear when consumers can take via using
Apple goods. Substitutes of this brand items have limited features that lower down its
performance and drive people towards purchase quality goods like iPhone, iPads etc.
Threat of new entrance-
Extend of this force is moderate because companies who wants to enter into market
where Apple operates its business needs high capital investment and high cost of brand
development which is actually not possible for everyone. So, in that case it moderate power of
this force (Purkayastha and Sharma, 2016). It can be said that establishing a venture to compete
against companies like Apple, required high capitalization.
Competitive rivalry between existing players-
Degree of this force is high because there are many players managing its brand in
technology industry, where Apple operates and manage their business functions. It can be said
that Apple faces high force of competitive rivalry from its competitors like LG and Samsung.
Both these companies are aggressively competing with Apple and effort to give tough
competition to them.
SWOT analysis-
Strength-
The key strength of Apple Company over eras has been its innovative and unique product
line up. Firm has presented hit item after hit and that has been major strength of this brand.
Weakness-
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Many of items are incompatible with third party accessories or software and that is one of
its biggest weaknesses that can affect business activities.
Opportunity-
Technology advancement is one of the best opportunities; Apple can grab and take its
benefits for several years.
Threat-
Intense competitive is the biggest threats for Apple which they face from many years and
effort to overcome by using and grabbing available chances in industry.
4) Strategic directions available to Apple
Porter’s generic strategies-
Cost leadership strategy-
This is one of the most effective Porter’s generic tactics that Apple Company would use
to achieve set aims and their business objectives in effective manner. When organization uses it,
this will make them able to increase market size, profitability and reduces competition. This
tactic will help firm to gain all competitive benefits by setting low cost in sector.
Differentiation strategy-
This method permit firm to complete in market where they operates since for so long by
developing new and innovative offerings for consumers with something other than affordable
prices. Apple Company with this strategy can gain benefits in term of increasing consumer brand
loyalty and customer’s base rather than before, it also better profit margins.
Focus strategy-
This is the third tactic of above model, which includes targeting Apple products to niche
market. It provides key benefits to company in term of improving pricing structure for venture
and bringing expertise into goods.
Bowman’s strategy clock-
Hybrid strategy-
It seeks concurrently and effectively to achieve low price & differentiation relative to
rivals. When Apple use this strategy, they needs to be able to deliver enhanced benefits to buyer
with low price while achieving enough margins for reinvestment to keep and create bases of
differentiation.
Vertical or horizontal integration strategy-
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It is a strategy whereby an organization like Apple controls and owns their suppliers or
outlets to control their value chain. With this tactic company can improve their supply chain
coordination.
Diversification-
With all above strategic directions, chosen brand can also consider this approach as well
which makes them capable to minimize risk of loss and increase sales even better. It aid business
for creating new and beneficial chances. This is fourth tactic of Ansoff model that firm can use to
enhance business growth and achieve greater success for longer period of time.
5) Recommendation and justification of appropriate strategic direction accessible for chosen firm
As discussed above, company can consider varied strategic options that are quite
beneficial for them. It can be analysed that in regard to Apple there are varied forms of strategic
suggestions or options accessible which they can consider and goes through to achieving in
future progress chances which is quite beneficial for its business and overall operations in
positive manner. Ansoff matrix model here, provide suitable recommendations to brand which its
manager can utilized in order to gain all competitive advantages.
Market penetration-
This is one of the fourth business growth tactics of product market growth matrix as
described by chosen model. (Lévay, Drossinos and Thiel, 2017). It occurs when Apple penetrates
a area or segment in which existing goods already available. This best thing brand can do
because of this strategy is that they can gain its rival buyers.
Product development-
Second strategic of above concept is product development which is based on developing
or producing new Iphone, Ipad or other goods so they appear new and offering those things to
new as well as current customers. Furthermore, it can be said that company can modify existing
items and add on valuable and unique features such as Four Cameras in Iphone 11 pro.
Market development-
It can be considered as growth tactic that determines and creates new market segments
for present goods, which in return increase consumer base and profitability even better that is
quite beneficial for firm while operating business in their sector.
Diversification-
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Ansoff model define the last tactic that is diversification, which falls under category of
business tactic to enter into a new thing or product lines or new markets, including substantially
varied technology, skills and knowledge.
6) Strategic management plan with objective & priorities based on analysis
Vision-
Vision of Apple is to reach at international level with powerful workforce and excellent
customers base.
Mission-
The mission of firm is to become global leader and retain buyers with purchasing their
range of goods for longer.
Objectives of Apple-
 To become global leader in technology industry.
 To gain attention of new buyers
 To maximize profit margin and revenues.
 To build strong and loyal relation with buyers.
Strategies-
Apple is one of the best brands in the whole world they offer exiting and fresh offers to
people who seeks to purchase innovative items. Organization can achieve their strategic goals
and smart objectives by using range of approaches, which is essential and beneficial for its
business. Firm can use Hybrid & differentiation strategy and consider in context of implementing
within current business management plan for longer period of time if it provide benefits, which is
very effective in term of increasing sales, revenue and profit margin even better than other
players.
Tactics-
In order to obtain competitive benefits and achieve first objectives along with further
ones, Apple can set effective pricing strategies for customers who wants to buy their products
and are interested within it such as low pricing strategy because it permit brand to drive people
towards purchasing items against competitors. Organization can consider price, place and other
elements of marketing mix.
Implementation and control-
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Management of chosen brand can consider all above tactics by dividing roles and
responsibilities between skilled and talented applicants who are working in company for
achieving their aims.
Evaluation-
Success of this plan can be evaluated by experienced manager via considering profits,
revenue, sales and using appropriate methods such as KIP, Benchmarking etc.
CONCLUSION
From above analysis, it has been concluded that Apple Company by gaining competitive
advantages building their strong brand image in market place. They give tough competition to its
competitors by using and identifying their strengths. By using PESTLE and stakeholder analysis
as external environmental models, organization effectively determining factors that influencing
strategic decision making and planning functions. Furthermore, VRIO analysis is considered as
analytical technique suitable for evaluating Apple resources, which management is using to
reach their aims and set objectives. It has been summarized that organization by considering and
implementing appropriate recommendations gaining competitive edge and increasing their profit
margin.
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Online
Stakeholder Analysis. 2020. [Online]. Available Through: <
https://www.productplan.com/glossary/stakeholder-analysis/#:~:text=A%20stakeholder
%20analysis%20is%20a,of%20these%20stakeholder%20groups%20throughout.>
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