Internal Analysis of Apple: Value Chain Analysis and Success Factors

International Business
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Table of Contents
1. Introduction..............................................................................................................................................4
1.1. Overview of Apple............................................................................................................................4
1.2. Nature of the Business......................................................................................................................4
1.3. Challenges Face................................................................................................................................4
2. Define Success..........................................................................................................................................5
2.1. Measuring Success............................................................................................................................5
2.1.1. Balance scorecard.....................................................................................................................5
2.1.2. Gross profit...............................................................................................................................6
2.1.3. Customer satisfaction...............................................................................................................7
2.1.4. Employee satisfaction...............................................................................................................8
3. Reason of their success, why are they successful.....................................................................................9
3.1. Continuous Innovation.....................................................................................................................9
3.2. Look Beyond the Organisation........................................................................................................10
3.3. Focus...............................................................................................................................................10
3.4. Clear market Segmentation.................................................................................................................10
4. Internal analysis......................................................................................................................................10
4.1. Value chain analysis........................................................................................................................10
Primary activities........................................................................................................................................10
Inbound logistics.....................................................................................................................................10
Operations..............................................................................................................................................11
Outbound logistics..................................................................................................................................11
Marketing and sales................................................................................................................................12
Services...................................................................................................................................................12
Support activities........................................................................................................................................12
Firm infrastructure.................................................................................................................................12
Technology development.......................................................................................................................13
Procurement...........................................................................................................................................14
4.2. Core Competencies.........................................................................................................................14
4.3. VRIN Framework.............................................................................................................................15
5. Contribution of the leadership...............................................................................................................16
5.1. Leadership definition......................................................................................................................16
5.2. Tim Cook and the Apple’s Organisational culture...........................................................................16
6. Review of the strategy used...................................................................................................................16
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6.1. Growth Strategy.............................................................................................................................16
6.2. International Strategy.....................................................................................................................17
6.3. Competitive Strategy......................................................................................................................17
6.4. Collaboration Strategy....................................................................................................................17
6.5. Positioning Strategy........................................................................................................................17
7. Analysis for the future of the company..................................................................................................18
P.E.S.T factor affecting the company’s future.............................................................................................18
Recommendation...........................................................................................................................................19
References......................................................................................................................................................20
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1. Introduction
1.1. Overview of Apple
With the vision to own and control the primary technologies used in every product it manufactures
and stay innovative, Apple Inc. is an American multinational company that is involved in
manufacturing and marketing mobile communication and media devices, and personal computers
and potable digital media players(Hull, 2012; Reuters, 2018). The organisation also sells a wide
range of related software, services, networking solutions, third party digital content and
applications and accessories. It operates in America (North and South), Europe (European
countries, India and Middle East), Greater China (China, Hong Kong and Taiwan) and Rest of Asia
Pacific (Australia and the Asian countries excluded from its other operating geographical locations)
(CNN, 2018).
Figure 1: Products of Apple; Ref. (Reuters, 2018)
Source: Google Images
1.2. Nature of the Business
Apple is a multinational company with, which established its business through own stores mainly.
The company also has retail and wholesale distribution. There are 499 retail stores of the company
as of 2017, which indicate the success of the company worldwide. The company follows a
skimming pricing strategy, which makes it one of the expensive products.
1.3. Challenges Face
Marketing commercials of Apple have sometimes received criticism. In addition to that, the
company has a high price for its products and limited software titles caused problems. Another
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challenge that the company faced is the power struggles between its executives. These challenges
have greatly affected the operation of the company at some point in time. The tough competition
that the company faces from the other players in the market also lowered the market.
2. Define Success
Success for a company could be measured by several indicators, of which the profitability of the
company and the financial gains are the prominent ones. However, there are some other indicators
for measuring the success as well.
2.1. Measuring Success
2.1.I. Balance scorecard
Balanced score card uses mainly five indicators to measure success, which are core
competencies, customer satisfaction employee commitment, increase market share and
shareholder’s value. It's an effective measure of the Apple’s success from different perspectives.
The company focuses on product innovation, allowing it to focus on R&D and invest in it. It allows
ensuring that continuous innovation in products. Furthermore, balanced score card creates a
foundation on which further improvements could be made till reaching objectives. Apple maintains
an effective score card, which prompted apple to shift towards customer satisfaction and even
prioritised their employees for innovative thinking and product development. Hence, with efficient
employees designing and developing new products, the customer satisfaction increased, which
stimulated Apple sales globally.
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2.1.II. Gross profit
In addition to the balance scorecard, the gross profit is also an effective indicator of the company’s
success, it is seen that scrutinising the profitability of Apple is likely to provide an idea of their year
on year performance:
Period Ending: Trend 9/30/2017 9/24/2016 9/26/2015 9/27/2014
Total Revenue $229,234,000 $215,639,000 $233,715,000 $182,795,000
Cost of Revenue $141,048,000 $131,376,000 $140,089,000 $112,258,000
Gross Profit $88,186,000 $84,263,000 $93,626,000 $70,537,000
Table 1: Gross Profit Margin of Apple
Source: (NASDAQ, 2018)
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