Strategic Management of Apple USA: Evaluation and Analysis
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This report evaluates the strategic management of Apple USA and analyzes recommendations aligning the company’s strategies. It includes a discussion on Apple’s value creation, Porter’s Five Forces Analysis, competitive analysis, corporate level strategy, business level strategy, and implementation of business operations.
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1MANAGEMENT Table of Contents Introduction......................................................................................................................................2 Discussion........................................................................................................................................2 Evaluation of Apple’s Value Creation.........................................................................................2 Five Forces Analysisof Apple (Porter’s Five Forces Model).....................................................3 Apple’s Competitive Analysis.....................................................................................................5 Evaluating Apple’s Corporate Level Strategy.............................................................................6 Analyze Implementation of Apple’s Business Operations..........................................................8 Conclusion and Recommendation...................................................................................................9 References......................................................................................................................................10
2MANAGEMENT Introduction Technical expertise aligned with minimalistic designs and innovative promotion with a strategic leadership of Steve Jobs has sustained Apple as one of the most costly brands in the world.Reports of Wheelen et al. (2017) have revealed that theorganisations significant achievements tend to develop into well established brand loyalty and further a supreme profits growth ranging from $8.5 billion dollars in the year 2004 to over $235 billion as estimated in 2017. Following to amonotonous period, Apple foundedby Steve jobs haverefurbished in the delayed phase of 1990s with a series of tactical and technical developments and further during the 1997s, the company successfully launched the Apple online store significantly pursued by the iMac along with the video controlling program ultimate cut Pro in 1998 (Morschett, Schramm- Klein & Zentes, 2015).According to Lasserre (2017) it wasthe iPod which was introduced in the early 2000 hasembarked the business’s preliminaryproject away from traditional computer systems as well as into other parts of consumer gadgets. The following report will be evaluating the strategic management of Apple USA and further analyze recommendations aligning the company’s strategies. Discussion Evaluation of Apple’s Value Creation However till 2015 the overall market capitalization of Apple has reached almost $475 billion US that has been accounted to be higher than that of its competitors namely Google, Microsoft and IBM.Furthermore as per the reports of Audretsch (2015)Apple market cap has successfully acquireda record of over $755 billionin 2015 but however lately have been experiencing a decline to around 5 20 billion US dollars in May 2016. Apple has persistently been accountable for treating as well aspromoting over 2.5 million jobs across theUnited States
3MANAGEMENT and further has been anticipating generating greater level of value towards employment resulting to increasing number of initiatives taken by the company (Lasserre, 2017).Data produced by Denney (2018) hasindicated thatmerging newly developed financial support along withApple's current pace of investment with domestic suppliers andmanufacturers Apple's revenues have been estimated to be around $58 million for 2018. Additionally the company's direct financial contribution to the US economy is estimated to be greater than 355 billion dollars over the next five years without taking into consideration its current tax payments (Audretsch, 2015). Five Forces Analysisof Apple (Porter’s Five Forces Model) Apple’s strategies have partly been supported by the needs in order to deal with forces in the external business environment. These forces however tend to constrain or reduce the company’s market share and revenues (Khan, Alam & Alam, 2015). Rivalry among existing competitors (Strong) -Apple has been experiencing severe rivalry which has been determining the intensity of power competitors constitute on each other. Reports of Bradley, Madnick and Kim (2016), as companies such as Samsung, Google and others have been competing assertively with Apple; such level of aggressiveness has been analyzed in rapid advancement, aggressive promotion and simulation. Furthermore, on the other hand, switching cost has also reduced further implying that it is easy for consumers to change from Apple to new emerging brands, thus intensifying the struggle. Thus, Five Forces analysis confirms that competitive rivalry is between the most important deliberations in strategic formulation of Apple (Wheeler & Omair, 2016). Bargaining Power of Buyers (Strong) -Audretsch (2015) has claimed that it is easy for customers to switch brands by escalating the strength in forcing companies like Apple to
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4MANAGEMENT guarantee higher level of consumer satisfaction. As the buying level of each purchaser has been evaluated to Apple’s total profits, thus it is uncomplicated for buyers to move from Apple to other emerging products and apply a high power. Apple’s Porter’s five forces analysis Source: (Wheeler & Omair, 2016) Bargaining power of suppliers (Weak) –Regardless of Apple constituting less than 200 providers of components for its product range, the business comprises additional options because of several merchants worldwide. Such requisites tend to condense the bargaining power of individual suppliers in imposing their demands on companies like Apple (Morschett, Schramm-Klein & Zentes, 2015). In relation, authors have observed an increased level of delivery for the majority of components of Apple merchandise. Threat of New Entrants or New Entry (Moderate) -Reports of Bradley, Madnick and Kim (2016) have stated that instituting a business next to companies like Apple necessitate elevated level of capitalization resulting new entrants into the consumer electronics sector to develop well-established brands in order to compete with these
5MANAGEMENT companies. However, recently there have been identified large firms with the financial competence to enter the market and influence revenue growth of Apple. For example, according to Denney (2018), Google has been introducing products like Nexus smartphones further implying that there are large companies which are competent to directly compete against Apple. Threats of Substitutes (Weak) –Bradley, Madnick and Kim (2016) have stated that for Apple, several customers would rather show greater level of inclination towards Apple products due to their superior features. Thus, replacement tends to have a fragile force in influencing Apple’s industry. Apple’s Competitive Analysis Apple’s success is associated with the capability to utilize business strengths in order to prevail over weaknesses and threats and further to use opportunities in the industry setting. Thus, A SWOT analysis of Apple offers comprehensive insights on the strategic measures of the business, in particular to capitalize on its development relying on its strengths and opportunities (Apple, 2019). I.Strengths-Apple’s marketing mix primarily involves best pricing strategy generating increased profit margins. Such an internal strategic factor has been identifies as one of the significant strength because of its maximization of revenues even with limited sales growth. II.Weaknesses-Premium pricing strategy of Apple according to Audretsch (2015) comprises the weakness of the reliance on retailing of high-end sell segments.As high price-range chiefly magnetize consumers starting from the middle and high-income cohort, whereas avoiding clients from low-income ranges to without difficulty obtain
6MANAGEMENT premium product range of the company. Such an internal strategic factor has been identified as a considerable weakness as high-end market sections correspond to only a marginal section of the global market. III.Opportunities- Studies of Bradley, Madnick and Kim (2016) have revealed that recently, Apple has been experiencing the opportunity to develop its distribution network. This avenue however directly links to the disadvantages of the company’s restricted distribution network.Additionally, an extended supply system can facilitate Apple to acquire more clientele in the international marketplace. Furthermore, the business has the prospect to amplify its trade capacity throughout insistent promotion, particularly for its mobile goods (Wheeler & Omair, 2016). IV.Threats- Khan, Alam and Alam (2015) have noted that severe marketing rivalry in the consumer electronics sector has been occurring due to high level of aggressiveness among companies. Apple has been competing with companies like Samsung which recently has been implementing rapid innovative techniques. Additionally, Apple has been encountering threat of imitation whereby significant numbers of local as well as multinational firms have been copying the designs and features of Apple’s products (Froud, Johal, Leaver & Williams, 2014).
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7MANAGEMENT Apple’s Competitive Analysis Source: (Audretsch, 2015) Evaluating Apple’s Corporate Level Strategy Drawing significance in analyzing corporate strategy, Khan, Alam and Alam (2015) have identified two kinds of diversification namely linked and constrained. Companies who have been using linked diversification primarily enter new businesses while it associates in certain way to another business with which they are already engaged, but have not been essentially engaged to other businesses. However, Apple has been employing constrained diversification by using their skills to develop hardware and software (Froud, Johal, Leaver & Williams, 2014). The Macintosh, iPad, iPhone as well as the Apple TV have been operating the OS X that is Apple’s operating system by proficiently extending economies of opportunities, which according to Myers and Fellow (2014) have been strategically creating cost investments for Apple as the company’s resources have been distributed across several businesses. Moreover, reports of Khan, Alam and Alam (2015) have emphasized on refurbishment of
8MANAGEMENT the iBook store which is presently operating as a book store. According to authors, the iBook store must emerge as a print media platform for books, manuscripts, news articles and magazines.However, though the digital print business is in its early years, but is considered to be highly decisive for potential consumer electronic business. This further is perceived to be highly decisive in providing Apple a significant opportunity to set up its platform as the paramount one (Froud, Johal, Leaver & Williams, 2014). Apple’s Business Level Strategy – Product Segregation in Design and Functionality Apple business strategy has been essentially categorized as product differentiation in design as well as functionality.Studies of Froud, Johal, Leaver and Williams (2014) have revealed that Apple business strategy fundamentally supports building as well as increasing its individual trade as well as online stores along with its third-party supply system in order to efficiently acquire additional clientele and offer its clientele with premium level of trade as well as post-sales support experience. Furthermore, drawing relevance to Apple’s business strategy, Myers and Fellow (2014) have noted that the firm has been efficiently acclimatizing advanced features along with competence of its products as well as services as groundwork of its competitive gain.Moreover, Apple has been benefitting from its process of vertical integration through strategies whereby the firm has extended its proficiency in software, hardware as well as services. These factors have been resultant to Apple to be distinguished from rest of the existing competition in the market. Furthermore, Apple’s competitive gain primarily associates with its ecosystem that has further been facilitated by such high level of integration. According to reports of Khan, Alam and Alam (2015), as Apple’s devices and software tend to sync successfully; they function well with each other. Applications primarily operate on multiple Apple devices simultaneously and no significant variation in user interfaces. On the other hand, similar items do
9MANAGEMENT not tend to align with me of other corporations, consequently generating the likes of a blocked network. Apple’s network tends to create controlling expenses for its consumers to the rivalry which further offers huge avenues in order to leverage associations with current customer base to purposefully offer other products and services (Bradley, Madnick & Kim, 2016). Analyze Implementation of Apple’s Business Operations Apple comprises ahierarchical organizational compositionwith extraordinary divisional distinctiveness along with a weak functional medium. The divisional individuality further refers to the product-centric alignment surrounded by the company, such as for iOS as well as macOS whereas the unconstructive efficient medium primarily entails inter-segmentation alliance though the chain of command has been preserved (Myers & Fellow, 2014).While assessing Apple’s organizational structure authors have been noted that the upper as well as lower levels of the firm’s corporate configuration chiefly comprises of product-based distributions considered as a factor resulting from the divisional form of organizational configuration.For example, Apple with its corporate in the US constitutes a Senior Vice President employed for Software Engineering for its iOS and macOS segment, a Senior Vice President operating in Hardware Business functioning for segment aimed for Mac, iPhone, iPad and iPod along with a Senior Vice President responsible for Hardware Technologies (Apple, 2019). Furthermore, reports of Myers and Fellow (2014) have revealed that chain of command in Apple’s organizational configuration relies on well-established management regulation in the organization. Organizational ladder supposedly authorizes top influential namely Tim Cook to strategically regulate operations in the business. Through the organizational ladder, business operations as well as product-based range has been efficiently controlling in the course of the judgments of the chief executive along with other senior executives. This lead of Apple’s
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10MANAGEMENT corporate organization primarily eases rapid as well as successful strategic supervision and aids in creating consistency right through the whole organization. Conclusion and Recommendation Hence to conclude, Apple could aim in amplifying their brand equity by intensifying their distribution systems into the lower end, cheaper product range. Thus, bygrowing into this new market the company can essentially raise its band width and further will be competent to enter into a new customer sector. Furthermore, Apple could develop its brand identity in less developed countries that have been currently unable to have the funds for Apple’s product at full price, by selling their outmoded products for a reduced price in these nations. These strategies would strategically facilitate Apple to remove existing supply and further at the same time inflate their market share.
11MANAGEMENT References Apple. (2019). Apple. Retrieved fromhttps://www.apple.com/ Audretsch,D.B.(2015).Everythinginitsplace:Entrepreneurshipandthestrategic management of cities, regions, and states. Oxford University Press. Audretsch,D.B.(2015).Everythinginitsplace:Entrepreneurshipandthestrategic management of cities, regions, and states. Oxford University Press. Bradley, S. P., Madnick, S., & Kim, C. (2016).Digital Business. Chicago Business Press. Denney, A. (2018). Apple plans to invest $1 billion in second campus in Northwest Austin, hire 5,000newemployees|CommunityImpactNewspaper.Retrievedfrom https://communityimpact.com/austin/northwest-austin/development-construction/ 2018/12/13/just-in-apple-plans-to-invest-1-billion-in-second-campus-in-north-austin- hire-5000-new-employees/ Froud, J., Johal, S., Leaver, A., & Williams, K. (2014). Financialization across the Pacific: Manufacturingcostratios,supplychainsandpower.CriticalPerspectiveson Accounting,25(1), 46-57. Kane, G. C., Palmer, D., Phillips, A. N., Kiron, D., & Buckley, N. (2015). Strategy, not technology, drives digital transformation.MIT Sloan Management Review and Deloitte University Press,14, 1-25. Khan, U. A., Alam, M. N., & Alam, S. (2015). A critical analysis of internal and external environmentofAppleInc.InternationalJournalofEconomics,Commerceand Management,3(6), 955-961. Lasserre, P. (2017).Global strategic management. Macmillan International Higher Education. Morschett, D., Schramm-Klein, H., & Zentes, J. (2015).Strategic international management(pp.
12MANAGEMENT 978-3658078836). Springer. Myers, C., & Fellow, K. (2014). Corporate Social Responsibility in the consumer electronics industry:AcasestudyofAppleInc.Resourcedocument.GeorgetownUniversity, EdmundA.WalshSchoolofForeignService.http://lwp.georgetown. edu/wp-content/uploads/Connor-Myers. pdf. Accessed,10. Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017).Strategic management and business policy. Pearson. Wheeler,S.C.,&Omair,A.(2016).Potentialgrowthareasforimplicittheories research.Journal of consumer psychology,26(1), 137-141.