Strategic Management Analysis of Apple Inc.

This report analyzes the strategic management of Apple Inc. and its product, place, price and promotion related objectives. It discusses the driving forces, value chain analysis, and recommendations for the company. Apple's brand strength, innovative products, strong supply chain, and premium pricing strategy are the sources of its cost and differentiation advantage in the industry. The report also covers the impact of environmental forces on the strategic planning of the organization.

Strategic management
Capstone

Executive Summary
Every organization has a set of goals and objectives and they prepare some strategies to
accomplish all the tasks in the most efficient way. This creation and implementation of
strategies is known as strategic management. In the below report, I have done an analysis on
the strategies of Apple Inc. It is an organization that has achieved so many goals and considered
as a very successful organization. Apple has created different strategies regarding its products,
marketing and management. It became successful in all the aspects for which the strategies
have been created. Apple is facing a very strong competition in the market and it is still on a
high rank. This report is all about the cost and differentiation advantage Apple has gained in the
industry by becoming a market leader. I have mentioned the strategic issues and challenges; it
has faced in the journey. It also includes the impact on environmental forces on the strategic
planning of an organization. This report can give a proper idea about the strategic planning and
all the aspects of strategic management.

Contents
Introduction.................................................................................................................................................4
About Apple Inc...........................................................................................................................................5
Product related Objectives-.....................................................................................................................5
Place related Objectives-.........................................................................................................................6
Price related Objectives-..........................................................................................................................6
Promotion related Objectives-................................................................................................................6
The basic sources of cost and differentiation advantage in the industry.....................................................7
1. Brand Strength.................................................................................................................................7
2. Innovative products.........................................................................................................................7
3. Strong Supply chain-........................................................................................................................8
4. Premium Pricing Strategy................................................................................................................8
Driving Forces-.............................................................................................................................................8
1. Industry growth rate........................................................................................................................9
2. Change in society.............................................................................................................................9
3. Technological change......................................................................................................................9
4. Increased Globalization...................................................................................................................9
5. A change in Cost and efficiency.......................................................................................................9
Apple Value Chain Analysis........................................................................................................................10
Apple Primary activities-........................................................................................................................11
Apple Operations...................................................................................................................................11
Apple Outbound Logistics......................................................................................................................12
Apple Marketing and Sales....................................................................................................................12
Apple Service.........................................................................................................................................13
VRIO Analysis.............................................................................................................................................13
Recommendations.....................................................................................................................................15
Conclusion.................................................................................................................................................15
References.................................................................................................................................................16

Introduction
Strategic management is known as the management of all the goals and objectives of the
organization by optimum utilization of the resources. It refers to a full-fledged procedure that
includes setting of the objectives, analysis of environmental internal forces, analysis of
organization’s external forces and evaluating the strategies by considering the feasibility
according to the organization. Strategic management gives an idea about the implementation
of the strategies in comparison to the competitors and recognizing all the opportunities that
helps in the growth of the organization. There are different aspects of strategic management
that defines how strategies has been created and implemented on an organization. It helps in
facing the competition in the market. Strategic management helps in human resource planning
and assists in internal as well as external communication practices. An organization can easily
achieve its targets by following a feasible and good strategic plan. This report is about an
organization named Apple Inc.

About Apple Inc.
Apple Inc. is a multinational company belongs to America. It involves in the design and
manufacturing of different consumer electronics and computer software related products. It is
basically famous for its three products I Phone, I Pod and Macintosh. Apple software uses Mac
OS X operating system and it has very creative software and browsers. There are more than 250
retail stores of Apple Inc. in nine countries. It has an online store too where they sell their
products online. It was established in 1976 in Cupertino, California by Steve Jobs, Steve
Wozniak and Ronald Wayne. It was earlier known as Apple computer INC. for 30 years but then
removed the word ‘Computer’ In the year 2007 as it has expanded the business by entering into
consumer electronics market. It has approximately 35000 employees and sales of US$32.48
billion. It provides unique product in the market that helps in creating a big reputation in the
consumer electronic industry. It has a very loyal consumer base that completely devoted to the
Apple products and the brand basically in United States. It has also been named by Fortune
magazine as the most admired company in United States and in the world also.
There are different objectives of Apple Inc. related to all the marketing mix as the four P’s are
the most important aspects for the success of the organization. All the objectives and strategies
have been created by considering marketing mix. Apple Inc. is considered as a leader in
Technology market as it is really good in marketing and branding of their products (Baines,
2011).
Product related Objectives-
 To create amazing products and create a new trend by introducing something exciting
and it can be done by having a great team that can help in the strong research and
development of great product. They do not take risk of failure in any case.
 Innovation of future technology is important as technology is a thing that needs to be
updated time to time. Consumer wants to buy products that are technologically
advanced. Apple studies the market conditions by doing an analysis about the
requirement of the consumers and then improves their products with the help of
customer’s feedback.

Place related Objectives-
 It has an objective of expanding its stores nationwide on a global level. They are
increasing their stores in different areas where there is a high demand of their
products.
 It is trying to get the product available on all the possible retail stores as well as
online (Lockamy, 2017).
Price related Objectives-
 It tries to maintain premium pricing in order to gain more market share. They
strategically price their products as per the base marker price by relying on the brand
and quality of the product to set off the price differential.
 It wants to increase the profit margin of the products. The competitors have
comparatively low prices of the products so Apple is focusing on cost management to
lower the cost and to maintain same prices of the products.
Promotion related Objectives-
 It is difficult to build a new brand and promotion activities are necessary to make the
brand famous. Apple has an objective to build hype for their upcoming products. It is an
innovative way of getting the customers anticipates the next release. Customers always
remain curious about the new features of Apple products. It use annual conferences and
some events to announce the information related to upcoming product. It automatically
increases the demand of the product.
 Expansion of the brand name is also one of the objectives of Apple Inc. It wants to
become a trend setter and deliver innovative products to fulfill the needs of the
customers.
Apple is one of the largest companies in United Sates that has a market cap of over $917 billion
as of June 27, 2018. Apple has a very good position in the stock market with an average volume
of approximately 29 million shares traded in a day (Sum, 2011). Many insiders own a large stake
in the company and there are some institutional investors that have a good position. Some big
shareholders are Tim Cook, Arthur Levinson, Bruce Sewell and Jeffrey Williams.

The Board of Directors of Apple has expanded the roles and responsibilities of its Independent
Nomination Committee in order to include Corporate Governance as the new Nominating
Committee. It has also expanded the role of the Audit committee according to the Sarbanes-
Oxley Act and proposed SEC and NASDAQ regulations. The two committees are handled by
independent directors and the staff includes many independent directors ("Enhancing innovation
through supply chain management", 2015).
The basic sources of cost and differentiation advantage in the industry
1. Brand Strength- Apple is one of the leading brands in all over the world. Brand is
important as it gives strength to the companies and helps in creating a greater market
visibility. Brand helps in gaining customer loyalty. The strong branding of Apple Inc. and
the interrelationship between its different products helps the customer to try all the
Apple products. Their products like I phone, I pad have same software and applications.
It is similar to operate all the Apple devices due to the same application structure.
Example, if a person buy I phone then he wants to try the wireless headphones and
again he wants to get the Apple watch.
2. Innovative products- Apple has gained reputation for the innovation of new
products by introducing latest technology and being a trend setter in the market. The
company uses graphical user interface and it was used first in its own computers. The
main feature of Apple Inc. is that it develops innovative products by sharing the same
operating system, same software as well as applications. It is an amazing technique that
gets changes in the device but without handing the basic front end. It basically helps in
minimizing the risk, cost related to product development and timescale. It helps in
facing the strong market competition. This feature of Apple helps in getting customer
loyalty and attracts more and more customers towards the brand.

3. Strong Supply chain- There is an involvement of suppliers, developers and business
partners that gives Apple, a competitive advantage. The company has its own
manufacturer for chip and controls. It has some specific standards of manufacturing that
is necessarily followed. It deals with the leading entertainment and music companies
that help to inbuilt media to its products. It owns a group of 6 million software
developers who are responsible for creating different applications for Apple products.
Apple has a full control over the whole production process that has been considered as
an advantage for the company (Steiner, 2014).
4. Premium Pricing Strategy- Apple has a strategy to set premium prices for their
products and give fewer discounts to wholesalers to maintain a constant price across
the whole market. Company has a target to provide best quality products that contain
unique features and apply high prices to maintain a basic level of profitability. The high
pricing strategy creates a benchmark for the other competitors.
Apple has a high competitive advantage as there are some features that make the company
different from the competitors.
 High Quality products
 Premium pricing
 Dedicated customer base
 Specialized services related to repair and expert advice
 Innovative products.
Driving Forces-
1. Industry growth rate- The industry has been slow from past some years as there is
less disposable income and people do not prefer to spend a high amount on such goods.
Consumer waits for so many upgrades before buying a product.

2. Change in society- There are different preferences of different people in the society.
Young people come to know about the brand Apple while the elder generation is still
depends on the old brands.
3. Technological change- Every company is adopting new and innovative technology
in order to upgrade the product. Companies are spending millions of dollar for the
technological advancement. So, consumers also desire to buy the latest technology
product.
4. Increased Globalization- Globalization has been increasing and many companies
are targeting to grab a higher market share (David, 2016).
5. A change in Cost and efficiency- It has been observed that product life cycle has
become shorter and the more focus has been shifted to the innovative techniques.
Apple has a different operating system that leads to addition selling and administrative
cost. Every time Apple has to justify the consumers the reasons of high prices of the
products.
(“Apple Inc. Strategies”, 2018)

Apple Value Chain Analysis
Value Chain analysis of Apple refers to an analytical framework that helps in identification of
business activities that are responsible to create value ad competitive advantage to the
business. Below diagram shows the value chain analysis of Apple Inc.
(“Apple Value Chain Analysis”, 2018)
Apple Primary activities-
 Apple Inbound logistics- There are hundreds of suppliers that are tied up with Apple
around the globe and they try to maintain a very sophisticated supply- chain
management. Its CEO Tim Cook is responsible of creating all the strategies for getting
supplier to come in a competition with each other and reduced the number of suppliers
due to the same. Apple inbound logistics has some sources of value that are related to
economies of scale for operations related to business. It leads to strategic relation with
the supplier. Apple has a very good bargaining power as it deals with the supplier in an

effective way. Because of this, Apple was able to get the cost advantage for purchasing
the resources.
Apple Operations
All the operations of Apple are divided into some operation segments-
1. Americas: North and South America
2. Europe: European countries, India, Middle East and Africa.
3. Greater China: China, Hong Kong and Taiwan
4. Japan
5. Rest of Asian Pacific: Australia and other Asian countries
There are approximately 1, 30,000 employees who are working with Apple. Apple outsources
its manufacturing operations to get lower cost of resources is the major source of value for the
operations of Apple. Only a specific model of Mac computers are manufactured in USA and
Ireland and the remaining product are outsources to different manufacturing unit present in
Asia (Grant, 2013).
Apple Outbound Logistics
There are different activities related to warehousing and distribution of I phones, I pads, Mac
computers and other different products of the company. They all are a part of outbound
logistics. E- Commerce is helping to earn more profits as company has a high source of value in
relation to inbound logistics because E- commerce has been considered as the most cost
effective technique of sale in comparison to sales through Apple retail stores.
After doing so many efforts to achieve a higher position in the market, Apple has become the
third largest retailer in US in terms of e- commerce business. Apple has a record of sale of USD
12 billion through e- commerce that is 5.1% of company’s totals sales. There is a high market
penetration in the Asia’s and China’s market from outbound logistics point of view. The reason

behind this is selling the products in a particular market do not involves a high logistics
expenses and it gives customers a cost advantage by availing offers (Roosa, 2016).
Apple Marketing and Sales
Apple sells the products with the help of these seven channels-
1. Apple retail stores
2. Apple online store
3. Direct sales force
4. Third-party cellular network carriers
5. Wholesalers
6. Retailers
7. Value-added resellers
The company’s recorded sales for domestic as well as international market was accounted for 37%
and 63% respectively. In the same time period, the company’s sale through direct and indirect
distribution channel was 28% and 72% respectively. Apple has been increasing concentration on
the sales and Tim Cook has announced a further increase in the sales.
Apple Service
Apple values its customers very much and they provide quality services to them during pre-
purchase, at the time of purchase and after the purchase. Apple Inc. has its service center at
different locations where anyone can reach for any issue related to Apple product. The service
people of Apple are fully trained and very polite in communication. Apple also offers the
exchange of phone to an upgraded model by paying an additional amount.

VRIO Analysis
VRIO framework is basically used to evaluate the competencies of an organization by
completing an analysis of its value, rareness, imitability and organization.
Value
Apple is launching a new Apple phone in some time period and the target of the device is to
provide the clear communication capability as well as data storage, internet access as well as
computer dissemination tactics. They focused on the product’s speed and easy to use to that it
can be considered as a very user friendly device. Apple has combined different features in a
single device like music feature of I pod. Apple is considered as a user friendly portable device
that helps in assessing different features without hassles (Pulido Polo, 2018).
Rareness
There are different companies that are in mobile phone market but the other mobile phones
are cheaper in comparison to the Apple phones. Apple has maintained the quality of product, it
is offering to the consumers. Their products are absolutely considered as a symbol of luxury
within young generation that makes the product more worthy. A malfunction in Apple devices
has come in the year 2008 that was regarding the chip that used to manage the devices. It has
influenced the reputation of the company and they started losing their market shares. But
somehow, Apple started advertises about their products more and again increased the sales of
their product. Apple is known for the advanced features and quality services it provides to the
customers that makes Apple different from other competitors.
Imitability
There are a lot of competitors of Apple in the mobile phone market that provides features
similarly like Apple. Samsung is the biggest competitor of Apple as it launches the similar
features in Samsung mobile phones. There is a tough competition between the two companies
as the limitations of both of them are same like multimedia capabilities in video recording

option, camera is more good, touch screen feature without the presence of Home button.
Competitors are trying to copy the design of Apple phones and increase the sales by
introducing similar features like people. People who cannot afford Apple phones are always up
to the purchase of such phones. But still, the loyal customer base always goes for the Apple
products by spending more (Schetter, 2017).
Organization
Apple has created a very good rand name by providing innovative as well as technologically
advanced features to its customers. Apple mobile phones are known as its long lasting battery,
easy user interface, and camera quality and trouble free hardware. Although it has done
something wrong that resulted in exploitation of the brand name but Apple has started
maintaining their products of the best quality. Apple has started asking feedbacks to the
customers and applies their needs in the production of a new product.

Recommendations
Apple is known for the quality product like I phone, I pad, and Mac Book and I pod. It is doing
good as it has a loyal customer base across the globe but there is some recommendation that
helps Apple in increasing its sales. Apple should start implementing hybrid strategy as it has
integration with the cost leadership strategy and differentiation strategy. It helps in promoting
economies of scale and decrease the cost in order to earn high profits. It can help in develop a
philosophy of ‘Think Differently’, creating innovation in the products, management, marketing
and services as these are the major things for the implementation of differentiation strategy.
Apple should continue in the ‘Switchers’ campaign as it helps in creating customer focused
strategies that help in understanding the needs and the requirement of the customers. It has to
adopt an aggressive advertisement strategy that can shift the users from Microsoft to the Apple
by the expansion of market shares. Apple should not stick to consumer electronic market only
as there should be some expansion strategies in other areas too. Apple should focus on creating
a healthy relationship with the governmental and educational organizations that can constitute
a main source of profits in market. The major market segment for apple are schools that is
considered as a low budget and limited growth sector but it can help the organization to earn a
good amount of profit.

Conclusion
Apple is one of the big organizations of the world and it is doing a good job by creating
consumer satisfaction. It is famous for providing quality products to the customers that can
satisfy their needs. It always focuses on innovative methods and new technologies to make the
product more perfect and user friendly. Apple should start explore new segments of the market
with the same product or some other products as Apple products are quite high in price and
they are not affordable for each class of consumers. Apple should concentrate on the cost
management in order to earn higher profits. There are many competitors in the market and
sometimes it becomes difficult to compete with them so Apple should always make their
customers happy so they can be loyal to the brand.

References
Apple Inc. Strategies. (2018). Retrieved from
https://www.slideshare.net/mahiadel94/apple-inc
strategic-case-analysis
Apple Value Chain. (2018). Retrieved from
https://research-methodology.net/apple-value-chain
analysis/
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