Strategic Management of Apple

This report analyzes Apple Inc.'s strategic management, focusing on its corporate and business strategies. It examines Apple's competitive advantage through broad differentiation, its constrained diversification approach, and its commitment to CSR. The report also discusses recent failures and provides recommendations for future strategic direction.

STRATEGIC
MANAGEMENT

EXECUTIVE SUMMARY
Strategic management is concerned with the identification and description of the action
plans called as strategies for guiding a business unit to carry its affairs for reaching its objectives
and goals. The project report is about strategic management of Apple company, an American
Tech giant. The company is renowned for its highly differentiated products and services. The
company has maintained a status value attached to its offerings which helps it in selling the
products and services at relatively higher prices. The assignment is concerned with the corporate
strategy of Apple which is making a difference in people's lives. The company has focussed its
energy on expanding its business by creating on those products that could be developed by
utilising Apple's current core competencies and resources. This helps the company in yielding
high profits by cutting the cost of production and leveraging on economies of scale through
constrained diversification.

TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN ANALYSIS..........................................................................................................................4
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Strategic management is concerned with the planning of organizational goals and
objectives and formulating strategies for the business for achieving those goals and objectives.
These strategies are the detail plans laid out for guiding managers regarding how to conduct
business affairs that will the company in the attaining its long term objectives. Such strategies
help a firm in building a competitive advantage over its rivals when it makes more profits than
others in the market (Geng, 2018).
The present report is about strategic management of Apple Inc., an American
multinational technology company founded in 1976 and headquartered in Cupertino, California ,
United States. The study will highlight an analysis of company's business strategy, an evaluation
of organisation, finding out where the strategy went ineffective, what could be the recovery plan
for overcoming the deficiencies in the business plans.
MAIN ANALYSIS
Fundamental issues related to strategic management
Strategy can be defined as the long term direction and guidelines of an organisation.
These are required for achieving the goals of business in whole. There are various kinds of
strategies built for different level in organisation such as:
Corporate level strategy:
This is concerned with the overall scope of Apple that lays out the detail plan of how
value could be created to the business.
Business level strategy:
It is related to the action plans regarding how to compete in the market for remaining
stable and profitable (Kaya, 2015).
Operational level strategy:
This one is concerned with how the corporate and business level strategies are to be
executed within the organisation.
Origin of strategy:
A strategy is required for making one to stand out from the crowd. Apple incorporate
strategies in its functioning for facing the competition in the market and for making itself highly
different and unique from its rivals. The purpose of strategy formulation by the organisation is to
guide the organisation towards a path that takes it towards the success. It is done by creating a

competitive advantage. Apple through its excellent corporate strategies have become highly
different from its competitors and is now one of the most trusted, profitable and high value brand
of the world.
Approaches to strategic Management:
There are different approaches for setting a strategy for a business organisation. These are
mentioned below:
The industrial organisational approach: This approach is based on the economic
theory which is concerned with the issues such as rivalry in the market, resource allocation, size
of operations, scale of economies. This approach is based on the analysis of internal and external
environment of the organisation (Salajeghe, Mehdizadeh and Nazeri, 2017).
Sociological approach: This approach deals with the human factor of the company. The
strategies are formulated by considering human aspect is the prime considerations around which
operations are revolved around. A proper example of a company following this approach is
Google where the employees are kept as one of its prioritize aspect.
Apple uses a mixture of both the approaches where profit maximization along with
employee welfare is the utmost priority. It focusses on allocating its resources in a such a way
hat yield the maximum possible outcomes to the business (Galpin, 2018).
Another approaches of forming business strategy:
Internally driven approach: A company formulates a business strategy which is based
on its past. Like what it has done in the past, it will continue to do so in the future. The problem
with this approach is that it does not consider the dynamic changes of the business environment
outside the organisation.
Customer driven approach : This approach is concerned with setting strategies that
revolves only around the customers' aspect of the market rather than considering every aspect of
market such as competitors, suppliers, investors etc.
Market driven approach: The strategy is formed by taking the forces of market in
consideration. This approach is more viable and reliable than the above mentioned approach.
High performance companies like apple apply this approach for formulating its business strategy
for remaining competitive by serving as per the need of the target market (3 approaches to
business strategy, 2015).
The strategic management process consist of five stages which are:

 External analysis: Apple company conducts a detail assessment of macroeconomic
environment that have the potential of affecting its business operations significantly. It
also includes identifying the power of different forces of market that can influence the
bargaining power of Apple in the global market.
 Internal analysis: Then the organisation assesses its own capabilities, strengths and
weaknesses. The strength is its strong branding, leader in the global market, high liquidity
etc.
 Strategy formulation: In this stage, after assessing the business environment, Apple
moves ahead with forming the corporate and business strategy that is created by
considering all challenges. The company formulates such a strategy which provides it a
competitive advantage by matching its strengths and weaknesses with opportunities and
threat present in the business environment (Songsangyos, 2016.).
 Strategy execution : At this stage, the formulated strategy is implemented in the
organisation. Strategic control : The performance of the business is measured and corrective actions
are taken when the results deviates from the desired results.
Relationship between Apple and its business environment
Every organisation works in a business environment that is formed by internal and
external factors which affects the function of such organisation. Apple is no exception. The
assessment of the forces of the market determines its bargaining power and competitive
advantage in the target market.
For example, Porter's five forces model scans the external environment by which Apple
determines the power of the various forces present in the market. The model itself is a strategic
management tool that evaluates the different forces that affects the operations of Apple.
Following is the porter's five analysis of Apple:

Illustration 1: porter's five forces
(Source : Apple Inc. Five Forces Analysis ,2019)
Bargaining power of suppliers: The force of suppliers in the technology industry for
apple's product is weak. Almost every, supplier wishes to supply its products to one of the
biggest company in the world. This provides Apple a wide variety to choose its supplies/ parts of
its products from large number of suppliers.
For example, competition amongst suppliers such as computer processors is itself very
high that focuses on supplying the products at the most reasonable costs. This makes the
switching cost of Apple to shift from one supplier to another very low (Khan, Alam and Alam,
2015).
Bargaining power of customers : The customers in the technology and gadget industry
are very price sensitive and have high tendencies of switching from one organisation to another.
Thus, the force of this aspect of market is very high.
There are two points which needs to analysed under this head which are individual
bargaining power and collective bargaining power. Individual bargaining power is very weak
due to its global presence and loss of one customer would be negligible in company's revenues.
However, collective bargaining power is high because group of customers switching from Apple
to other firm say Samsung would cost the profitability of the company.

Apple tackles such high force through its continuous efforts and investment in R&D for
making its highly innovative. It always focuses on delivering the supreme quality products which
is one of the problem with other organisations in this industry.
Threat of new entry: The threat from the new firms is very high. More firms are
entering in this industry with highly innovative and creative products and services. This has
become a serious concern for the Apple.
For example, One Plus company has acquired the market share very rapidly in the south
eastern countries and its has adversely affected the sales of Apple in this geographic area. The
new firm introduced mobile gadgets which are more in everything from Apple's offering that too
on a very less prices as compared to Apple. This has made people to shift from Apple to One
Plus.
However, the new entrants have several challenges because they have to compete with
the already existing tech giants such as Amazon, Google, Samsung, etc. Creating a brand name
and recognition as high as of these companies is not an easy task for new entrants. The company
is dealing such situation by making its customers more brand loyal through its USP of status
being attached to its products. Most of the people buy Apple's products for satisfying their self
esteem.
Threat of Substitutes: There are direct substitutes that can replace Apple's products. For
example, phone calls can be made by using landlines instead of using iPhone, or Windows PC
can used for Mac book. But the utility of substitutes ar every less when compared the Apple
products and services. Thus, it can be said that force of substitute is very less.
Rival firms: Apple faces cut throat competition from Samsung Electronic, Google,
Hewlett Packard Company, Amazon Inc. The force of this rival firms in the industry is very
high. The company focuses on its adding new features every time it launches it products through
continuous R&D. The competitiveness in the market is very. But this competition drives the
company in making its products and services better from its rivals through continuous
development for strengthening its leading position in the global market.
From the above analysis, the attractiveness of the industry is known and the environment
in which Apple survives.
Porter Model of generic strategies

The model shows how Apple builds and manages its competitive advantage across its
target market scope. The model lays down various generic strategies which are; Low cost,
Differentiated and Focus. These strategies detail out the interaction between market focus
strategies, product differentiation strategies and cost minimization strategies. The purpose of this
model is to blend the strategies in a such a manner that helps in company's growth by being
competitive in market.
Apple's generic strategy has helped it in selling its products at relatively higher prices due
to its excellent innovation in the products and services. The company has adopted broad
differentiation strategy. The organisation aims to remain successful by being highly different
from its competitors. It makes huge investment in the R&D department for the continuous
development of new products with innovative features that could differentiate it from its rival
firms at the global level.
The organisation has managed to stand out from crowd in the market for the past ten
years successfully because of its broad differentiation strategy. For example, the firm offers
elegant product designs with user friendly gadgets. It always experiments with its designs such
as cutting edge features that differentiates its products from others in the market. So, in this way,
broad differentiation strategy helps the company in building and managing its leader position in
the world (Pulaj, Kume and Cipi, 2015).
Apple's intensive growth strategies are :
Product development : It focuses on widening its product range by offering variants of
existing products along with new products. By this way, it desires to capture larger market share
throughout the world.
Market Penetration : This is the second most aggressive growth strategy of Apple
where it focuses on enlarging its market share by selling its current products in the target market.
For example, this strategy is reflected in the selling of iPhones and iPads. It tries to do more sales
by selling its rights to sell the products to authorised dealers and promotes the same on various
websites and through advertisements in TV for reaching the masses across all the segments.
SWOT Analysis:
This analysis is conducted for assessing the strengths and weaknesses of the Apple and
for identifying the major opportunities and threats that could affect the business.
Strengths : Weaknesses :

 High brand recognition
 Excellent brand value.
 Human capital of more than 130000
employees.
 Wide range of products and services
 Strong global presence.
 Large base of loyal customers
 High profitability and liquidity.
 High selling prices
 Less distribution method
 Sales depends on up-class segment of
market.
Opportunities :
 Expansion of distribution system in the
emerging economies.
 Development of new products and
product lines.
 More innovative products and
services(Yadav and Kumar, 2015)
Threats :
 Stiff competition
 Major threat of imitation.
 Rising cost of good and labor in various
nations.
Apple can leverage on the gaps in the industry and on its strength and can makes its
brand more powerful than ever. However, it needs to work on its weaknesses for ruling the
possibility of rival firms of capturing its leading position in the market.
Apple's Corporate Strategy
The tech-giant is unbelievably successful in the mobile industry. Ever since, the launch of
iPhone in 2007, the company has continues to grow bigger and bigger. The popularity of the
brand is exceptional. iPhones and iPads are its two most saleable products that attracted windows
PC users and Nokia phone users to Mac-book and iPhones. This was due to its change in the
corporate strategy of venturing into other industries and widening its product range. The strategy
has proved successful so far and the company is focussing on growing by employing product
development as its core growth strategy (Rugman and Verbeke, 2017).
Company's most popular tag line that was promoted in 1997 was "Think Different". This
add referred to number of people who with crazy ideas changed the world. The advertisement

clearly showed its purpose which was to change the world better. Apple clearly wants to deliver
something to the customers that change their lives in some or the other way.
Apple has focussed on constrained diversification in which it enters into only those
ventures which are based on its core competencies and resources. For example, it used to make
only personal computer based on which it started producing other products such as Apple TV,
iPad, iPhones, Macintosh. This is because all these products runs on Apple's single operating
system OS X. The reason behind strategy is the economies of scale which helps in cost reduction
because same resources are used for creating variety of products. Similarly, Mac book and iMac
both are constructed with aluminium and glass. These are produced not only by consuming same
resources but provides a meaning to all the product lines of the organisation.
Apple's corporate strategy includes its responsibility towards the society (Planer-
Friedrich and Sahm, 2017). Following are the highlights of company CSR strategy:
 The company in its CSR statement has committed of protecting the environment by
controlling its industrial emissions, recycling of materials .
 It focuses on setting high standards of fair work and working conditions for its
employees.
 It focuses on empowering its employees. It works for women empowerment through health education (A supply chain that
empowers people and protects the planet, 2019).
Recent Failures of Apple:
Ping: iTunes Ping, an application attempted by the company in creating a social
networking which was music orientated with a recommendation system for searching new music
based on user's previous activity on app. This product was not successful and is considered as
major flop in the history of Apple. The reason identified was large number of scam accounts and
its lack of integration with Facebook and Twitter.
IOS 11 Glitches Galore (2017) : Apple's IOS 11 has many bugs that led to the downfall
of this offering of the company. The operating system has many problems and made the
functioning of gadgets very unpleasant for the users.
iPhone 8 & iPhone 8 plus : These products in the year 2017 have proved to the biggest
failure in the iPhones product line. The prices of the products were too high and no additional

and worthy features offered by the company which were different from its rivals. For example, it
introduced dual SIM phones which is provided by all of its rivals from so many years.
Conclusion:
The company has so far been very successful in its operations through its effective
corporate strategy and business strategy. The product differentiation generic strategy has helped
the company in making its brand highly recognisable at the global level. It has also assisted it in
building a competitive advantage. Its corporate strategy is effective as it has result in the cost
efficiency by utilising the same materials and competencies for producing new products. Its CSR
policy guides the company in conducting its business operations in the most ethical and
responsible manner.
Recommendations:
Apple can make changes in its corporate and business strategies for being the most
successful organisation of all time. It has to alter its strategies for meeting with the different and
complex situations in the business environment. The biggest problem which this industry faces
the habit of customers of wanting something new in quick intervals. Rapid changes in the
culture, economic power of people, customer's preferences are creating a challenge for the
company to cope up with every single demand of the target audience around the world.
The very first thing the company can modify is its generic strategy of broad
differentiation to cost leadership. The products of the company are relatively higher than its
competitors. This restricts the company in reaching masses. Most of the people around the world
cannot afford its products. The entity can either low down its prices or it can create a new
product line which are affordable by the average earning segment of the market. This would the
enterprise in enlarging its market share by a huge percent because of its high brand recognition
throughout the world (Planko and et.al., 2016).
Other recommendation is to adopt the corporate strategy that have linked diversification.
Through this way, it can enter into other business that are linked to one another in some or in
another way but not necessarily have any solid connection with its other business. Such
inclusions in the corporate strategy will help in optimum diversification of risk which would
ultimately help the company in mitigating or reducing its business failure.

The organisation needs to make products free of defects, bugs etc., for avoiding the
failure and negative controversy. More innovation is required in the recent times for giving hard
times to its competitors such as One Plus in the south-eastern Asian market.
CONCLUSION
From the above project reports, it can be summarised that strategic management helps in
the systematic planning of organisational goals and objectives and formulation of strategies for
achieving those set objectives and goals. The strategies are formed for the business organisation
for providing a direction to the company regarding how the activities are to be conducted for
attaining the success. The report showed that evaluation of strategic management of Apple Inc.,
from which it was concluded that the company has employed broad differentiation strategy for
building a competitive edge in the market where it aims to highly distinguishes itself from its
competitors through continuous improvement in its products and services. The corporate strategy
is based on the constrained diversification in which it enter only those business areas where the
existing resources and competencies can be optimally be utilised for capitalising economies of
scale and cost efficiency.

REFERENCES
Books and Journals
Andersen, T. J. and Andersson, U., 2017. Multinational Corporate Strategy-Making: Integrating
International Business and Strategic Management. In The Responsive Global
Organization: New Insights from Global Strategy and International Business .(pp. 13-34).
Emerald Publishing Limited.
Galpin, T. J., 2018. Making Corporate Strategy Work-Focused Corporate Parenting as a Core
Competence. Journal of Business Strategy.
Geng, G., 2018, May. STRATEGIC CHANGE MANGEMENT IN PUBLIC AND PRIVATE
SECTORS. In 2018 4th International Conference on Humanities and Social Science
Research (ICHSSR 2018). Atlantis Press.
Kaya, N., 2015. Corporate entrepreneurship, generic competitive strategies, and firm
performance in small and medium-sized enterprises. Procedia-Social and Behavioral
Sciences. 207. pp.662-668.
Khan, U. A., Alam, M. N. and Alam, S., 2015. A critical analysis of internal and external
environment of Apple Inc. International Journal of Economics, Commerce and
Management. 3(6). pp.955-961.
Planer-Friedrich, L. and Sahm, M., 2017. Strategic corporate social responsibility.
Planko, J and et.al., 2016. Strategic collective system building to commercialize sustainability
innovations. Journal of cleaner production. 112. pp.2328-2341.
Pulaj, E., Kume, V. and Cipi, A., 2015. The impact of generic competitive strategies on
organizational performance. The evidence from Albanian context. European Scientific
Journal, ESJ. 11(28).
Rugman, A. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.
Salajeghe, S., Mehdizadeh, S. and Nazeri, M., 2017. Journal of Industrial Strategic
Management. Journal of Industrial Strategic Management. 2(2). pp.89-96.
Songsangyos, S. I. P., 2016. Knowledge Management in Strategic Marketing. International
Journal of Applied Computer Technology and Information Systems. 4(1).
Yadav, T. and Kumar, S., 2015. Mangement Information Systems: Significant Tool for Strategic
& Discreet Planning. International Journal of Applied Research. 1(11). pp.685-688.
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