Strategy Audit Report for Apple Inc

Strategy Audit Report

Executive summery
In the current different strategic issues have been defied based on the previous business
internal and external analysis. those issues are Smart phone market saturation, Over
dependency on iphone market, low Market penetration, Barrier for disruptive or radical
innovation, Beyond iphone improbable growth, Service business lack the scale and volume of
business, Apple losing its talent base. Considering these issues some solutions has been
developed and those are managing the current vision of the company, repositioning the
business in the market, finding the next big thing to invest and continue its radical innovation
culture. These strategic changes are possible misalignment with respect to current product
portfolio, Structure, current Value chain activity, Performance measure and current
organisational culture and behaviour. But those strategic changes would bring diversified of
product and service portfolio along business diversification, growth in revenue and
profitability, reduction is business risk, opening of new source of revenue, developing better
competitive advantage, faster delivery of new innovations.

Table of Contents
Executive summery....................................................................................................................2
Strategic issue and recommendations........................................................................................4
Strategic issue.........................................................................................................................4
Recommendations................................................................................................................11
Risk and benefit....................................................................................................................13
Key measurement.................................................................................................................15
Action...................................................................................................................................16
Reference..................................................................................................................................18
Appendices...............................................................................................................................24

Strategic issue and recommendations
The extensive analysis of the business external environment, business internal environment,
business positioning, strategic scorecard analysis is done in the appendices section of this
report. That analysis has provided some important insight to the current report. From those
insights some important issue for the Apple Inc is identified in this current report (Ghemawat
et al., 2010). Those issues are analysed in details in the following section of this report to
provide some important recommendations for the company. Later part of this report would
try to identify the risk-benefit aspect of the new strategy, key approach of measurement of
those strategies and the action plan of those strategies.
Strategic issue
The strategic issues for Apple are as follows.
 Smart phone market saturation
 Over dependency on iphone market
 Low Market penetration
 Barrier for disruptive or radical innovation
 Beyond iphone improbable growth
 Service business lack the scale and volume of business
 Apple losing its talent base
These strategic issues of Apple Inc are identified from the earlier market environment and
business analysis provided in the appendices section. A details analysis of these issues is
provided below to understand the possible way out for these issues.
Smart phone market saturation
The market of the smart phone is now saturated state. The customers are no longer having
any excitement from the new release of iphone. The improvement and the increment in the
technological innovation are gradual and slow. There is no marked different in the new
releases of the smart phones. The growth in the global smart phone sale indicates the
saturated growth figure from the 2015 onwards though future project is looking to be
somewhat better (statista, 2018).

[Source: statista, 2018]
The trend is flowing for the sale of the Apple products. The price of the products over the
year has been increased by Apple to address the financial or the profitability question of the
business (Verbeke, 2013). Better margin and better profit level were able to satisfy the
shareholders but the unit sale of the product has seen a year on year basis drop from the 2012
onward as shown in the figure below (Sherman, 2018). This is a strong strategic problem for
the business as the high days of customer enthusiasm are not visible in the market.

[Source Sherman, 2018]
Over dependency on iphone market and growing beyond iphone
The figure above shows that Apple has higher dependency on the iphone market. Apple
before the iphone and after its high popularity has tried to introduce several products into the
market for example ipod or iwatch. But none of those product has been able to deliver the
result that iphone have provided to apple. Therefore the lack of diversity in the product
portfolio is going to be huge strategic problem for the business as the smart phone market
losing its shine (White & Bruton, 2010).
Another important thing is that the technology curve. The current top product line especially
the PC and iphone products have probably reached the mature technology level in their
technology growth curve (White & Bruton, 2010). Therefore deriving further value from this
product portfolio may not be an appropriate strategic move for the company; rather here
Apple must invest the potential section in the technology market strategically. On the other
hand iphone is the largest revenue generator for the Apple, as of 2018’s 3rd quarter Apple is
having close to 57% of its revenue from this source (statista, 2018). Therefore under this

context of slowdown in innovation and dependency on this product, Apple has to think
beyond iphone.
[Source: macro-ops, 2018]
Low Market penetration
The command over the market is going to be another strategic issue for the Apple. Apple
products are high differentiation focused strategy based products. Because of this reason the
products are high premium priced (Ghemawat et al., 2010). This aspect makes Apple the
most profitable business internationally but the lack of market penetration is the main cause
of concern for the business. The first figure below that Samsung has the large market share
whereas Apple and Huawai is trailing being. In recent time Huawai has occupied the second
spot in the market by moving Apple from that space (Choudhury, 2018). But the market
penetration of iphone can be understood from the market share of the smart phone operating
system (OS) market share. The next figure of OS market share shows that more than 85% of
the OS market share in the world is under Android whereas iOS just hold around 15% market
share (Richter, 2017). Therefore in the overall market of smart phone in the world iphone has

limited market presence. Under the slowing down of smart phone market this low market
penetration would be an important problem for the organisation strategically.
[Source: gs.statcounter, 2018]