Business Strategy of Apple Inc.: A Comprehensive Analysis

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Busines
s
Strateg
y
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Table of Contents
Introduction:..........................................................................................................................................3
Part A.....................................................................................................................................................4
1. Complete an internal and external analysis that provides a basis for strategic planning..............4
2. An analysis of the organisation’s capabilities.................................................................................7
3. Analysis of the competitive environment using Porter’s Five Forces Model.................................9
Part B...................................................................................................................................................10
1. Evaluation of the different types of strategic directions available to the organisation...............10
2. Justify and recommend the most appropriate growth platform and strategies..........................12
3. Produce a strategic management plan with strategies, objectives and tactics............................13
Conclusion:..........................................................................................................................................15
References:..........................................................................................................................................16
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Introduction
Business strategy refers to the identification and the implementation of the various
strategic processes by the business organisation so as to achieve organisational
goals and objectives and to remain competitive in the global market. The following
assignment is based on the business strategies of Apple Inc., which is one of the
major USA based multinational companies of the world that offers electronic and
computing products and services. Apple is also known for its unique and own
operating software iOS. The company is the leading technology company of US and
is successfully operating in more than 14 countries worldwide. The company
operates more than 425 retail stores across the globe at present. The corporate
strategies followed by the Apple and the various future strategies that can be
followed by the company will be discussed in the following assignment.
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Part A
1. Complete an internal and external analysis that provides a basis for
strategic planning.
The vision, mission and objectives of Apple are given below:
Vision: The vision of Apple includes providing best and excellent computing
experience to students and professionals through its innovative hardware and
software services.
Mission: The mission of Apple includes providing high quality and innovative
products and services to its customers worldwide and to become the global leader.
Objectives: The main objectives of Apple include market expansion and increased
customer base so as to increase growth, sales and profitability (Pratap, 2016).
The external environment analysis of an organisation helps it in the proper analysis
of its capabilities so as to meet the various current as well as future organisational
needs.
PESTLE Analysis:
Political Factors: The political factors do affect the business operations of Apple.
The various rules and regulations affects the trade operations of Apple Inc. The
political situations at US supports the business operations of Apple Inc. and do not
hinder its progress as Apple has already successfully established itself in the US
market as a leader in its industry. The various rules and regulations of US
government supports Apple’s operations and are favourable for its business.
Economic Factors: The economic situations of the country impacts the business
operations of Apple Inc. The various economic factors includes inflation rates, rate of
interest, currency exchange rates etc. The economic conditions of US favours the
growth of the company as US is a developed nation and hence US favours the
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growth and success of Apple Inc. The favourable inflation rate and stable GDP of US
supports the Apple’s business operations (Lombardo, 2017).
Social Factors: The various social factors such as disposable income of people of
country, market trends, preferences of customers as well as choice of consumers
also affects the business operations of Apple Inc. US is a highly developed nation
and the living standard as well as the disposable income of its people is high.
Therefore, the purchasing power of consumers is also high in US which results in the
increased sales of products of Apple in US and hence increased profitability for the
company (Lombardo, 2017).
Technological Factors: The changes in technology takes place overnight and this
impacts the businesses as well. Apple has been known as a leader of innovation in
the market and therefore there is a high pressure on Apple to keep itself updated
with the recent technological advancements in order to retain its reputation and
image in the market. Apple continuously updates its processes so as to remain
updated.
Environmental Factors: Environmental factors are yet another important part of
business environment that affects the business operations of Apple Inc. The various
environmental factors includes rules related to environmental protection, pollution,
carbon emission etc. The environmental rules and regulations are strict in US. Apple
considers the various rules and regulations in relation with the environmental
protection and reducing pollution due to emission from its industrial processes.
Legal Factors: The various employment laws, labour laws as well as other legal
factors prevailing in US supports the business operations of Apple and favours its
growth. The various legal policies framed by US’s government supports the
technological innovations made by Apple Inc. and hence supports the company in its
expansion (Pratap, 2017).
SWOT Analysis:
Strengths:
 Excellent marketing capabilities: The Apple Inc. has been awarded for its
marketing excellence in the year 2012. The company mainly focuses on the
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wants of the customers and presents its products in the manner which appeals its
customers in the most perfect manner.
 Strong network of distribution: Apple has been capable of maintaining a strong
hold in the US market and the distribution network of the company in USA is quite
strong and large.
 Strong Brand Image: Apple has been successfully established itself as the
biggest brand in the whole world by continuously innovating new products and
services of high quality for its customers. It has been included on the top in the
list of best branded companies of the world (Jurevicius, 2018).
Weaknesses:
 Not compatible with other OS: The biggest weakness of the Apple is the
incompatibility of its products with other operating systems. The products of
Apple such as iPhones and iPads are compatible only with its own OS i.e. iOS. It
limits the scope for the usage of its products.
 High Price: Apple is one of the leading mobile brands and provide its customers
with products of only high and supreme quality. Hence the price of the products
of the company is high as compared to other brands and therefore its products
are only affordable by high class people (Bhasin, 2018).
Opportunities:
 The biggest opportunity for Apple Inc. is the increasing demand for smartphones
and tablets in the markets. The scope for the products of Apple is huge in Asian
markets where demand is high with little or no compromise on quality of products.
 The physical appeal as well its quality as compared to similar brands provides
ample opportunities of growth and expansion in American and European
markets.
 Apple has a huge opportunity of getting a competitive advantage by its innovation
of iCloud technology (Smithson, 2018).
Threats:
 The major threat to Apple Inc. is its competitors like Samsung and Nokia which
provides products and services at much cheaper prices.
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 The changes taking place in technology poses threat to Apple as the
innovativeness and creativity of Apple is in threat (Smithson, 2018).
2. An analysis of the organisation’s capabilities.
In order to analyse the internal capabilities of the Apple Inc., we will use the BCG
Matrix. The BCG matrix will help us in gaining an insight into the future growth
prospects as well as the market share for the different products and services of
Apple Inc (Hartman, 2018). The four areas of BCG matrix in relation with Apple Inc.
are explained as below:
(Source: https://strategicplanning13.weebly.com/bcg-matrix.html)
Cash Cows: The products and services of the organisation that have been in market
for the longer period of time but their growth rate remains slow and the market share
of the same is relatively high are referred to as Cash Cows. The Apple Mac Laptops
belongs to Cash Cows category as their market share is high due to its brand value
(Adamkasi, 2016).
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Stars: Stars refer to those units of the business organisation whose growth rate as
well as the market share and value is high. Therefore an organisation always
considers it beneficial to invest in those products and services. For Apple, its
products like iPhones and iPods belongs to the category of Stars as their growth rate
and market share both are high.
Question Mark: Question Mark comprises of those units of the business
organisation whose growth rate is high but their market share is not that high. Among
the products and services offered by Apple, Apple TV belongs to the category of
Question Mark as this product has not been as successful on the global platform as
there are various issues associated with it.
Dogs: Those business units which neither have a high growth rate nor have a high
market share and value are categorised under Dogs. Therefore it is not feasible for
the organisation to invest in these products and services. Among Apple’s products,
iPod belongs to this category as their demand has been low due to their lost appeal
and technological advancements (Adamkasi, 2016).
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3. Analysis of the competitive environment using Porter’s Five Forces Model.
The various forces according to the Porter’s Five Forces Model which can have an
impact the competitiveness as well as the profitability of Apple Inc. are described
below:
Bargaining Power of Suppliers: The bargaining power of suppliers for Apple Inc. is
limited as their supplier chain has been efficient and large at the same time A large
number of suppliers makes the switching cost relatively lower for the company and
therefore they enjoy a strong brand position against their suppliers.
Bargaining Power of Customers: The bargaining power of customers for Apple
Inc. is low as well as moderate at the same time. It is low for the individual customers
but for the group of customers, it is considerably moderate or high. As for example:
the high sales of iPhones has a low bargaining power of customers but due to
competition from similar brands like Lenovo, the bargaining power of customers for
its products like PC or Laptops is high (Maverick, 2018).
Threat of new entrants: The threat for new entrants is low for Apple Inc. Apple
holds a strong brand position as well as brand image in the market which is not
possible for any new competitor to achieve overnight. Also, the cost involved in
establishing a technological company requires for huge capital which is not easy.
Threat of Substitutes: The threat of substitutes have become moderate for Apple
Inc. as more and more competitors have started introducing the similar products and
services in the market that poses a threat to Apple’s high cost products in future.
Competitive Rivalry: The competitive rivalry for Apple Inc. is considered to be high.
The major threat comes from the competitors like Samsung, Google, Microsoft,
Lenovo etc. There is a close competition between all these brands in the market.
Lenovo and HP pose threat to its products like laptops, while Microsoft is the
competitor of Apple in OS (Ferguson, 2017).
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Part B
1. Evaluation of the different types of strategic directions available to the
organisation.
The various types of strategic directions and the strategies that can be adopted by
Apple Inc. are described as follows:
Limited Growth Strategies: These strategies can be better understood with the
help of the Ansoff Matrix. According to Ansoff Matrix, a business can grow in its
present market or new market with the help of its existing products or new products.
 Market Penetration: Market Penetration refers to the strategy adopted by the
business organisation to sell its existing products and services in the present
market. The Apple Inc. have adopted the market penetration strategy for the sale
of its iPhones by continuously updating its features as well as models.
 Market Development: Market Development refers to the strategy where the
existing products of the business organisation are sold in new markets. Apple
needs to adopt market development strategy by targeting new age group of
people by adding more features to its existing products and services suitable for
new age groups as at present it only targets customers aged between 15-35
years of age (Mind Tools, 2018).
 Product Development: Product Development refers to the strategy where the
business organisation sells new products in the existing markets. Apple Inc. can
incorporate this strategy by innovating new products and services based on 4G
and cloud computing compatible with all the devices in accordance with the
demands.
 Diversification: Diversification refers to the strategy where the business
organisation sells new products and that too in the totally new market and
therefore the risk involved is relatively high. Apple Inc. can adopt this strategy in
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order to launch its new products at relative low prices in the new markets of Asian
Countries.
Substantive Growth Strategies: Substantive growth strategies are those strategies
that can be adopted by Apple Inc. in order to get huge outputs resulting in increased
profits for the organisation.
 Horizontal Integration: Horizontal Integration is the strategy that can be adopted
by Apple by acquiring or merging with similar functional organisation in order to
increase market share and profits. Horizontal integration has been adopted by
Apple in the past in order to produce its products at cheaper rates by using the
labour of other countries (Dunne, et. al., 2013).
 Vertical Integration: Vertical Integration is classified under two categories i.e.
backward and forward integration. When a business organisation starts to
exercise control on its supply chain so as to minimise costs of its products, it is
called backward integration. Products costs less if the production has been
carried out on its own. Apple has been successfully using vertical integration by
using its own operating system and the mobile applications like Apple Store, iOS,
iCloud etc (Hill, et. al., 2014).
Unrelated Diversification: Unrelated diversification is the strategy that can be used
by the business organisation in order to establish itself in a completely different
market of different industry. Since yet, Apple has not used this strategy and have not
expanded its business operations in new areas other than electronic and computing
devices.
Retrenchment Strategies: Retrenchment strategies refer to those strategies that
are adopted by the business organisations in order to sell those units of the business
which are not resulting in profits for the business. Apple can adopt retrenchment
strategy in order to stop investing on those products and services which are not
profitable for the company and investing more in products which are in high demand.
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2. Justify and recommend the most appropriate growth platform and
strategies.
Future strategy of Apple: The most appropriate and suitable growth strategy for
Apple in future in order to expand its business operations in Asian countries is the
diversification strategy (Rothaermel, 2013).
Diversification Strategy for Apple: Diversification strategy can be adopted by
Apple by producing and introducing cheap iPhones and other products with
comparatively less quality in the developing nations like India where the demand for
its products are very high and the purchasing power is relatively low. Introducing
products at cheaper rates will increase its sales and market share in these nations.
The justification for the same is provided as follows:
Suitability: Diversification can be adopted successfully by Apple by making sure
that the company can compromise on its quality for few products and services so as
to launch them at lower prices in the Asian countries as it has been observed that
price in Asian markets is given preference over quality. These nations are still
developing and therefore the income and standard of living of people is low.
However, the products of Apple are affordable by high class segments of market but
in order to attract the whole market and all segments of people, Apple need to lower
its prices by compromising on quality for few products (Johnson, et. al., 2014).
Feasibility: In order to make it feasible, Apple needs to ensure that there are more
service centres as well as data centres in these Asian countries so that the
maximum number of customers can be reached. In order to expand successfully, the
company needs to make sure that there are more service centres.
Acceptability: Apple holds a strong reputation and brand image in the market.
However, still majority of population in Asian countries is not aware of its image and
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