BMG 403 Group Report: Apple's Digital Transformation and Strategy

This group report, prepared by Michaella Mccollum, Danielle Sherry, Cristopher McAuley, Bethany Taggart, and Jack Davis, analyzes Apple's digital technology evolution, business processes, and ethical implications. The report examines how Apple has leveraged digital technology, including AI and big data, to respond to market changes and maintain its competitive edge. It covers both online and offline business processes, highlighting the company's use of the App Store, iCloud, and Apple Music. The report also addresses the social and ethical implications of Apple's decisions, particularly concerning supply chain management and worker conditions in factories. Furthermore, it identifies potential threats, such as increased tariffs with China, and opportunities, including virtual and augmented reality, for future growth. The report references key sources and provides an executive summary and table of contents. The report offers a comprehensive overview of Apple's strategies and challenges in the digital age.

Word count-2973
BMG 403: Assignment Two -Group Report
Michaella Mccollum-B00761213, Danielle Sherry-
B00806858 Cristopher McAuley – B00807888, Bethany
Taggart –B00790339, Jack Davis-B00821553

Table of Contents
Executive Summary...............................................................................................................................2
Introduction...........................................................................................................................................2
Online and Offline Business Processes..................................................................................................2
How Apple has used Digital Technology to Respond to Changes Overtime......................................3
Social and Ethical Implications of Apples Decisions...........................................................................4
Threats and Opportunities.................................................................................................................5
References.............................................................................................................................................8
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Executive Summary
Over the past thirty to forty years apple have continuously redeveloped their technology
and the industry leaving competitors struggling to keep up. With Apple seeming to always
be one step ahead of competitors it has allowed them to stay as the monopoly of the
market. They have been able to branch out with their use of digital technology to many
other products whether it’s been their apple music streaming services, new editions of the
iPhone, iPod and iMacs or even their wearable technologies the Apple watch and Air pods.
Constantly running software updates on all devices ensuring they are as update as any
competitors and keeping their high status in the industry. As discussed, there are huge
threats for apple in terms of the increased tariffs with China, they could have massive
effects on supply chain and future productions although CEO has dismissed these reports.
Although there are also future opportunities for Apple, with virtual reality becoming a huge
section of the market if they can release a product in this section their huge consumer
following could quite easily push them to the top of this field if the product is of similar
quality to there already very high-quality brand. Apple not only have the opportunity for
virtual reality but also with the addition of new wearable tech. With apple already leading
the wearable tech market their strong team of developers and researchers could have the
opportunity for augmented reality in the form of smart glasses with forecasts showing this is
a growing area of the market which is relatively untouched by Apple. These opportunities
could allow Apple for huge profit and market growths in the coming years as digital
technology continues to develop and grow.
Introduction
Apple Inc. is a multinational information technology firm headquartered in California, USA.
Consumer electronics, personal computers, and software are all produced by the
corporation. It is one of the world's largest IT corporations and is widely regarded as the
most successful start-up of all time. Steve Jobs, Steve Wozniak, and Ronald Wayne created
Apple in 1976.
Online and Offline Business Processes
The Apple I, their first personal computer, was released in July 1976. It was practically
nothing more than a motherboard (with CPU and RAM). For the past 35 years, Apple has
repeatedly transformed the way we think about technology and pulled the rest of the
industry kicking and screaming into the future. Steve Jobs, Apple's co-founder and CEO at
the time unveiled the iPhone to the world as a three-in-one product: "a widescreen iPod
with touch controls, a revolutionary mobile phone, and a game-changing internet
communications device." And for a while, that was all there was to it. The true change,
however, occurred a year later – nearly precisely 10 years ago today – when Apple opened
the App Store. Suddenly, the iPhone might function as a game console, an image editor, a
musical instrument, and a torch (Apple News+, 2022). These apps, along with mobile web
access, transformed everything from shopping and banking to purchasing train tickets,
booking flights, paying parking metres, and reading the news.
Apple is at the helm of it all, receiving a 30% share of all app income. Apple have a range of
online and offline services and products. The online and offline products and services that
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are best identified with Apple include the following: Mac computers, iPod portable digital
media players, Apple Music is the most complete music experience, now available in 167
countries and regions and offering over 60 million songs. Apple Podcasts is the best place
to browse and listen to the world’s largest catalogue of podcasts, now featuring over 1
million shows in more than 100 languages and 175 countries and regions.
iCloud is an essential service that keeps users’ personal content safe, up to date, and
available across all their Apple devices, allowing them to store a lifetime of photos, keep
important documents at their fingertips, and share and collaborate with ease. Apple also
offer the option to shop online or pop into one of their local stores for shopping or support.
Over the years, Apple has been extremely good at meeting its customer’s needs, wants and
demands by constantly releasing new improved premium products, providing their
customers with a great experience each time (Hyson, 2011).
Tim Cook, a supply chain expert, joined apple in 1998 to help reinvent, speed up and
simplify the Apple supply chain. It was the best decision for the company at the time,
because now the Apple supply chain is considered to be one of the most powerful, efficient
models ones in the world. Back in 2011, a comparison of how tech companies managed
their inventory shows Apple was performing much better than Dell, HP, Blackberry (RIM)
and Motorola. A recent Bloomberg report said AAPL is investing a record $10.5 billion in
new technology—from assembly robots to milling machines—in its supply chain. So, the
company hopes to improve sales that have been slowing due to competition.
Studies show Apple is doing something right There was a recent study by the US Congress
on the US-China trade deal (The Reasons Behind Apple’s Customer Loyalty and High NPS,
2022). Apple have improved life for the customers in many ways with the advancement of
technologies. For example, people can download podcast and listen to the offline. A lot of
apple serves function like this with leaves them with a lot of successful offline channels as
well as online. Comparing to when Apple first emerged and the quality of the products to
now is unbelievable. They have taken the customers into consideration in almost every
aspect. Look at apple pay for example, an offline channel which can be used to pay for good
or services anywhere in the world.
How Apple has used Digital Technology to Respond to Changes
Overtime
‘Technology is not static, it keeps changing or better say developing.’ Apple is a company
that knows this too well and continues to consistently adopt digital technology over time to
cater to the needs of their customers. Apple does have an in-store option to purchase their
products. However, their website is widely used by consumers to provide convenience. The
need for convenience also means Apple use other mobile phone providers such as EE and
O2 to market and sell their phones online.
Maslow’s Hierarchy discusses five needs consumers seek, the second being security and
safety. Apple has incorporated many safety features into their products due to this,
including face ID and fingerprint ID. However, two huge steps Apple has taken in recent
years regarding digital technology are Artificial Intelligence and Big Data. Some ways in
which it uses Artificial Intelligence are face ID, sleep tracking for the apple watch, suggesting
apps the specific user may need, the translation app and sound and handwriting recognition
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apps. The competitive dynamics theory (Smith, Ferrier and Ndofor) helps explain why a
company like Apple may introduce so much artificial intelligence. This theory emphasises
the need to be a ‘first mover’ to secure the top position amongst competitors. Other phone
companies such as Samsung are attempting to use Artificial Intelligence to compete in the
industry by introducing their own version of Siri and face ID. Therefore, to compete Apple
are continuing to expand their use of Artificial Intelligence in hopes their products will serve
all the needs of consumers.
Big Data was initially used by companies such as Google, Apple have also begun to use big
data in recent years. ‘It’s fair to say Apple have now entered the Big Data race with a strong
stride. Their powerful presence in the mobile market has put their devices in the hands of
millions and they have been keen to encourage development of apps that are based on
monitoring and sharing of user data.’ This was a move that Apple had to make to ensure
that Porter’s ‘Industry Competition’ force was less of a threat. Apple is in direct competition
with many other huge companies, specifically Google who were further ahead in the use of
big data. The switching cost for users is low and therefore using big data to ensure new
products and existing products are meeting consumer needs and bettering their life is
essential.
Apple has used digital technology in other ways too including the introduction of iCloud
storage in 2011 which allows customers to store photos, files, videos, text messages, emails,
etc. Fortunately for Apple the cloud not only pleases customers by allowing them easy
access to their personal information but also benefits Apple, in that the cloud is linked to big
data and the sharing of information with Apple. ‘Basically, the cloud helps you keep pace
with the demands of the market.’ Apple has also over time adapted to consumers' needs
regarding music. Starting with the introduction of the iPod in 2001, Apple have worked over
the years to introduce Apple Music which you can now stream from your phone rather than
needing a separate device. Again, facilitating the need for convenience.
However, consumer behavior is not the only reason for Apple to continue to use digital
technology to their advantage to expand into streaming, storage, big data and artificial
intelligence usage. Market forces such as expectations and speculation also encourage this.
For Apple to secure their prominent position in the technology industry they need further
and continuous investment from speculators. The only way to ensure investors are
interested in Apple is to use digital technology to create products that exceed expectations.
Social and Ethical Implications of Apples Decisions
Apple has been embroiled in issues related to the company’s ethical and social responsibilities.
Recent reports about inefficiencies and suppliers’ non-compliance with the ethics and social
responsibility code has raised a lot of public attention (Chen, 2013). Research highlights ethical
issues with Apple, these include environmental reporting, pollution and toxics, infringement
of human and workers’ rights, supply chain management, and irresponsible marketing.
Ongoing media reports over the reportedly repugnant working conditions in many factories
that produce Apples top product ‘iPhone’, have left the world thinking “is it ethical to own
an iPhone?”. The Foxconn Technology Factory where Apple produce majority of their
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merchandise have been world-wide criticized for their ethic violations and socially
irresponsible slave like working conditions, according to a New York Times report.
Workers were forced to work and live in overcrowded dormitories for wages ranging from
as little as $50 a month, this involved individuals from as young as 14. Apple has admitted to
employing school kids for up to 11 hours a day to make their hugely overpriced iPhone’s
(Richard, Nelson and Reid, 2020). There are many children working in hazardous industries
and working with dangerous equipment’s, risking accidents and injury (Basu and Van, 1998).
Within these factories there were multiple suicide attempts over the years, most recently
involving 150 workers threatening to jump off a roof in a suicide bid, due to a pay dispute.
A report by Students & Scholars against Corporate Misbehaviour found that publication of
suicide in Foxconn in 2010 by various media houses and blogs did not have any effect on
Apple’s revenue levels (Workers as Machines: Military Management in Foxconn, 2010).
The world is amid a transition from a computer culture to a robotic culture in which
technologies are increasingly occupying more intimate social spaces in our lives and minds
(Turkle,2007). Apple’s introduction of Siri, an artificial intelligent enabled assistant, is built
on large-scale machine learning algorithms that combine speech recognition and natural
language processing. Much of the data that Siri collects and uses is personal and possibly
sensitive information. There are many speculations that this can act as a violation of an
individual’s privacy and the security of their data.
Artificial intelligent assistants can record conversations and the user’s location all via the
smartphone, these devices can then easily be hacked remotely, resulting in breaches of
user’s privacy. Cyber security research has proved that “voice hacking” – using voice
commands to access a device without authorization is growing widely throughout the world,
Siri being one of the main routes for hackers.
Designer and developers should be transparent on privacy policies to inform all customers
how their information is collected, stored and most importantly protected. This enables a
sense of trust between the supplier and the consumer regarding the virtual assistant, this
will encourage customers to be more willing on sharing their information. It is the role of
Apple to ensure that Siri adheres with the ethical principles of Transparency, Justice and
fairness, Non-maleficence, Responsibility and Privacy.
However, despite the negative publicity Apple obtained, research proves Apple has made a
huge impact on the way people use smartphones to communicate, use the internet and
take digital images. The criticism has worked to the advantage of Apple since it has been able
to improve in their social responsibility. Apple states their goal is - “to put people first, by
empowering them with accessible technology, being a force for equity and opportunity,
creating an inclusive and diverse work environment, and respecting the human rights of
everyone whose lives we touch” (Apple, 2022).
Threats and Opportunities
One digital opportunity for apple would be the virtual reality section of their market. This
industry over the past few years has been growing massively and is showing no signs of
growth falling off. With the recent release of Meta by Facebook this is opening many
different opportunities for the new virtual world. Mark Zuckerberg Facebook CEO has many
plans for this new virtual reality, with everything that has happened over the past 2 years
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due to Covid-19 the world has already become a lot more digital. This new technology will
allow businesses to carry out full meetings across the world with all attendees in the
comfort in their own home and still getting that face-to-face encounter. The industry will
also allow for thousands of jobs within this new digital universe. As well as jobs this new
technology would allow apple to vastly improve training for staff and employees, the new
immersive training would totally engage staff and be much more beneficial. If Apple can get
involved in this area of the market, they could massively increase profits, the industry is
projected to grow from less than 5 billion to in 2021 to over 12 billion by 2024
(statista,2022). With apples' huge consumer base and this rapidly growing market this
would be a huge digital opportunity for them to get involved in with immense benefits.
From 2018 USA and China have engaged in a trade war increasing tariff prices. The tariff
rates have ranged from a 7.5% - 25% increase over the duration of the dispute. Throughout
2019 and 2020, various Apple products were on the US tariff list including the Apple watch,
Air pods, iPad, I- Mac and various others. However, Apple were narrowly granted a tariff
waiver request. Sparing them the financial impacts of the tariffs but not the continuing
uncertainty around trade policy between the two countries (A. Akins,2021). Following Joe
Bidens election, he stated he would develop a ‘Coherent Strategy’ on how to approach US
and Chinas trade negations. However, after the virtual meeting between Xi and Biden there
has been no significant developments (Morollo,M.K, 2021). The uncertainty of policies is a
huge threat to Apples future production and sales of products. In 2020 a report stated that
42% of Apple products were manufactured in China as other countries do not provide
China-like infrastructure, inexpensive skilled labor, and many other components (Verdict,
2021). Previously there has been speculation that apple was set to move a fifth of their
production to parts of Southern Asia including India and Vietnam. However, CEO Tim Cook
later dismissed reports and said, ‘’They are always looking to strengthen the supply chain’’
and that ‘’The vast majority of products are made everywhere’’. Apple should beware of the
uncertainty and plan for a major shift throughout the supply chain as the changing polices
between the two countries could affect Apple’s production and profitability in the future.
Due to Apples domination of the technology sector for years now. They provide top quality
and cutting-edge technology that offers a breakthrough in experience. They obtain a
staggering retention rate of 92% of consumers which creates new opportunities every year
(C. Miller, 2021). Smart wearable technology is an industry that Apple is currently leading
with a market share of 37.2% in 2021 (Statista,2022). Apple has led the market due to the
production of the Apple smartwatch and Air pods; these devices have enabled consumers
with the freedom to track your fitness goals and workouts, put your money where your
wrist is, and simply enjoy the sound you love. The global wearable technology market has a
shipment volume of 266.3 million units in 2020 and is projected to reach 776.23 million
units by 2026, registering a CAGR of 19.48% during the period of 2021-2026 (Businesswire,
2021). As Apples researchers, developers and product specialists are a team of highly
qualified professionals who are already leading the way in the industry. Apple have the
opportunity using their software and position in the market to provide consumers with an
augmented reality, which is an experience where designers enhance parts of user’s physical
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world with computer generated input, an example of an augmented reality would be smart
glasses. Smart glasses would be the best opportunity in the wearables market for Apple as
there is a sizeable target market, it has been forecasted that by 2025 there will be 14.39
million users of smart glasses daily in workforces across the USA in industries such as
security, maintenance, construction, engineering, and various others (Statista,2021). Smart
glasses are also desired by consumers outside of the working environment as smart glasses
would be a diverse technology that will enable users to complete everyday tasks such as
cooking, navigation, fitness routines and various others with ease. Smart glasses would keep
Apple on top in the wearables industry and strengthen their stronghold in the market as
competitors such as Google, Samsung, Xiaomi, and others are not keeping pace with Apple’s
innovation.
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References
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