Apple Incorporation Strategic Management Report

This report analyzes the strategic management of Apple Inc., focusing on its current strategies, Porter’s Value Chain activities, and recommendations for future growth. It highlights the company's competitive advantages, challenges in emerging markets, and the importance of innovation and CSR initiatives. The report concludes with a call for Apple to develop new products for emerging markets and enhance its brand image through strategic initiatives.

Running head: APPLE INCORPORATION-STRATEGIC MANAGEMENT
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Contents
1.Introduction...................................................................................................................................1
2. Background Information of Apple Inc........................................................................................1
3. Identification and Evaluation of Suitability of the organization’s Current Strategy...................2
4. Evaluation of implementation of strategy....................................................................................5
5. Key Issues and Recommendation................................................................................................6
6. Conclusions..................................................................................................................................6
Reference Lists................................................................................................................................7

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Executive Summary
The report is about the strategic management of global technological organization Apple Inc.
The report analyzes the Porter’s Value Chain activities of the Apple Incorporation and Porter’s
generic strategies of the Company are analyzed. The report is written to analyze the current
strategies of the Apple Incorporation and to contemplate on the suitability of the strategies of the
organization. The key findings in the current strategy of Apple Incorporation are that the
organization uses focused differentiation strategy to cater to the needs of niche segment of the
society, product differentiation and premium pricing is adopted by Apple Incorporation. The key
findings in the implementation section are that Apple Incorporation achieves cost advantage by
outsourcing manufacturing facilities in low cost Asian market and adopts supportive culture of
visionary leadership and make leverage of its R & D team to achieve vertical integration.
Recommendation is to develop new products for emerging markets and the organization should
focus on CSR activities in emerging markets.

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1. Introduction
Strategic management is of paramount importance for an organization because when
strategies are well-formulated by an organization, it can benefit the organization in several ways.
The strategies formulated by an organization should be aligned with the components of the
mission and long term vision statement of the organization (Hill, Jones & Schilling, 2014). The
future can be taken into account and strategies are formulated after analyzing the micro and
macro environment of the organization. A proactive approach is adopted by the organization
while formulating strategies which enables a business organization to leverage the opportunities
of the external environment by utilizing its inner strength or core competence and to mitigate the
threats of macro environment by focusing on strengths and minimizing the weakness of the
organization (Griffin, 2013). The purpose of the report is to analyze the current strategies of the
Apple Incorporation by analyzing its value chain activities and its long term vision statement.
The problem or issue that is addressed is that few strategies of Apple Inc are not suitable. The
scope of the report is to analyze the Porter’s Value Chain Activities of Apple Inc, Porter’s
Generic strategy, future strategies are suggested and implementation of the future strategies for
Apple Incorporation is analyzed. Recommendations are provided to address issues of strategies
of Apple Incorporation (Eden & Ackermann, 2013).
Discussions
2. Background Information of Apple Inc
Apple Incorporation is an American Multinational Technological Company which is
headquartered in California, Silicon Valley. iMac, iPod and iPhone are the main products of

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Apple Incorporation( Anzures & Sabatelli, 2014). The organization was founded in the year
1976 and since then the organization has focused on innovation and creativity. The first personal
computer was produced by Apple Inc and Apple Inc has shifted its focus from manufacturing
computers to manufacturing and selling consumer electronics goods like Apple watches and
iphones (Han & Park, 2010).
The core of the business strategy of Apple Inc is the core competency of the organization
to design its own operating system, software and hardware application, the innovative product
design of the Company delight customers of the organization year after year. Apple
Incorporation has a huge customer base because of the organization’s user friendly operating
system which attracts customers and they are willing to pay premium price to own products of
the Company (Kane, 2014).
3. Identification and Evaluation of Suitability of the organization’s Current Strategy
3a) Primary activities in the value chain of Apple Incorporation are as follows
1) The Inbound Logistics of Apple Inc Corporation- There are hundreds of suppliers
across the globe and used modern technology to manage its Supply Chain activities. Apple
sources from countries like United States, Europe, and other countries of Asia and since Tim
Cook was elected the CEO of Apple in 2011, he has applied the strategy of incorporating healthy
competition among suppliers and number of suppliers has also been reduced. Strategic
relationships are developed with suppliers and Economies of scale is achieved due to massive
operational activities. The organization can leverage cost advantage by utilizing effective
bargaining power with suppliers. Apple Incorporation outsources its manufacturing operations in

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countries of Asia where human resources are available at cheaper rate and thus this activity adds
value to the operations of the Company. Only few models of Mac Computers are manufactured
in the United States and Ireland.
Apple’s outbound Logistics
The warehousing facilities and distribution of the already manufactured iPhones, iPads
and Mac computers are a part of the outbound Logistics of Apple Incorporation. The
organization and e-commerce platform is used to sell the products of the Company more than
Apple stores as this platform is more cost effective. Immediately after Amazon.com and Wal-
Mart Stores Inc. the organization has secured third rank in terms of retail leaders. The outbound
logistics of Apple Incorporation in Asia and China does not contribute much to the expense of
the Company and thus cost advantage can be achieved by penetrating the Asian market (Hill,
Jones & Schilling, 2014).
Apple Inc’s marketing and Sales
The different sales channel of Apple Incorporation are Apple Online Stores, Apple retail
Stores, Direct Sales Force of the organization, Third party cellular network carriers, wholesalers,
retailers and Value added resellers. The enterprise sales were the prime focus of the organization
and after Tim Cook was selected the CEO of the organization, extensive tie-up with Channel
Partners enhanced the volume of enterprise sales of Apple Incorporation. For instance, Apple
entered into a partnership with Cisco in the year 2015 and networks of Cisco was optimized in
iOS based devices of the organization and better business integration was developed between the
iPhone and voice and video environments of Cisco via apps.

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In the year 2015, the budget for advertising of Apple Incorporation reached to USD 1.8
billion and this budget continuously kept on increasing since Tim Cook was appointed the CEO
of the organization in the year 2011. Sales through direct distribution channel was 25 percent of
the net sales of the Company in the year 2015 and sales through indirect distribution channel
contributed to 75 percent of the net sales of the organization in the year 2015(Hittmár, Varmus &
Lendel , 2014).
Service of Apple Inc
The customer service delivered by Apple Incorporation is of superior quality during all
stages of customer services the pre-purchase stage, the purchase stage and the post purchase
stage. There are Apple stores and Apple Centers in major cities across the globe where customers
can walk-in and touch and feel the products of the Apple Incorporation so that they can be well
assured about the superior quality of the products of the Company. The male and female sales
force of the organizations who assist the customers have great product knowledge and are well
experienced and tech savvy, so they can demonstrate the features of the products of the Company
efficiently to customers. The post-purchase services provided to customers also delight them as
customers can easily upgrade to newer versions of iPhone launched every year by making
additional payments.
The strategy followed by Apple Incorporation is differentiation of products and investing
in new product development which satisfies the needs, wants and requirements of a niche
customer segment. Apple prices all the products in the premium range and the brand is
considered a status symbol and customers are willing to pay premium price to own the products
of the organization (Zott & Amit, 2013).

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Support activities of the Value Chain
Human Resource management is also a prime supporting activity in the value chain of the
Apple Incorporation. Inclusion and diversity are the culture of the organization and Apple
Incorporation has hired talented employees across the globe and paid them well and adopted
innovative retention strategies to retain the human resource since the times of the founder Steve
Jobs. The organization fosters creativity and innovation among its employees.
Procurement- The suppliers of Apple provide good working conditions for workers and
Apple is also a buyer from its suppliers and thus Apple has excellent relationship with suppliers
across the globe.
Firm Infrastructure- The organization structure, the culture of the organization, the
structure of management all form a part of the organization structure of Apple Incorporation. The
organization reengineers its business process and the innovative infrastructure of Apple
Incorporation enables the Company to manage the business process efficiently (Bourletidis,
2014).
Importance of Porter’s Value Chain
Porter’s value chain activities are important for analyzing the strategic management of
Apple Incorporation because the internal activities of Apple Inc can be analyzed using Porter’s
Value Chain Activities. The primary and support activities of the value chain helps in analyzing
which activities add value to the firm and enable it to achieve competitive advantage, the
activities which require improvement can be analyzed using Porter’s Value Chain Model (Boons
& Lüdeke-Freund, 2013).

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Porter’s Generic strategies components
The Porter’s generic strategies are used by a business organization to gain competitive
advantage.
In the cost leadership strategy, costs are eliminated from the activities of the value chain,
organizations gain competitive advantage by achieving cost advantage. The sustainability of the
organization is assured through lean times because of the low cost strategy of the organization
(Teeratansirikool et al., 2013).
The differentiation strategy focus on creating differentiated products to target different
segments. Variety of products are branded, promoted and priced differently when organizations
follow differentiation strategy (Yu et al., 2013).
The focused strategy is used by an organization to cater to the needs, requirements and
demands of narrow market segment also called niche market segment (Rees & Karbing, 2015).
Importance of the Porter’s Generic Strategy
The Porter’s Generic Strategy can be applied to Apple Incorporation to analyze the
current strategy for the organization. The current generic strategy that is adopted by Apple
Incorporation is focused differentiation strategy. The Apple Incorporation focuses on Research
and Development for innovation of the products and developing and upgrading products for
existing and emerging markets. Apple Inc uses premium pricing to price the products for niche
segments of the market and targets population with high disposable income who are willing to
play premium price for products of Apple Inc (Johnson et al., 2013).

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b) The current strategies of Apple Incorporation are suitable for the organization. The use
of focused differentiation strategy of Porter’s Generic Strategy is suitable because it helps the
organization to develop a premium brand image, the strategy focuses on a niche market and the
brand enjoys high Customer Perceived Value (CPV) and has a huge base of loyal customers. The
user friendly operating system and the release of better version of product every year, like the
launch of iPhone 7 in 2016 and iPhone 8 in 2017 clearly reveals the innovation and creativity
adopted by the Company in upgrading features of products. Also premium pricing strategy is
suitable for Apple because the highly differentiated products of the Company are only targeted to
niche segments of society who are willing to pay premium price to own products of the
Company. The current strategy of the organization to outsource manufacturing facilities of
products like iphone in low-cost Asian countries to Companies like Foxconn is suitable for
Apple Incorporation because it enables the organization to achieve cost advantage in
manufacturing
The strategies that can be recommended to Apple Inc are as follows
1) Apple Incorporation should focus on developing new products for emerging and
existing markets. The extension of product lines will enable the organization to sustain in the
market for longer time. For instance, Apple Incorporation’s new product Apple watch was
popular and widely accepted in the market. Similarly Apple Incorporation should develop more
products especially technical products to satiate the changing needs of customers. Apple should
focus more on horizontal integration
ii) Apple should focus on CSR activities. For instance, the firm has an online education
store and support for learning through mobiles is provided through iTunes U( for University),

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however such initiatives should be extended to emerging economies like Brazil, China, India.
Apple faces stiff competition from Samsung in emerging markets and CSR initiatives will
enhance a good image about the organization in minds of consumers and profitability of the
organization will increase indirectly.
4. Evaluation of implementation of strategy
The Hubbard Model for implementation of strategies suggests that business organizations
should analyze its capabilities like core competency and the environmental factors for
implementation of strategies. Also culture, people, systems, structure and leadership of an
organization are of paramount importance for the implementation of strategies. The culture and
structure of organization should be supportive for implementation of strategy. Employees should
be motivated by leaders, budget preparation and utilizing information system are important for
implementing strategies (Peppard & Ward, 2016).
Fig: Hubbard Model
Source :( Porter & Heppelmann, 2014)

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Importance of Hubbard Model
The Hubbard Model can be applied to Apple Incorporation because the organization
already provided innovative products to customers under visionary leadership of Steve Jobs and
the organization culture of product differentiation , innovation and creativity should be carried
forward in future for strategic implementation. Also current strategy of focused differentiation is
achieved by leveraging the manufacturing cost advantage and outsourcing manufacturing
facilities in Asian countries (João Bettencourt Gomes de Carvalho Simas, Francisco Bertinetti
Lengler & José Dos Santos António, 2013).
The organization should take leverage of its strong research and development team and
strong balance sheet to bargain with suppliers and achieve cost advantage. This will enable the
organization to develop new product line for emerging markets where the infrastructure does not
support the products of Apple. Apple Incorporation can also drop the additional features of its
products for emerging markets to reduce cost to make these new product lines affordable for the
emerging markets (Markides, 2013).
There is always excess inventory left with Apple Inc and these inventories should be
distributed to the schools in emerging markets to support the cause of education. This will
increase the brand awareness and visibility of Apple Incorporation in emerging markets (Porter
& Heppelmann, 2014).

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Change management
Apple Incorporation manages changes by following its own release cycle, introducing
new features slowly and making its operating system user friendly. The organization does not
follow competitors and manages changes by clearly communicating the changes to its
employees.
Performance Measurement
The performance of Apple Incorporation can be evaluated using Balance Scorecard
Framework. Information should be collected well, business processes should be analyzed to
identify waste and bottlenecks, customers perspective should be analyzed and financial
performance should be analyzed by Apple Incorporation for evaluating its performance.
Fig- Performance of Apple Inc
Source: (Peppard & Ward, 2016)

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5. Key Issues and Recommendation
Key issues during strategic management analysis
The key issues that are faced by Apple Incorporation are that the organization faces stiff
competition from competitors like Samsung in emerging markets because these markets do not
have infrastructure to support the devices of Apple, also high price is not affordable for
customers in emerging markets. These key issues can be resolved if the brand develops some
new product lines for the emerging markets , dropping out some additional features will enable
the organization to reduce cost for products of emerging markets. Also, CSR initiatives will
increase the brand awareness of the organization in emerging markets. Apple can take leverage
of its strong balance sheet and strong bargaining power to achieve cost advantage from suppliers
and then utilize this in developing new product lines. Also, extra inventory of Apple can be
donated to schools in emerging economy to support education. The key issue of Apple
Incorporation of focusing only on vertical integration can be resolved by focusing on horizontal
integration and adding extending the product line of the Company. Apple Incorporation can take
leverage of its Research and Development team to focus on Horizontal integration which will
enable the organization to sustain competition in the long run in emerging economies.
6. Conclusions
It can be concluded that Apple Incorporation has been successful in achieving customer
loyalty by maintaining its strong brand image among customers. The organization has focused on
innovation and creativity and releases new and upgraded versions of products every year. Apple
Incorporation has high market share in countries like the United States, the United Kingdom but
the organization should focus on developing new markets in emerging economies like Asian

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countries which huge opportunities for the organization by adopting horizontal integration,
developing new product lines and focusing on Corporate Social Responsibility in developing
countries.

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Reference Lists
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and Trademark Office.
Boons, F., & Lüdeke-Freund, F. (2013). Business models for sustainable innovation: state-of-
the-art and steps towards a research agenda. Journal of Cleaner Production, 45, 9-19.
Bourletidis, D. (2014). The Strategic Model of Innovation Clusters: Implementation of Blue
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Eden, C., & Ackermann, F. (2013). Making strategy: The journey of strategic management.
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Hittmár, Varmus, & Lendel. (2014). Proposal of Model for Effective Implementation of
Innovation Strategy to Business. Procedia - Social and Behavioral Sciences, 109, 1194-
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João Bettencourt Gomes de Carvalho Simas, M., Francisco Bertinetti Lengler, J., & José Dos
Santos António, N. (2013). Integration of sustainable development in the strategy
implementation process: Proposal of a model. Corporate Governance,13(5), 511-526.
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Rees, S., & Karbing, D. (2015). Model-based optimization of peep, a strategy and its
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Yu, W., Jacobs, M. A., Salisbury, W. D., & Enns, H. (2013). The effects of supply chain
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learning perspective. International Journal of Production Economics, 146(1), 346-358.

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Zott, C., & Amit, R. (2013). The business model: A theoretically anchored robust construct for
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