Strategic Management: Apple Inc. Strategy Issues Analysis Report

This report provides a comprehensive strategic analysis of Apple Inc., examining its background, external environment through PESTEL analysis, and competitive landscape using Porter's Five Forces. It identifies Apple's key competitors, core competencies such as leadership, innovation, and design, and analyzes its business-level strategy including cost leadership and product differentiation. The report also includes a value chain analysis, positioning, and strategic recommendations for future growth. It concludes with a summary of the key findings and references used in the analysis. The analysis covers political, economic, social, technological, environmental, and legal factors affecting the company, as well as the bargaining power of buyers and suppliers, the threat of substitutes and new entrants. The report highlights Apple's strengths in innovation, design, and branding, while also acknowledging the challenges posed by competitors and the changing needs of the market.

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APPLE’S INC. STRATEGY ISSUES ANALYSIS
STRATEGIC MANAGEMENT
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Table of Contents
Executive Summary.........................................................................................................................2
Introduction – The Company Background......................................................................................3
External Analysis.............................................................................................................................4
PESTEL Analysis........................................................................................................................4
Apple’s Porter’s Five Forces........................................................................................................6
Apple’s Competitors....................................................................................................................7
Core Competencies..........................................................................................................................8
Business Level Strategy.................................................................................................................10
Value Chain Analysis....................................................................................................................11
Positioning.....................................................................................................................................11
Recommendations..........................................................................................................................12
Conclusion.....................................................................................................................................13
References......................................................................................................................................13

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Executive Summary
Apple has come a long way in business to become the leading firm in the industry. The resilience
and, strategic directions from the leaders has steered Apple to curve a niche in the stiff market.
The report looks at the strategies employed in the organization for its success. The PESTEL
analysis gets employed as well as Porter’s Five Forces that give the situation of the company in
relation to the working environment. Additionally, core competencies, the business level
strategies, value chain analysis and positioning get examine. In the end, recommendation and
conclusion get presented.

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Introduction – The Company Background
The company began in 1976 with specialization in computers and it has expanded and
specializes in different categories of products. Its growth was accelerated when the company
went public in 1980 and since then, the company has tremendously transformed in product
development. In 1989, the company structure was re-organized and this led many of its top
management team quite because of dissatisfaction. This was the time when management of the
company was at test. In 1999, on the emergence of Steve Jobs, the management was transformed
and Apple began to stand in the light of success. Steve Job was a restorative instrument to
growth. The company since then has gone through transformation and diversification in products
innovation. The organization’s leadership emphasizes on doing things in a different manner as
opposed to the competitors. The coming of Cooks as the new CEO brought in another leadership
transformation of democratic leadership and this has further moved the company to a different
notch (Suggett, 2018). The report examines the strategic issues of the organization and begins
external analysis which is followed by Porter's five forces, the competitors, core competencies,
business and corporate strategy, the threat, recommendation and end with a conclusion.
External Analysis
PESTEL Analysis
Political Factors
The creation of policies concerning free trade is not hindering Apple’s business strategies
that have been created for some time, particularly with emerging nations. These policies have
allowed the organization to distribute its products to different markets the world over
(Dockalikova et al., 2014, p. 418). Furthermore, a large portion of the assembling plants for its
products are done in other nations outside America (Fleisher and Bensoussan, 2015). It means
that these nations like China and Korea have the stable political environment that permits

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business to thrive well. However, there are the tax policies and import limitations experienced in
the assembling plants situated in other nations and are this additionally one of the issues that
influence trade in these countries. The focus on the opportunities facilitate commerce with the
emerging nations is valuable and profitable for the organization. The strategy provides Apple
with opportunities to further distribute their products in different markets (Meade, 2013).
Economic Factors
The stability of the economy of most emerging nations presents chances for the
organization. Furthermore, the emerging nations are growing economically fast. For example,
Asian has a high rate of economic growth and this present a significant opportunity for Apple to
enhance sales in these business segments (Grant, 2016). In the examination of the economic
effect on the business, the organization can unfavorably be affected by economic crisis and
recession because of its pricing technique which is premium. The US inflation rates experienced
can influence organization's monetary reserve (Baker, 2014).
Social Factors
The pattern of the expanding prevalence among the people on the use of mobile is an
opportunity for the organization to keep giving products usable with ease. The company has
established a way to maximize this opportunity, for instance, through the creation of different
products like the iPhone, Apple Watch among the many (Hasan and Ali, 2015). The company
characterizes people's way of life and the growing demands for Apple’s items have assisted the
company in detailing techniques of opening establishments and invest heavily in emerging
nations (Baker, 2014). However, there is an issue of coping with the changing needs of the
market. Will the organization continue developing its products based on design and quality? The
reason is that there are rapid and dynamic changing needs of the customers (Hasan and Ali,
2015).

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Technological Factors
With the current demand for Apple’s item, the element of innovation for Apple’s
developed market. As the pacesetter, the organization continues to offer the remarkable and
innovative product. Therefore, Apple has to concentrate on the inventiveness of its items and put
emphasis on the life-cycle. Despite the fact that the organization spends a great deal on the
innovative work, the rate of innovation changes and the way contenders are competing in terms
of technology is not essential because Apple always lead in innovation (Grant, 2016).
Environmental Factors
Apple has constantly adopted an extensive strategy to reduce issues of environmental
concerns and consider this as an important role. It has revealed for carbon footprint, however, it
has not figured out how to lessen the footprint. The company uses proper waste disposal
techniques (Baker, 2014). In addition, it is working in reusing electronic parts. With the rising
changes in climate, the contamination related issues grows, the organization's suitable way of
dealing with the ecological issue is putting emphasis on the well-being cognizance presented by
the products and is examined in lawful and socio-social effects (Meade, 2013).
Legal Factors
Currently, many governments are getting to know the protection as well as privacy issues
associated with innovation and this is a threat since it creates difficulties organizations in
creating products that compromise of the transmission of private information. These regulations
are stringent to the point that organization gets to threaten to the point of halting their pursuit of
meeting the demand of customers with quality product. On the other hand, this is a factor that
presents an opportunity for the organization to enhance its products includes and ensures the
protection of privacy (Baker, 2014). Other legal encounters are right infringement by other

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organizations like Nokia, Samsung among others which present the organization with many
lawsuits (Meade, 2013).
Apple’s Porter’s Five Forces
Competitive Rivalry
The organization is experiencing a strong competition from the rivals because the
intensity posed by competing players is high. The reason is rapid innovation, competitive
advertising as well as imitation. Also, the customers are in a position to switch to products that
are of low prices (Eaton et al., 2015, pp.217-243).
Bargaining Power of Buyers
There are strong forces as a result of cheap products from competitors which renders
Apple’s products as expensive. Moreover, the small numbers of buyers who are able to buy
Apple’s products are small. Therefore the company must incorporate the power of buyers as a
variable in strategies development (Teece, 2014).
Bargaining Power of Suppliers
There are large numbers of suppliers supplying the organization with raw materials. It is,
therefore, an advantage to the organization. The demand of these suppliers is weak (Ghazawneh
and Henfridsson, 2013).
Threat of Substitutes
There are available substitute products to rival Apple’s products, however, the
performance of these products are poor, thus rendering Apple’s products to still stand out in the
market and hence favorable to many customers (Al‐Aali and Teece, 2014).
The threat of New Entrants
New entrants into the mobile business have to put in the high capital in order to rival
Apple and to spend a considerable amount in the development of a strong brand. However, there

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are potential organizations such as Google and Samsung who have the capacity to enter the new
market and compete favorably with Apple (Haslam et al., 2013).
Apple’s Competitors
The analysis of Apple competitors is based done based on product category. In the
iPhone product category, Samsung is leading in the market with market share of 21.0% followed
by Apple at 12.5%, Huawei at 9.3%, Vivo at 5.9% Oppo at 7.1% and others comprise of 44.2%.
In the iPad category, Apple is leading with a market share of 21.5% followed by Samsung,
Amazon, Lenovo, Huawei, and others at 15.5%, 7.3%, 6.3%, 5.6% and 44.2% respectively
(Jurevicius, 2017). The analysis shows that Apple is not the only the leader in the digital market.
There are other strong players like Samsung and Lenovo who captured a larger market as
compared to Apple.
Core Competencies
Leadership and Innovation: The leadership has assumed a fundamental part of the company,
Steve and Cooks employed a blended mix of leading styles like autocratic and democratic styles
(Mao, Chen, and Li, 2013). They made the workers perform highly, improve and complete given
work with quality. The combination of these two styles of leadership has put the organization at
a high standard that no one can compete and hence become strength to the company (Taheri et
al., 2014). Moreover, the innovation and the development of products as well as services through
constant innovation imparted values for Apple Inc (den Hartigh et al., 2016).
Perfect Design and Usage: The Company’s items are novel in their design, utilization as well as
quality. Every customer utilizing the company's products have admiration for them and attest
that the style, design, and features of these products are perfect. Additionally, these products are
user-friendly as they are easy to learn and use. The organization continues to offer a remarkable

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and innovative product; therefore, the company concentrates on the inventiveness of quality
products and putting emphasis on the life-cycle. The strong branding that the organization builds
is strong and the products created are interrelated to each other which encourages customers to
buy more than one of Apple’s products (Brewster, 2017)
Human Resources: In the course of launching their products, the organization has most of the
things inbuilt with the use of their own resources. The company has a well-equipped and able
team of human resources spanning from different expertise (Purce, 2014). It is exceptionally
hard to change over a designed item to genuine and customization product, however, the
company is able to perform this with flawlessness, very much developed and easy to use. The
explanation for it is assets of employees which dynamic capacity that the company enjoys
(Rugman and Verbeke, 2017).
High investment in R & D: As per pulse live, (2017), the organization is putting a lot of finances
on research and development in order to improve its products as well as the product range
focusing on four product segments where the demand is increasing thus calling for more
investment. They concentrate on product depth as opposed to the breadth of the product.
Additionally, there is increasing demand in the service segment like the Apple pay, App store,
iCloud, etc. call for more investment to meet the growing massive user base; there is a bigger
concentration on in-house technology in which the organization has control of product roadmap.
Through this, they are endeavoring to maintain a higher degree of distinction and be unique
among the players in the industry (Niu, 2017).
Product Diversification and Marketing Strategy: The organization in the pursuit of getting hold
of the larger market diversified its product into different category range. It is at this point that
there are varied products such as iPhone, iPad, Tablet among others. In addition, the service

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sector concentrates on different products like the Apple pay, the Apple care and App store
among many (Rugman and Verbeke, 2017). The reason is to capture a different type of target
segments in the market. The strategy employed in marketing take the advantage of superior
technology, brand equity, brand loyalty, and premium pricing strategy (Pineda, 2017).
Business Level Strategy
The company uses cost leadership in the industry and concentrate product differentiation
and this is seen through product functionality and design. It incorporates the constructing new
retail stores as well as expanding the retail online stores and its network of distribution to achieve
more clients and provide excellent sales and support post-sales understanding. Additionally, the
organization uses iTunes Store to distribute and expand its digital content and applications.
Moreover, the company set its competitive advantage by taking advantage of its product features
and capabilities via the list of innovative products created (Meyer, 2017). In particular, a critical
success of the company is its identification with the ecosystem, which has been empowered
through the use vertical integration (Grayson and Hodges, 2017). The products of the
organization are in synchronous with each other. Applications developed by the organization can
interface well with numerous Apple gadgets and with no big differences in user interfaces;
however similar products do not combine well with those of different organizations, in this way
making a closed ecosystem to their products. Apple's ecosystem makes exchanging costs for its
clients to the opposition. Additionally, the company employs first-mover advantage as a
competitive strategy which is challenging to the organization because it requires a long-term
sustainability for a longer perspective (Linton, 2018). However, the innovative nature of the
organization places this strategy at the forefront of the company endeavors to continually
innovate and make distinctive products for the market. In the respect, the organization has placed

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the service business to the core of the business strategy where the service’s business revenue has
grown and become the second income generator among Apple’s line of products (Dudovskiy,
2018).
Value Chain Analysis
Strong Integrated Supply Chain
Apple has a strong system of suppliers, as well as the stakeholders. It gives the
organization an advantage. The organization possesses chip creation, controls fabricating, have
strict control to over the programming models as well as workings on its stores (Klettner, Clarke
and Boersma, 2014). The music and entertainment companies are the source of the media for the
organization's products. Additionally, the company has a group of approximately 6 million
programming designers who are making applications for the products developed by the
company. Therefore, the company has control of whole procedures beginning with
development, manufacturing, and marketing. This is a strategy that cannot be matched by the
competitors (Dobbs, 2014).
Sales and Marketing
The company uses premium pricing for its items and limits discounts to wholesalers in
order to have consistent prices in the entire market. The company strives in offering the clients
good quality products that carry with it special features (Wheelen et al., 2017). On the other
hand, the company uses high prices to give the impression that the products are of values with
special advantages. This pricing strategy sets a good pace for the rival so that they continue
struggling to create products that match Apple's products and thus enabling customers to be
presented with quality products across the board in the market (Gershon, 2013).

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Positioning
The organization strives to hold a larger market through diversification of its product into
different category range. It is at this point that there are varied products such as iPhone, iPad,
Tablet among others. Moreover, the development of products as well as services through
constant innovation imparted values for Apple Inc. (Pineda, 2017). In addition, the service sector
concentrates on different products like the Apple pay, the Apple care, and App store among
many. The reason is to capture a different type of target segments in the market. The strategy
employed in positioning take the advantage of superior technology, brand equity, brand loyalty,
and premium pricing strategy. The strong branding that the organization builds is strong and the
products created are interrelated to each other which encourages customers to buy more than one
of Apple’s products.
Recommendations
In view of the PESTEL analysis undertaken by the organization, it is evident that the
organization has a favorable macro-environment that presents good opportunities to thrive. It is
the reason why the company has penetrated into major global segments and it is poised to
continue leading in the mobile industry. In the analysis of the organization with use of Porters
Five Forces Model, it is apparent that Apple still is moderately strong because the bargaining
power of suppliers’ demand is weak; threat from substitutes is also weak and the new entrants to
mobile business have to put in high capital in order to rival Apple which is impossible.
However, the organization must come up with strategies to deal with the legal issues such
as right infringement by other organizations like Nokia, Samsung among others which present
the organization with many lawsuits. Additionally, the company have a high task in dealing with
strong competition from the rivals owing to their rapid and intense innovation, competitive