Strategic Options for Apple's Business Development in Germany - Report

This report offers a strategic analysis of Apple's potential for business development in Germany. It begins with an executive summary highlighting the focus on market expansion and the use of strategic tools like McKinsey's 7S model, SWOT, and PESTLE analysis to assess internal and external environments. The internal audit, using McKinsey's 7S and SWOT, identifies Apple's strengths, such as brand reputation and loyal customers, and weaknesses. The external audit, using the PESTLE model, considers political, economic, social, technological, legal, and environmental factors. The report recommends market development strategies based on the Ansoff Matrix and addresses barriers like financial constraints and human resource needs, proposing mitigation strategies such as budget allocation and employee training. The report concludes by emphasizing the importance of aligning internal elements to achieve competitive advantages and expand in the German market.

STRATEGIC CHANGE
AND ORGANIZATIONS

Executive Summary
This report focused on strategic options for development of business of Apple in
Germany. Apple Incorporation is one of the leading American Multinational technology
company that specialises in manufacturing computer products, software, mobile devices and
gadgets to its target consumers. The internal and external environment environmental audit has
been made in the report. To carry out internal environment analysis, McKinsey's 7S strategic tool
and SWOT analysis has been used. In order to gain competitive advantages it is crucial for
management to align the internal elements effectively and efficiently. In this context it was
identified that internal elements at Apple are precisely aligned with each other thus enhancing
the shared values within the company. Apple possess immense strengths and opportunities to
grow substantially and be the market leader worldwide. It has efficient brand reputation, loyal
customers and large number of stores. To carry out external analysis, PESTLE model has been
used in which it was identified that there are numerous elements such as unstable political
conditions, environmental factors which could affects the growth and development of the
organisation in Germany. Market Development strategic option has been recommended to the
Apple after using Ansoff Matrix. The barriers such as financial, human resource and
environmental negatively effects the productivity and profitability of the organisation. To
overcome these barriers, precise plans and mitigation strategies such as proper allocation of
budget, raising captial through bank loans, providing training to employees and considering
environmental impact has been recommended to Apple.

Table of Contents
INTRODUCTION...........................................................................................................................1
a) Strategic internal and external audit............................................................................................1
Internal Audit..........................................................................................................................1
External Audit........................................................................................................................8
b) Strategic options for Apple........................................................................................................11
CONCLUSION..............................................................................................................................19
REFERENCES..............................................................................................................................21
Illustration Index
Illustration 1: Apple McKinsey 7S Model ......................................................................................2
Illustration 2: Apple SWOT Analysis..............................................................................................6
Illustration 3: PESTLE analysis ....................................................................................................10
Illustration 4: Bowman Strategic Clock Model ............................................................................15

INTRODUCTION
Business organisations in order to earn higher profits and revenue opt to expand their
operations in overseas market. Apple Incorporation is one of the leading American Multinational
technology company that specialises in manufacturing computer products, software, mobile
devices and gadgets to its target consumers (Rothaermel, 2015). The company would like to
expand their business in Germany for enhancing their productivity and profitability in European
markets. The focus of present report will be on analysing internal and external environmental
factors which could affect and influence the operations of Apple in Germany. In order to do that
precise strategic tools will be applied in the report in order to conduct robust analysis and to
generate deeper insights. Furthermore, the strategic direction for expanding business in Germany
will be provided to the management of Apple in this report. The challenges that could be faced
by the organisation will be identified and eventually mitigation strategies will be provided to the
Apple to overcome those barriers and obstructions.
a) Strategic internal and external audit
Analysing both internal and external environment is essential for strategic planners and
decision makers. Internal factors represents the internal positions and internal strategic capability
of the organisation whereas external environmental factors are those factors which affects the
organisation externally (Taghavifar and Mardani, 2015).
Internal Audit
In order to expand globally, the management of Apple needs to focus on their internal
strategic capabilities by analysing the internal environment. Strategic capabilities refers to the
capability of business to successfully employ competitive strategies which enables them to
survive and enhance its value over time (Tan and Carrillo, 2017). In order to analyse the internal
environment of the organisation, McKinsey 7S mode and SWOT analysis will be used. By using
these models the internal position of Apple can be assessed. Internal Audit, also called as internal
analysis is the overall procedure of identification and the evaluation of an organization's specific
properties (Grant, 2016). It includes all its resources, abilities, core competencies etc. It can also
be considered as an exploration of the cost, position and competitive viability in the market. The
internal audit provides essential data about the strengths, weaknesses, opportunities and threats.
McKinsey 7S model
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McKinsey 7S model is a tool which analyses firm's organisational design by considering
at 7 key internal elements which are structure, strategy, systems, shared values, style, staff and
skills. It was developed in 1990 and has been broadly used by academics and practitioners. It is
one of the efficient strategic tool that helps in analysing the internal environment of the
organisation (Neto, Abrita and Parré, 2017). It sought to present an emphasis on human
resources rather than traditional mass production of capital, infrastructure and equipment as a
key to higher organisational performance. In order to achieve effectiveness in a company it is
essential to align these 7 elements. The McKinsey 7S model applied for Apple is described
below:
1. Structure: Structure represents the manner in which the divisions and departments of the
organisation are divided and organised. In simpler terms, structure represents the
organisational chart of the firm. In order to attain set goals and targets, management of
business organisation needs to create robust organisational structure. Apple incorporation
2
Illustration 1: Apple McKinsey 7S Model
(Source: Dudovskiy, 2018)

has ability to attract large human resource base because of its flat organisational structure
(Wheelen, Hoffman and Bamford, 2017). Flat organisational structure has an
organisational structure with few or no levels of middle management. For attaining
higher effectiveness within the organisation it is important for the management to align
its flat organisational structure with other core internal elements. Organisational structure
can be transformed by the management so that all the elements can be aligned effectively
and efficiently.
2. Strategy: Strategy refers to the plan which developed by the strategic thinkers and
decision makers after analysing the aggregate position and resources of the organisation.
Strategy falls under Hard S category of McKinsey model. In order to sustain in the
competitive environment it is important for the management devise precise plans and
strategies (Michaely, Rubin and Vedrashko, 2016). The management of Apple focus
product differentiation strategies where they provide premium quality of products and
services to their target customers. This is essential in order to gain competitive
advantages. The strategy formulated by Apple is aligned to other internal elements which
initially helps provides them assistance in enhancing the effectiveness in the quality of
work within the organisation (Morán‐Ordóñez and et.al., 2017). Strategy must be
formulated for long term purpose as it helps in providing precise direction to the
management through which they can attain desired goals and objectives.
3. Systems: Systems are the process and procedures of the company which reveal daily
activities of businesses and the process of decision making. System is the sector of firm
which determine the operations of business, its main focus and role of manager during
transformation in organisation. In Apple, the management set explicit policies and
procedures which employees and staff members have to follow. The system within
organisation is aligned with other elements effectively (Sathappan, 2017). The role of
managers and executive officers within the organisation has been explicitly defined.
Apple Incorporation boasts unique and non conventional organisational structure known
as “Apple Core Structure”. Through this structure and system the company has managed
to streamline interactions between the company management and employees (Saha,
Sarmah and Modak, 2018).
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4. Skills: Skills are the abilities and competencies possess by the employees. To enhance
the quality of work, it is essential for the management of Apple to hire talented, skilled
and competent employees who possess adequate knowledge and information regarding
the type of work which is done within the organisation (David, David and David, 2017).
During transformation within the organisation managers often considers the skills
required in employees to adapt the change. Skills factor plays crucial role in the growth
and development of the organisation. It affects the internal environment and influences
the quality of work within the company. As one of leading American technology
company, Apple does not compromise with raising skills of their employees and thus,
provides them adequate training and development so that employees can raise their skills
(Hill, 2017). Furthermore, Apple prefers to hire diverse employees who have immense
potential and talent to generate new and innovative ideas which helps the organisation to
accomplish its desired aims and objectives.
5. Staff: Staff elements represents the type of employees working within an organisation. It
is important element which needs to be concerned by the management of the firm. The
human resource is one of the precious assets possess by the organisation. Apple prefers to
recruit diverse employees within the organisation so that generation of new and
innovative ideas can be occurred within the company (Hitt and Duane Ireland, 2017).
This element is essential as in order to enhance the effectiveness within internal
capabilities the management needs to concentrate on recruiting, selection, training and
development policy (Hill, Jones and Schilling, 2014). From the analysis, it was identified
the staff element at Apple is aligned to other element which helps them in gaining
competitive advantages.
6. Style: Style represents the way the company is managed by the top level managers. The
way managers interact with the workers, the action they take and their symbolic value.
Style is yet another important and essential element which affects the overall internal
position of the organisation. Style is the behaviour and culture circulating within the
organisation that impacts directly on the behaviour of employees (Barney, 2017). From
the analysis of leadership style of Apple it was identified that there is democratic
leadership style has been followed by the executive officers and managers. They allow
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employees to participate in the decision making process which eventually helps in raising
the level of motivation of employees.
7. Shared Values: Shared value are the norms and standards that guide employee behaviour
and company actions and thus are the foundation of every organisation. Every internal
element must be aligned effectively so that the shared values within the organisation can
be enhanced (Ginter, Duncan and Swayne, 2018). It determines the behaviour of
employees within the organisation. In order to enhance the effectiveness of internal
environment and organisational culture, it is essential for the management to have shared
values.
Thus, from the analysis it was identified that internal elements at Apple are precisely aligned
with each other thus enhancing the shared values within the company. In order to gain
competitive advantages it is crucial for management to align the internal elements effectively and
efficiently.
SWOT analysis
SWOT stands for strengths, weaknesses, opportunities and threats. It is most efficient
strategic tool that determines the internal position of the organisation. Here manager identify the
key strengths that prosper the growth of the organisation, weaknesses that drags its aggregate
performance, opportunities which can be acquired by the management to enhance its
productivity and profitability and threats which can affects its overall positions (Wheelen,
Hoffman and Bamford, 2017). SWOT tools is mostly used by the strategic thinkers and analytics
where management desire to expand its business globally. In this context, the SWOT analysis of
Apple is described below:
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Strengths Weaknesses
 Strong Financial performance
 Focusing on few products
 Product Quality
 Brand Reputation
 Large number of stores
 iCloud
 Marketing and advertisement
 Customer demographic
 Pricing
 Products does not work with other
hardware and software.
 Vendor Lock-In
 Limited offer of sector specific
software for Mac
 Decreasing market share
6
Illustration 2: Apple SWOT Analysis
(Source: SWOT analysis, 2015)

 Innovation by continuous development
 Expanding ecosystem
 Customer loyalty
 Brand reputation
Opportunities Threats
 High demand for iOS and OSX based
devices
 More opportunities to expand in
overseas market
 Obtaining patents through acquisitions
 Online music market
 Increasing services
 Increasing competition
 Guidelines for marketing
 Price Pressure
Strengths
Strengths refers to excel of the organisation which makes it distinct form the competition.
Robust brand loyalty, loyal customer base, strong balance sheet, unique technology and so are
some example of strengths. These can be considered as the internal factors of a company which
has a positive effect for the achievement of the objectives at Apple. It is very essential to focus
on the solutions and methods so that the targeted goals of Apple Inc. can be achieved. At Apple,
the basic need is the satisfaction of the customers (Meyer, Neck and Meeks, 2017). They always
focus on looking for various new and impressive opportunities to meet the needs of the
customers. The major strength of Apple is having robust financial position and customer loyalty.
Furthermore, the company has large number of stores in different part of world. The marketing
and advertising tactics utilised by Apple is optimum to target specific demographic customers.
The management is expanding its ecosystem and focusing development through continuous
innovation. In this manner, the organisation is able to sustain in the competitive environment.
The technology used by the organisation is exclusive and patented which cannot be used by any
other firm.
Weaknesses
Despite of having immense strengths, there are few weaknesses which possess by Apple
that drags its aggregate performance down. The features or properties that are having negative
impact or they act as a barrier for achieving the targeted goals are weakness of Apple. These
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often make it difficult for Apple to achieve goals. They behave as a barrier many time towards
the target of the company. The management at the Apple focuses on finding the errors, then
searching for solutions to correct or to modify them in a way that the weaknesses turn into
strengths for the organization. Poor behaviour of any member of the staff or management at
Apple makes it consider as the weakness of the internal analysis of the company (Rothaermel,
2015). Bad systems to work with are also weaknesses of the company. Patent infringement done
by the organisation is considered to be another weaknesses of management of Apple. The
product provided to the customer are extravagantly expensive which reduces the number of
buyers. Vendor Lock-In is another weaknesses identified which affects the purchase behaviour
of customers. The customers has to depend on authorise dealer or service centre for any cause.
With the increase in number of competitors and substitution within the market, the present
market share of Apply is decreasing substantially.
Opportunities
The management of Apple have numerous opportunities to enhance its productivity and
profitability. External factors obviously do have an impact for the fast growth rate of the
company. They also help Apple in achieving the goals that are not considered before. The
external factors do the modifications in the previous ignored goals and then they also help in
achieving the targets for the betterment of the company (Bettis, Gambardella, Helfat and
Mitchell, 2015). Stakeholders are also a part of the company that takes part in every activity in
which the other staff does. Apple ensures guiding all the stakeholders about all the roles and
responsibilities so that they can stay focused and work in the correct direction. Management of
apple have immense opportunity to expand its business in global markets which helps in
enhancing its productivity and profitability. Another opportunity that could be acquired by the
management of Apple is enhancing digital payment system known as Apple Pay which can
transform the perception consumer do their day to day transactions. Opportunities helps the
organisation to grow and promulgates its market share which helps them in sustaining in the
competitive environment. Raising demand for mobile gadgets and technology is another
opportunity which can be acquired by the management of Apple (Bettis, Helfat and Mitchell,
2016). By diversifying and improving the quality of product, base of customers can be enhanced.
Development of more compatible products could provide greater opportunities to the
organisation by increasing their revenues and sales.
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Threats
Incorporation ensures the fact that they must be utilizing all its resources and giving all
the required facilities to the employees. Apple considers it necessary for the employees that they
take full use of the resources of the company and it is their right to ask for it. The Brexit decision
can have a direct impact on the economy, fall in stock markets, British banking sector etc. With
the increase in number of competitors, it becomes difficult for the management to sustain in the
market and maintain its market share (Lasserre, 2017). The confidential information and
technological design has been leaked out from the organisation which affects its overall
reputation. Another threat that possess by the management is looking for skilled and competent
employees. It becomes difficult for the organisation to attract skill and talented employees with
increase in the level of competition within the market economy. External factors which have
some negative impact on the objectives of the company or the factors that are making the
objectives hard to be done, they are considered as threats. Apple always ensures to stay aware
and prepare for any threats that come up in the market. It can be the introduction of any new firm
that is featuring the same products or the same features at lower costs.
From the above SWOT analysis, it has been identified that Apple possess immense
strengths and opportunities to grow substantially and be the market leader worldwide. It has
efficient brand reputation, loyal customers and large number of stores. Though, there are certain
weaknesses and threats which needs to be consider such as gradually declining market share,
threats of competition, loss of security, etc. Overall, Apple has immense potential to operate in
Germany.
External Audit
External environmental factors greatly affects the overall growth and development of the
business organisation. These factors include the political stability in the country, economic
policies, governmental decisions regarding rules and regulations, environmental factors and
technological factors that affects the growth and development of the organisation (Michael,
Storey and Thomas, 2017). In order to conduct external audit of Apple, PESTLE analysis will be
used. In this context, the PESTLE analysis of Apple is described below:
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Political Factors
Political factors includes governmental policies, political stability, norms, regulations,
changing political parties, lobbying and pressure groups which affects the daily business
operations of the organisation in any country (Ferlie and et.al., 2016). The political condition of
Germany is stable which is effective for expansion. Apple is one of the leading American
technology company that has accumulated large amount of cash. It has enormous amount of
capital and is heavily dependence on lowering manufacturing cost in China (Morden, 2016). Due
to lack of political unrest in Germany, management of Apple has enormous opportunity to
enhance its market share in the country. In order to sustain in the competitive environment of
Germany, the management of Apple needs to study the political environment of the country
thoroughly. This will eventually foster the overall growth and development of the organisation. It
is essential as management will able to comprehend the political environment of the country
adequately and efficiently and thus will be able to operate in the country effectively.
Economic Factors
Economic factors refers to economic policies and structures of the country which affects
the overall productivity and profitability of the organisation. It includes local economy,
10
Illustration 3: PESTLE analysis
(Source: Advantages and Disadvantages of PESTLE Analysis, 2017)

international trade, inflation rates, industry growth, import - export ratio, international exchange
rates, etc. These factors greatly affects the overall productivity and profitability of the
organisation and also foster or hampers the growth and development of the organisation within
the country (Morden, 2016). The economic condition of Germany is efficient which helps new
ventures to grow and develop. The market environment is also efficient enough to provide
effective support to global ventures. Thus, the management of Apple can expand its market in
Germany. The current inflation rate in Germany 1.74 per cent which is relatively low thus it
implies that customer tends to purchase more in the country (Renz, 2016). Thus, operating in
Germany can be successful for Apple as the economic condition and market are effective and
efficient.
Social Factors
Societal tastes and preferences is dynamic in nature. In order to sustain in the global
environment is essential for the management to understand the needs and expectations of the
customers. The natives of Germany prefers quality products irrespective of its price. Apple is one
of the leading company in technology known for providing quality and premium products. Thus,
Germany is suitable for the management for global expansion (Daspit and et.al., 2017). Though,
with the increase in competitors and substitution, the management has to face enormous
competition with business giants like Samsung, HTC, Sony, etc. Customers prefer unique and
quality product at Germany and management needs to satisfy their needs in order to sustain in
the country. Social factors plays significant role which affects the growth and development of the
business organisation (Bettis, Helfat and Mitchell, 2014). In order to sustain in the competitive
environment it is essential for the management to comprehend the needs and expectations of the
customer. This would help them in deciding what type of product to be provided to the particular
customer segment in the country.
Technological Factors
Technological factors relates to the technological aspects, innovations, barriers and
incentives, and to what degree these impact the business. In the present era, development in
science and technologies is rising rapidly which results in production of high tech gadgets and
digital technology. The government at Germany promotes technological development and
provides ample of support to the small, medium and large scale organisations. Apple is one of
the leading American technology company which focuses on providing high tech products to its
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target consumers. The technology used at Apple is advance, patented and exclusive which
provides them opportunities and competitive advantages. Changes in technology are normal and
they occur from time to time (Bryce, 2017). It means the companies must be aware of the
changes included. Involvement of these factors also impacts the business environment of Apple
Incorporation. Apple Incorporation is much aware of the new modifications in the technology.
Legal Factors
Legal factors relates to the laws, regulation and legislation that will affect the way the
business operates. It involves current legislation, future legislation, consumer protection, health
and safety regulation, industry specific regulation, etc. In order to conduct the business
operations in Germany effectively, the management needs to consider the laws and legislation.
This will help them in avoiding legal consequence and they will be able to sustain in the
competitive environment (Rothaermel, 2015). In order to operate in Germany, the management
of Apple needs to focus on understanding the laws, legislation regarding company law, consumer
health and safety, environmental protection and employment laws. These are essential and
mandatory for the organisation especially reputed organisation like Apple to comprehend
company laws of Germany so that growth and development can be made in the country
(Taghavifar and Mardani, 2015). In this manner, the organisation will be able to attain their set
goals and targets.
Environmental Factors
In present global environment with the rise in business operations, international supply
chains, transportation increases the pollution rate worldwide resulting in global warming,
melting of glaciers, natural disasters, etc. Government of Germany is determined to reduce the
emission of carbon in the environment by formulating precise policies and norms which are
mandatory to be followed by the organisation operating within the country (Tan and Carrillo,
2017). For example, for managing waste, organisations implemented high tech recycling
technologies, resource recovery and waste to energy technologies. In order to reduce the carbon
emission management of Apple in United States plan to develop its infrastructure which is
environmental friendly. The company is committed to green and sustainable business practices.
Furthermore, as a part of its CSR activity, the management of Apple contributes sufficient
amount of its earning towards preservation and protection of environment.
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b) Strategic options for Apple
Global expansion is considered to be one of the most challenging task which faced by
any business organisation. Strategic thinkers and analytical decision makers conducts extensive
research, market analysis, internal and external environment audit in order to formulate robust
plan and strategy (Grant, 2016). There are numerous strategic tools which utilised by the
strategic manager of the organisation in order to get glimpse of strategic direction and option
which can be optimum for the organisation in order to operate in global context. Models like
Ansoff Matrix is popularly used by strategic thinkers and decision makers of the organisation in
order to generate strategic options. Porter Generic Strategy and Bowman strategic clock model
has been used widely by the managers for product positioning (Neto, Abrita and Parré, 2017). In
context of Apple, for generating strategic options for Apple, Ansoff Matrix is going to be applied
and for formulating strategic direction Bowman Strategic Clock model will be used.
Ansoff Matrix
Ansoff Matrix is a marketing planning model that assists in determining business product
and market strategy. Ansoff product or market growth matrix recommends that a company
attempts to grow depends on whether it markets new or existing products in new or existing
market. Mr. H. Igor Ansoff developed this strategic tool for helping the business-leaders as well
as marketers in broadly thinking about the involved growth risks. This tool is often known as
expansion grid for product/market (Wheelen, Hoffman and Bamford, 2017). It incorporates
namely 4 strategies which could be utilized for growth. Also, the associated risks with each of
the strategy are effectively analysed as well. The result derived from Ansoff matrix is a series of
recommended growth strategies which constructs direction for the business strategy. Apple's
strategic managers could use the matrix in order to generate strategic options. It is described
below: Market Penetration: Market penetration is the low risk strategic option for any business
firm. In this strategy organisation penetrates existing market with existing products. It is
low risk because all management is to focus is on marketing and promotional activities.
As Apple is going to enter in market of Germany, considering this strategy will not be an
option (Morán‐Ordóñez and et.al., 2017). Though this strategy could help the
organisation in enhancing its productivity and profitability in its domestic market. In the
market penetration strategy, the strategic manager recommend the organisation to
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enhance its goodwill and reputation in the existing market by providing existing product
to the target consumer. This can benefits the organisation whenever they desired to
launch new products. Market Development: Market development is the strategy where firm enters a new
market with exiting product. Contextualizing upon the market penetration quadrant which
is at lower left, accounts to be one of the safest (Sathappan, 2017). As per this, company
usually lays emphasis upon enhancing the sales of existing products that too in the
markets which already exist (Michaely, Rubin and Vedrashko, 2016). It is already known
about the product and so market tends to offer certain surprises. A more advanced level
of promotional campaign is required for driving out the associated competitors. Also, this
strategy demands to increase the existing customer-base by offering attractive schemes
which enhance loyalty. This strategic option can be considered by the Apple before
expanding business operations in Germany. In this the management needs to focus on
market research and analysing the behaviour of consumers in Germany. Product Development Strategy: Under product development strategy, the management of
business organisation focuses on introducing new product in the existing market. This is
moderate risk strategy which are utilised by the business organisation (David, David and
David, 2017). In order to consider this strategic option, the management first needs to
develop adequate brand image in the market and consumers (Saha, Sarmah and Modak,
2018). In this strategy management of Apple could launch a new product in the market of
Germany. This is considered to be risky strategy as organisation first have adequate brand
reputation and value to attracts customers towards. Apple one of the leading American
technology company possess immense brand reputation and goodwill as the organisation
is committed to provide quality products and services to its targeted customers.
 Diversification: Diversification is considered as highly risk strategic option for business
organisation. In this the management offers new product in the newer market. In order to
enhance the productivity and profitability, the management of business organisation
considers diversification strategy as optimum strategy (Hill, 2017). Apple have immense
brand image and goodwill. This can be beneficial to the organisation as they desired to
expand their business operations in Germany.
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Thus, from the Ansoff Growth Matrix analysis it can be said that management of Apple could
use market development as strategic option in order to expand its business operations in
Germany.
Bowman Strategic Clock model
Bowman strategic clock model is used by the strategic planner in order to analyse the
competitive position of the organisation and to provide strategic options which can be
implemented by the organisation in order to sustain in the market environment in both domestic
and international economy (Hill, Jones and Schilling, 2014). The managers at Apple in order to
expand their business operations use Bowman Strategic clock model to make decision regarding
position of its products and services. The motive of Bowman's strategic clock is to provide
various options that business can have and the ways it can be positioned in order to enhance the
revenue and profits of the organisation. The strategic Low Price and low value added: As per this position, organisation offers product at low
price but with low value added. This strategy is not considered to be successful strategy
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Illustration 4: Bowman Strategic Clock Model
(Source: Bowman's Strategic Clock (Strategic Positioning), 2017)

as consumer perceive it as very little value despite of its low price (Hitt and Duane
Ireland, 2017). As per the consumer analysis of Germany it can be said that the
consumers prefer quality product with high value added with it irrespective of its price.
Furthermore, Apple is known for providing quality products at premium price thus, this
management should not consider this strategy for expanding its products and services in
Germany. Low Price: Firms in order to gain competitive advantages often provides products at low
price. Low price strategy are successful those organisations who newly enters the market.
For Apple providing products at low price might compromise its brand value (Barney,
2017). As the organisation is known for providing premium quality products and services
to its target consumers, considering this strategy will not be an option for the
organisation. In this strategy, the management perceived as low cost leaders in the
market. It is beneficial for those organisations who have newly enters the market. Hybrid: Hybrid is the fusion of low price strategy and diversification strategy. In this
strategy, the management of business organisation offers distinct product with low price
in order to gain competitive advantages. Most of the firms utilise this strategy in order to
sustain in the competitive environment (Ginter, Duncan and Swayne, 2018). Apple in
American and many international market provides products range from low price to high
price in order to enhance its customer base. This strategy is considered to be most
successful strategy which helps the organisation in generating more and more profits with
increase in customer base. In order to operate in Germany, the management of Apple
could consider this strategy to attract customers. Differentiation: Product differentiation strategy refers to the strategy where firms
provides distinct and differentiated products at premium price. The aim of differentiation
strategy is to provide consumers the highest level of perceived added value. In this
context, branding plays crucial and important role (Wheelen, Hoffman and Bamford,
2017). Apple is considered to be most premium technology brand in the global markets.
This strategy can be beneficial for Apple as the management can provide distinct and
premium quality products at Germany. In this manner, the organisation will be able
sustain in the market economy of Germany.
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 Focused Differentiation:In this strategy, the strategic managers focused on positioning
product at the highest price level where customer purchase goods because of apex
perceived value. This strategy positioning is adopted by luxury brands who aim to
achieve premium prices by highly targeted segmentation, promotion and distribution.
Apple can adopt this strategy in order to enhance its business operations in Germany
(Meyer, Neck and Meeks, 2017). Focused differentiation strategy is effective for brand
who have immense brand reputation like Apple in the national as well as international
markets. If implemented successfully the management could observe higher revenue and
profits margin. It has an exception that only best product and brand will able to sustain
the strategy in long term. Risky High Margins: This strategy is also known as doomed to failure strategy because
of high risk associated with it. With this strategy firm offers products at high price
without providing any added value associated with the products. This strategy is
implemented and considers mostly to earn higher profits (Rothaermel, 2015). This
strategy is mostly done by the organisations operating in monopoly market. High risky
margin strategy cannot be implemented by Apple due to higher competition level. This
strategy will only tarnished the brand image of the organisation and thus management
will begin loosing its customers. Monopoly Pricing: It is partial identical with risky high margins. Here the firm sets the
price of products irrespective to the perception of customers. Management are not
concerned with the customer added value and thus provide products at desired price. This
strategy could not be optimum for Apple (Bettis, Gambardella, Helfat and Mitchell,
2015). Though with its exclusive technology and immense brand image, the organisation
provides products and services at the price which is relatively more than its competitors.
The strategy can only be implemented if Apple able to become monopolist in the market
of Germany.
 Loss of Market Share: In competitive market, this strategy is considers as recipe of
disaster. Here management of business firms sets a middle range or standardise the price
for goods with low perceived value (Bettis, Helfat and Mitchell, 2016). This strategy is
not considered to be optimum strategy for Apple as management could loss its market
share in Germany by implementing this strategy.
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Thus, from the above analysis, it can be understood that Apple's management could implement
Hybrid, differentiation, focused differentiation strategy in order to expand its operation in
Germany. These strategies could be beneficial for the organisation and they will be able to
enhance their productivity and profitability.
Porter Five Force Analysis
Porter Five Force analysis is strategic tool developed by Michael Porter which is used by
the organisations and business managers in order to assess the competitive position in the
economy (Lasserre, 2017). The strategic tool posses five force which affects the competitive
position of the organisation in the market economy. In context of determining the competitive
position of Apple in Germany the strategic framework is implemented. The analysis is described
below: Threat of New Entry (Moderate): Threat of new entry comprises of various components
such as time and cost of entry, specialists knowledge, economies of scale, cost
advantages, technology protection and barriers to entry. Apple is leading American
technology company operating in numerous countries. In Germany, the organisation
possess moderate threats of new entry (Michael, Storey and Thomas, 2017). With the
increase in information technologies and artificial intelligence, new and innovative
entrepreneurs launching their new ventures rapidly. Moreover, the government of
Germany provides them platform on which they can represent their concept and embark
their own ventures. There are new and innovative organisations growing rapidly within
the country thus contributes in increasing the competition level of existing firms. Buyer Power (High): Buyer power involves elements such as number of customers, size
of each order, difference between competitors, price sensitivity ability to substitute and
cost of changing. Buyer power greatly influences the profits earning ability of the
organisations. Apple can face higher threats of buyer power while operating in Germany.
With the increase in new innovative products, substitutes and alternatives, customers
have varied choices available for purchase. In present world, with efficient accessibility
of internet customers can gain immense knowledge about the particular product or
organisation which can impacts on its purchase decision (Morden, 2016). In Germany,
there are various local technological companies who have already captured large amount
of market share. Thus, it could be difficult for the management of Apple to penetrate the
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market and capture market share without fulfilling needs and expectation of the
customers. Threat of Substitution (Low): The threats of substitution is low for Apple as the
organisation uses exclusive technology and information system to manufacture its
products and services. There are less substitution available for the organisation thus
provides them competitive edge within the market economy of Germany (Renz, 2016). In
order to sustain in the competitive environment it is essential for the organisation to have
adequate brand image and reputation so that customer can attract towards the company. It
is difficult to imitate the technologies as it is patented. Company is committed to provide
unique, innovative and high tech products to its target consumers so that their attraction
towards Apple remain high. Supplier Power (Low): Supplier power refers to the power of supplier to influence the
productivity of the organisation. The bargaining power of supplier is weak for Apple due
to high number of potential supplier for Apple. The organisation can have large number
of alternate supplier who are willing to work with the reputed organisation effectively
and efficiently. The manufacturers that supplies computer processors to the organisation
is highly competitive which provide advantage to the Apple Incorporation (Morden,
2016). In Germany, the organisation though at initial phase could find difficulty in
selecting precise supplier due to new environment but through redundant efforts and
maintaining effective relationship with them can foster organisational growth and
development.
 Industry Competition (High): Industry rivalry refers to the competition given by
organisations working under same industry. Apple is surrounded with companies like
Google, Hewlett Packard, Samsung Electronics, HTC, which gives the organisation stiff
competition. In Germany, Apple has to face competition with companies like Lenovo,
Google and Samsung (Ferlie and et.al., 2016). Thus, there is higher competition for the
organisation and in order to sustain in the competition the management of Apple needs to
devise precise strategies and plans so that business can drive towards growth and
development. With its unique products and immense brand value it wont be difficult for
the organisation to attract Germans towards the purchase of their products and services.
Barriers that could be faced by Apple during implementation of strategic options
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Strategies are futuristics and prepare by the managers in order to enhance the profitability
and revenue of the organisation. During the process begins from formulation to the
implementation, strategic managers might faced one or many obstructions which impacts on
implementation of the strategies. In the above, numerous strategic options and direction has been
identified which could be implemented by the management of Apple. But management could
face one or many barriers while implementing the strategy in pragmatic conditions. In this
context, the barriers that can be faced by the Apple is described below: Financial Barriers: Financial barriers can be foremost obstruction that could be faced by
Apple in order to penetrates in the market of Germany. In order to establish business
operations in Germany, the management of Apple requires adequate amount of budget as
it will be used in activities like marketing, promoting, construction of building, land, etc
(Daspit and et.al., 2017). If management adapt alternative strategy i.e. to export products
to Germany than too sufficient amount of budget will be require by the organisation.
Thus, these obstructions could impacts on the strategic direction of the organisation. Human Resource Barriers: For product development, managing and hiring human
resource is another barrier for Apple. To fill the gap for development and innovation of
products, it requires professional skills. It would be difficult for the organisation for
managing human resource in Germany (Bettis, Helfat and Mitchell, 2014). Due to
language and cultural barriers, human resource managers at Apple could find issues in
communicating and interacting with German employees. Furthermore, if Apple select
market penetration strategy it requires competent candidates who can approach to the
customers efficiently. Management needs to provide them training which adds cost to the
organisation. Environmental Barriers: For market development, product development and product
diversification strategy, environmental barrier can have negative impact for the Apple in
Germany. For instance, political instability in Germany could affects the development of
Apple in the country (Bryce, 2017). Furthermore, Euro is depreciating which implies that
lower cash value can affects the financial bottom line which could have negative impact
on the manufacturing cost in the United States. In Germany the labour cost are high and
in order to penetrates in German market, the management of Apple needs to expend
sufficient amount of cost to hire skilled and competent employees.
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 Excessive distraction: Excessive distraction could negatively impact on the
implementation of the strategic options. Numerous strategic options have been identified
which can be implemented by the leaders at Apple (Rothaermel, 2015). Selecting the
precise strategic options could be distracting as all the options produces same output. Too
many distractions can be significant obstruction in effective planning. Thus, this barrier
could affects the growth and development of Apple in Germany.
 Lack of leadership: Lack of leadership could be another issue that could become barrier
in selecting the strategic options. Market penetration and product development were the
strategic options for Apple to expand their business operations in Germany. It is essential
that leaders direct their team members effective and efficiently so that global expansion
at Germany can be made effectively.
Overcoming Barriers
In order to sustain in the competitive environment at Germany, the management of Apple needs
to develop mitigation strategies which helps them in overcoming the barriers and obstacles. The
recommendations to overcome the identified barriers are described below: Overcoming financial barrier: To overcome financial issue, the management of Apple
can seek for new capital investment through a bank or loan issuing shares. The best way
to overcome this issue is to get bank loan (Taghavifar and Mardani, 2015). The interest
paid on bank loan is exempted from tax and it also increases the creditability of the
business. This is essential as Apple has potential winning from the market development
strategy. The issue here is that management must be able to represent to the banker that it
has lucrative returns on investment. Thus, in this way the management will be able to
operate successfully in Germany. Overcoming human resource barrier: To minimise the risk of human resource, Apple's
human resource manager could conduct a training program to enhance the skills and
competencies of existing manpower of the organisation (Tan and Carrillo, 2017). To hire
employees from Germany, the management could use advertisement to provide
information about the vacancy in the organisation. New blood within the organisation
will help in boosting up the profits and revenue of the organisation and thus, the
management will be able to overcome the issue of managing human resource.
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 Overcoming environmental, leadership and distraction barriers: By developing
effective relationship with stakeholders, the management of Apple can enhance support
from them which drive organisation towards growth and development. To eliminate
leadership issue, leaders needs to focus on overall needs of the employees and
stakeholders so that strategic option can be implemented. In this manner, the excessive
distraction a leader face can be eliminated.
CONCLUSION
In the above report the internal and external analysis of Apple has been made by using
different strategic tools. By using McKinsey 7S strategy the internal elements and their
alignment has been assessed in this report. From the analysis it was identified that internal
elements at Apple are precisely aligned with each other thus enhancing the shared values within
the company. The strengths, weaknesses, opportunities and threats has been identified in the
study. From the SWOT analysis, it has been identified that Apple possess immense strengths and
opportunities to grow substantially and be the market leader worldwide. It has efficient brand
reputation, loyal customers and large number of stores. Though, there are certain weaknesses and
threats which needs to be consider such as gradually declining market share, threats of
competition, loss of security, etc. Overall, Apple has immense potential to operate in Germany.
To carry out external analysis of Apple, PESTLE model has been used. It has been identified that
there are numerous elements such as unstable political conditions, environmental factors which
could affects the growth and development of the organisation in Germany.
By using Ansoff Matrix strategic options has been generated for Apple. From the Ansoff
Growth Matrix analysis it can be said that management of Apple could use market development
as strategic option in order to expand its business operations in Germany. Bowman strategic
clock and Porter Five force analysis has been made in the report to understand the strategic
directions and analyse the competitive position of Apple in Germany.
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