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
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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
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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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