LCBS5001 Strategic Management: A Strategic Report on Apple's Strategy

This report provides a comprehensive strategic analysis of Apple Inc., a leading technology and innovation company. It employs several strategic tools to evaluate Apple's position and potential. The analysis includes a PESTEL analysis to assess external factors like political, economic, social, technological, legal, and environmental influences. A SWOT analysis identifies Apple's internal strengths, weaknesses, opportunities, and threats. The report also features a five-force analysis to understand competitive rivalry, buyer power, the threat of new entrants and substitutes, and supplier power. Furthermore, it explores Apple's competitive strategy, business model canvas, and the applicability of the Blue Ocean strategy. Strategic decision-making tools like brainstorming and cause-and-effect diagrams are also discussed, culminating in strategic recommendations for Apple to maintain its market leadership.

Running head: STRATEGIC MANAGEMENT
Strategic Tools
Name of the Student
Name of the University
Author Note

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Execute Summary
The report highlights the importance of strategic management in the field of human resource.
The application of strategies for the success of a company is defined in the report. The report
focuses on Apple one of the leading companies in the field of technology and innovation in
the modern day. The report analyses the external factors that may affect Apple in its quest to
retain its position as the number one company in the world. The external factors are analysed
by the application of PESTEL analysis. Furthermore, the internal capabilities as well as
opportunities derived from Apple are highlighted by using a SWOT analysis. The report also
conducts a five-force analysis and a competitive analysis so that the threat of competitors can
be determined. A business model canvas of Apple is provided along with the importance of
Blue Ocean strategy is provided.

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Table of Contents
Introduction:...............................................................................................................................4
Overview of the organisation.................................................................................................4
External analysis of the strategic capabilities............................................................................5
PESTLE analysis....................................................................................................................5
Political..............................................................................................................................5
Economic............................................................................................................................5
Social..................................................................................................................................5
Technological.....................................................................................................................6
Legal...................................................................................................................................6
Environmental....................................................................................................................6
Five forces analysis................................................................................................................7
Competitive rivalry............................................................................................................7
Buyer power.......................................................................................................................7
Threat of new entrants........................................................................................................7
Threat of substitutes...........................................................................................................8
Supplier power...................................................................................................................8
Internal capabilities of the strategic capabilities....................................................................8
SWOT analysis.......................................................................................................................8
Strengths.............................................................................................................................9
Weaknesses........................................................................................................................9

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Opportunities......................................................................................................................9
Threats..............................................................................................................................10
Basis of competitive strategy...............................................................................................10
Competitor analysis..............................................................................................................10
Strategic choice and application of business model.............................................................11
Porter’s generic strategy.......................................................................................................11
Business model canvas:........................................................................................................13
Recommendation strategies.................................................................................................13
Blue ocean theory:................................................................................................................13
Strategic decision making:...................................................................................................14
Brainstorming.......................................................................................................................14
Cause and effect diagram:....................................................................................................15
Conclusion................................................................................................................................15
Bibliography:............................................................................................................................17

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Introduction:
Strategy is certain plans of action that is designed to achieve some long-term aim.
According to Hill (2017), any strategy need to be carefully thought out and need to be based
on certain alternatives. It is required to assess the market environment to resolve the lack of
flexibility in the organisation. Strategy can be divided by three levels such as corporate
strategy, business strategy and financial strategy. As opined by Hill, Jones and Schilling
(2014), strategy involves certain advantages for the organisation and it helps to increase the
level of resources by changing the environment, meeting the needs of the market and fulfil
the expectations of the stakeholders. Strategic management is a process by which competitive
advantages can be developed by analysing the decision and action of an organisation.
Through strategic management, the general managers of a company take creative
decisions for developing the performance of a firm (Barney 2017). Strategic management has
made a balance in between the internal and external environments. The formation of the
strategy includes certain essentials like internal and external analysis, competitive
advantages, strategic options and strategic implementations. Strategic fit is different from the
normal static consideration and it requires long-term circulation. Managers need to be careful
and vigilant while making and implementing strategic ideas. When a new business has been
incorporated, certain external environment has affected the same.
External environment includes the societies that influenced the industry or firm;
factors that creates impact on the action of a firm and competitors of the firm. Certain
strategic tools like SWOT, PESTLE analysis, 5 forces analysis, competitor analysis, Blue
ocean theory and Porter’s generic strategy assist to make the company strategically improved.
The prosperity of a company depends upon the effective strategic management. There is
certain business model canvas that helps to develop the base of a business and it will help the
company to establish a successful corporate future for the company in the market.
Overview of the organisation
Apple is the world’s largest technological and innovative company that was
incorporated in the year 1976 (Apple.com 2018). Steve Job founded it and after various
difficulties, it has emerged as the biggest and most popular technological company in the
world. It provides varieties of products such as smart watches, phones, I-phone and so on.
The target people of the company are mainly the people that belong in the higher society.

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Some of the competitors of Apple include Nokia, Samsung, Xiaomi and so on. The revenue
of the company is estimated at US$229 million. The functioning objective of Apple is that it
provides the best technical products for the satisfaction of the customers with a strategic
statement that highlights the manner in which the company can maintain its business in the
competitive business.
External analysis of the strategic capabilities
PESTLE analysis
Political
In the modern world, political scenarios play an important role for the success and
failure of a country and its business. In the case of the UK, the existence of democracy paves
away for companies to remain competitive in the business environment. After the end of the
world wars, the country has been developing at a faster rate. Nevertheless, they are facing
constant threats from terrorist activities that are threatening the policies within the country
(Wheelen et al. 2017). The democratic form of government within the country has resulted in
distributing the power within certain sections of people. The country has been successful in
mitigating the level of corruption within its political system, which has increased the
effectiveness of the government as well. This has helped in the growth of many industries
within the country, as they have been able to flourish under the policies that have helped in
shaping the existence of business organisations. The technological companies like Apple are
flourishing in the market in a positive manner due to the increase in the technological factors
and the modernisation of the society (Meyer, Neck and Meeks 2017). However, the policies
that are made within the country do not affect Apple largely, as the government does not
possess any threat to the company.
Economic
United Kingdom has one of the highest rates of Gross Domestic Product (GDP),
which indicates that the consumers have a higher rate of purchasing capacity. This has helped
the companies in increasing their rate of production, as more number of customers is willing
to pay and purchase the products (Rothaermel 2015). Companies like Apple have been
provided with an excellent environment, which has helped them to increase their rate of
production and engage skilled professionals as well due to the intense level of competition
that is present. The rate of corporate taxes has also decreased from 23 to 20 percent that has

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helped the industry in increasing its profit levels. This has also allowed an increase in the
level of competition within the country, as Apple has to pay a lower rate of taxes (Bettis et al.
2015).
Social
According to Lasserre (2017), UK has an educational system that is very strong and
attracts a majority of student from all around the globe. The degrees that are obtained from
some of universities are recognized over the world due to the intense system of education that
is present. The educated society means that the people are aware of the technical changes that
exist in the modern world. Therefore, the social life of the people has improved with the
application of technical changes brought forward by companies like Apple. People now a day
in modern UK promote the use of technological services among the world and within the
population.
Technological
There has been a rise in the technical factors, which has helped companies like Apple
to increase its level of production. The country has been using the technological
advancements so that it can increase the rate of production of manufacturing units so that the
economy can be structured in a better manner. The increase in technological effectiveness has
led to an effective Research and Development (R&D) team so that companies like Apple can
work in an effective manner. The country makes it a point to store the rights of intellectual
property, as the legislation has been developed in that manner. Training is provided to the
personnel that help in using the technology in a better manner so that the work can be done in
an effective way.
Legal
The legal system within the country is transparent and efficient that has helped in
boosting the growth of the companies. The legislation has been formed by taking in to
account the stakeholders so that the business opportunities within the country are not
hampered. As observed by Hitt and Duane Ireland (2017), the UK government has taken
effort in reducing the taxes so that expensive businesses like Apple can operate in an efficient
manner. The transparency in the rate of taxes has enabled the companies in understanding the
tax rates so that it can help in managing the Foreign Direct Investments (FDIs) in an effective
manner.

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Environmental
The country makes it a point to take care of the pollution levels so that it can help in
creating a better environment for the people to reside. The changes that are taking place in the
climatic conditions has a serious impact on the country, which has lead them to take an extra
initiative in keeping the environment clean. The Corporate Social Responsibility of Apple
can help in keeping the environment clean and ensure that popularity among the people is
maintained. Although the technical wastes are limited, Apple takes proper precaution to
reduce wastes that are emitted due to the manufacturing of the new and innovative products.
Five forces analysis
Competitive rivalry
The rivalry in this industry is weak, which indicates that the dominance of Apple in
the technical industry is superior to other companies. The products that are manufactured by
the company are different based on the quality that it provides to the customers. According to
Ethiraj, Gambardella and Helfat (2016), this has resulted in building up a loyalty among the
customers, which has resulted in the customers sticking to one particular brand that is
operating in the market. At the same time companies like Nokia and Samsung has a higher
value in the market due to the stability it provides to the products. This has increased their
percentage in the consumer markets.
Buyer power
The power of the buyers is weak or moderate in the technology industry, as the
similar products such as phones are priced close to each other in the market. This has resulted
in decreasing the cost of switching over to new phones for the customers. The companies that
manufacture the phones differentiate the brands and most of the customers remain loyal
towards Apple. Michael, Storey and Thomas (2017) are of the opinion that the period of
recession in the UK market does not affect the customers, as most of them prefer purchasing
Apple brand due to its name. This proves that most of the buyers in this industry are not
sensitive towards the price and has a less amount of bargaining power in the market.
Threat of new entrants
The new entrants in the market are moderate in this industry, as the target customers
need to be convinced about the quality of products that are being sold. The manufacturing of
these products are capital intensive and a large amount of finances can be incurred due to the
demands of the customers in the market (Morschett, Schramm-Klein and Zentes 2015). The

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innovation need to be made in such a manner that new entrants find it difficult to compete
with Apple and thereby give up on any type of competition. The organisations that are
already present in the market are well-known and have a set of target customers as well,
which makes it difficult for the new companies to gain entry in the market. Moreover, Apple
is able to produce large quantities at a lower cost, as the cost of establishment is not present
and they can sell at a lower price in the market as well. The established companies also
maintain strong relationships with the suppliers along with the distributors, which may make
it difficult for the new companies to survive in the market (Morden 2016).
Threat of substitutes
This is one of the major factors, as there is constant threat from substitute products
such smart watches and laptops. These same products are available to the customers at a
cheaper rate from other companies such as Lenovo or Dell. The feature that makes these
products substitute in the market is that it is available in the market in an easy manner and are
advertised heavily, which helps in increasing the awareness of the products among the
customers (Steinbach et al. 2017). These factors in a combined manner act as a substitute for
Apple that operates within the global market.
Supplier power
The power of the suppliers’ acts as a major force in the technological industries, as
they are heavily dependent on the suppliers for the right supply products required for
innovation. The raw materials have to be supplied in the right quantity, which can help in
increasing the quality of the products for Apple. As observed by Christopher (2016) Apple
uses latest technologies along with other unique machines that need to be sourced from the
suppliers so that the production can be continued in a constant manner. The demands of the
suppliers need to be controlled by Apple so that it can help in providing efficient supplies for
the manufacturing of its products, which can help in making the products less controversial
and complicated.
Internal capabilities of the strategic capabilities
SWOT analysis
Strength
 Innovative
Weakness
 Lack of application of marketing

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 Popular
 Largest manufacturer of technology
 Profitable
 Use of latest technology
principles
 Loss in profits
 Failure in Asian market
 Increase in Stock Keeping Unit
Opportunities
 Capitalise on market share
 Develop training and experimental
rooms
 Manufacture unique products
Threat
 Competitors
 Low price
 Lack of proper manufacturing
Table: SWOT analysis
(Source: Created by author)
Strengths
The company is one of the largest manufacturers of technical products in the world. It
uses a strong and effective system of innovating technical products so that the customers can
be satisfied and there can be an increase in the rate of profits as well. Apple is advanced, as it
uses the latest technologies that are present within the country that helps in increasing their
level of efficiency in the market as well. This has helped Apple to increase the portfolio of
the products so that they can offer variety of brands to the customers. The use of the
innovation has helped the company in gaining the attractiveness of the products in the market
by the customers.
Weaknesses
Apple has not been using the marketing principles in an effective manner, which
hampered its growth in the market particularly with sale of its I-phones. The company has not
been able to capitalise in the Asian markets, as these markets are reluctant to pay huge sum
for the development of innovative technologies. The company has failed to increase its Stock
Keeping Unit (SKU), which has resulted in the reduction of profit owing to improper
business strategies.

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Opportunities
The company needs to develop an exquisite room for testing the products that are
being manufactured before launching it in the market. This can be done by increasing the
level of inventory and developing a training room for the testing of the product. Apple needs
to produce some unique products such as the smart watch under their name so that it can help
in grabbing the attention of different customers. The outside markets like Asia and the Africa
need to be capitalized so that it can result in increasing the market share for the company.
Threats
Companies like Nokia and Samsung provide major threat for the company, as it is
also been taken in to consideration as a technological and innovative service company. This
has increased rate of innovation in the market for Apple. The customers are being aware of
the side effects that Apple phones can have and it is considered as a primary reason for many
of the customers to choose products manufactured by the competitors.
Basis of competitive strategy
Competitor analysis
As observed by Bratton and Gold (2017) competitor analysis is a manner in which
organisations get to analyse the strengths and weaknesses of the competitors. In the case of
Apple, this strategic analysis of the competitors is essential to understand the potential threats
to the company. The technological advancement has developed over the years and has grown
into a steady demand for the customers. At the same time, Apple can implement Bowman’s
Strategy Clock as a marketing strategy so that a competitive position is gained in the market.
With the application of the strategy, Apple can ensure that it understands its competitors in
the market and create a relationship between the customer value and its prices.
Customers all over world have adapted to the use of modern technology that have
provided companies like Apple with an opportunity to improve continuously. There have
been rumours of low-cost competitors as well as high-cost competitors in the industry. Some
of the competitors of Apple include Nokia, Sony, Lenovo, Xiaomi and Samsung. These
companies are formed either before the existence of Apple or after it. The threats can come in
either form as the traditional companies such as Nokia and Samsung have more experience in
the business market.

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These companies can gain the loyalty and trust of the customers. For example, Nokia
have also claimed accolades from various newspapers and customers stating the quality of
phones it provides in the market. At the same time, the newly formed companies such as
Xiaomi have the advantage of using modern technology to promote and manufacture its
products. Thus, a competitor analysis can be done by keeping in mind the key industry
success factors.
Key
Industry
Success
Factor
Priority is
given by The
London
Distillery
Company
(1=low
priority,4=high
priority)
Competitor
rating of
Nokia
Competitor
rating of
Samsung
Competitor
rating of
Blackberry
Competitor
rating of
Xiaomi
Distribution
process
3 4 4 2 1
Focus on
customer
2 4 1 1 4
Economies
of scale
3 2 1 2 3
Innovation
of products
4 2 3 4 4
Table: Competitor analysis
(Source: Created by author)
The analysis shows that the while Apple focuses more on the innovation of the
products, competition in this particular department is received from Blackberry and Xiaomi.
As observed by Brewster, Chung and Sparrow (2016) the reason for more focus on
innovation from Xiaomi is that the company is the new in the manufacturing of latest
technologies and therefore, uses the latest technologies to understand the mentality of the
people to manufacture the products.