Strategic Analysis of Apple Inc. and Entrepreneurial Activities

This report provides a comprehensive strategic analysis of Apple Inc., examining its internal resources, competitive advantages, and entrepreneurial activities within the smartphone industry. The analysis utilizes frameworks such as Value Chain Analysis, SWOT analysis, PESTEL analysis, and Porter's Five Forces model to evaluate Apple's strengths, weaknesses, opportunities, and threats, as well as the impact of external factors and competitive forces. The report identifies key drivers of change in the external environment and their impact on Apple's entrepreneurial activities. Furthermore, it recommends two strategic options, based on the Ansoff Matrix and Porter's Generic Model, to enhance Apple's market position and entrepreneurial opportunities, justifying these choices using the Suitability, Acceptability, and Feasibility (SAFe) criteria.

Strategy, Enterprise
and Innovation

Table of Contents
SECTION 1......................................................................................................................................1
a) Critically analyse the internal resources and capabilities that give the organisation a
competitive advantage............................................................................................................1
b) Key drivers of change in external environment and evaluate their impact on entrepreneurial
activities of organisation.........................................................................................................3
c) Using appropriate framework, evaluation of impact of competitive forces influencing
entrepreneurial activities and profitability within the industry..............................................4
SECTION 2......................................................................................................................................5
a) Selection and critical evaluation of two strategic options that could be recommended for the
selected organisation in order to increase its entrepreneurial opportunities on the market....5
b) Justification of selection of each strategic choice using Suitability, Acceptability,
Feasibility (SAFe) criteria......................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

SECTION 1
a) Critically analyse the internal resources and capabilities that give the organisation a
competitive advantage
Apple is one of the most trusted brand in smartphone industry. Analysis of internal
environment of Apple in context of smartphone industry can be done with the help of Value
Chain Analysis and SWOT .
Value Chain Analysis
Value Chain provides an analysis of stages starting from raw material procurement to
after sales service. There are two kinds of activities namely, primary the support activities, both
of these explained in context of Apple below:-
Primary Activities:
Inbound logistics:
Apple has a very large supply chain when it comes to procurement of raw materials. Its
major suppliers include 3M and Foxconn.
Operations:
Manufacturing of Apple products takes place in many countries but mainly assembling is
done in China (Dewangan and Godse, 2014). Company emphasizes upon eliminating the use of
toxic substances in manufacturing and assembling.
Outbound logistics:
Apple has a large distribution channel including direct and indirect methods. Products are
available from retail stores to online sites to Apple Stores.
Marketing and sales:
Apple makes use of unique ads including television, online commercials and print ads for
marketing and promotion.
Products and services:
Most of Apple products possess 90 days complementary support and one year warranty.
Also, online store help is available for customers (AppleCare+: Everything you need to know
about Apple’s extended warranty program, 2018).
Support activities:
Technology:
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Known for technological innovation, unique design and superlative quality of its
products, company focuses on increased in-house technology development.
Human Resource Management:
Apple emphasizes both on hiring potentially viable employees and paying them off well.
Company does not compromise with its quality.
Procurement:
Company has maintained healthy relationship with its suppliers who provide products
and services as per brand standards.
Firm Infrastructure:
Infrastructure for Apple is its management, finances and other resources including the
corporate culture and working strategy of company (Edgeman, 2013).
SWOT Analysis
It provides knowledge of the internal environment of company. iPhone's SWOT is dome
below:-
Strengths Weaknesses
 Apple Inc.’s ability of designing and
developing its own software, hardware
and applications aid the company in
introducing innovative and unique style
and features of iPhone with every
model (SWOT Analysis Of The iPhone,
2018).
 Company's brand positioning and
customer loyalty makes iPhone one of
the most well-known and purchased
smartphones in world.
 iPhone has app for everything, out of
which some apps are exclusive to iOS,
Apple's operating system.
 iPhone being recognised for sleek build
and slim design quality is highly
expensive for many people to afford it.
 iPhone battery isn’t removable which
indicates that for occurrence of any
issue with phone, it has to be sent to
headquarters for fixing.
 There are unnecessary restrictions in
iPhone like absence of Bluetooth and
expandable memory.
Opportunities Threats
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 There is a lot of scope for the company
to expand the reach of iPhones to
locations still not covered.
 With high brand recognition in market,
expectations of customers about latest
features in every model that unleashes
in market gives an opportunity to
company to use innovation to develop
iPhones.
 With the availability of cheaper
smartphones in market, company faces
a threat in terms of loss of customers.
 The biggest threat to Apple iPhone is
Android operating system. Developed
by Google, this system is widely used
by people across the globe and its
market will continue to grow.
b) Key drivers of change in external environment and evaluate their impact on entrepreneurial
activities of organisation
External environment of Apple can be evaluated by using PESTEL analysis, explained
below:-
Political Factors: These factors define the extent of government intervention in business
conduct. Apple is highly dependent on China for lower cost manufacturing (Lapalme, 2012). But
political and social instability in China can create interruption in manufacturing or increase
overall manufacturing cost.
Economic Factors: These factors constitute the economic drivers of economy like
interest rate, inflation rate, labour costs etc (Lechner and Gudmundsson, 2014). Apple products
are known for premium pricing, thus, they are not suitable for lower end markets. This is the
reason Apple has been unable to dominate countries like India where still other brands rule.
Social Factors: These include factors like customer preferences, changes in trends etc.
Ethical concerns about Apple’s manufacturing in China could limit its products’ appeal among
socially-conscious consumers (Lapalme, 2012). Lifestyle of people affect the demand of Apple
products like iPhone as some people link possession of Apple products with status symbol in
society. Thus can generate revenue for company.
Technological Factors: Over years, there have been many technological advancements
across the globe (Edgeman, R., 2013). Apple is technology friendly and uses innovation in its
products to attract people. But increasing number of smartphone brands offering same features at
lower cost can hamper the revenue for Apple.
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Environmental Factors: It is imperative for businesses to keep environmental factors
like sustainable development, use of chemicals, recycling of waste etc (Lechner and Godse,
2014). in mind. Manufacturing of Apple products includes the use of chemical. With time,
company has become aware of its ill effects and emphasized upon reducing toxins from its
products.
Legal Factors: Compliance of laws related to health and safety, employment,
manufacturing etc. are considered by organisations (Dodgson, 2018). Apple follows all the laws
including patents, copyright and trademarks as in past, company has been involved in legal cases
because of patents issue.
c) Using appropriate framework, evaluation of impact of competitive forces influencing
entrepreneurial activities and profitability within the industry
Apple uses Porter’s Five Force model to monitor the entrepreneurial activities and
profitability within the mobile phone industry. Application of this framework in Apple is
explained below:- Threat of New Entrant– The mobile phone industry is a well developed marketplace
with negligible chances of new entrants (Gobble, 2012). This is because the capital
requirement in this industry is quite high along with the resources required to develop
products. Also, customer loyalty towards already established brands makes it difficult for
new entrants. Since Apple invest high on research and development and also on
advertisement and setting up of brand value, it is difficult for new companies to pose
threat to the company. Competitors– Presence and availability of substituted products can pose threat to mobile
phone industry as nowadays, many companies are coming up with same applications and
features. This can lead the organization to cut the price of its product which reflects that
there is huge competition in industry (Eesley, Hsu, and Roberts, 2014). iPhone models
have always been a symbol of new ideas like introduction of touch screen. However, the
rival companies develop the products having same features and sell it at cheaper prices
which urge the company to produce something that can differentiate itself from other
brands. Threat of Substitute product- The power of substitute products in this industry is
moderate and it depends on the impact of the substitute products that they can offer the
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same applications and features at an economic price for customers to consider the
substitution of products (Lechner and Gudmundsson, 2014). With android operating
system of Google, there is always a threat of substitution for Apple products like iPhone. Power of Suppliers- The bargaining power of suppliers is low as there is huge
competition in the industry along with the threat of substitution. Apple has set standards
for suppliers in relation to delivery of products and services. The unique material
supplied by them enhances the quality and features of iPhone. This assisted the company
in launching innovative products to compete with rivals.
 Buyer Power– The bargaining power of customers is very high in mobile phone industry
as they possess the power to substitute any product if they think another company is
offering same features at lesser rates (Lechner and Gudmundsson, 2014). Apple has been
successful in gaining customer loyalty in American and European markets but Asian
countries stiff prefer to choose other substitute smartphones because of lower cost price.
SECTION 2
a) Selection and critical evaluation of two strategic options that could be recommended for the
selected organisation in order to increase its entrepreneurial opportunities on the market
Apple is the tech giant in current scenario and definitely the leader in smartphone
segment. Still there is immense scope for iPhone to improve its market position. Various
strategic tools can be taken to improve customer attraction for iPhone, explained below:-
Corporate level strategies
Ansoff Matrix:
In context with an iPhone, Ansoff matrix is useful for finding scope and development of
marketing scenario of the Apple's current and future iPhone (Lechner and Godse, 2014). The
various components of the Ansoff matrix are as follow:
Market penetration- Apple's iPhone are high price ended smartphone and their
accessories also. Apple can acquire maximum attention of their existing customer of iPhone by
adding more innovative features to the new products and selling them at reduced prices than
previous model of iPhone. Here, focus is on retaining existing customers.
Product development- As Apple is continuously working towards upgrading their
existing iPhone by giving quarterly iOS updates to the existing customers. Profitability of the
Apple is connected with selling new developed iPhone, this could be possible with the help of
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adding new technical advancement, classy features such as top notch, thermal face unlock in the
product. Company believes in investing a huge amount in Research & Development so as to
gather knowledge of the demands and requirements of consumers especially the millennials. This
is done with the objective of bringing phones with upgraded and unimaginable features and
applications in front of customers (Gronum, Verreynne and Kastelle, 2012).
Market development- Apple can attract new customer base by selling their existing
iPhone at lower price, in a way to gain users trust and belief about the Apple. Company can
acquire customer's trust by giving free demonstration of the new product to the user to create
interest and faith (Lechner and Gudmundsson, 2014).
Diversification- Apple has recently come up with iWatch which can be easily connected
with iPhone to see messages, calls and time through the smartphone. Company must innovate
additional product such as wireless charging, Bluetooth sound amplifier or navigation software
for the driving convenience.
Business unit level
Porter's Generic Model:
Cost leadership- There are several factors which leads to increase in price of the iPhone.
But still users have faith, trust and they are loyal about their choice. Apple's iPhone is considered
as “Style Statement” and customer are ready to pay for iPhone (Gronum, Verreynne and
Kastelle, 2012).
Differentiation- Apple's generic strategy in context with iPhone is broad differentiation.
There are various function in the iPhone which makes it different from the other brands of
smartphone such as notch feature, thermal face unlock etc. Thus, the major aim of company is to
focus upon this aspect and continuously bring innovation and development in iPhone by bringing
latest features in new models (Eesley, Hsu and Roberts, 2014).
Cost focus- Cost of the iPhone is quite high because of Apple manufactures iPhone only
in USA and export it to different regions and countries. Apple.
Differentiation focus- Samsung is considered as the biggest rival of Apple's iPhone.
Samsung provides pen stylus feature in their smartphone, which iPhone is lacking. It means
customer shifting towards Samsung which is a threat for the Apple.
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b) Justification of selection of each strategic choice using Suitability, Acceptability, Feasibility
(SAFe) criteria
SAFe criteria is used by companies to evaluate the application of strategies in the
entity and to provide justification of those strategic choices.
Ansoff Matrix
Suitability: Top management of Apple adopted Ansoff Matrix to analyse the present and
future scope for iPhone. It can be used by management for carrying out research about
preference and requirements of people (Dodgson, 2018). This helps the company in modifying
the existing product to meet the new trends of technology and demand of customers in relation to
latest features being incorporated in the phone.
Acceptability: This strategy has helped the company in analysing the external
environment of Apple in relation to market penetration and development of updated iPhones,
thus its widely used by the enterprise.
Feasibility: By using this strategy, company has been feasible in achieving the desired
goals by matching the needs of customers through development of products with innovation.
Porter's Generic Model
Suitability: This model gives an insight into the costing and differentiation of iPhones
when compared to smartphones of other companies. By using this strategic option, management
develops an understanding of suitability of prices of iPhones and alignment of features of phone
with the latest technology.
Acceptability: This model is largely used by Apple to know the extent to which the
products of company differ from other business organisations that operate at same level and deal
in smartphones (Lambert and Davidson, 2013).
Feasibility: This strategy applied by company is feasible as it results in company being
able to recognise the level of differentiation in their products from rival and gives them an
opportunity to add more new features to iPhones to gain competitive edge in market.
CONCLUSION
From the above report, it is concluded that there are various aspects of a business
strategy. Business strategies and their related concepts have to be considered by every
organisation to approach a wide range of customers. Strategic planning is essential to ensure that
the approaches which the organisations have applied result in increasing its reach to markets.
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Also, it is concluded that internal as well as external factors of an organisation have to be
analysed in order to keep track of any potential threat to company and its products.
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REFERENCES
Books and Journals
Lambert, S. C. and Davidson, R. A., 2013. Applications of the business model in studies of
enterprise success, innovation and classification: An analysis of empirical research from
1996 to 2010. European management journal. 31(6). pp.668-681.
Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and
internationalization in innovation. Routledge.
Gronum, S., Verreynne, M. L. and Kastelle, T., 2012. The role of networks in small and medium‐
sized enterprise innovation and firm performance. Journal of Small Business
Management. 50(2). pp.257-282.
Lechner, C. and Gudmundsson, S. V., 2014. Entrepreneurial orientation, firm strategy and small
firm performance. International Small Business Journal. 32(1). pp.36-60.
Dewangan, V. and Godse, M., 2014. Towards a holistic enterprise innovation performance
measurement system. Technovation. 34(9). pp.536-545.
Rexhepi, G., Ibraimi, S. and Veseli, N., 2013. Role of intellectual capital in creating enterprise
strategy. Procedia-Social and Behavioral Sciences. 75. pp.44-51.
Gobble, M. M., 2012. Innovation and strategy. Research-Technology Management. 55(3). pp.63-
67.
Edgeman, R., 2013. Sustainable enterprise excellence: towards a framework for holistic data-
analytics. Corporate Governance. 13(5). pp.527-540.
Eesley, C. E., Hsu, D. H. and Roberts, E. B., 2014. The contingent effects of top management
teams on venture performance: Aligning founding team composition with innovation
strategy and commercialization environment. Strategic Management Journal. 35(12).
pp.1798-1817.
Lapalme, J., 2012. Three schools of thought on enterprise architecture. IT professional. 14(6).
pp.37-43.
Online
SWOT Analysis Of The iPhone. 2018. [Online]. Available
Through:<https://pestleanalysis.com/swot-analysis-of-the-iphone/>.
AppleCare+: Everything you need to know about Apple’s extended warranty program. 2018.
[Online]. Available
Through:<https://www.macworld.com/article/3227045/hardware/applecare-warranty-
faq.html>
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