Approach to Business Strategy at Apple Inc - Case Study Example

Apple: Business Strategy Name Course Name and Code Date EXECUTIVE SUMMARY According to Griffins (2008, p.207), he states that organizations can pursue differentiation, cost leadership as well as focus strategy at the business level. A firm that pursues differentiation strategy is after distinguishing itself from its competitors through the quality of products and services it provides. Organizations that successfully implement the differentiation strategy can charge more than its competitors since its users will be in position to pay more so that they can get the additional value they are after. Apple pursues a differentiation strategy. Apple products are beautiful and carefully designed and have innovative features absent among its competitors’ products. Apple’s reputation gives it a chance to charge more than what its competitors charge. According to Heracleous (2013), Apple implements overall cost leadership strategy attempts to get a competitive advantage by lowering its costs below the costs of its competing firms. When a firm keeps its operational cost low it is able to sell its goods at low prices and make profits at the same time. A case in point is Timex, Timex uses overall cost leadership and for many years now it has been specializing in the manufacture of simple, low-cost watches for mass market. Its watches have a starting price of $39.95. The price is low since it has an efficient high-volume manufacturing potential. Apple has also implemented this strategy since at one time it sold iPod shuffle at $49 as well as the Mac mini at $499. Later on, Apple enticed the users to upgrade. This was the same strategy that they used with the iMac and the outcome was great. Lastly, focus strategy. This strategy aims at concentrating on a specific product line, regional market or group of buyers (Wit & Meyer, 2010, p.270). Focus strategy may have differentiation focus, in this case the organization differentiates its products in the focus market or an overall cost leadership focus, in that the organization manufactures and sell at a low price in the focus market. INTRODUCTION The fundamental objective of this report is to explain Apple’s porter’s generic strategies. The paper has illustrated the three strategies that include differentiation, cost leadership and focus strategy. The paper has explained these strategies using a number of measures that have been put in place by Apple, for instance, beautiful design, user interface, low entry point, complete solutions, proprietary formats, support, branding, buzz and innovation among others. MAIN FINDINGS Reputation According to O’Grady (2009, p.42), over the years, Apple has had a strong reputation for simplicity, beauty as well as quality; all these are part of its mission. Apple emphases on its user experience as well as it are rewarded with strong sales as well a fierce loyalty as a result. Apple is always quiet and very secretive regarding their future strategies, especially when it comes to new products yet to be released in the market. For instance, Apple’s staff members are usually instructed not to comment on any unannounced product. The most common refrain from its staff on new product is “Apple does not give comments on unannounced products”. This refrain is very common that journalist will print the refrain without calling Apple for comment (Barker, Valos & Shimp, 2012, p.336). Interestingly, Apple has considerable success with little focus group testing, barely any beta testing as well as a public relations department, which is wound more tightly than a drum. Surprise is their primary strategy. It keeps quiet since it develops suspense since it expects big money upon launching its new products. A new Apple product announcement makes millions of dollars because of free publicity in the mainstream media and on the internet, and the bigger surprise is the free coverage its gets. This is just part of their strategy to get attention, customers and eventually, money. Apple’s strategy is very simple: mediocrity is the enemy of excellence. Apple’s success is not just a matter of being lucky or good fortunes. While those play part, the firm spent the last decade perfecting on a complex strategy, which yields a seamless mix software, hardware and services. Apple products are user-friendly and very powerful (Prashant, 2012, p.205). The products are unobtrusive, inviting and motivate the user to be creative without getting in the way. Apple’s philosophy is to develop products, which are user-friendly and designed beautifully. Simplicity is the mantra. Overtime Apple’s calling cards have been that it “just works.” Additionally, a majority of its products is designed intuitively therefore; they do not necessitate the user to go through the manual so that he can comprehend how to operate the gadget. Evidently, when you ask Mac users whether they read the manual, they will say they have not read the manual. Steve Jobs Inopportunely, the simplicity idea almost evaded Apple around 1990s. However, without Steve Job’s eagle eye watching over the coop, Apple produced many confusing as well as similar products so that they could battle IBM PC and consequently scaring its customers away. In 1997 when Steve Job’s came back, his strategy was to clean house. Job’s was able to accomplish this by eliminating unprofitable products that were in the market. Instantly, he killed all clones that were cannibalizing Apple’s sales as well as the Newton that was a$ 500 million money pit. Steve Job simplified Mac models. As a result, Apple reduced its array of computer models to four. He reduced the number of computer models so that they perfectly fit in his product matrix. Steve job beefed up Apple’s existing products line and improved on them. Steve Jobs would upgrade Apple’s best-selling products after every 9 months will appeal innovative features that Apple users wanted (Lusted, 2012, p. 67). Lastly, accessing developed markets, which had considerable profit margin potential. Apple would watch while its competitors spend R&D money into new products and markets (Mazzucato, 2013, p.92). Apple would then analyze where they went wrong and they would release their new version that does not have anything that is bad. Other strategies, which contribute to the bottom, include: a) Beautiful design It is clear that attractive products tend to sell faster compared to dull and unattractive products. Apple ensures that its products that are released to the market are appealing visually. Steve recruited Jonathan Ive, a visionary industrial designer, for his beautiful but simple designs (Jarrett, 2010, n.p). Apple’s iMac, iPhone and iPhone are recognized universally because of their appealing design and eventually Apple gets handsome sales Ferrell, 2012, p.329). Apple takes their design to the next level and every part of its experience is designed carefully, this includes the packaging, the box as well as the cables and accessories. Therefore, even before the customer open the box all part the experience is choreographed carefully in Cupertino. b) User interface – apart from its hardware that is beautifully designed, Apple has a tight control regarding its software feel and look (Edson, 2012, n.p). It publishes user-interfaces instruction, which program developers ought, to follow and the result is an unwavering consistency as well as predictable user experience. c) Low-entry points – for a long time Apple had been selling its products expensively it devised a strategy that would attract all and sundry. For instance, they introduced an inexpensive iPod shuffle at $49 as well as the Mac mini at $499. Later on, Apple enticed the users to upgrade. This was the same strategy that they used with the iMac and the outcome was great (Zylla-Woellner, 2013, p.76). d) Complete solutions – new Mac ship with iLife. iLife is a strong and full-featured software suite. Mac user can be productive without having to add any software. Its programs are designed so that they can be interoperable as well as compatible so that it can work with any other Apple software. Additionally, its software and hardware are designed in a manner in case a user has a problem with how it is working, there is no finger pointing among vendor or shifting the blame among vendor instead, the customer can ask the company. e) Proprietary formats – most of the commercial music tracks that are bought on iTune are encrypted with FairPlay DRM that enables it to be played on Apple products only (Parsons, 2013, p.466). Therefore, when a customer has invested in Apple music then it is not in their best interest to change to a different platform unless they do want to have access to the tracks that they purchased. This strategy makes it to have repeat customers. f) Support – consistently, Apple has high customer satisfaction rating for technical support. For instance, at one time it won top honor in Consumer Reports annual survey. It was ahead of its closest rival by double digits. The win can be attributed to Apple being responsible for its software and hardware as well as service unlike its rival who bestow the responsibility upon vendors or do not have such plans at all. This gives Apple a chance to control quality and make sure that everything works pretty well (Decker & Jackson, 2013, p.170). g) Branding – Apple has a great marketing sense, for instance, from its popular “1984” TV commercial to “Think Different,” to “I’m a Mac” (Kahney, 2010, p.131). Apple’s campaigns are funny, insightful as well as interesting at the same time. Many people like Apple’s ad to the extent that they analyze the ads, purchase the posters as well as post Apple’s television commercial on their Web sites so that other people can watch. The ads are posted free of charge therefore Apple’s will get much publicity for free compared to its competitors who spends millions of dollars on publicity. Many corporation envy Apple when it comes to them getting free publicity. h) Buzz – Apple’s employees as well as its public relations department are religiously tight-lipped. This has made a cottage industry of journalist who follows Apple’s moves so that they can get a tip of any new product since they know that they will reap big from such revelations. The name blogger was invented for many enthusiasts who write about every Apple’s whim. The firm gets millions of dollars annually because of free publicity generated from its adherents (n.a, 2013). Innovation Apple has specialized on making innovative products. Seemingly, this is why they are always mum on their unannounced products. The firm has a pedigree of developing new technologies as well as adapting its technologies to the masses (Yarow, 2013). Some of its biggest innovations include: a) The LaserWriter - 1985 In 1985, the firm released Macintosh Office that had Laser-Writer feature as well as AppleTalk networking technology in so that they could entice small businesses. Apple’s LaserWriter plus Adobe’s PostScript was a great revolution in the publishing and printing word. b) PowerBook 100-1991 This was a serious notebook computer. The PowerBook 100 was not innovative but it opened way for PowerBooks, which came in an array of shapes. c) The First PDA -1993 The Newton MessagePad was an innovative product for Apple and was a great step towards the unknown field of PDAs. CONCLUSION Apple is committed to bringing the best computing experience among its users (Grant, 2010, p. 23). Its business strategy leverages its distinct ability through design and development of user-friendly products. Apple believes in investment in research and development, this has helped it to be very innovative in the cutthroat computing industry. Apple has been able to expand its territory owing to its high-quality sales as well as after-sales services, for instance, as mentioned before it has won several awards due to its excellent support services. The organization has instituted a number of innovative strategies that have helped it beat its competitors. The organization also has a strict policy on divulging information on new products yet to be released to the public. This has enabled the company to get much attention after the product has been officially released. In most cases, it has even led to free publicity. This has enabled it to increase its sales hence getting more profits. RECOMMENDATIONS It is clear that Steve Jobs was very instrumental in the success of Apple. Therefore, after his death Apple is likely to be rocked with a myriad of challenges. Therefore, Tim Cook should ensure that the business is on track and enhance technological innovations being developed by Apple (n.a, 2013). Apple should be wary that not all computer geeks are loyal to one product or company even though it has strong customer devotion. In case a rival company develops a technological and innovative breakthrough, its users are likely to change positions anytime. For instance, in the recently judged case which Apple had sued Samsung for imitating its iPhone features, this is a big threat to Apple. Let us imagine if Apple had lost the suit, it would have implied that Apple would have had big losses in the near future but thanks are to Apple’s competent legal team. Recently iCloud products have increased considerably but Apple has never focused in that field. The field is now occupied by its competitors who have become strong as a result. This disadvantage can be a chance for Apple to go ahead in the gadget/software (cloud software) combination that prompts its customers to buy both. 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