Apple Strategic Analysis - Case Study Example

Apple Strategic Analysis Name Institution Course Date Apple Strategic Analysis Introduction Apple Inc. (Apple) is American multinational electronic giant founded in 1977 by Steve Jobs, Steve Wozniak and Ronald Gerald Wayne. Apple currently ranks among Forbes most valuable brand and engages in the design and manufacture of a variety of products among them being iPhone. Apple released its first generation of iPhone in June 2007 and has since sold more than 500 million iPhones to customers (Lüsted 2012, p. 2). However, Apple iPhone is facing a number of challenges, including stiff competition from Samsung tabs among others. This report begins by examining the major structural features of the electronic industry in which iPhone is offered and how these features affect options open to Apple. The report will also explore the ways in which Apple’s resources and capabilities provide competitive advantage. The third part of the report details the ways in which the structure of Apple affects its ability to compete in the industry. Lastly, the report will discuss how Apple pursues generic strategies with respect to iPhone. Industry Structure The technology industry is one of the fastest growing industries in the world. The most outstanding feature of the tech industry is that the industry has diverse customers with diverse need. The market is very huge and is divided into different market segments. The first feature of the industry is that it is segmented demographically. Demographically the industry is segmented according to age, occupation, family size and life cycle. The industry is also segmented geographically, according to states, countries and regions. Apple iPhone, for instance, is sold in different parts of the world, including the U.S., Europe, Australia, Africa, South America and Asia (Sadeghi 2012, p. 11). The tech industry is also segmented according to behaviors of consumers. These include focusing on product knowledge, attitudes, usage and responses. The last feature of this industry is that is segmented according to psychographic. These include targeting consumers according to their values, personality and lifestyle. The fact that the industry is highly fragmented and has customers with diverse needs has affected the options available to Apple by giving the firm the opportunity to design an iPhone with features that are accustomed to the different consumers with different needs. In this regard, Apple has segmented its market demographically by introducing iPhones that target teenagers, college students, business people, kids and adults (Ireland and Hoskisson, 2012, p. 101). The iPhone is also sold in different parts of the world, including America, Europe, Asia, Africa and Australia. Resources and Capabilities Strategic capability of a firm denotes the resources and competences that a company has for it to address the needs of its consumers in the market and succeed. For any organization, regardless of size, resources and competence are fundamental to gaining a competitive advantage over rivals in the industry. Merely having enough resources is not adequate for becoming competitive. Instead, a company must ensure that it takes advantage of its competencies to ensure effective and proper deployment of the resources to ensure competitiveness. Apple’s success in the technology industry is largely attributed to its ability to utilize its key resources and competence. Apple’s resources are divided into tangible and intangible resources. Tangible resources include CEO Tim Cook, programmers, designers, software, hardware, engineers, suppliers and retail stores (Sadeghi 2012, p. 16). Tim Cook is a key resource for Apple considering that he has fitted well in the shoes of the founder Steve Jobs. He has a very unique approach and has strong charisma and vision for the company. Apple also has a team of highly talented professional engineers, designers, programmers, which enabled Apple has become the leader in software production, such as OS X operating system. This team of talented workforce has also helped revolutionize the product portfolio of the company, such as the iPhone and iPod. Unlike some competitors that source software from outside, Apple designs its own software for use in its hardware. Apple also has many retail stores numbering over 400 as at the close of 2011, about 233 stores of which are in the United States and the rest distributed internationally (Sadeghi 2012, p. 27). The availability of many stores spread in different geographical locations is a key resource that helps give the firm a competitive edge over rivals. Apple also has a number of capabilities that gives it a competitive advantage in the industry. These include unique design, innovation, strong brand image. Apple has various core competencies that underpin the iPhone, which is one of its main products. Core competency denotes something that a firm does best internally. The core competency that has enabled Apple iPhone stand out include excellence in innovation and engineering, inventions, creativity, technological development, excellent product design, high-end marketing, and good human resource policy (Sadeghi 2012, p. 38). Effects of Apple’s Organizational Structure on its Operation in the Industry The way an organization is structured affects the success or failure of an organization. According to De Wit and Meyer (2010), a company needs a strong organizational structure to succeed. In this respect, a company must ensure that it is structured in a manner that enables it to achieve its objectives. Creating an effective organizational structure is also critical since structure affects the strategies and how a company operates in an industry, such as coordination of work efforts to ensure success. Apple is regarded as one of the most successful companies of the current times. Although the success of the firm is largely attributed to innovation and effective leadership, the firm’s organizational structure has also been partly responsible for the success by supporting leadership in the company. Because of the importance of organizational structure in company operations, Apple has changed its structure from the initial Spoke-and-Wheel Hierarchy under Steve Jobs to a collaborative structure. During Jobs leadership, the leader was responsible for making all major decisions (Sadeghi 2012, p. 16). However, this has since changed under Steve Cook. Currently, Apple adopts a more collaborative approach that allows different parts of the firm, such as hardware and software teams to work together as partners and participate in decision making to ensure the achievement of a common goal. The current collaborative structure has help promote creativity and innovation from its staff. Accordingly, the collaborative structure has ensured that Apple compete effectively in the industry by keeping a head of its rivals. Generic Strategy In this globalized business environment, all companies, small and large face competition in their market. Therefore, to succeed, Michael Porter, the father of management strategy advised that a company must ensure that it adopts unique and effective strategies. In the process, Porter came up with the generic strategies, which denotes the various ways in which a company can gain a competitive advantage in their industry of operation. The generic strategies include cost leadership, differentiation, cost focus and differentiation focus (Simon and Schuster 2008, p. 22). Source: Simon and Schuster (2008). Cost leadership Strategy Cost leadership is one of the generic strategies that Porters proposed for gaining a competitive advantage in an industry. According to Porter, cost leadership is a strategy that involves a company becoming the low cost producer in the industry (Simon and Schuster 2008, p. 23). Being a low cost producer allows a company to achieve a competitive advantage in two ways. First, it allows a firm to increase its revenue and profits by reducing cost, while charging average prices in the industry for products and services. Secondly, cost leadership allows a company to increase its share of the market by charging lower prices than competitors while still making good profits for every sale made because of the low cost of production. Differentiation Strategy Differentiation is a strategy that involves making the products and services unique and more appealing to customers than rivals. According to Porter, a company can differentiate itself from competitors in the market by enhancing the features, functionality, durability, and brand image of a brand (Simon and Schuster 2008, p. 25). This ensures the delivery of quality services and products to customers in the market, thus competitive advantage. Focus Strategy Focus is a strategy where a company identifies a particular niche market and develops products and services that suits the needs of customers in that market to the exclusion of others (Simon and Schuster 2008, p. 27). Because companies that adopt a focus strategy are able to serve the market in a peculiar and satisfying manner, they are able to build a strong brand identity and customer loyalty. Cost strategy can be cost focus or differentiation focus. Cost focus is where a company focuses on the cost advantages when serving its targeted market. Differentiation focus, on the other hand, is where a firm seeks to differentiate itself from rivals in the targeted market segment. Apple uses differentiation strategy to increase the demand for its iPhone and other products. Apple has differentiated its iPhone by coming up with designs that are unique and attractive to customers. For instance, the latest generation of iPhone has unique features, including dual camera, retina display, video phone and high definition video editing and recording. References De Wit, B., & Meyer, R 2010, Strategy: Process, content, context; an international perspective. Cengage Learning EMEA, Mason, OH. Ireland, R. D., & Hoskisson, R. E 2012, Understanding business strategy concepts plus. Cengage Learning, Mason, OH. Lüsted, M. A 2012, Apple: Company and its visionary founder, Steve Jobs. ABDO, London. Porter, M. E 2008, Competitive strategy: Techniques for analyzing industries and competitors. Simon and Schuster, Oxford. Sadeghi, S. 2012, Defensive strategy – Apple’s overlooked key to success. Epubli, New York. Read More