Apple Case Study mgt-201

Introduction

Apple Inc. has become a successful business in a global consumer electronics market, previously known as Apple Computer. By innovative products and distinguishing them with superior standards of service and high-quality products, the firm managed to outsell others. Apple has outsourced its production to a reliable third party manufacturing company called Foxconn Technology to ensure that standards are complied with. The smartphone industry has been moving toward marketing in recent years, in the three months ending March 31, Apple sold 52.2 million iPhones (Tibken, 2018). The intensive competition resulted in continuous innovation to resist its commercial marketability. Apple has strategic strengths such as custom-made hardware/software solutions to put the company in price, availability, inimitability, and non-substitution. However, the company may need to evaluate its corporate suitability to retain its dominance in the industry and preserve its market share as the best smartphone (United States Securities and Exchange Commission, 2019). This essay will review Apple’s strategic mission and vision, the business model and value price cost framework and also the strategy will be tested by fit test, competitive advantage test, and performance test.

Apple Inc. Operations

Apple is a technology company that has consistently developed, produced and sold its diverse line of products, including Mac, iPod, and iPhone, introducing innovators in the fields of laptops, TV Tablets, video devices, and mobiles. Apple now offers a range of related software, apps, products, networking tools, peripherals and digital content from third parties, marking a new period in Apple’s creativity and differentiation. Although the digital touch panels are not the new Apple has managed, by developing and releasing the first iPhone in 2007, to gain mass adoption on the electronics market. The company seems early to have created a new market for its brand, requiring everybody else to reach the standards of Apple products (Elliot, 2012). The company sells its products globally via its retail stores, online shopping, and direct selling companies as well as cell network third parties, wholesalers, retailers, and resellers. The best way to take the future course is to develop a strategic vision of what the company will be in the future, compare it with how the organization is now, and then develop a strategy to bridge the gap: the Strategic Plan. They demonstrate how to do it efficiently and effectively within the Strategic Vision (Cowley and Domb, 2012).

Apple Strategic Vision

“Innovating complex technologies in a simple manner to achieve optimal user experience by deep collaboration and cross-pollination” since its inception Apple has been producing products in a simple manner, the new strategic vision will not change the foundation on which the company lays. To further breakdown the strategic vision of Apple. The strategic vision for Apple suggests a vertical integration approach. This practice has an effect on distributors and the supply chain of the business. The focus is also placed on performance. The Apple corporate view statement functions like a value and company philosophy specification based on these details. Focus on innovating is placed to handle complex technologies but in a simple design that Apple has known for. The essential factor in this vision is the user experience for Apple products the vision has set the direction clear for the company to achieve the optimal level of experience for all users.

Apple Mission

The goal an organization works for is specified in a mission statement. For apple, the mission statement would be “Apple designs the best hardware for Macs, iPhone and IPad with the technologically advanced OS to revolutionize the industry”. The mission statement of Apple primarily sums up the products it produces and its technological value. The value of its services is well known to all Apple fans and consumers. Apple is in personal computing as well as technical. It develops excellent hardware and software which has no competition. Above all, Macs in the desktop-class are considered the best. The next is Apple OS and the other performance software.

The Business Model and Value-Price-Cost Framework

A business model of an organization illustrates the manner in which its approach can create value to consumers, thus raising enough profits to pay for expense and benefit. There are two elements in the business model for any organisation the first element is customer value proposition where the firm’s overall strategy is established and the approach towards customer satisfaction is laid out by providing the product/service to the customer at a good value, the attractive proposition is of greater value and lower price. The second element of the business model is profit formula where the cost structure is determined that will generate profits in comparison to the customers’ value proposition. The price which is charged to the customer is subtracted from the customers’ value proposition should be higher than the cost of the firms it increases the ability to convert the business in money-maker (Thompson, Peteraf, Gamble, and Strickland, 2017).  In its opinion, the company’s purchasing experience with expert salespeople is highly effective, so it has the opportunity to transmit the value of its products and services to attract and retain clients. From the beginning, Apple has been a leader in premium prices. The original iPhone was $499, which for a phone was unpredictable. Due to its reputation as a hardware and software company, Apple could allow this price point. Since then, the virtuous circle has continued to run. Low expected, valued interest supports fluctuations of costs. This indicates that the value pricing strategy can benefit high-end premium brands absolutely and is fully compatible with their e-commerce expansion:. Apple is capable of combining all aspects of key strategic resources/capacity into one, and its sustainable value and success in seizing opportunities and reducing threats, enable it to be above competitors. The value-based pricing of Apple Inc. ensures that the highest cost can be paid and profits maximized. It can lead to a digital high price ring that promotes high value perceived and high prices. Since value depends on the perception of customers, value-based pricing only applies to certain segments of the product market and not to the vast majority of products. Therefore, it is important for companies to grasp the preferences of their consumers and to produce the right values. In order to learn and spread the principles of goods, this requires a substantial budget for market research and advertising. Finally, pricing based on value fosters high competition in the markets. New competitors can bring me-too products at a lower price and dent market shares for the brand. The perceived value for Apple products is based on its willingness to position and identify its products separates itself from rivals. Apple is able to gain market uniqueness thanks to its innovativeness in industrial design, specialist hardware/software, and strategic retail position. It means that Apple Inc. has a brand identity and superior quality as a profitable company. The inimitability of Apple in most of its business capabilities allows the company to achieve a competitive edge over its rivals. It’s custom software and OS in particular. Although Apple has a talented software development team, the fact that competitors can train and develop staff is always inimical. In fact, the strong strategic capabilities of Apple also preclude the replication of rivals. This perceived value exceeds the premium pricing set for apple products, the targeted perceives the value above cost, even in a highly competitive market apple has differentiated its product on being a premium product.

Testing the Apple Strategy

As Christensen, Bartman, and Van Bever (2016) describe, the fit between business opportunities and models is systematically evaluated because innovation in the business model is too important for happenstance and devaluation.

Fit Test

A good strategy must be well-connected with competition and economic dynamics, market opportunities, and challenges and other facets of the outside world of the organization. At the same time, it should be adapted to the strengths and weaknesses of assets, expertise, and experience of the organization (Thompson, Peteraf, Gamble, and Strickland, 2017).  Apple’s current aim is to provide its customers with the best product experience by offering outstanding high and low-medium products that are user-friendly and feature-friendly, innovative in design, integrate seamlessly sale excellence and after-sales support experience for the consumer. Combined with this strategy Apple succeeded in achieving a high-profit margin where its smartphone is produced cheaply and sold at a premium price. The innovativeness and competitiveness of Apple have set its strategy apart from its competitors and it is fit with the external environment, the consumers of the industry seek innovations regularly even at premium prices. Apple has been dominating that aspect of the industry since its launch. With the help of its mid-price ranged products, it is also catering a market to increase its target market. The strategy has been clear for Apple give the customer a premium experience from a premium product at a premium price which holds a higher value than its cost.

The Competitive Advantage Test

To analyse the competitive advantage test for the strategy of Apple we will use the VRIO method of evaluation measures value rareness, imitability and market organisation. The final objective of this internal analysis is to assess the corporation’s key skills and competitive advantages based on the VRIO variables. Apple Inc. is, in this case, using its core competencies to achieve competitive long-term advantages over aggressive competitors.

Apple’s Organizational Resources & Capabilities	V	R	I	O
– Automation of the business process	✔
– Internal capabilities for innovation	✔	✔
– Range of the product mix	✔	✔	✔
Sustained (Long-Term) Competitive Advantage(s):
– Universally recognised premium brand	✔	✔	✔	✔
– R&D for innovation	✔	✔	✔	✔
– User Data Analysis	✔	✔	✔	✔
– Global distribution and sales network	✔	✔	✔	✔

 

Non-core competences include automation of business processes that is valuable, but common across the industry and also in other industries and markets. Competitive pay plans for working people are a function that lets the business retain a highly trained and quick technology worker. This capacity, therefore, forms the key competency of Apple as it also provides attractive employee compensation plans to other technology companies, including Google and Microsoft. The human resources of Apple are common in other businesses in IT, consumer electronics and the digital/online services industries in this connection. The increasing versatility of the product mix of the organization is an indication of a proactive effort to reduce the sensitivity of the firm to market risk. A global brand is a key asset for this business because it is unique, uncommon and (if not impossible) difficult to replicate, and the organization is structured around the use of this product as a major competitive force. Apple has also developed its systems for fast innovation, which would be a key factor for commercial success. This resource/capacity allows the company to maintain a high level of innovation, especially for hardware products such as the iPhone. The large global user base of the organization continues to gather valuable information to support creativity and innovation through product development as well as effective marketing strategies, and strategic planning. Apple Inc.’s broad network of strategically located approved manufacturers and dealers ensures a long term competitive advantage. The network simplifies the business strategies and practices of the company to reach its core customers globally.

Performance Test

A good strategy enhances business performance. There are two types of improvement in performance: profitability gains and long-term business strength gains and competitiveness. Apple Inc. has been tasting the perks of profitability since 12 years now and has been dominating the market share as well as the profitability factor, the products of Apple has set itself apart and have achieved long term strength being in an industry which requires constant innovation and upgrading with a high risk of imitation. It is only due to no dependency, apple designs, manufactures and sells its products which translates to having total control over its value chain. The strategy will provide profitable gains as the value perceived for the consumer is still higher than the cost associated with the product and the design, software and brand image has given the company long term strength in competitiveness.

Conclusion

Apple Inc. has clearly recorded commendable technological industry performance. The organization has succeeded in providing its customers with high-quality services at the level that most organisations have not achieved. The company has also managed to keep creativity running. The mission and vision created for Apple have a high value perceived with all the tests on the strategies being positive. It is essential to understand that Apple is recognised for its innovation, the constant upgrading of the technological industry in recent years gives Apple to grasp on those opportunity and keep producing complex technologies in a simple manner with a premium user experience.

References

Cowley, M. and Domb, E., 2012. Beyond strategic vision. Routledge.

Elliot, J., 2012. Leading Apple with Steve Jobs: management lessons from a controversial genius. John Wiley & Sons.

Haaker, T., Bouwman, H., Janssen, W. and de Reuver, M., 2017. Business model stress testing: A practical approach to test the robustness of a business model. Futures, 89, pp.14-25.

Thompson, A.A., Peteraf, M.A., Gamble, J.E, and Strickland, A.J., 2017. Crafting & Executing Strategy 21/e: The Quest for Competitive Advantage: Concepts and Cases. McGraw-Hill Education. ISBN 9781259732782

Tibken, S. (2018). What iPhone slowdown? Apple’s sales are better than feared. [online] CNET. Available at: https://www.cnet.com/news/apple-second-quarter-earnings-revenue-guidance-are-better-than-expected-but-iphone-sales-dont-soar/ [Accessed 24 Nov. 2019].

United States Securities and Exchange Commission (2019). K-10. Apple Inc. [online] Available at: http://www.annualreports.com/HostedData/AnnualReports/PDF/NASDAQ_AAPL_2018.pdf [Accessed 24 Nov. 2019].