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Apple Inc. Business Strategy Analysis

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Introduction

As businesses’ activities become more globalized, competition continues to rise in today’s commercial climate. To obtain a competitive advantage over their competitors, they mostly use business- and corporate-level tactics. Business-level techniques include actions carried out by businesseslii, such as using fundamental capabilities that provide value to customers. This may take the form of having one-of-a-kind operations that provide goods that are distinct from those offered by competitors. To achieve a competitive advantage, a company may use five business-level tactics. Differentiation and concentration are two of them (Rothaermel, 2021). This paper will look at Apple Inc.’s business and corporate strategy. Apple Inc. is the world’s biggest consumer electronics company.

Apple Inc. Business Strategy Analysis

Apple’s Business Model

Apple is a modern American corporation run by a single person’s personality and ideas. Steve Jobs’ incredible inventions propelled the business to new heights. On the basis of hardware sales and high-quality devices, the business easily outperforms its competitors. It enabled a significant proportion of Millenials to grow up with Macs. This is aided by the company’s tenacious commitment to integrating its products, making it simple to use Apple products and more difficult to switch to a competitor’s product. The “Apple Ecosystem Lock” is what it’s called (Banerjee, 2020). Because it is in the historical manifestation of its golden innovation, the iPhone, the company’s economic model is weak. According to Banerjee (2020), iPhone sales account for more than half of Apple’s revenue, and no other comparable invention has been created.

Value Proposition

Even in today’s competitive consumer electronics industry, it’s difficult to imagine a device that is more classic than the iPhone. It’s also difficult to envision the company’s flagship smartphone gadget becoming a product with a lot of competition. The iPhone’s value proposition provides a one-of-a-kind experience. This is reflected in the device’s form, the ease of use that has been a cornerstone of the company’s design style since the introduction of OS X, and the user’s ambitious capabilities. Apple thinks that a phone should be more than a collection of functions (Payne, 2017). Apple is well aware of how crowded and competitive the intelligent device industry is. As a result, rather than focusing on particular features, of which almost none are unique to iOS or the iPhone, Apple Inc. has chosen to concentrate on the iPhone experience.

Most firms cannot pull off through the use of words like “magical” to define the use of a smartphone, but Apple can. Apple uses its familiar achievements and depends on aspiring messaging to show its value proposition. Still, the iPhone website has some of the exclusive features of iOS and iPhone to make its case, which includes its security. As stated by Payne (2017), the company knows that even concentrating on the exclusive features of the iPhone would be inadequate to differentiate the device in the crowded market. By stressing the whole experience of using the device, the company’s value proposition is as distinctive as its approach to aesthetics and design of its products.

Apple Business Level Strategies

Differentiation Strategy

Apple has been dominating the technology industry for a long time. This has been boosted by the continuous introduction of new technologies in the iPad, iPhone, and Mac13ook. One area that the company beats its competitors is the differentiation of its goods, where it has dominated in mobile phones, computers, online music stores, and digital music players (Aliekperov, 2019). Apple engages a single firm to provide hardware and operating system for its products.
This allows the firm to concentrate on the quality of its design. Besides, the business is positioned in the high-end market because of its reputation for manufacturing products of high value to its customers. Also, Apple uses a differentiation strategy in distributing its products, where it has established retail stores globally. Furthermore, the business’s service delivery is superior and unique as its brags a state-of-the-art bar for technical support, dedicated and continuous customer service. It allows its clients to sample their goods before purchase. Such strategies have made the business maximize its profits by providing products that stand out in design and quality, user-friendliness, and advanced innovation.

Cost Leadership Strategy

Generally, companies struggle to maximize profitability through effective production and delivery that increase cost-saving. Apple Inc. has a heavy investment in product innovation through a vibrant Research and Development (R&D) department (Lockamy III, 2017). Cost leadership strategy involves providing high-value goods and acceptable to clients at a reasonably competitive and low price. This is achieved by establishing efficient scale facilities, minimizing production and overhead costs, minimizing costs related to sales, research and development, service delivery, and installing efficient and updated production facilities (Lockamy III, 2017). The strategy is the most widely used and increases profitability. 

Apple Inc. has implemented this strategy by providing cost-effective and high-quality products using economically viable and affordable raw materials. This is improved by an innovative and influential staff and management team in marketing, production, and delivery of goods. Another cost leadership strategy applied by Apple is forming business alliances with other famous corporations, allowing the corporation to focus on market intelligence and innovation (Lockamy B1, 2017). For instance, Apple provides an iTunes service that helps other companies to distribute videos, music, and games digitally at a reduced cost, thereby abolishing the need for physical tapes and disks. Finally, the cost leadership strategy has been more successful by eliminating intermediaries and distributing its goods through its website. 

Apple Corporate-Level Strategies 

Diversification

The company’s corporate-level strategies comprise the close-related diversification of its goods at high and moderate levels, including personal computers, home computers, music stores, mobile phones, and software. This diversification strategy is that the customers can receive their ideal product of a design standard and high quality because all products are highly combined and run on one operating system. Also, Apple Inc. has a mixture of entertainment and personal computing and a high degree of integration, making it more effective in producing and delivering goods at reasonably competitive prices while remaining profitable (ling, 2018).

Strategic Alliances 

Another corporate strategy involves forming strategic alliances to gain from economies of scale, tap skills from rivals, and share costs and risks. Among the coalitions that Apple Inc. has entered include AT&T for the manufacturing of iPhone, Intel for processors, and Microsoft for software products used in Mac computers (Jing, 2018). 

Globalization

The company has established its manufacturing base in China to take advantage of access to raw materials, low labour costs, high potential market, and an encouraging economic environment brought about by the stability of the economy of China. Apple beats its competitors by manufacturing standard products globally because manufacturing and engineering design are closely centralized and controlled. Therefore, it becomes easy to recognize its products, the only customization being the ability source due to the voltage differences in different countries. (Jing, 2018). 

Apple Competition Environment Analysis

The Information Technology (IT) industry is highly competitive, given several players operating in the sector. Apple Inc. faces stiff competition at every level and line of its business. In the computing sector, it faces excellent rivalry from IBM, Microsoft, HP, and Acer. In the smartphone sector, Samsung is seen as a direct rival, while in portable music devices, Microsoft is the company’s main competitor. With the continuous expansion of the world market, there is increased competition because of the globalization of trade. Mainly, Apple’s iPad and iPhone are compared with the smartphones produced by Samsung (particularly the galaxy family). Indeed, there is a tough rivalry in the smartphone business. In 2013, competing brands for Apple’s tablets took almost 28 per cent of the Apple tablet’s market share during the second quarter (Dolata, 2017).

Despite such rivalry, the company’s business-level strategies have helped it continuously control the market due to increased differentiation strategy revolving around its ability to establish and grow its hardware and software, constant innovation, and vibrant team for Research and Development (R&D). R & Apple focuses on innovative products in a wide competitive range, mainly iPhones, iPads, and the iTunes store. In 2013, the business produced an iPad Air that followed the Mac Pro desktop and MacBook Air notebook (Dolata, 2017). This differentiation enabled the company to price its products at a premium while retaining its loyal clients. At the corporate level, Apple’s major competitor is Samsung, known for its line of the smartphone business, with the most recent trends of  Galaxy S putting iPhones behind based on features and technology. This competition is more forceful considering that Samsung invests heavily in competitor intelligence and ostentatious distribution channels and supply chain. This makes Samsung’s revenues keep on rising. However, to deal with this challenge, Apple Inc. has ensured that its products have a standard design system platform. Additionally, it has established online stores and retail stores that provide a suitable way for clients to buy and allow the business to operate at reduced costs. Also, its App stores and iTunes store make the company a leader in access to digital music, apps, and video.

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Further, Apple has recognized the strength of corporate diversification, strategic alliances, vertical integration, and internationalization in beating off competition (Amadeo, 2019). Provided that competition adversely affects the market share of the company in the industry, Apple Inc. It needs to be more potent in its corporate-level and business-level strategies. According to Dolata (2017), Samsung poses the ultimate threat in the smartphone market, considering the previous court suit about the two firms on allegations of imitations and patents. Samsung seems a strong force in the future, given its research and development strategy, innovation, promotion, advertisement, and penetration. 

Competition in Slow-Cycle and Fast-Cycle Markets 

The IT industry lies more in the fast-cycle market. Dolata (2017) stated that some goods have shifted to a slow-cycle market (like the PC’s), others remaining in the fast-cycle market. Tablets and Smartphones have recorded the fastest development ever seen before, with the new gadgets hitting the market and being replaced immediately even before the clients have a complete orientation. The two rivals, Apple Inc. and Samsung seem to continuously push very hard to surpass one another in the smartphone industry. For instance, Samsung has introduced the Galaxy family smartphones, which hit the market with, but even before the ducts sink to the minds of consumers, Apple is hitting back with more classy iPhones. With such a trend, there is a big future fight for both businesses, and no one can be sure of being the leading firm in the industry and remain profitable. Apple Inc. It appears to have a brighter future compared to Samsung in the slow cycle market.

Conclusion 

The IT sector is very competitive and needs companies that operate to be extremely intense in their policies to gain a competitive edge and make a profit. Businesses can apply both business-level and corporate-level strategies to make them more attractive to their customers. Apple Inc. has established a business-level plan that focuses on differentiation and cost leadership, making the firm a leading force in nearly every line of business, with products such as iPhones, Mac computers, iPods, iTunes, or App stores taking the largest market share. Its complete retail stores and engineering design strategy, where tailored services are provided, works well for the business. Finally, the business’s corporate strategy of strategic alliances, diversification, and globalization have been positive. Though, in the current fast-cycle market, stiff rivalry exists among big corporations like Samsung.

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