Discuss about the Strategy and Culture Management.
Apple is a technological organization, which had to attain high success in the field of designing, producing as well as selling off a huge range of products, such as iPod, iPad, and iPhone, that brings innovation in computers (Hubbard, Rice & Galvin, 2015). Mobile phones, media tablet, along with Portable music players. Along with this, Apple also provides a huge range of software, networking solutions, application services, third-party digital content, as well as peripherals that depict the revolutionary time of differentiation and innovation of Apple. Although it is noted that touch screens are not something new, still Apple managed to become the first in attaining the huge market adapter for the technology by developing and launching the first ever series of iPhone in the year 2007 (Hubbard, Rice & Galvin, 2015).
The phone was popular due to its virtual, which was created by the new category within the market by leaving everything else. The target market of Apple cover up teenagers, university, and college students, along with young children, adults, business people, and kids. In the year 2012, Apple had around 412 retail stores in around 14 countries of the world (Zand, 2009). Simultaneously, Apple had 72800 employees as permanent and around 300 as temporary workers all over the world (Zand, 2009).
As per the financial report, the organization recorded around total net revenue of around $156508 million in the 2012 fiscal year that also depicts the rise of 6% in the 2011 fiscal year. The company also recorded the net profit of around $41733 million, which was an increase of 61% in the 2011 fiscal year. It is depicted that, gross profit margin of Apple rise from 40.5% to around 43.9% in the last two years. It had happened mainly due to the efficient implementation of the differentiation strategy and cost-leadership in the years (Zand, 2009).
Detect and discuss the strategy that the organization (or SBU) is implementing/has executed by examining its strategy statement and its value chain activities.
There is a shift in strategy at Apple for their business of Smartphones because the company had tried to change in their leadership practices in the year 2012. The current goals of Apple are to provide customers with the best experience of product through providing them with high as well as low-end items, which are user-friendly, includes innovative features that relate to the excellent sales along with post-sale support customer experience (Mankins & Steele, 2005).
Apple tried to outsource the core production of its items to the third party original manufacturer of equipment’s, which attain the cost savings by the massive economies of scale, where else in housing components of the design attract as well as retain the users. The company excels in the field of the user interface, and industrial designs and emphasize over these areas for the purpose of delivering the items, which are both stylish and useable (Mankins & Steele, 2005). The people friendly devices of Apple along with highly personalized services of one to one customer help in creating the value proposition, which also commands the high and average cost. Value chain analysis plays a significant role in the progress of Apple. The company failed in becoming pioneer within the market, which was always good and came as the second mover in the market (Mankins & Steele, 2005).
Apple also attempts to explore the drawbacks in various items, and the company had tended to launch the products that are entirely free from the disadvantages. For instance, in the starting days, there exist a good availability of music players in the market, but simultaneously in lacks an important factor, such as portability. People are also not comfortable in applying the fewer facilities such as Walkman. People often look around for the portable music player having the enough capacity of storage along with best music quality. IPod launched by Apple tried to satisfy the needs, and this product was having the best quality of music as well as huge capacity for storage (Mankins & Steele, 2005). There is no wonder that the iPod sell had broken all the previous records. One can even view the best implementation of the value chain of Apple when it offers the substitution for their items. The introduction of Apple like the vast range of issues due to the possibility of consumers adopting products goes less (Mankins & Steele, 2005). Apple is still considered as excellent in its value chain analysis due to below factors:
In inbound logistics, the primary operations of the company are highly controlled, which cover up activities like attaining materials from the suppliers, storing content and the manner it is handled by the enterprise. Apple had tried to implement the sophisticated automated system of receiving, to speed up the process of receiving and minimizing the footprint facility as well as the need for storage space (Okumus, 2003). It also includes delegation of raw material acquisition. The company works with the OEM partners to delegate the procurement process of raw material, which offers precise supervision of quality control.
Operations relate to handling production as well as services. Apple had attained loads of ground through this factor. About the production and services of Apple, it’s quite complicated as well as vast in its nature, because various subdivisions are created for work distribution (Kaplan, 2005). According to the operations of the company, it is significant to make use of OEM economics of scale. Outsource production of Apple towards the third party partners that they take advantage of economies of scale while trying to mitigate production management burden from the company. It also includes interior designs. It includes conceptualization and design of the present as well as future products, which is undertaken internally at Apple, and it also makes use of industry-leading engineering and design team (Kaplan, 2005).
In outbound logistics, end items are offered to the users, and it’s important that the firm’s distribution system should be good enough to do better within the department. In outbound logistics, Apple stores are highly devoted towards Apple items. In which distribution network is up to the mark, but the again monopoly of the product matters a lot. Outbound logistics includes about stylish or economic packaging (Kaplan, 2005). For the purpose of saving money over entice customers as well as shipments, Apple makes use of eye-catching packaging, which takes around little weight and physical space. It minimizes the cost of shipping as well as the impact of the environment while targeting the customers towards the products of Apple. Outbound logistics also includes authorized retailers or Apple stores. To control the brand image of the company, Apple tries to sell its products through first party details or either through the authorized retailers (Kaplan, 2005). Apple store also tries to act as per its ads for their brands and offer human touch between the customers and company. Authorized retailers often held towards specific standards for protecting the brand image of Apple. Outbound logistics includes direct shipment, in which the website of Apple includes online orders directly through the consumers through the availability of storage facilities set in China (Kaplan, 2005). It reduces the build-up of inventory in costly locations of a warehouse located in America.
Apple tries to slowly score in all these areas due to conducting aggressive marketing, developing heavy buzz within the market at the time of product launch, slick items, along with vast product range. Apple always try to innovate new items as per the requirements of user and even try to analyse the need of user in a very authentic way, for that Apple consistently undertake individual market survey, construct predictions, and then finally produce the items that meet the needs of consumers (Henderson Miller & Hambrick, 2006). In the case of marketing and sales, Apple undertakes Mac Ads, in which Apple make use of TV ads as compared to products of the company towards competitors and apply various indirect and direct ways for building the brand image. The advertisements are quite humorous and don’t stress over the cost or either the features, and develop a picture of the company (Henderson Miller & Hambrick, 2006). Apple also emphasizes over the location of retail or either flagship stores, while marketing. Apple stores located in America try to serve live ads for the purpose of promoting the lifestyle and brand image of the company. Flagship stores such as one located in New York try to attract the customers over novelty in a hope to convert the consumer’s visit during the time of sales. It also includes selective unveilings. Through undertaking the secrets related to items release and hold press events for unveiling the things (Henderson Miller & Hambrick, 2006). The company also try to create suspension and hype around the launch of products.
Services usually force the company, in which they hold specific provisions that excellently work towards growth such as Apple users had to make use of software’s developed by Apple, in case they take advantage of Apple gadgets. It not only tries to create a monopoly of products, but it also enhances the base of product and even increases loyalty of product. Services also include Apple genius, in which Apple store the Apple genius bar, in which customers can quickly discuss the specialist of Apple, about the issues ongoing with the device (Bradford & Duncan, 2000). This interaction of human having the service provider of the first party try to build the rapport with the customers and provide the stark contrast towards unlimited service calls of the phone. It also covers included as well as extended warranty. Apple offers around 90-day warranty that goes against the problems and defects ongoing with products. Customers can also make a purchase the extended warranties by their “Apple care,” to save the product. Service also include free consultation, in which customers can come with a device for having a free consultation about the problems related with no commitment (Kono, 1994). The customers hold an option towards pursuing various avenues towards resolving the problem without going for an upfront charge.
It includes greener Apple, in which Apple try to redesign its packaging for various famous items, to be more lightweight and hold less space in the shipment of products. It implies minimizing the emissions at the time of transportation and outcome in firm savings. Apple had also tried to move towards decreasing the harmful use of chemicals in the production of the product. It also includes the active position of cash. Apple seeks to maintain the vast cash reserves as well as undertake the little long-term debt (Kono, 1994). It also seeks to enable the company towards the capital purchase, expansion of finance, along with internal development with less dependence towards the third party creditors.
It includes selection process for recruiting talented people. Apple also provides different benefits to employees to complement the direct wages. The system of interest applies entice as well as retain the talent in benefit of the company (Kono, 1994).
Apple focuses on research and development, and the company had spent around $1.33 billion in the year 2009. This push the company towards innovation. The company even holds the portfolio of having thousands of patents (Akan, Allen, Helms & Spralls III, 2006).
Apple works with leading suppliers like electronic industry citizenship coalition and makes sure that right treatment is given to factories (Akan, Allen, Helms & Spralls III, 2006). The company had also developed supplier’s code of conduct to focus on supplier’s action.
In the year 1996, Bowman had considered Porter’s general strategy, which includes product differentiation, cost leadership, as well as market segmentation for developing the model, known as Bowman’s Strategy Clock (given in Appendix 1). It is noted that Apple 2011 report depicts that business strategy of Apple leverage the different ability towards designing and developing the own operating systems, software’s, hardware, and services for offering customers with new items and solutions having the high ease to use, innovative industrial design as well as seamless integration. It implies that Apple is creating things by adopting digital hub strategy that refers the MAC operating system (Allen & Helms, 2006). The famous products of Apple include iPad, iPhone, iPod, as well as iTunes. None of these items can work without Mac operating system, and this depicts the focused differentiation strategy of the company. The company had even developed the brand reputation and even leads towards innovation in Smartphone technology. Apple even charges high price for its products in its segment and niche (Allen & Helms, 2006).
Political factor- It provides the high influence on the decision-making process of Apple, as they had set up various companies in the world. Though Apple failed in controlling the political factors since 2009, it is seen that half of company’s sale comes through America. For reducing the operating cost, the firm had also spread the manufacturing of its product to various other businesses located in America (Parnell, 2006).
Economic factor- the Global condition of the economy can be viewed as the factor, which can create influence on the business process of Apple, as the company is famous in the international market. Recession, inflation, as well as currency, are the three key factors, which are noticed by Apple. For instance, in inflation time in America, the people purchasing power get reduced and product sale of Apple in America also got reduced (Parnell, 2006).
Social factors- Lifestyle, globalization and virtual world are considered as a social factor, which provides a broad effect on the business development of Apple. Technology is also viewed as a critical media, which develops globalization even faster. The virtual world can access in the present time by the support of tremendous business opportunity for Apple (Stephen & Haines, 2004). Through this, the company can develop various virtual media. Cyberspace to trade market holds a huge role in creating influence on people to apply virtual world.
Technological factor- in present time, technology market is getting big. The competition is increasing due to the healthy technological changes as well as innovation at a faster rate. In this case, Apple requires up gradation of its products to outdo competitors (Pretorius, 2008).
The generic strategy, as well as intensive growth strategies, directly link with the strategies of the company in costing, marketing as well as in various other business areas. As one of the top company in the world, Apple depicts the generic strategy as the key determinant benefit for supporting growth and for maintaining the firm position in the international market (Finkle & Mallin, 2011). With the increased rate of innovation and stress over excellence in the area of product design, Apple had gained success relatively with higher cost. The favorable position depicts that the effectiveness of firm lies in its use of intensive growth strategies and growth strategy.
The generic strategy of the company is broad differentiation. This strategy emphasizes over main features, which create a difference in the company and its items from the competitors. By applying general differentiation generic strategy, the company can easily stand out in the market (Heineman, 2011). For instance, stress over the designs along with high-end branding and user-friendliness create a difference in the company. The generic strategy of broad differentiation aims towards establishing the firm apart from its market competitors not by price but rather through the main features, which are advantageous to customers. All these main features cover up seamless connectivity existing among the cutting edge aesthetics and devices while designing (Heineman, 2011).
Product development- Apple make use of product development, as their critical intensive strategy towards bringing growth. Development of product needs that the firm should provide beautiful items for enhancing its market performance and share (Hull, 2012). Apple tries to implement their intensive growth strategy with the help of innovation in the process of research and development.
Market penetration- Apple make use of market penetration as the key intensive growth strategy. It includes attaining high market share through selling the current items of the company. For instance, intensive approach to selling out the iPads and iPhones in the present targeted market (Hull, 2012).
Market development- Apple make sue of developing market as the less important factor within intensive growth strategy. Market development includes developing new markets for the total new market (Hull, 2012). The intensive growth strategy match with the strategy of market penetration, but still the development of market emphasize over establishing a presence within new markets. Apply usually apply intensive growth strategy through trying to authorize the market new sellers, in which companies fail to hold presence.
Apple strategic goals are set towards developing new items, while simultaneously, it stresses over designing it successfully, due to its use as the element of strategic implementation. The resource allocation undertaken by the company for creating the new items should be substantial, and it should be planned and thought resources (Heather 2012). The financial resources emphasize the new product development, having a unique and high design, which adopts the Sun Tzu’s strategic principles for knowing the competitors. By making use of superior capabilities, Apple had tried to develop the above items, as developed by its competitors and therefore, it’s important for the firm to acquire the valuable segment in the market. The important systems, which is employed by the company is best, and it helps in bringing electronics and telecommunications business, and accordingly implementation is undertaken (Lynch, 2011).
The key issues faced by Apple is related to whether it will be able to maintain their success. The firm had tried to establish the high standards on its own. In case the company comes with the new product, it can be ground breaking or it might either disappoint the customers (Lynch, 2011). Coming in contact with the high expectations can be considered as the key challenge, which is faced by the organization. Famous notion mentions that Steve Jobs can be seen as responsible for coming up all fortune for the firm, and under the guidance given by him had helped in rolling the products such as iPad, iPhone, iPad as well as MacBook. The other issues relate with increasing competition coming from other companies like, HP, Samsung, Nokia, etc., which wouldn’t be easier.
The key intensive growth strategy of Apple is referred as product development. Market development, as well as market penetration, are considered as a second and third priority for the company (Lynch, 2011). These intensive strategies of growth approve and help the generic strategy of Apple. The company is reliable in its product development, which is undertaken from innovation. However, for enhancing the performance, the firm should stress over market development and market penetration. It is important that focus should be set on two main intensive growth strategies, which can support in improving the resilience of Apple against the aggressive competitors (Lynch, 2011).
Conclusion
A good strategy can help in turning the ailing firm to become a global leader. The story related with success of Apple prove this statement. Simultaneously, inability in explaining the competitive strategy, when required can impact the future of the organization.
References
Hubbard, G., Rice, J., & Galvin, P. (2015). Strategic management: Thinking, analysis, action (5th ed). Sage.
Zand, D. E. (2009). Strategic renewal: How an organization realigned structure with strategy. Strategy & Leadership, 37(3), 23-28.
Mankins, M. C., & Steele, R. (2005). Turning great strategy into great performance. Harvard Business Review, 83(7/8), 64-72.
Okumus, F. (2003). A framework to implement strategies in organizations. Management Decision, 41(9), 871-882.
Kaplan, R. S. (2005). How the balanced scorecard complements the McKinsey 7-S model. Strategy & Leadership, 33(3), 41-46.
Henderson, A. D., Miller, D., & Hambrick, D. C. (2006), How quickly do CEOs become obsolete? Industry dynamism, CEO tenure, and company performance. Strat. Mgmt. J., 27, 447–460.
Bradford, & Duncan. (2000). Simplified Strategic Planning. Chandler House.
Stephen, G., & Haines. (2004). ABCs of strategic management: an executive briefing and plan-to-plan day on strategic management in the 21st century. Sage
Kono, T. (1994). “Changing a Company’s Strategy and Culture”. Long Range Planning
Akan, O., Allen, R. S., Helms, M. M., & Spralls III, S. A. (2006). Critical tactics for implementing Porter’s generic strategies. Journal of Business Strategy,27(1), 43-53.
Allen, R. S., & Helms, M. M. (2006). Linking strategic practices and organizational performance to Porter’s generic strategies. Business Process Management Journal, 12(4), 433-454.
Parnell, J. A. (2006). Generic strategies after two decades: a reconceptualization of competitive strategy. Management decision, 44(8), 1139-1154.
Pretorius, M. (2008). When Porter’s generic strategies are not enough: complementary strategies for turnaround situations. Journal of Business Strategy, 29(6), 19-28.
Finkle, T. A. & Mallin, M. L. (2011). Apple Inc.: product portfolio analysis. Journal Of The International Academy for Case Studies, 17(7), 63-74
Heineman, B. W. (2011). “Steve Jobs and the Purpose of the Corporation.” Harvard Business Review. Harvard Business Publishing
Hull, P. (2012). “Be Visionary. Think Big.” Retrieved on 26 January 2017, from https://www.forbes.com/sites/patrickhull/2012/12/19/be-visionary-think-big/
Heather, K. 2012. “How Apple Has Changed under Tim Cook.” CNN. Cable News Network, Retrieved on 26 January 2017, from https://www.cnn.com/2012/10/04/tech/innovation/apple-tim-cook/index.html>.
Lynch, R. (2011) “Strategic Management Case plus Case Answer – Apple’s Profitable but Risky Strategy”. Retrieved on 26 January 2017, from https://www.global-strategy.net/apples-profitable-but-risky-strategy/
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