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6BM503 Management | Strategic Analysis of Apple Inc

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In this assessment, you demonstrate your understanding and ability to apply strategic management theory and frameworks to a case study. Your case can be the organisation you are working at or any other business you are familiar with or wish to explore. Please note that citing sources of concepts/theories/models is essential.

Linking your answer to academic literature, you are required to address the following tasks:

1.A strategic analysis of organisational data and information that supports decision making 

· An indication of business level strategy and corporate strategy

· Environmental analysis

· Resources and competence analysis

· Given the analysis in parts a, b and c provide a reasoned argument for the strategic direction you believe the organisation should consider

2. Develop a strategy plan based on your analysis in question 1, ensuring you include the resource implications. The plan should include as a minimum the mission, strategic direction, objectives and Key Performance Indicators (KPIs).

3. Evaluate the place of strategic control through the development of a strategy implementation plan. This should fully consider and include communication methods to internal and external stakeholders and appropriate monitoring and evaluation systems for the strategy plan as outlined in your response to question 2.

Answer:

Part A – Strategic Analysis 

1. Introduction

Apple Inc. was established as a computer company in the year 1976. It was previously known as Apple Computer Inc. It is a multinational organization which creates electronic goods, servers, personal computers and software for computers and is also a media content digital distributor. The company has several retail stores globally which are known as Apple stores. Apple computer was created by Steve Jobs and Steve Wozniak on 1st April, 1976 and later the company was incorporated by them in Cupertino, California, on 3rd January, 1977. The main products of the company are the smartphone iPhone, computer line Macintosh, iPod media players and iPad tablets. Apple Inc. is currently one of the dominant players in the phone and music industry.     

2. Corporate Level Strategy

The corporate level strategy of the Apple helps it to compete with other organizations at different levels. Every product that is developed by Apple contains the same techniques of design and these techniques are used by the company of several other new devices manufactured by the company without having to change the format of the technique. Apple has several retail stores globally and the aim of the company to have both online and retail store is that they will be able to provide the customers the chance of purchasing their product from wherever they feel comfortable (Laudon & Traver, 2013). This gives them more exposure and also a chance to move their business forward. They provide very swift services for their users and are always prompt in solving their issues. This corporate level strategy enables them to gain precedence over the other competitors in the market.

3. Business Level Strategy


The business level strategy, on the other hand, depends on the cost of the products that are manufactured by the company. The cost of the products are extensively high as compared to other products of the same sector, however, the cost that is set by the company is the lowest that they could manage based on the manufacturing and the other operational costs of the product (Rothaermel, 2015). However, Apple has always maintained that after a newer generation of their product is introduced in the market, they lower the prices of the older generation products. This decrease in the cost of old generation products is also a reason why consumers are compelled to return to the company and purchase their products (Grant, 2016).

4. External Analysis

- PEST

 The strategies that are formed by every company depends on the external environment of the market. The factors of external environment are political, economic, socio-cultural and technological.

  1. Political –In the political aspect, more than half of the sales that occurs in the company comes from different countries other than America. Many parts of products of Apple Inc are manufactured outside the United States such as in Ireland, Cork, China, Czech Republic and Korea. However, the company is gravely affected by the unfriendly relations between the United States and several other countries.
  2. Economic –In the economic aspect, the three most important factors that have been noticed by the company are recession, currency and inflation (Zott & Amit, 2013). The products of Apple Inc. have always been considered luxury products because of their price in the market and therefore customers tend to spend less on these products. On the other hand, the company is not gravely affected by the economic changes and the dollar value fluctuations that occur often because of their strategy which have led them to purchase foreign currencies from beforehand.
  3. Social –In the social aspect, the presence of Apple products in market is extensive because of its product differentiation and special features that are present in their products (Ho, 2014). Moreover, due to the rise in the purchasing power of the people there have been a rise in the purchase of apple products among the common people as well. The possession of Apple products is determined as a growth in the status of a person in several societies and hence this has also become a reason for the increase in sales.
  4. Technological –In the technological aspect, Apple continuously strives to upgrade their technological system so that they are able to beat their competitors. They have made large investments in the research and development sector and aspires to bring innovation in their products every time (Greco, Cricelli & Grimaldi, 2013).

5. Internal Analysis - SWOT

  1. Strengths –The strengths of Apple are its innovation and creativity which has given a strong recognition to the company. They have also positioned their branches at areas where there is high traffic and this attracts a lot of customers and increases the trust among the customers as they realize that they will be able to get prompt support due to the availability of the support centers (Minakhmetova & Savchenko, 2015).
  2. Weaknesses –The weaknesses is that they have yet not be able to make the direct sales channels a smooth operation as they have very limited direct sales location all over the world. Another weakness that is faced by the company is that its products are listed as luxury products hence the common people do not wish to spend much on them. The internal analysis consists of the opportunities and threats of the company.
  3. Opportunities –The opportunities that should be taken by the company are is the major fact that they believe and act on different innovative techniques which is imbedded in their products which changes from generation to generation. Hence, they could use this factor to grow their sales and develop themselves as a company (Pisano, 2015).
  4. Threats –The threats of the company are that their competitive nature. This competitive nature have enabled them to supply their software from Asian countries so that they are able to manufacture such products which would not be available to others. In case there is a political or economic problem in the countries then the supply of those software will stop. Therefore, they would lose a lot of market share if they are no more able to manufacture innovative products anymore.

6. Resource and Competence Analysis

Apple has various resources and capability to operate in the business world. There are two kinds of resources which are tangible and intangible. Tangible resources of Apple are very extensive in spite of the high security level of the company in the section of design. The tangible assets of the company are measured in such a way that they are able to give competitive edge to the company. Determining the financial resource, the annual sales of the company is about $100 billion and the market capitalization is about US $550 billion. The share price of the company started at $5 and has currently reached about $600 under the guidance of Steve Jobs. The physical resources of the company comprises of about 362 retail stores all over the world so that they are able to promote their sales and advertising (Dimitrios, Sakas & Vlachos, 2013). The intangible resources is also a major reason behind the success of Apple. The retail stores are an intangible resource which enable millions of users to communicate with the concerned person in case they face any issues. Therefore the intangible resources of the company is presented in the form of proper communication with customers, technological support provided to the users at all times and attractive designs of the stores which appeals to the customers. The technological advancements that have been made by Apple has led the consumers to trust them to provide the best services. The capability of Apple is based on their ability to combine all the sections of their company which may be marketing and sales, advertising, research and development or even product development (Zamir, Sahar & Zafar, 2014). The skills and design team of the company makes it possible to develop products which can enhance and showcase the capability of the company in the market.

7. Strategic Direction

Based on the above analysis it can be said that Apple Inc, should always strive to make changes in their products and bring about innovation as this is a major reason that consumers are attracted towards their products. Every time a new Apple product is launched into the market, there is a big hype regarding the product and most of the sales of that product occurs during the starting few weeks. They should not get influenced by the other technological companies and stick to their technological upgrade since this is their USP which is the Unique Selling Point. However, they should also manufacture products which would be pocket friendly for the middle class population so that they are able to use the features that are present in an Apple product.

Part B - Strategy Plan 

1. Mission

The motto and the company is defined so as to understand the base and the background of the company. The motto of Apple is ‘Think Different’, around which the company has based their products and innovations. They have been successful in following this motto as they have continuous brought different and innovative products into the electronic market. Many companies have tried to replicate the technology and techniques that have been used by Apple but have failed to do so (Grant, 2016). Apple’s mission is to produce good quality products, at a low cost and which are easy to use by the consumers in spite of having highly advanced technology. With their products they wanted to prove that the incorporation of advanced technology is not always intimidating for the people who are not experts in computers. In a speech, Steve Jobs have explained that the core value of the company is they believe that every person contains the passion with which they can change the world for the betterment of everyone. Steve Jobs had said that Apple as a company would like to hire those people who has a passion to do better for the company (Peng, 2013).

The mission that would be set by the company according to the strategic direction is that the company should plan to make those products which would be lower in price than the other products of Apple. This mission needs to be fulfilled by the company as every person want to use Apple product but are not able to do so due to the high price.

2. Objectives     

Apple does not have a fixed set of objectives, however, their main objective is to launch an innovative and new product in the market. There are some other objectives that are followed by the company such as to be the one and only standing organization among its competitors and to increase their market value (Nagle & Müller, 2017). Moreover, they have always wanted to beat their biggest competitor who was Microsoft. To succeed in the market among their biggest competitors it is needed to find strategic options which would enable them to stand out among the crowd. The strategic options have to creative and action oriented so that they are able to get the most responses from their consumers. The strategic decisions can be to provide the customers with reliable support and information which will help the customers to enhance their knowledge regarding the product and could use it in a much better way. Another strategy that could be adopted by the company is to maintain its continuous advancement and evolution in their software and technology approximately every six months (Vazquez Sampere, 2016). The success of Apple products solely depends on the feedback and the experience of the customers and therefore it is mandatory for them to satisfy their customers to the fullest and ensure that they have the best possible experience. The external and internal analysis that have been done in the previous sections would help the company to form the right strategies so that they are able to expand and sustain their reach in the market.

3. Key Performance Indicators

The key performance indicators for Apple Inc. are the metrics that help the company to attain their goals and objectives. Every company has a different parameter for measuring the key performance. However, the most common parameters that are used are the history of the company and the future perspectives that would help them to attain the goal. There are five main performance indicators of Apple Inc. They are core competencies, market share, customer satisfaction, employee commitment and shareholder value. The best way that they can develop their competencies is by equipping their employees with solutions that are innovative and new in the market. However, they should also ensure that the employees are able to perform the complex tasks that are being given to them (De Stefani, 2015). This is because the main direction of Apple is customer satisfaction which cannot be fulfilled if the employees of the company are not able to perform to the best of their abilities. The company also believes in the fact that to have a good set of employees, they should fulfill their commitment to the employees such as giving them a favorable working environment and solving their issues at a good pace. The market share is another important indicator as it increases the company’s profit (Young, 2014).                          

Part C – Evaluation of strategic control by developing a strategic implementation plan

1. Communication methods of internal and external stakeholders

Stakeholders are the people who have an interest in the operations of the company and are often indirectly or directly affected by their stake in the company. They are the ones who contribute to the business and always have an interest towards the company. The stakeholders are positively affected if the company performs well and are negatively affected if the company does not perform well. Every stakeholder has a different set of needs and demands which can often become conflicting and every requirement may not be possible for the company to satisfy at all times (Scheer et al., 2014). Thus it becomes mandatory for the company to prioritize the different demands and requirements of the stakeholders. It is mandatory to keep the stakeholders happy as they are the ones who are always in favor of the growth of the company. The profits that are incurred by the company will benefit the stakeholders in different forms such as in the form of dividends to the investors and shareholders and in the form of remuneration and bonus for the employees (Andriof et al., 2017). These stakeholders will always keep their focus on the profitability of the company and expect an increase in their gross profit.

The different stakeholders that are a major part of the company are as follows. Firstly, the investors and the financer of Apple will always demand a huge investment because of the huge expenses that they do on the research activities and therefore the investors will focus on the profitability and the market value of the shares every time. Secondly, the suppliers will focus on the growth of the company and its profits as well so that they are able to understand the capacity that the company has to pay them for their supplies (Bourne, 2016). The suppliers of Apple have no conflicts with the company due to the high profit percentage of the company and thereby possessing a high paying power. Thirdly, the customers are the main and the most important shareholders of the company. They are the ones on whom the whole profit and sales of the company depends. If a company is happy with the product of a company then they will purchase the product and if they are not happy then they will not purchase the product thereby affecting the revenue of the company. Therefore the company should always manufacture their products so that they are able to meet the demands of the consumers (Coombs, 2014). Apple is best known in the market for their innovative and unique products and they have to maintain this position so that the companies get the product that they have always received.

Fourthly, employees are the stakeholders who belong to the internal circle of the company. They are the contributors to the operations of the business and help the company to develop the products which will bring in profit for the company (Johnston, 2014). However, the company will have to keep the employees happy and satisfied with their work in the form of incentives, compensations, bonuses and others which would motivate the employees to work better and use their skills to their full potential. Apple demands a very skilled base of employees who are able to give their best and contribute for the betterment of the company (Gyrd-Jones & Kornum, 2013). They also seek talented group of employees who are adapt at working with the new techniques and innovative ideas that are used by the company. In return for their extraordinary services, Apple provides them with monetary benefits and job security which enables the employees to work harder and contribute to the best of their abilities. Since the stakeholders, both internal and external, are an important part of the company, they have to maintain a clean communication system with the stakeholders (Thomas & Stephens, 2015).

The employees who are the internal stakeholders of the company are communicated with internal policies of the company. The other external stakeholders are communicated with the use of external policies. The policies that are formed should contain clear information so that everything becomes open to the stakeholders. Apple bases its communication with the stakeholders on four policies which are respect, compliance, honesty and confidentiality. Respect is the necessity that should be given to every person and stakeholders. Apple focuses on building respect between their employees, customers, suppliers and all other stakeholders. Compliance means that the stakeholders and employees should follow the rules and regulations which are formed by the company (Rodrigue, 2014). The decisions that are taken should always be in compliance to the laws. Honesty means that every business deal and operation that is done by the company should be honest and maintain the ethical standards of the society. Confidentiality means that there should be certain information should he kept private and confidential as it could contain important business deals. There are certain confidentiality policies of Apple which should be maintained by the employees and the company circulates this policy at all times. These principles are followed by the company to maintain communication with their internal and external stakeholders.

2. Monitoring and evaluation system

On the other side the strategic plan that have been made by the company should be monitored and evaluated by the company at all times. Firstly, the strategic plan formed should contain the name of the responsible person who will monitor and evaluate the plan as per the decisions that have been taken in the plan. The person should see if the desired goals and objectives are being fulfilled according to the plan and according to the mentioned timeline as well. If a goal is not being fulfilled then the person has to ensure that the right steps are taken so that the correct way is formed (Willcocks, 2013). The resources that are needed for the fulfillment of the objectives should also be kept track of, since they are needed to develop the company’s goals. A report should be prepared at a fixed interval regarding the progress of the strategic plan and this report should be discussed and evaluated among the top management to determine the shortcomings of the plan. The strategic plan should be kept under notice at all times of the company wants to succeed in their field and beat all the competition that they face.   

Conclusion

Hence it can be concluded that Apple has a very strong base of consumer and a strong foothold in the market which they should maintain with the implementation of a proper strategic plan. This strategic plan should also be monitored and evaluated so that any shortcomings that might be faced can be eradicate at the initial stage and a strong plan is finally implemented which helps in the development of the company.

References

Andriof, J., Waddock, S., Husted, B., & Rahman, S. S. (2017). Unfolding stakeholder thinking 2: Relationships, communication, reporting and performance. Routledge.

Bourne, L. (2016). Stakeholder relationship management: a maturity model for organisational implementation. Routledge.

Coombs, W. T. (2014). Ongoing crisis communication: Planning, managing, and responding. Sage Publications.

De Stefani, S. (2015). Why did Apple change its strategy? The case of the iPhone: adoption of a new technology and trade-in programs in the context of innovation (Bachelor's thesis, Università Ca'Foscari Venezia).

Dimitrios, N. K., Sakas, D. P., & Vlachos, D. S. (2013). Analysis of strategic leadership simulation models in non-profit organizations. Procedia-Social and Behavioral Sciences, 73, 276-284.

Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

Greco, M., Cricelli, L., & Grimaldi, M. (2013). A strategic management framework of tangible and intangible assets. European Management Journal, 31(1), 55-66.

Gyrd-Jones, R. I., & Kornum, N. (2013). Managing the co-created brand: Value and cultural complementarity in online and offline multi?stakeholder ecosystems. Journal of Business Research, 66(9), 1484-1493.

Ho, J. K. K. (2014). Formulation of a systemic PEST analysis for strategic analysis. European academic research, 2(5), 6478-6492.

Johnston, K. A. (2014). Public relations and engagement: Theoretical imperatives of a multidimensional concept. Journal of Public Relations Research, 26(5), 381-383.

Laudon, K. C., & Traver, C. G. (2013). E-commerce. Pearson.

Minakhmetova, D., & Savchenko, A. (2015). Mobile marketing strategy development in china, japan and south korea: An apple app store example.

Nagle, T. T., & Müller, G. (2017). The strategy and tactics of pricing: A guide to growing more profitably. Routledge.

Vazquez Sampere, J. P. (2016). Apple has a business strategy behind the iPhone 7. LSE Business Review.

Peng, M. W. (2013). Global strategy. Cengage learning.

Pisano, G. P. (2015). You need an innovation strategy. Harvard Business Review, 93(6), 44-54.

Rodrigue, M. (2014). Contrasting realities: corporate environmental disclosure and stakeholder-released information. Accounting, Auditing & Accountability Journal, 27(1), 119-149.

Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.

Scheer, D., Benighaus, C., Benighaus, L., Renn, O., Gold, S., Röder, B., & Böl, G. F. (2014). The distinction between risk and hazard: understanding and use in stakeholder communication. Risk Analysis, 34(7), 1270-1285.

Thomas, G. F., & Stephens, K. J. (2015). An introduction to strategic communication.

Willcocks, L. (2013). Information management: the evaluation of information systems investments. Springer.

Young, A. (2014). Brand media strategy: Integrated communications planning in the digital era. Springer.

Zamir, Z., Sahar, A., & Zafar, F. (2014). Strategic alliances; A comparative analysis of successful alliances in large and medium scale enterprises around the world. Educational Research International, 3(1), 25-39.

Zott, C., & Amit, R. (2013). The business model: A theoretically anchored robust construct for strategic analysis. Strategic Organization, 11(4), 403-411

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