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STRATEGIC ANALYSIS OF

APPLE INC.

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Table of Contents
1. Introduction.............................................................................................2
2. Strategic position....................................................................................2
SWOT analysis..........................................................................................2
3. Business strategy....................................................................................3
4. Strategic options available to Apple........................................................4
5. Strategic evaluation................................................................................4
5.1 Suitability...........................................................................................5
5.2 Feasibility...........................................................................................6

Resource Deployment......................................................................6

5.3 Acceptability......................................................................................7

Analysing Risks................................................................................7

6. Conclusion...............................................................................................8
References...................................................................................................9
Appendices................................................................................................10
Appendix A.............................................................................................10

1. Introduction
Apple Inc is a US based public limited
company which is popular for making
innovative

electronic

products

for

music, computer, communication, and


entertainment

purposes.

Apple

was

founded by Steve Jobs in 1976 and


presently it has more than 357 retail
stores and over 50,000 employees all
around the world (Apple Inc., 2014).
This particular report evaluates the
strategic

position,

strategy,

and

current

business

strategic

options

available

to

Apple

using

strategic

management

relevant

tools

and

Figure 1: Strategy evaluation


framework Source: Johnson et

techniques. This is done in order to

al. (2010)

evaluate how the strategic direction


relates

to

international

growth,

innovation

expansion.

The

or

entire

report is written on the basis of Johnson


and

Scholes

framework

which

is

depicted in figure 1.

2. Strategic position
SWOT analysis
The SWOT analysis is conducted in assignment 1 (group report) where
each element (i.e. strengths, weaknesses, opportunities, and threats) of it
was explained thoroughly. As mentioned in figure 1 that strategic
evaluation of strategic choices available to Apple are based on SWOT
analysis. Therefore, it is inherent to present here the summary of SWOT
analysis which is derived from the assignment 1.

Table 1: SWOT analysis of Apple Inc

Strengths
1. Customer loyalty combined

Weaknesses
1. High price

with expanding closed

2. Incompatibility with different

ecosystem

OS

2. Apple is a leading innovator in

3. Long-term gross margin

mobile device technology

decline

3. Brand reputation
4. Research and Development
(R&D)
5. Digital hub for focused
differentiation
Opportunities
1. Emergence of the new

Threats
1. Price pressure from Samsung

provider of application

over key components

processors (product

2. Strong dollar

development)

3. Android OS growth

2. Growth of tablet and


smartphone markets (market

4. Competitors moves in online


music market

penetration)
3. Obtaining patents through
acquisitions (market
development)

3. Business strategy
In 1996, Bowman reconsidered Porters generic strategy framework
consisting

of

cost

leadership,

product

differentiation,

and

market

segmentation to develop its model namely Bowmans Strategy Clock


(Thomson and Baden-Fuller, 2010). This model is the extension of Porters

model and considers eight instead of three elements as shown in figure A1


in Appendix A.
It is mentioned by Apple Inc in annual accounts and report of 2011 that
the companys business strategy leverages its unique ability to design
and develop its own operating systems, hardware, application software,
and services to provide its customers new products and solutions with
superior ease-of-use, seamless integration, and innovative industrial
design (p. 27). This means that the company is creating products by
following digital hub strategy which refers MAC operating system
(Caulfield, 2011). The companys all popular products iPod, iPhone, iPad,
and iTunes are based on MAC. None of the product runs without MAC
operating system and this shows Apples focused differentiation strategy.
By looking at the strengths of Apple, it is identified that Apple has
developed brand reputation and leading as an innovator in mobile device
technology. The company is charging premium price for its products and
developed its own niche and segment.

4. Strategic options available to Apple


After getting familiar with strategic position and business strategy of
Apple, the Ansoff matrix is used in this section to develop and evaluate
strategic options and their appropriateness to achieve them (Proctor,
2014). The development and evaluation are based on threats and
opportunity factors in table 1.
Apple has vast capabilities and high brand value in delivery its innovative
products to customers. So the biggest opportunity that the company can
adopt

is

to

explore

unexplored

markets

by

considering

market

development strategy. By adopting this strategy, the Apple can gain


access to new customer base by establishing joint ventures or strategic
alliances (Henry, 2011).
By considering the present economic condition of Europe and USA, which
are the major markets for Apple, the company requires to utilise its core
competency in R&D and concentrate on product development strategy
for future growth in these regions. In this regard, by focusing on
opportunities factor, the company can offer smart phones with relatively
low prices which can enable Apple to retain present customer base and
achieve customer loyalty. By bearing in mind the strengths, core
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competencies, and the large size of two regions, the product development
strategy best suits to Apple Inc.

5. Strategic evaluation
Two strategic options for Apple can be
Market development for international expansion; and
Product development for growth purpose
The internal or organic development can be the best method when
considering product development strategy. This method is recommended
on the basis of companys strengths. In fact, in developing innovative
products, the company spends a large amount of its budget each year on
R&D activities for achieving competitive position. In order to launch
cheaper smart phones with relatively low prices, Apple neither requires
arranging massive capital nor depending on third party investment. In
addition, the company is also capable to use its core competencies in
technical areas.
Furthermore, the suitable method for adopting market development
strategy is joint ventures and alliances (Henry, 2011). Apple can establish
strategic alliances or acquire mobile companies currently operating in new
unexplored markets in Asia and Africa. In this regard, Apple can
revise/modify existing business strategy (see section 3) according to the
conditions of new markets. This will indirectly assist the company in terms
of attracting customers and achieving their satisfaction. This strategy is
also appropriate for Apple as the company will not involve high
investment.
In the subsequent sections, the market development and product
development strategies are analysed critically on the basis of suitability,
feasibility, and acceptability framework proposed by Johnson et al. (2008).

5.1 Suitability
Suitability usually refers to appropriateness of strategic option in
assessing whether it addresses the key weaknesses and threats of the
company associated with its strategic position (Johnson et al. 2008).
The strategy of product development needs extensive support of the
existing management. The management needs to carry out support
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activities same as required for launching new innovative products,


employing adequate resources, acquiring the infrastructure machinery
and equipment, and managing the new service by focusing on the
development and delivery of new products. In this way they can satisfy
rapidly increasing needs and demands of the customers. Apples key
strengths are its R&D activities and rich resources of developing
innovative products and these competencies are sufficient for product
development activities.
On the other hand, the strategy of market development needs to establish
joint venture or strategic alliances of new or existing organisations in the
potential market. The principal activities in market development involve
marketing, sales, and inbound and outbound logistics (Wilkinson, 2010). In
exercising the option of strategic alliance or joint venture, Apple will not
have a great deal pressure on its resources and thus will greatly rely on
partner companys resources. However, the organisation must ensure that
the marketing and sales operations are well integrated which address the
key aim of market development needs. Currently, Apple has insignificant
existence in developing economies (Majeed and Ahmad, 2009), so the HR
department is required to employ adequate human resources which are
capable of performing required activities for market development at large
scale. In addition, key sales and marketing operations can be performed
by Apples staff and logistic responsibilities can be handled by its partner
company.
Based on the value chain analyses conducted in the group assignment 1,
these two strategies look adequately suitable as the company is not
required to employ massive resources to implement these strategies. By
selecting a suitable strategy and method, Apple can support its key
business strategy in order to achieve short-term goals and long-term
objectives.

5.2 Feasibility
Evaluating strategic options in terms of feasibility means to verify whether
a company is able to deliver the strategy. This ability is assessed on the
basis

of

companys

core

competencies

and

resources.

The

core

competencies of Apple are derived from assignment 1 illustrated in figure


2.

P e rs o n
a liz e d
S e r v ic e

G
B
A
D
E
e

e t
u y

To
W it h

i ff e r e n t
x p e r ie n c

T h in k O n
A
D i ff e r e n t
L e v e l

H ig h
Q u a
lit y

Figure 2: Core competencies of Apple

A number of approaches can be used to measure feasibility in which


resource deployment is one which is recommended by Johnson et al.
(2008).
Resource Deployment
Product development: Apple has invested massive amount of money and
resources already in building the image, brand value, innovative
technology, and competitive position in the world market. As mentioned
earlier that R&D is the core strength of Apple, however, developing low
price products will need the company to develop new strengths and
capabilities. Most importantly, Apple will need to improve its abilities of
reducing manufacturing costs and look for new vendors who can provide
cheaper parts with desired quality. Moreover, some additional amount will
be required for spending on R&D activities.
Market development: The market development strategy will need Apple to
employ additional resources for new market. It is necessary to organise
and look after business in that market. In fact, the current competencies
and technical expertise of Apple are adequate for existing markets and for
present products. In order to diversify to new market preferably
developing countries where low price products are welcomed, Apple will
require to recruit resources as per demand of the new market. The
adoption of market development strategy will enable company to
significantly increase its market share and consequently profitability will
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be enhanced as well. Therefore, to achieve these outcomes, recruiting


new staff will not be a major issue for Apple.
After having a look into the latest financial statements of Apple, the
market development and product development strategies look feasible for
the company in terms of arrangement of financial resources. The
organisation

will

not

suffer

from

additional

burden

with

market

development strategy. Although, the strategy of product development will


need some additional capital but the financial position of the company will
enable it to consider this option.

5.3 Acceptability
Acceptability mainly deals with the anticipated performance results of the
strategy. The acceptability of any strategy can be analysed on the basis of
risks and return (Johnson et al. 2008).
Analysing Risks
Risks are evident in any business. No business can run its operations
without the element of risk. So, it is extremely imperative to take into
account risk factors during the planning and implementation of strategic
options. For this, the most important step is to estimate the likelihoods
and impacts of success or failure of a strategy (Barnwell and Best, 2008).
In considering product development and market development options,
several internal and external risk factors can be taken into account.
In the present business scenario, new market development is one of the
best strategies to be implemented for Apple. Based on situational
analyses (i.e. SWOT and PESTEL) conducted in the group assignment, it is
apparent that the finest strategy for Apple is to expand internationally.
Apple can adopt the market development strategy aggressively by
establishing strategic alliances in order to move forward. The strategic
alliances method carries minimum risks for the company in terms of
financial loss. So, Apple can enter into the unexplored markets without the
fear of huge losses.
On the other hand, the company needs to be careful in terms of product
development strategy. There is no doubt that Apple is fully capable of
developing new products due to advanced R&D activities and also has
competencies

of

technical

advancements;

but,

reducing

costs

of

operations and choosing new vendors for new product can be challenging.
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These may require extensive research and massive time investment in


order to maintain the image and quality of Apple products.

6. Conclusion
The two strategic options available to Apple are market development and
product development. The product development strategy embraces longterm growth of the company and it also provides foundation for new
innovative technology. Based on assignment 1, there are some evidences
for Apple entering into the emerging markets like China and India. This
shows companys proactiveness and continuous involvement in market
research and market development. However, companys position is weak
in some markets like Russia, Egypt, and Brazil. This position can become
better with product development strategy. Conclusively, it can said that
the integration of both strategies (i.e. product development plus market
development) can generate remarkable results in terms of expanding
market share, increasing customer base, competitive advantage, and
higher projects.

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References
Annual Report and Accounts (2011). Apple Inc. [online]. Available from:
http://www.annualreportowl.com/Apple/2011/Annual%20Report?
p=27 [Accessed: 09 April 2014]
Apple Inc. (2014). A store like no other. [online]. Available from:
http://store.apple.com [Accessed: 09 April 2014]
Barnwell, H. and Best, N. (2008). CIMA Official Learning System Test of
Professional Competence in Management Accounting. 5th edition,
Butterworth-Heinemann
Caulfield, B. (2011). A Decade After Steve Jobs Positioned Mac As A 'Digital
Hub,' iCloud Could Bury PC. Forbes, 06 March 2011
Henry, A. (2011). Understanding Strategic Management. Oxford University
Press
Johnson, G., Scholes, K. and Whittington, R. (2008). Exploring Corporate
Strategy: Text & Cases. Pearson Education
Johnson, G., Scholes, K. and Whittington, R. (2010). Exploring Corporate
Strategy with MyStrategyLab. Pearson Education
Majeed, M.T. and Ahmad, E. (2009). An Analysis of Host Country
Characteristics that Determine FDI in Developing Countries: Recent
Panel Data Evidence. The Lahore Journal of Economics, 14(2), pp.
71-96
Proctor, T. (2014). Strategic Marketing: An Introduction. Routledge
Thomson, N. and Baden-Fuller, C. (2010). Basic Strategy in Context:
European text and cases. John Wiley & Sons
Wilkinson, I. (2010). Business Relating Business: Managing Organisational
Relations and Networks. Edward Elgar Publishing

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Appendices
Appendix A

Figure 2: Bowmans Strategy Clock (Thomson and Baden-Fuller, 2010)

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