Apple Inc.

Business Strategy

Assignment

Date

3374 words

Name

Institution
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Table of Contents
Introduction................................................................................................................................2
Apple’s Background...................................................................................................................3
Task 1: Strategic Planning..........................................................................................................3
1.1 Apple’s vision, mission, objectives, goals, core competencies........................................3
1.2 issues involved in strategic planning................................................................................5
Evaluation...........................................................................................................................6
Coordination.......................................................................................................................6
1.3 planning techniques that organisations can employ.........................................................6
BCG Matrix........................................................................................................................6
Space matrix.......................................................................................................................7
Quantitative Strategic Planning Matrix (QSPM)................................................................7
Chain value analysis...........................................................................................................7
Task 2: Formulating strategy......................................................................................................7
2.1 Internal audit using Porter’s five analysis........................................................................7
Threats of new entrants.......................................................................................................7
Bargaining Power of suppliers............................................................................................8
Bargaining power of buyers................................................................................................8
Threats of substitute products.............................................................................................8
Rivalry in the industry........................................................................................................8
2.2 PESTEL analysis..............................................................................................................8
Political and legal factors....................................................................................................8
Environmental factors.........................................................................................................9
Social factors.......................................................................................................................9
Technological factors..........................................................................................................9
Economic environment.......................................................................................................9
2.3 importance of stakeholder’s analysis................................................................................9
Task 3: Approaches to Strategy Formulation.............................................................................9
3.1 possible alternative future strategies of Apple..................................................................9
Market penetration............................................................................................................10
Product development........................................................................................................10
Market development.........................................................................................................10
Diversification..................................................................................................................10
3.2 Appropriate future strategy for Apple.............................................................................11
Task 4: Strategy Implementation..............................................................................................12
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4.1 roles of those implementing the strategy........................................................................12

Corporate level..................................................................................................................12
Technical managers...........................................................................................................12
Project team members.......................................................................................................12
4.2 Resources required to implement Mac product line extension......................................13
Finance..............................................................................................................................13
Human resources...............................................................................................................13
Materials and technology..................................................................................................13
Time..................................................................................................................................13
4.2 targets and timescales.....................................................................................................14
Gantt chart............................................................................................................................14
References................................................................................................................................16
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Introduction

Computer and technology industry has the most competitive environment; organizations need

to have effective business strategies so that they can maintain their sustainability in the

market. Thus, organization's key to success is an effective business strategy that not only

solve current issues, but also other problems and challenges that may occur in the future. This

paper will highlight and analyse key features relating to Apple Inc. and the effect they have

on the organization.

The paper will clearly examine the key strategies involved in the planning process of the

organization in line with the organizational goals. On this light, the vision, mission, objective,

and core competencies and capabilities of Apple will be highlighted and analysed.

Additionally, issues associated with their strategic planning will be analysed, and solutions to

the issues provided using planning techniques. The paper will also carry out an internal

analysis of Apple to determine the strength and weaknesses. External analysis of the company

will be conducted using PESTEL analysis to identify the prevailing opportunities and threats.

The paper will also analyse possible future strategies to be employed by Apple relating to

limited growth, substantive growth, and retrenchment. Finally, the strategy implementation

will be analysed giving reference to key roles and responsibilities of those implementing the

strategies on different levels of the organization. Additionally, resources to implement the

strategies will be put under the microscope.

Apple’s Background

Apple Inc. is an American based corporation that designs and manufactures smart electronic

products ranging from software and computer hardware. The company employs their

Macintosh PC line, Mac OS X, for its outstanding and dependable user base that makes them
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significantly unique in the market. The company also has IPod music player and the iTunes

media app that make them competitive in the market. The company is based in Cupertino,

California. The company has more than 284 retail outlets spread across ten different

countries1.

The company was established by Steve Jobs, Steve Wozniak and Ronald Wayne on 1st of

April 1976, to sell their Apple I personal computer kit. With time, Apple has brought

significant influence to the electronic market. The company is guided by quality and brand

loyalty. However, most people who have no experience with their products often criticize

them of being too expensive. Apple has approximately 35, 000 employees globally and

records sales of nearly US $43 billion yearly. In 2009, it was named as the most appreciated

company in the US by Fortune magazineError: Reference source not found.

Task 1: Strategic Planning

1.1 Vision, Mission, Objectives, Goals, and Core Competencies

Different organizations use the term ‘strategy’ in different ways. However, most organizations

view a strategy as a plan, pattern, position and perspective directed towards organizational

goals. As a plan, strategy means the way a company gets from one point to the other. Strategy

as a pattern encompasses the way a company does its activities and operations; it may employ

a certain pattern to realise their organizational goals. As a position, strategy reflects on the

decisions that are aimed to offer products and services in certain markets. Strategy as a

perspective focuses on the direction, mission and vision of the company. Most organizations

focus on the four definitions when focusing on their strategies.

1
C, Meyer. “Apple Business Strategy” [Online] 2012
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Vision

A vision is a clear and comprehensive ‘photograph’ of a business or a firm at some point in

the future. The mission statement provides a direction for the firm on where it wants to be in

the future. If a firm doesn’t have clear statements or plan of where it is going, probably the

firm won’t get there. The vision of a firm in its statement helps firm to identify where they

want to be in the future with relation to where they are currently. It assists the organization to

identify the key aspects in the organization that needs to be improved for them to propel to

greater heights.

Mission

A firm’s mission is different from its vision. There is a clear line separating the two features

in a firm. A mission is an operation that is intended to perform a specific program objective.

Often it is described as the reason for being or why the firm was created in the first place. It

entails a brief statement of a business strategy that is developed from the customer’s

perspective. The mission statement should be aligned with the vision of a particular firm.

What the firm does, how they do it, and why they doing it are the questions that mission

statement addresses.

Goals

Goals are the desired or expected outcome of a planned business process. They are usually

vast and provide general expressions of the business guiding principles and aspirations.

Objectives

On the other hand, objectives are precise targets that are necessary to achieve the set goals.

They are detailed statements of qualitatively or quantitatively measurable result the strategy
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aims or hopes to achieve. They are very crucial to an organization as they guide the team

members to be in line with the goals desired by the chosen strategy.

Core competence

Core competence is a unique ability a company develops or acquires from its founders that

delivers value to the company and that cannot be imitated easily by other firms. The core

competence gives a specific company competitive advantage over its rivals, in creating,

developing and delivering value to the customers in a specified field. For instance, the core

competencies of Apple is its creative and innovative designs employing advanced technology

based on their software. This is manifested on their latest batch of products including iPad,

iPhones and iPod that have creative and innovative features. Apple also offers a complete

range of products and services to its customers. For instance, they have the iCloud for instant

backup. They had a visionary executive, Steve Jobs, who had the ability to develop strategies

that brought change to the organization. The company invests a lot to bring new mind-set in

the company such as corporate leaders who can transform an organization2.

1.2 issues involved in strategic planning

Innovation

For effective planning to be in line with the organizational goals, innovation must be

enhanced in all levels of production. An effective strategic plan must encompass creativity in

all its aspects. Innovation is a very critical factor in business operations since it affected by

internal and external factors. Innovation is revealed in today’s business trends and is a major

driving force in many organizations. Organizations employ innovation to establish an avenue

that improves their collaborative and competitive advantageError: Reference source not

2
D, Lei & J, Slocum. “Strategic and Organizational Requirements for Competitive

Advantage.” Academy of Management Executive, 2010: 6(18): pp. 34-47.

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found. However, innovation is extensively dependant on the ability of the organization to

develop its management system and the utilization of the available resources to maximise its

capabilities. Some organizations fail to utilize or underutilize their resources to gain a

competitive advantage. When a firm is less innovative, other companies in the market will

utilise this opportunity to gain a larger market share. Therefore, innovation is critical for

strategy implementation.

Evaluation

Evaluation is very critical in strategic planning and management for any organizational

operation. It is very critical in establishing how the different strategies employed are being

adopted by the organization to advance their positioning in particular markets. Evaluation is

key in determining the effects of the strategy employed and helps to measure the negative

effects of the external environment. Evaluation challenges often affect strategy

implementation process. Poor evaluation mechanism adds up to issues in the process of

strategy implementation.

Coordination

Coordination is key in implementing the planning strategies. Issues that arise in coordination

are mostly to do with resource allocation. Resource allocation is critical at all operations of

the organization. However, coordinating all the resources can be problematic. The

management should be able to define management and planning roles in all levels. Human

and non-human resources should be coordinated appropriately for the success of strategy

implementation process. However, some organizations tend to be coordinate various

resources accordingly leading to issues in strategy implementation process.

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1.3 planning techniques that organisations can employ

BCG Matrix

BCG matrix segregates the organizational activities and products into four squares; stars,

dogs, cash cows and others. Organizational can employ this matrix to effectively analyse their

planning strategies. The matrix provides a framework that enables an organization allocate

resources to its business units effectively.

Cash cow – it’s a business unit having a large market share in a mature and slow growing

industry. These business units require less investment.

Star – a business unit having a large market share in a fast developing and growing industry.

They generate cash but requires investment due to the nature of the industry. If successful, a

star becomes a cash cow in the future.

Question mark – it’s a business unit having a small market share in a high growing market.

They require a lot of resources to gain market share and possibly stars.

Dog – it’s a business unit having a small market share in an already mature industry. Though

the unit may require no capital, it unit ties up capital that could be invested in other units.
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Space matrix

A space matrix is used by firms as a management tool to determine the appropriate strategy the firm
should undertake. It has four quadrants each suggesting a different nature or type of a strategy;
aggressive, conservative, defensive and competitive. Below is a space matrix:

The above Space matrix tells us that the firm should pursue an aggressive strategy. The firm

has a solid competitive position in the market and a rapid growth. The company depicted

above needs to employ its internal strengths so as to develop a market development and

penetration strategy. This can be achieved by acquisition of competitors, integration with

other firms, product development, and so on. The Space matrix is based upon a company’s

internal and external strategic dimensions.

Quantitative Strategic Planning Matrix (QSPM)

Components of QSPM include weaknesses, opportunities, strengths, total weight, strategic

choices, and attractive score. QSPM is very important since it allows organization strategists

to examine various strategies with respect to the established internal and external critical

success factors.

Chain value analysis

Value chain analysis is important in any organization. In a company, the business unit can be

categorised into two. These are: primary activities and secondary activities. Primary activities

include the company’s HRM, technology, infrastructure, and procurement process. Secondary
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components include: manufacture of products; in-bound logistics (raw materials); marketing

and sales of the finished products.

Task 2: Formulating strategy

2.1 Internal audit using Porter’s five analysis

By conducting Porter’s analysis, it will assist in establishing Apple’s market position.

Threats of new entrants

Threats of new entrants in the smart phone, tablets and PC industry is very high. Huge

amounts of capital are been employed by many organizations in the same industry to bring

their products in the market. This will ultimately lead to competition from the rivals. The

company should enhance their technology and innovation so that the new entrants don’t have

a competitive advantage. Apple has an innovative team that embraces technology. Due to this

fact they will remain competitive in the market. Rival organizations are allocating huge

amounts to market their products to the consumers. HTC, Huawei, Lenovo, ZTE, and BenQ

are the new entrants that poses huge competition in the industry.

Bargaining Power of suppliers

The amount of suppliers in the industry determines their bargaining power. In the PC, smart

phone and tablet industry the threat of supplier is very high since there are few suppliers of

operating systems and digital chips. Due to this, the suppliers often manipulate the market

since they have high bargaining power.

Bargaining power of buyers

According to Porter3, once a consumer buys a certain product of Apple, brand loyalty begin to

formulate. This is because Apple offers platforms that are user friendly. Though the consumer

3
M, Porter. “The Five Competitive Forces That Shape Strategy.” Harvard Business Review, 2006: pp.
23-41.
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has a large bargaining power, the choices of buying are restricted temporarily as the products

and services are bound to the network carrier. The buyer has a high bargaining power.

However, a buyer cannot terminate contracts with Apple since some software and apps built

may be lost.

Threats of substitute products

Substitutes of the PC, smartphone and tablet industry include fax and emails. Therefore, the

substitute threats may be said to be very low since they are not efficient.

Rivalry in the industry

Rivalry in the industry is very high. Competing companies offers product differentiation,

product development and competitive prices. Microsoft, HTC, Huawei, Lenovo, ZTE, and

BenQ among others poses huge competition to Apple’s products.

2.2 PESTEL analysis

Political and legal factors

Since Apple is present in many countries worldwide, the company must ensure it complies

with all the regulations and specified rules in the various countries. They have to adhere to

tax rates, business rules, and employment rules among others.

Environmental factors

AppleError: Reference source not found, states that as far as the environment is concerned,

the company considers all the impacts of their products to the environment. They ensure that

their products are environmental friendly.

Social factors

Apple products and services have proved to be effective among different cultures since their

products are driven by advanced technology that has been embraced globally. Therefore,
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Apple needs to develop products considering each market individually so that they can

develop marketing strategies for each of the market.

Technological factors

Apple is considered among the most innovative companies. The company develops products

using advanced technology to produce state of the art gadgets. They enhance the quality in all

aspects of product development. This has made them stand out in the market. Apple has an

innovative team that embraces technology. Due to this fact they will remain competitive in

the market. Capturing the opportunities that brought about by technology, Apple gains a

competitive advantage over their rivals.

Economic environment

The increased wages in China will lead to increased production cost of Apple products and its

manufacturing partners. This is a possible threat to the success of the company in China. The

company should look at other possible regions where they can set up their plant. On the other

hand, increased wages will motivate the employees to be more creative; ultimately increasing

innovation in the firm. However, the US and other major economies have shown remarkable

improvement and the future looks bright for Apple in those economies.

2.3 importance of stakeholder’s analysis

Stakeholders include customers, internal partners, external partners, competitors and

suppliers. Analysis of all the stakeholders is very important since it helps the organization to

evaluate its progress. Analysis of the stakeholders assists the organization to develop

strategies that are effectively suited to the issues that arise from the stakeholders. Apple must

analyse the customers so that they can be able to define the extent of their market.

Stakeholders need to strategize on how to address the various business practices of the

company. It is the role of the stakeholders to come up with effective marketing strategies so
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as to increase the market share. Motivating employees is key in any organization. Apple

employees are well motivated so as to continue being innovative. The stakeholders of the

company have the role of forming partnerships with other firms such as retailers and

distributors.

Task 3: Approaches to Strategy Formulation

3.1 possible alternative future strategies of Apple

The possible alternative future strategies of Apple Inc. will be analysed using Ansoff’s

Matrix. Companies employ this matrix to assist them decide development of their product in

the market. The matrix contains four main categories: market penetration, product

development, market development and diversification. Apple could use the Ansoff’s matrix to

manage their existing products and in developing new products and services.

Market penetration

They should try to increase their market share using effective marketing tools and techniques.

They could lower their prices, do more advertisement and sales promotion. To increase their

sales and profits, the company should persuade more customers to purchase their products.

For example, Apple could persuade the existing iPod users to buy Mac computer.

Product development

To increase their sales, Apple could develop new products for their customers. Since they

already have loyal customers in the market, they should develop products that meet the

specifications of their customers. They should also develop more on their brands so that their

customers who already have their products will buy new ones. For instance, iPhone users

always want to replace their existing iPhone with a new model of the same.
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Market development

Apple could develop different marketing strategies depending on the market in order to sell

their products and services to the new markets. They can achieve this by expanding to other

geographical areas. This has worked previously on their strategies. Initially, they were only

selling their products to customer markets but later they expanded to other markets such as

education.

Diversification

This strategy is not employed by many organizations as it is very risky. Diversification

involves the introduction of new products into a totally new market. Therefore, Apple should

not employ this strategy. They should however, develop on their products and then introduce

new models of the same on the market.

For substantive growth Apple should employ horizontal and vertical acquisition. For

horizontal acquisition, they should merger with other companies in the market to achieve

organizational goals. For instance, Apple could merger with Google to produce smartphones

using the android platform. However, antitrust issues are more for this acquisition. Vertical

acquisition arises when a company mergers with its distributor or supplier. To gain balance in

their bargaining power with the suppliers Apple could merger with their suppliers. It will also

help them gain a competitive advantage among the competitors.

3.2 Appropriate future strategy for Apple

Product line extension

Product line encompasses a group of associated products that are manufactured by a single

company. A good way for Apple to expand its business is by continuously adding to its

existing product line. Product line extension is very effective since consumers are likely to

purchase brands that they are already familiar with. Apple offers different products under the
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Mac computers; that is, iMac, MacBook Air, Mac Pro, and MacBook Pro. Already this has

worked for them. What Apple need to do is offer more infrastructure and resources for Mac

computer product line extension.

Therefore, for Apple’s future growth managers of the brands should analyse periodically their

Mac product lines so that they can assess the sales and the profits and how each item

contributes to the overall line performance. They should leverage a combination of bottom up

and top down innovation strategy so that they can effectively create new innovations. They

should, therefore, build products that are intuitive, cool, and user-friendly so that they can

offer the most amazing experience.

Task 4: Strategy Implementation

4.1 roles of those implementing the strategy

Corporate level

Corporate level executives include the CEO, COO, CFO, etc. and other senior level

managers. Corporate level managers have vital effect on the strategic decision

implementation. In Mac computer product line extension, corporate level executives will play

the figurehead role of management in implementing the strategy. They will discuss key

features to be involved in product line extension and come up with appropriate decisions in

the implementation of the strategy. They will lead the organization to greater commitment of

the strategy in line with the organization mission, vision and capabilities of the organization.

They will ensure the successful implementation of product line extension.

Technical managers

These are the middle level managers. They are responsible for the implementation of the

strategy on technical terms. They link with the top managers to effectively implement

strategy. In Mac product line implementation, technical managers will evaluate the alternative
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course of action and decide on the appropriate way to implement the strategy. They will be

responsible for forming the appropriate team to effectively implement the project. Technical

managers will have the following roles: synthesizing information, championing the

alternatives, implementing deliberate strategy and facilitating adaptability of the extended

product line.

Project team members

They are responsible for the actual implementation of the strategy on ground level. They

work under the technical managers. In product line extension, they will be responsible for

completing the various tasks assigned to them by the technical managers. They will report to

the technical managers on the challenges and issues they will face in the implementation of

any product line extension. Project teams have the responsibility of either delaying or

preventing attempts towards alteration of the project if they find it disagreeable or

threatening.

4.2 Resources required to implement Mac product line extension

Resource allocation will be an integral part of Mac computer product line extension strategy

implementation. Resources will be prioritized with the opportunities in an effective way.

Finance

Finance is a key resource requirement of implementation of a new strategy. A budget will be

set out for the implementation plan. Since the company will invest heavily on Mac product

line extension, a capital budget will be required. Budgets will be set out for all the

departments in the organization to implement the strategy. Revenue budget will be essential

since the company will be managing new development areas.

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Human resources

This will involve managing personnel in the project. A well planned HR policy will be

effective in the implementation of the project. Staff planning will be necessary so as to

identify structures needed in the organization and the number of employees required.

Effective training and recruitment will be necessary for the success of the project.

Materials and technology

Managing materials for a new project is difficult. Inventory and stock control will be crucial

to ensure all the operations run smoothly in project implementation. Managing materials will

give emphasis on the quality desired by the organization. The project will be implemented

using advanced technology. Apple employs state of the art technology in designing and

developing their products.

Time

Time is very crucial in strategy implementation. If the time is not managed properly, the

project will consume a lot of resources and may fail before it serves its purpose. A value

analysis of usage of time will regularly be done to ensure the project implementation is in line

with the schedule. A Gantt chart will be designed to schedule the tasks involved in the project

implementation.

4.2 targets and timescales

Targets and timescales will be realised by scheduling the various tasks accordingly. The

project will be broken down into various tasks for easy handling and management. The

project managers in each team will assign their team members various tasks to effectively

meet the scheduled deadline.

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The entire project will take approximately one year to implement. The anticipated budget will

be approximately US $250 million. The tasks must be completed in time and within the

budget.

The following are the scheduled tasks to effectively implement the strategy. The tasks and

time schedules are effected using a Gantt chart.

Gantt chart

The Gantt chart is generated using Microsoft project 2013.

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The Gantt chart will hell the project managers assess and evaluate the project. Evaluation will

help them trace the progress of the project. It will also help in budgetary control.
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References

Advantage.” Academy of Management Executive, 2010: 6(18): pp. 34-47.

Apple. “Apple’s official Webpage.” 2012. Retrieved from www.apple.com

Lei, D, & Slocum, J. “Strategic and Organizational Requirements for Competitive

Meyer, C. “Apple Business Strategy” [Online] 2012. Available at:

http://www.workingwider.com/strategic_innovation/apple-business-strategy-2012/

Porter, M. “The Five Competitive Forces That Shape Strategy.” Harvard Business Review,

2006: pp. 23-41.