PORTERS ROOTS OF COMPETETIVE

ADVANTAGE FRAMEWORK FOR VALUE

CREATION

Done By
MONISHADEVI J NADAR
22BBL7010
BBALLB
SUBMITTED TO
DR. ARUNKUMAR SIVAKUMAR

Amaravathi
Andhra Pradesh, INDIA
#1. PORTERS ROOTS OF COMPETETIVE ADVANTAGE
Porter's Five Forces is a model that identifies and analyses five competitive
forces that shape every sector and aids in determining an industry's strengths
and weaknesses. Five Forces analysis is widely used to define corporate strategy
by identifying an industry's structure.

Porter's approach can be applied to any sector of the economy to better analyse
industry competitiveness and increase a company's long-term profitability.
Michael E. Porter, a Harvard Business School professor, inspired the Five
Forces paradigm.

 Porter's Five Forces is a framework for analysing the competitive

environment of a company.
 Porter's Five factors are a widely used framework for assessing the
competitive factors that influence a wide range of economic industries.
 It was developed in 1979 by Harvard Business School professor Michael E.
Porter and has since become a significant management tool.
 These forces include the number and strength of a company's competitive
rivals, possible new market entrants, suppliers, customers, and replacement
products, all of which have an impact on its profitability.

The Five Forces model can be used to influence corporate strategy in order to
get a competitive edge.

1. Cost Advantage
In cost leadership, a company strives to be the lowest-cost producer in its
industry. The sources of cost advantage vary depending on the industrial
structure. They may include scale economies, proprietary technology, privileged
access to raw resources, and other factors. A low-cost producer must identify
and capitalise on all areas of cost advantage. If a company can attain and
maintain overall cost leadership, it will be an above-average performance in its
industry, as long as it can charge prices that are at or near the industry average.

2. Distinctiveness
In a differentiation strategy, a company strives to be distinctive in its industry
along some aspects that purchasers highly value. It chooses one or more traits
that many buyers in an industry consider vital and positions itself distinctively
to suit those needs. It is rewarded with a premium price for its originality.

3. Focus
The generic focus approach is based on the selection of a small competitive
scope within an industry. The focuser chooses an industry segment or collection
of segments and tailors its approach to serve them at the expense of others.
There are two versions of the focus strategy.
In (a), a firm seeks a cost advantage in its target market, whereas in (b), a firm
seeks differentiation in its target segment. Both types of the focus strategy are
based on contrasts between the target segment of the focuser and other segments
in the industry. The target segments must either have buyers with unusual wants
or have a production and delivery system that differs from that of other industry
segments. Cost emphasis capitalises on variances in cost behaviour in certain
sectors, whereas differentiation focus capitalises on the unique needs of buyers
in specific segments.

4.Effectiveness in operation
It entails completing tasks and activities with as little waste, mistake, and
rework as possible.
It improves productivity, quality, and customer happiness while lowering
expenses.
To achieve this, businesses must prioritise process improvement,
standardisation, and personnel training. It is vital to achieve and maintain
operational effectiveness through continuous improvement.

#2. THE APPLE COMPANY

Apple Inc. is a multinational technology business based in Cupertino, California
that designs, develops, and sells consumer gadgets, computer software, and
internet services. The iPhone smartphone, iPad tablet computer, Mac personal
computer, iPod portable media player, Apple Watch smartwatch, Apple TV
digital media player, and Home Pod smart speaker are among the company's
hardware offerings. The macOS and iOS operating systems, the iTunes media
player, the Safari web browser, and the I Life and iWork creativity and
productivity suites are all part of Apple's consumer software. The iTunes Store,
the iOS App Store and Mac App Store, Apple Music, and iCloud are among its
online services.

Apple Inc., headquartered in Cupertino, California, is a multinational

technology company that designs, develops, and sells consumer electronics,
computer software, and internet services. Among the company's hardware
offerings are the iPhone smartphone, iPad tablet computer, Mac personal
computer, iPod portable media player, Apple Watch smartwatch, Apple TV
digital media player, and Home Pod smart speaker. Apple's consumer software
includes the macOS and iOS operating systems, the iTunes media player, the
Safari web browser, and the I Life and iWork creativity and productivity suites.
Among its online offerings are the iTunes Store, the iOS App Store and Mac
App Store, Apple Music, and iCloud.

The apple company ,2017 interfaces and Apple's product marketing campaigns
gained considerable critical acclaim. However, the company's high product
prices and restricted software titles produced problems, as did power disputes
among management. Jobs left Apple and founded his own company. As the
market for personal computers grew, Apple's PCs suffered declining sales due
to lower-priced competitors' offerings, particularly those that came with the
Microsoft Windows operating system. More executive job shuffles occurred at
Apple until then-CEO Gil Amelio agreed to buy Jobs' firm in 1997 in order to
bring him back. Jobs reclaimed his position as CEO and launched a plan to
repair Apple's reputation, which included opening Apple's own retail stores in
2001, making many acquisitions of software firms to create a portfolio of
software titles, and establishing Apple's own retail stores in 2002.

In January 2007, Jobs announced that Apple Computer, Inc. would be renamed
Apple Inc. to represent the company's transition towards consumer electronics
and unveiled the iPhone, which received widespread critical acclaim and
commercial success. Jobs resigned as CEO in August 2011 because to health
issues, and Tim Cook took over as CEO. Jobs died two months later, signalling
the end of an era for the corporation. Apple is the world's largest information
technology firm by revenue and, behind Samsung, the world's second-largest
mobile phone manufacturer. In February 2015, Apple became the first
corporation in the United States to be valued at more than $700 billion. As of
July 2017, the corporation employed 116,000 full-time employees and has 498
retail stores in 22 countries.

It runs the iTunes Store, the world's largest music retailer. As of January 2016,
more than one billion Apple products were in active use around the world.For
the 2016 fiscal year, Apple's worldwide annual revenue totalled $215 billion.
The corporation has a high level of brand loyalty and has been named the
world's most valuable brand on multiple occasions. However, it faces major
criticism for its contractors' labour practises as well as its environmental and
business practises, including the origins of raw materials.
Apple Computer Inc.

Apple Inc.'s purpose and vision statements create global market strategies,
pointing to the corporation as one of the most valuable enterprises in the world.
The corporate mission and vision statements of the corporation encourage
employees to support and contribute to innovation in order to achieve a
competitive advantage over Samsung, Google (Alphabet), Microsoft, Amazon,
IBM, and Sony. Apple modifies its implementation of the corporate vision and
mission statements over time to reflect changes in the company from Steve Jobs'
tenure to Tim Cook's current leadership. The company's efforts in addressing
contemporary business prospects in the computer technology, consumer
electronics, cloud computing, digital content distribution services, and
semiconductors industries are reflected in the purpose and vision statements.

Apple's corporate mission and vision are intertwined in its pursuit of continual
expansion in the face of competitive obstacles. Given the multiplicity of
industries in which the technology business operates, its corporate mission and
vision embody the variety of strategic methods for these businesses. Apple's
Five Forces research reveals fierce competition. This competitive component of
the information technology market is taken into account in the company's
strategic mission statement implementation. Furthermore, the vision statement
of the organisation drives business efforts addressing competition towards a
future of leadership in the global information technology and online services
industry.

 The Mission Statement of Apple

The goal statement of Apple is "to create technology that empowers people and
enriches their lives." This corporate purpose statement, which touches on the
interface between people and technology, serves as the foundation for the
company's business processes. Apple's mission statement includes the following
elements:
Technology development Empowering individuals Enriching lives
According to Apple's company objective, the target business output is
technology. The goal of product design and development at the organisation is
to release technical goods and services such as cellphones and web services. As
a result, Apple's generic competitive strategy and aggressive growth strategies
strive to compete in the market with innovative technologies. This strategic goal
may be seen in the company's efforts to create and improve its own systems on
a chip, such as the M3 Series

Apple's tactics account for other technological firms in order to achieve its
corporate mission statement's concentration on technology. Many technology
companies do not compete directly. However, the strategic intentions of these
companies have an impact on industry and market conditions, corporate
performance, and Apple's mission statement.

Apple's ambitions are also guided by the business mission statement, which
includes empowering users of the company's products. The components of
empowerment and enrichment mirror market changes, such as shifts in demand
for high-quality digital services. These trends, as outlined in Apple's
PESTEL/PESTLE study, influence the types of technological items included in
the company's corporate mission implementation.

 The Vision Statement of Apple

Apple's vision statement is "to create the best products on the planet while
leaving the world a better place than we found it." This corporate vision
statement emphasises excellence as well as the net advantages of the
technological firm's goods. Apple's vision statement includes the following
elements:

Making the finest goods possible

The planet as a target market
Making the world a better place

The element in the vision statement about "the best products" necessitates Apple
aligning its strategic objectives in order to achieve excellence. The iPhone
maker has the organisation, resources, and expertise to create the greatest goods.
For example, this corporate vision statement requires Apple's operations
management to adhere to high productivity and efficiency requirements.To
safeguard the firm against competitors who are also constantly improving their
respective organisations and information technology, the various sections or
divisions of the organisation must continuously improve. Apps for iOS, iPadOS,
and MacOS must also meet high quality standards.

The phrase "earth" in the corporate vision denotes that the company's strategic
goals and objectives include worldwide leadership in industries like as
consumer electronics. As a result of the transnational presence of Apple stores,
Apple's marketing strategy focuses on the international market for consumer
electronics and online services. This global reach implies that the corporation
creates products like smartphones and laptops to meet the different wants of
clients all around the world.
Apple's corporate vision statement also directs activities to "leave the world
better," implying that the company's stakeholders are satisfied. In stakeholder
management, the company's goal is to achieve a net benefit for the globe using
information technology and related services. Thus, Apple's corporate citizenship
activities towards minimising environmental effect and contributing solutions to
the world's problems are influenced by the vision statement. Other business
characteristics, such as Apple's organisational culture or corporate culture and
its impact on human resource capabilities, correspond to the corporate vision's
concepts and aims.
 #3. THE FIVE FORCES ANALYSIS OF PORTER APPLE

Since its inception in 1976, Apple has achieved significant success as an

industry leader in the technology business, and it is now considered as one of
the world's most valuable firms. In 2018, Apple became the first US corporation
to have a market capitalization in excess of one trillion dollars, an
accomplishment made possible by the organization's continual focus on
innovation, marketing initiatives, and developing brand loyalty. A Porter's Five
Forces analysis can provide useful insight into how Apple continues to be an
industry leader in technology despite severe competition from Google, Amazon,
Microsoft, Lenovo, Samsung, and others.

1. Competitors in the industry

In the technological industry, Apple faces stiff competition from companies

such as Samsung, Google Inc., and Amazon Inc., among others. These
competitors are just as aggressive as Apple when it comes to innovation, new
product development, and marketing, giving Apple a strong industry
competitive force.
Furthermore, in terms of product differentiation, Apple's competitors provide
identical types of items that serve the same function for customers.

Low switching costs between products are another key driver of rivalry in the
technology industry. Switching from an Apple product to another brand's
product requires little commitment from the user, mainly due to the presence of
similar items serving the same purpose. For example, an Android user's
favourite app will almost certainly be accessible on iOS (Apple). Another
example is the iCloud feature in Apple's iPhone and Google Drive in Android
devices, both of which serve the similar goal of saving data in the cloud.

The presence of these industry competitors is a significant concern during

Apple's strategic planning, and it is a threat that Apple has consistently dealt
with by making their products unique in order to improve and maintain their
market position.
As a result, industry competitiveness is great, making this a powerful factor for
Apple.

2. Competitors in the industry

In the technological industry, Apple faces stiff competition from companies

such as Samsung, Google Inc., and Amazon Inc., among others. These
competitors are just as aggressive as Apple when it comes to innovation, new
product development, and marketing, giving Apple a strong industry
competitive force.
Furthermore, in terms of product differentiation, Apple's competitors provide
identical types of items that serve the same function for customers. Low
switching costs between products are another key driver of rivalry in the
technology industry. Switching from an Apple product to another brand's
product requires little commitment from the user, mainly due to the presence of
similar items serving the same purpose.

3. Supplier negotiating power

This Porter's Five Forces model force emphasises suppliers' influence in forcing
their demands on an organisation, which is quite modest in the case of Apple.
This is owing to Apple's global access to a diverse range of component
suppliers, which weakens particular suppliers' ability to impose demands on
Apple. Apple can also quickly switch component suppliers at a minimal cost
and with little or no difficulty. Component part providers are also reluctant to
lose a large customer like Apple to a competitor parts supplier, bolstering
Apple's position when negotiating a contract with a supplier. This demonstrates
the poor bargaining power of component part suppliers and their weak position
in Apple's strategic strategy. As a result, suppliers' bargaining strength is
modest, making them a weak force for Apple.

4. Buyer negotiating power

This Porter's Five Forces force depicts the impact of consumer preferences and
purchasing behaviours on a business. This is especially important for Apple
when we consider the low cost of switching between brands. This force is
modest when only individual negotiating power is considered, but it is
considerable when customer collective bargaining power is considered. This is
because an individual consumer switching to a rival brand result in a tiny
income loss for Apple; yet, a mass switch of customers to a direct rival
diminishes Apple's market share while increasing the competitors. Because
purchasers have access to information, this is a powerful force. Customers may
now readily obtain information about a variety of products' features, customer
reviews, and so on.

This is particularly opposed by Apple's continuous investment in research and

development, which has resulted in the production of different items unique
only to Apple, such as Air Pods and the Apple Watch, reinforcing customer
loyalty and drawing new customers.
As a result of the readily available knowledge and low switching costs, buyer
power has become a powerful force for Apple.
5. Threat of substitution
According to Porter's Five Forces analysis, the threat of substitution refers to
products that are not direct competitors but can act as substitutes to Apple
products.

The threat of substitutes for Apple products is particularly low due to the
limited capabilities of said substitutes. An example of this is owning a DSLR
camera instead of an iPhone 12, but iPhone 12 does more than take clear
pictures, giving it the edge over a DSLR camera. At the moment, there is no
other technology available that could substitute the use of smartphones
completely.
Also, the Apple operating system (OS) places Apple products in a strong market
position, due to the fact that there is no near substitute for it. As a result, the
threat of substitution is a weak force for Apple.
 #4. APPLE COMPETITIVE ADVANTAGE

Apple operates in the technology industry, which is currently one of the world's
fastest expanding businesses. The industry's growth and potential are
continually attracting new market participants who want to offer more appealing
value propositions to clients and compete fiercely with current companies such
as Apple. Apple's competitors are continuously attempting to surpass the
business by offering new goods and services that have a significant influence on
consumers. Despite fierce competition, Apple has maintained its market
position by developing a significant competitive edge.

A company's competitive edge allows it to separate itself from other market

participants in terms of value creation. The Porter's Generic Strategy model,
which is one of the most prevalent theoretical frameworks used to design
effective marketing strategy, can be used to analyse it.

The diagram above depicts Porter's Generic strategy model. This concept states
that an organisation can get a competitive edge through four main strategies:
cost leadership, differentiation, cost focus, and differentiation focus. To get a
competitive advantage, a corporation may choose to implement any of these or
a mix of these tactics.

 Using Distinction to Gain a Competitive Advantage

A comprehensive examination of Apple's business processes reveals that the

company employs a differentiation approach to get a competitive advantage.
The company is attempting to distinguish itself in a wide range of markets.
Apple's first point of differentiation is its brand development. Apple has built a
strong brand image over the years that is focused on quality, convenience of
use, privacy, and user experience. Furthermore, the company has developed
great brand loyalty among its clients, which is reflected in its brand equity.
Apple currently ranks first in terms of brand value, with a valuation of USD
260.2 billion.

Apple's strong brand image distinguishes it from competitors in the market that
offer similar product categories. Apple's distinct brand image has helped
customers to have top-of-mind brand memory, which is critical for brand
preference when making a purchase. When it comes to brand image, Apple is
quite open about its unwavering commitment to quality and user experience. If
you are writing a leadership essay, you might note that as a result of this
strategy, Apple has become a premium brand that caters to a narrow market
sector where people are willing to pay more for the brand and the promised
quality. Thus, Apple has gained a significant competitive edge through its own
brand image, which communicates excellent quality.

Apple's competitive edge stems from its product design as well. Rather than
simply selling items, the company has always prioritised developing
experiences for its customers. As a result, every Apple product is engineered to
provide a better experience than competitors' offerings. Apple's devices run on
proprietary operating systems in order to provide a one-of-a-kind experience.

The user interface has been designed in such a way that it stands out from the
competition. The iOS on iPhones differs from Google's Android, while the
MacOS on Mac computers differs greatly from Microsoft's Windows. In order
to give unrivalled performance and superior optimisation with its own mobile
processors, the company also designs its own mobile processors. Apple is
continually striving to provide a unique and pleasurable experience for their
customers.

The building of a product ecosystem significantly differentiates the customer

experience. Apple has built its products over the years to provide users with
additional value and a better experience when combined with other Apple
devices. Smart products such as the iPhone, iPad, and Apple Watch, among
others, will work in unison to provide an even better user experience. This
product ecosystem has assisted Apple in furthering their distinction.

#5. ENHANCEMENT RECOMMENDATIONS

To get a competitive advantage, Apple has used the differentiation strategy. The
company has distinguished itself through brand image, product design, and user
experience. Apple's distinct brand image is related with its higher quality,
convenience of use, improved user experience, and high aspirational value. In
terms of product design, on the other hand, the company has distinguished itself
by developing items that provide consumers with an unparalleled experience.
Apple has aggressively distinguished itself by developing its own user interface
and product ecosystem, which has played a significant part in its growth and
success.

Except for the LISA project, Apple has avoided obstacles to long-term
innovation. In 1983, Apple created Local Integrated Software Architecture, or
"LISA," for a personal computer. It was a more sophisticated and far more
expensive system ($9,995 in 1983). It was designed to be so complex that it
included protected memory, sophisticated hard disc, cooperative multitasking,
and other features. As a result, LISA became a commercial flop. LISA was an
Apple blunder because it was a sophisticated device with unneeded features and
without understanding true market needs. Apple, on the other hand, creates
other items by avoiding this trap and avoiding developing products that are
inconsistent with key values.

Its primary products include the iPod, iPhone, Mac laptop, and Mac desktop,
and it had its best-ever quarter with a net quarterly profit of $3.38 billion.
Because of the huge success of these main goods, it may be the maturity phase
in product life cycle (the highest selling time), particularly the iPhone, which
introduced the initial model in 2007 and has been evolved in numerous variants.
As a result, it appears to be an impediment if Apple develops a new innovation
model that is superior to the iPhone while adhering to the core concepts of "ease
of use" and "customer needs." If the new device fails, it may have an impact on
the company's finances, as the iPhone generated a lot of money by selling 8.7
million copies in the previous quarter. The next barrier is the resource's
fundamental skill. Intellectual development teams do not focus on high-
performance products. As a result, the target consumer is limited to a small
market that satisfies this type of goods. Another impediment is product
limitation. For example, a Mac laptop/desktop has less versatility than other
goods of the same type on the market. The consumer is unable to switch to more
appropriate hardware for their work. Furthermore, customers may encounter
issues with software that requires compatibility with the Macintosh operating
system.

Some of the conventions in developing ideal corporate mission statements are

met by Apple Inc.'s mission statement. The corporate mission of the company
provides information on products and technologies; however, some changes
could improve it. Mission statements should ideally include information about
corporate identity and workers, as well as other components of the computer
technology industry. Apple's corporate goal is focused on product development
and customer impact. Including details on corporate identity, workers, and the
business's strategic goals can help make Apple's mission statement easier to
apply in day-to-day operations.

Apple's vision statement outlines the company's future orientation. It meets

some of the traditional requirements of excellent company vision statements.
For example, it is apparent what Apple aims for, such as leadership in product
design and development, as well as a concentration on excellence in corporate
operations. Furthermore, the vision statement is abstract, aspirational, and
consistent in order to include the future of the technological firm. However,
more information can help to strengthen Apple's vision statement. For instance,
the corporation can make the corporate vision more detailed in terms of
strategic direction and the desired future condition of various business areas,
such as Internet services and artificial intelligence. These specifics can help
Apple employees understand and fulfil the corporate vision statement.

According to a Porter's Five Forces analysis of Apple, the two industry forces
that can have the greatest impact on Apple's position in the technology market
are industry competition and customer bargaining power. Apple's market
position is not threatened by substitute products or supplier bargaining strength.
Despite this, Apple must continue to invest in new product development and
customer acquisition to maintain its competitive edge over other brands and
emerging brands.