Strategic Management A Case Study of Apple Inc.

Question: Describe the Case Study of Apple Inc. for Strategic Management . Answer: Introduction: The report is based on business strategy of Apple Inc. The aim of the report is to examine various aspects of business and the way an organization operates in the market. The company selected for the purpose is Apple Inc because it has a span of multiple business units and is one of the most successful companies worldwide. 1) Company Overview: Apple Inc incorporated in 1977 designs and manufactures mobiles, media services, personal computers and portable music players. Apple is the worlds largest information technology company in terms of revenue with total revenue of $233.715 (Apple.com, 2016). Apple deals with a variety of technological products, iPhone being the most successful product of the Company (Apple.com, 2016). As stated by Khan, Alam and Alam (2015), corporation is an organization that is engaged in mobilizing resources for productive purpose, to generate wealth and other benefits. It is intentionally aimed at not destroying wealth or increase risk and is done for its multiple users and stakeholders. Apple is a well established corporation in America, headquartered at California. It has 478 other Apple retail stores in 17 countries (Apple.com, 2016). Thompson et al. (2013) defined product folio as the distinction of different products that an organization has, based on its category, product line and finally its individuality. An organization has different sets of products but each product generates different productivity and thus, management of product portfolio is indeed important. Product portfolio of Apple includes iPhone, iPad, Mac, Apple TV and software application iOS and OS X operating system. The iPhone and iPad are the most successful products of the company and fetch 56% of the total revenue (Apple.com, 2016). On the other hand, Apple TV is not a successful product. In the viewpoint of Vereecke and Wetzels (2014), service portfolio is the core repository for all information in an organization for all services. Each service of the organization is listed with its current and previous status, and the service design package design is the best descriptor of service portfolio. Moreover, the product of Apple has seen great evolutions. Last year, Apple came up with iPhone 6 and iPhone 6 plus and would release iPhone 7 within a short time (Apple.com, 2016). The design of their products is exclusive and happened to be the reason for service portfolio. 2) Corporate Research Reading Mouritsen (2016), business unit has been defined as a logical element or a segment of an organization including accounting, production or marketing that represents a specific business function and a definite place on the organizational chart under the domain of a manager of the organization. Tim Cook is the recent CEO of the company. The Company is well structured in terms of managing the accounts and marketing. Headquartered at California, the company does Global business with its business unit spread all over the Globe. Separate business units of Apple includes, technical unit, marketing unit, account and finance, product design and the most important research and development unit. Product and service lines have been defined by Krush, Sohi and Saini (2015), as a group of related products that is sold by the same company under a single brand name. Different products as mentioned include the most popular and successful iPhones, Apple TV, iPad, Mac book and others. The products are sold under the same name, Apple Inc. worldwide. Apple has huge market in United States, United Kingdom, China, Japan, India, Australia and others. 3) Corporation Revenue centre The amount of money that a Company actually receives in a specific duration of time after deductions and discounts occurred due to returned merchandise is termed as revenue of a particular organization (Gaiardelli et al. 2014). If the products are differentiated in terms of BCG matrix, it can be said that iPhones serves as the most successful product and is regarded as the star of the company that generates the most amount of revenue to the company. The iPad and Mac act as cash crops and can be improved to generate more revenues. The software like iOS and OS X are the cow and Apple TV can be considered as the dog that does not generate much revenue to the company. 4) External environment analysis Operating environment denotes the places where the organization operates and does its business (Picard 2014). In the age of globalization, every multinational company operates globally. However, there are certain external factors that affect the business of a company. Such factors include political, economic, socio-cultural, technological, legal and environmental condition of the particular region. PESTLE analysis of Apple Inc. Political The political situation of a country that affects the business or industry of the particular organization is the political factor (Rao 2014). Apple is one of most successful companies in America but the raw materials of the company are supplied from China. Therefore, political factors of China affect the business of the company. Economic This factor determines the economic performance of a country that affects the business of a company. Economic factors like increased labor cost and a strong exchange rate for US dollars makes it expensive for the company to sell product in international market. Socio-cultural Factors like cultural trends, demography and population analytics that affect the business of a company are the socio-cultural factors. Apples target consumers are the younger people (Selnes 2013). Todays consumers have a backlash towards stylish and expensive products. These factors increase the demand of innovative and exclusive products delivered by Apple. Technological The factors that pertain to innovation in technology and affect the operation of the industry are the technological factors. IOS is the operating system that happens to be the most superior form of operating system. Competitors like Google and Samsung shows the potential to compete with the technology of Apple. Legal The internal and external laws that affect the business environment of a country are the legal factors (Visnjic, Wiengarten and Neely 2016). Apple has recently entered a highly regulated sector, Apple Pay that has increased the legal regulation of the company. Environmental Factors like tourism, agriculture, climate and geographical location that affects the business of the organization falls under the environmental condition. Apple has been facing environmental issues regarding disposal of its lithium battery (Pivrinne and Lindahl 2016). 5) Source of sustainable competitive advantage Every company comes up with certain sustainable competitive strategies that help it to survive in the competitive globalized market. If the case of Apple Inc has to be analyzed, it can be said that its product differentiation and technological advancement has made its product sustainable in the competitive market. Although Apple products are very expensive, its premium pricing strategy happens to be one of the reasons of it being the number one company in mobile market. Four factors of sustainable competitive advantage that Apple has are: Effective supply chain management: As pointed out by Rao (2014), it is important to keep an effective supply chain for every organization for supply of raw materials and transportation of final goods to the expected buyers. Apple has its business spread all over the world. The Company has effectively managed its supply chain process. Online selling of products has been the most effective way of supply chain. Organizational responsiveness: It is very important to keep pace with the changing nature of the competitive environment. If technological factors are undertaken, it can be said that consumers look for innovative and advanced technological products in the market (Priyanka and Srinivasan 2015). With the changes in demand and increased technological advancement, Apple has been successful in meeting all the challenges and come up with latest and best product. Product differentiation and innovation: Making the product different from the existing products with innovative approach is one of the tools to increase sale of the product. Innovative techniques like iTune, live camera, Siri and many other concepts have made the product different and innovative from other smart phones (Pivrinne and Lindahl 2016). Cost leadership: Price of a product has always been an important factor to consider for a buyer. Therefore, keeping a check on the pricing strategy is equally important. Apple believes in premium pricing (Gaiardelli et al. 2014). This pricing technique has leaded the Company to achieve its business strategies. 6) Business level strategy Business strategies are the plans that an organization makes for its business. Apple believes in two main strategies, product innovation and premium pricing. All types of products that the company deals with are released into the market that supports the most advanced technology and have exclusive features that can compete with any other products available in the market (Mouritsen 2016). Recommendations for future strategic direction Pricing strategy: Price of the products of Apple is very high. It is recommended to reduce the price and frame a competitive pricing strategy. Software collaboration: Apples product does not support certain applications that are supported in android and windows phones. It is therefore, recommended to open up its patent to other smart phones. Conclusion The report has analyzed the various terms related to business strategy. Using Apple as the case study helped to gain better knowledge and understanding about the operation of an organization. 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