Apple strategic analysis

 A competitive analysis of Apple Inc

As a company Apple Inc. has developed from being a pioneering PC company specialized in creating high end PCs to a diversified design powerhouse focused on constantly innovating products that not only revolutionize and redefine industries but that also reshape customers’ perceptions of products and functionality simultaneously. This report attempts to put to Apple, its businesses, its products and strategies under the microscope in order to provide the reader a better view of the underlying reasons for Apple’s success with specific regard to strategy.

The report begins with a detailed overview of Apple’s core strategy of differentiating itself by constant innovation of products that redefine the boundaries of the industries it operates in. From here, a link is made to show the corporate structure of the company and more importantly to highlight the culture of innovation within Apple that serves simultaneously as its driving force and competitive advantage.

Further the report examines Apple’s evolution in the PC industry, its positioning of Macintosh computers as ‘digital hubs’ that add value to a chain of digital devices and how its model integrated of hardware/software has served as the foundation for its other products.

Later, analysis of holistic view of Apple’s development and strategies in the consumer electronics industry and how innovation has allowed it to become a dominant brand in the industry by surpassing stalwarts such as Sony in delivering consumer friendly devices. Few recommendations are made to Apple executives who could take a note of in order to stay ahead of the pack in their various businesses.

The Strategies, Corporate structure and culture of the firm

Apple is considered as one of the most reputable companies in the PC and digital industry all over the world. It has received many awards and recognition in many different categories and is ranked as the world’s most admired company consecutively for last three years. There is great effort behind Apple’s success in the market. Also there are many factors involved in its ongoing success as the market innovator. Apple has brought a big change in our day to-day life, simplest being buying music to participating in the domain around us. (Christine Thompson)

As BMW CEO Norbert Reithofer puts it, “The whole world held its breath before the iPad was announced. That’s brand management at its very best.”(Fortune Magazine, March 4, 2010)

One of the important factors for Apple’s success is its solid corporate culture that promotes its values and belief’s among employees and partners and their keen commitment towards the company. These values and commitment bring together the award winning products and services every year. All this has not come overnight, it has been there from the beginning (1980’s) until today. This is a sign of consistency and lasting culture in the company. The employees at Apple think diversity and dress code are the best part of the company. (Christine Thompson)

We know that many of Apple’s customers sleep or wait outside the Apple stores just to be the first to buy the new products. This indicates that Apple enjoys its brand loyalty. This success is from great effort to deliver the best products. To achieve this Apple employs a few strategies such as; exclusive Apple stores with well-trained and well-informed employees who have good knowledge of their products and services. These give the customers an opportunity to explore the technology. One of the other strategies is the complete control over the hardware and software which enables them to deliver complete products. They also have a range of products from music players to computers which allows them to capture the new market and establish their presence. Another strategy used by Apple is to develop its presence in the schools and universities which let young people to use Apple products, once the kids get acquainted to these products they would want Apple products even at home. One of the important strategies that Apple employs is a result of enthusiastic research, its design of easy to use products which are simple and durable. These great products basically have the same fundamental architecture that encourages the existing customers to buy more Apple products in their future. With their constant innovation Apple brings out new products that let its customers to stay loyal to the brand.(Insider CRM editors)

2) Evaluate your company against the four generic building blocks of competitive advantage: efficiency, quality, innovation and customer responsiveness. How does this exercise help you understand the performance of your company relative to that of its competitors?

 Use technology to drive efficiencies

This may seem like a no-brainer, but it’s not as easy as it sounds to make sure that your systems are running smoothly. Make the investment. There’s nothing that frustrates customers more than a failed attempt to even get to a customer service help portal/channel. When you make sure that this side of your business is taken care of, you’ll build a returning customer base who can depend on it.

Don’t forget to take advantage of innovations in technical assistance. Yes, everyone now has a Facebook page and a company Twitter handle, but are you thinking outside the box to determine what more you could be doing and how you can consolidate your efforts?

More and more companies are taking advantage of using video to answer consumers’ concerns. Warby Parker has used this technique to cover a series of customer questions on YouTube and provide recommendations on which frames may be best fit for particular shoppers. In the process, they are cutting down on costs by offering proactive advice and addressing several customers at once.

You can save precious time and money by looking for similar ways to be more efficient in your service operations.

3. Leverage the community

Successful businesses engage their power users and loyal customers to help inform others about the details of a product or service. Don’t be afraid to experiment with community platforms to get conversation flowing about a new product or service, and you may be able to build a community of users that can answer customer inquiries on your behalf. GetSatisfaction is one company offering a platform that can drive these conversations.

It’s important to make sure that you have someone on your team play a part in these forums. The format can help you cut costs as you ramp up your full customer service team, but make sure that you’re on call to verify consumers are receiving the correct information and you are maintaining promised quality standards.

Often, these types of conversations help consumers understand the personality of a company and appreciate the reps behind your customer service strategy. This type of great service is essential to building a loyal customer base that will come back for more.

4. Location, location, location

Don’t be afraid to use location to your advantage. Moving to a big city center isn’t always the right choice for a growing company, and you may be able to keep your operational costs down by establishing roots outside your closest metro area and playing up your regional ties.

Take advantage of local talent and avoid the large turnover rates and high competition for new hires that is often endemic in larger metro areas. You can also look for ways to play up regional passions that can help drive your company culture and build your local fan base.

Jackthreads, a men’s fashion retailer based in Columbus, OH pulls most of its customer service agents from among Ohio State University students, to great success. The company is filled with like-minded individuals who help to set the bar for company culture. Their passion for the community (and their alma mater) spills over into daily operations and helps to keep the company in check.

A focus on customers is essential to growing your business

By aligning your story and brand with service, you’re future-proofing your business. Your product may evolve over time as consumer preferences and trends change, but if you stay consistent in your service efforts, customers will reward you with their loyalty.

3) What are the distinctive competencies of your company? External analysis: industry opportunities and threats

Apple is a consumer electronics company which operates in hundreds of countries around the world. The company was founded by Steve Jobs and Steve Wozniak in 1976 where they produced a computer in a garage. The company has grown greatly since then but only gained worldwide popularity after the release of the iPhone. The share price of the company has been fairly stagnant up until that point, until it rose to make the company the most valuable company by market valuation.

Strengths

Innovation is the key to the company’s success. It has created unique products which have been ahead of the curve such as the iPhone which brought touchscreen technology to the mainstream. Other touchscreen phones were available at the time, but the products did not look appealing and did not have a good operating system. Other products like the iPad were created by Apple which also brought the market forward, in terms of design and in competition. This corporate culture towards research and development into new product ideas and thinking outside the box has created great goodwill within the company.

One of things that Apple has been able to do with the successes of their product ranges is to collect a lot of money in cash. The company has over $100bn in liquid cash available on the balance sheet. The money has been criticised by its corporate investors for not investing it in companies or to return the money via dividends. Apple has started to take this information on board only after the death of Steve Jobs and has purchased companies, issued dividends and underwent share buy backs. This had inflated the share price more and also allowed Apple to use acquired companies technologies in their product range such as the Touch ID on the latest iPhone 5S.

Branding and brand loyalty is one of the best things that the company has going for it. Existing customers have been able to switch from on product to another product very easily due to the operating system. This has created a type of loyalty with consumers which is an excellent for Apple to keep and grow over time while it’s competition, particularly Android based smartphones, have found it hard to take some of this market back. The brand and the logo itself of the company is known globally by most people in the world and would be able to name at least one product made by Apple.

Weaknesses

The way in which the company prices it’s products can be seen as exploitative. The costs of manufacturing for the products are several hundred dollars less than the recommended retail price. This is the method in which the company has amassed its large cash reserve. The fact that the company has also been criticised for having questionable work practices in its manufacturing factories in China is also a problem which needs to be constantly monitored. These problems combined make it harder for the company to truly have a positive influence on the social aspects of the business.

How much premium per phone is too much?

The yearly product offerings of the iPad, iPhone and some MacBook products is a cause for concern for consumers and Apple also. When new products are expected to be released, Apple experiences a major decline in sales for that particular product which is expected. In most instances, consumers will be polarised in their opinions of new releases. Some customers can justify making a yearly purchase of a gadget which is useable just to get faster processors, while other consumers may not agree and find a product better for them elsewhere. Recently, the iPhone segment of the company has innovated in some aspects such as speed but lacks features which is found on various other mobile products made by competitors. Features such as near field communication (NFC) and better resolution cameras have been present in products other than Apple smartphones. Apple need to ensure that they can innovate enough on a yearly basis to justify a new contract renewal or upgrade from older handsets.

Opportunities

One of the main things Apple has been criticised about with the iPhone 5C is that the price point is too high. The greatest opportunity for Apple as a worldwide company to do is to create a lower priced budget smartphone to cater for the biggest developing markets in the world, China and India. Analysts expected Apple to price the iPhone 5C as a budget phone for the developing market, but was priced too high for that to be real. Under the new leadership of Tim Cook, Apple can create a budget smartphone for the developing markets to create brand loyalty from a younger age or to follow the wishes of Steve Jobs which is to be a premium priced consumer electronics company.

There are various things the company can look into when choosing its future options. Reinventing existing products is the most common way in which all companies retain and possibly generate streams of revenue. Apple purchasing PrimeSense, which co-created the Kinect sensor for the Xbox 360, can yield future benefits. The way in which Apple could use this acquisition is to use the sensing technology in products like the rumoured Apple Television set or the Apple TV set top box. This would make the products have a unique selling point separate to conventional television sets or set top boxes.

Threats

Threats are usually considered to focus on the external factors, in the case of Apple, it’s the competition. The largest smartphone manufacturer Samsung is making it harder and harder for Apple to keep its customers. This is mainly done by the different features samsung offer on their smartphones. Even Noki.............