Apple Strategy Analysis
Apple had made our life even easier than time when Apple was just a fruit. The paper focused on critical analysis of Apple’s governance and social responsibilities. The paper also intended to draw a critical conclusion on Apple’s management techniques and solving conflict between business strategies. The Purpose of the paper is to study the impact of corporate strategy, governance and ethics on the achievement of Apple’s Goals. With a view to conduct the research for the paper, research methodology is the most important aspect. For the purpose of the study, data was collected from secondary sources. This study heavily banked on secondary data and Secondary data were collected using various published and unpublished sources, different case studies on Apple. For achieving the objectives, the paper analyses the external as well as internal environment of Apple Inc.with the help of SWOT analysis
Apple Inc. is an American multinational technology company founded on April 1st, 1976 by Steve Jobs, Steve Wozniak and Roland Wayne in Cupertino, California. The company is considered to be one of the Big Four of technology alongside with Amazon, Google and Facebook. Apple Inc. designs, develops and sells consumer electronics, computer software and online service. The hardware products include the iPhone smartphone, the Mac computer, the iPad tablet computer, the Apple TV digital media player, the Apple Watch smartwatch, the iPod portable media player and the HomePod smart speaker. Apple’s software includes iOS and macOS operating systems, the Itunes media player, the Safari Web browser as well as iWork and iLife creativity and productivity suites. The Itunes Store, iOS App Store, Apple Music and iCloud are the company’s online services.
Apple was founded in 1976 by three men: Steve Wozniak, Steve Jobs and Ronald Wayne. Apple back then was just a garage in California, created with the intention of selling their Apple 1 Personal Computer, hand built by Wozniak. The Apple 1 barely qualified as a finished product, lacking any Human Interface Devices built in such as a keyboard, or even a case. Regardless, it attracted the attention of a multimillionaire, Mike Markkula.
5 years after, the first Macintosh was designed. With the ground-breaking “1984” ad, Apple set themselves apart from the firms targeted in the advertisement: namely, IBM. The Mac was a revolution in personal computer design. It came with its own GUI (Graphical User Interface) and allowed for the use of a ‘mouse’. We still consider the use of computer mice and a user-friendly GUI to be essential, more than 30 years later.
Unfortunately, there were issues with developing hardware this advanced. At this point, Ronald Wayne had left the company a long time ago, as had Wozniak a year after the launch of the Macintosh, this time for good. With all but 1 of the founders left, Apple shifted gears to make high-end products with a high price, which they referred to as the High-Right Policy. This led to some unique products, such as the Macintosh Portable, a huge brick that nevertheless had most of the functionality of a Macintosh II. Other products include the PowerBook, the common ancestor of all modern laptop designs and the Newton, a pet project of John Sculley (The CEO of Apple after the resignation of Mike Markkula) that pioneered the PDA, and later assisted in creating the tablet.
On the other hand, Steve Jobs had advocated for a consumer market-led focus to product development, suggesting that the Macintosh be sold at $1000 in 1984 dollars. For this and his supposed eccentricities, he was held back from taking a leading role in the company he founded and eventually resigned in 1985. After the High-Right Policy proved to be unsustainable, Apple began introducing products at the consumer, such as the Macintosh Classic, the LC (essentially an upgraded Apple II) and the later Performa budget series, with the failure of the latter revealing how poorly thought out their approach to consumer-market electronics was.
By and large, the Performa series were just older Apple computers with a new coat of paint. By 1997, the company was struggling to make ends meet, with constant changes to management, layoffs across the board and failure to counter the rise of Microsoft, who offered equivalent performance at a much lower price bracket. With this, Apple bought NeXT, Steve Job’s firm that he had been working with since 1985.
With the resurgence of Jobs, Apple began restructuring. The High-Right Policy was abandoned for good and a year later, the iMac G3 was born. It was cheap, visually unique and powerful for its day, a radical departure from the expensive and serious looking boxes that could barely keep up with Microsoft. The iMac quickly became an icon of the late 90s and helped Apple escape from its financial rut.
Around this time, Apple began changing its brand and product image. Apple products weren’t just for stuffy businessmen: they were for kids, graphic designers, artists, and anyone that wanted to choose the ‘underdog’, with Microsoft earning some bad press at the time. The iPod further developed on this image, with an iconic advertising campaign helping Apple dig themselves a niche in the MP3 market which they quickly dominated.
Since then, Apple’s primary focus has moved from desktop computing to mobile devices, the iPhone and iPad quickly becoming vogue and them mainstream. Apple wasn’t the first to develop a smartphone (The Blackberry had a sizable portion of the market long before the iPhone) or a tablet, but pioneered the futuristic 2001: A Space Odyssey look for any future tablets.
Apple may have earned some (well deserved) mockery and criticism in the past, with unethical labour practices scandals, its insistence on their products being ‘closed off’ to modification, its history of tax avoidance and occasionally poor quality control, such as the iPhone 4’s antenna being blocked easily by putting your hand over it. But many of the technological marvels we take for granted were developed by Apple. From 1976 to 2017, Apple has been a key player in the consumer electronics market for 20 years and remains one of the most recognisable brands in the world.
On the company’s website, Apple’s vision is the following: “Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings” (Apple, Inc., 2019).
Apple Inc.’s mission is stated: “Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad”. (Apple, Inc., 2019).
Strength: Apple has a strong recognition thanks to its aggressive nature of founder towards creativity and innovation (Schmeiser 2008). As the existence of innovative culture, Apple had increased investment in R&D i.e. $4.5 billion in 2013, $3.4 billion in 2012 and $2.4 billion in 2011(Apple’s 10K). The company also had elevated sales as of practiced and skilled sales personals(Apple’s 10K). Further strength of Apple is implausible trade name trustworthiness; Customer can stand whole freezing night (Guenette, 2012) to be the first one to get new iPhone.
Weakness: One of the Apple’s biggest weakness is their hardware products are only supported with iOS, which makes it difficult to use, whereas competitors’ products are Android which doesn’t have such issues. It is also researched that its products are luxury products as carries a premium price.
Opportunity: Apple may want to start looking on how to innovate again. It should be looking at strengthening strategic partnerships with other giants in the field (such as enhancing partnering with IBM on AI). Apple should also Strengthen diversity (increase leadership diversity; hire more female engineers). Apple should consider distribution network expansion and the rising demand for tablets and smartphones. But most of all Apple should focus on the creation of new product lines. Apple, Inc. has also built a different experience for its customer, which has brought them more loyal customers. According to a survey of Goldman Sachs in May 2012, 88 percent of iOS users who own Apple’s tablets or smart devices will stick with the same brand for their next device (Elmer-Dewitt, 2012). On top of that, 21 percent of them will purchase Apple’s devices no matter the price of the products (Elmer-Dewitt, 2012). That shows how loyal Apple customers are and that the company will have a great profit just by only retaining these loyal customers.
Threat: Although Apple is very strong in the market at the moment it should not take its focus away from competition in the tech market, for example, more innovation from Samsung and others. Imitation (to include copyrights infringements) and the rising labor cost in countries where Apple plants are located is also something for Apple to contend with. Finally, Apple will have to consider that political forces may also influence the company and the technology sector in general.
Apple’s business level strategy can be classified as product differentiation in design and functionality. It also includes “building and expanding its own retail and online stores and its third-party distribution network to effectively reach more customers and provide them with a high-quality sales and post-sales support experience.” (Apple, Inc., 2018). As part of its business strategy, Apple “continues to expand its platform for the discovery and delivery of third-party digital content and applications through the iTunes Store” (Apple, Inc., 2018).
Apple’s vertical integration is one of the major factors that set the company apart from the competition. The company has been benefiting from its vertical integration immensely. Specifically, an important source of Apple competitive advantage relates to its ecosystem, which is enabled by such integration.
Apple devices and software sync easily and work well with each other. Applications work on multiple Apple devices at the same time and there is no much difference in user interfaces; however the same items do not pair with products of other companies, thus creating the likes of a closed ecosystem. Apple’s ecosystem creates switching costs for its customers to the competition. The ecosystem also provides the opportunities to leverage relationships with existing customers to offer other products and services.
First mover advantage is another element of Apple competitive advantage. It has to be stated that Apple competitive advantage may be challenging to be sustained for long-term perspective. Specifically, the management may fail in terms of ensuring the addition of innovative features and capabilities in new versions of its products, thus compromising its competitive advantage.
Marketing strategy: Apple is a unique electronic manufacturer because they have an approach of product launches that is more similar to fast moving consumer goods companies with new products every six months or at least once a year. When a new product is launched, that product is supported by an advertising campaign, and the end result is to generate a large amount of sales. This approach makes people excited about Apple’s products and keeps Apple as a leader in the technology industry.
R&D strategy: Apple was not the first to introduce the personal computer. It did not invent the first portable media player nor did it pioneer the first smartphone with touchscreen input. However, the company has been widely recognized as an innovator and game-changer in the industry. But Apple was not always innovative. Key to the business strategy of Apple is a specific product and innovation strategy centered on reactive and proactive innovation built on the need to promote simplicity. The company does this by using cues from already existing products and improving them further by removing undesirable qualities and integrating differentiating features, primarily by introducing novel functionalities and reinventing the entire user experience.
Retail strategy: Apple has their own retail stores so they also have direct conversations with their customers and potential customers. In fact, customers come into the stores to experience Apple’s products and give feedbacks or their expectations and what they do or do not like about products (Bajarin, 2011). This information is invaluable for Apple to stay ahead the competition of adapting and evolving consumer needs. As a result, Apple’s retail stores hosted 71.1 million visitors in one single quarter this year; this overwhelming statistic was an increase of 51% over the same period last year (Bajarin, 2011). In addition, Apple’s retail stores brought in $3.19 billion in the quarter, which is a new Q2 record and a 90% increase in the same period last year (Bajarin, 2011).
Production strategy: While the rest of the PC industry is struggling with differentiation and depends on software providers to improve their products, Apple has a strong competitive advantage because they manufacture both software and hardware. According to Wayne, a senior analyst in competitive analysis at IHS, “Apple takes a vertically integrated approach to its products, from the operating system to the user interface, to the hardware design, down to the selection of individual parts used in the device” (Wayne, 2011). Manufacturing both hardware and software also helps Apple control the compatibility between two aspects of a product. Therefore, the high tech company can provide the best overall experience to its customers
Logistic strategy: The lean supply chain strategy has been demonstrated in numerous product launches of Apple such as the introduction of the iMac and the Mac OS in 1998, the launch of the iPod and iTunes in 2011, and the unveiling of the iPhone in 2007 and the iPad in 2010. Note that these products were loosely based on counterpart products from competitors but featured significant reinventions and new innovative improvements.
Digital asset management strategy: Apple displayed smart strategy when they invested in digital asset management. Apple became one of the biggest digital retailers in the world with 100 million consumer credit accounts through iTunes. It also keeps customer using Apple’s products because once they purchase digital contents, they can have it in every other smart product of Apple. This is one of Apple’s strength, and it helps not only increase sales in the digital market but also keep Apple Inc.’s customers continuing use of their future products.
Of course, like any other business organizations and multinational corporations, the company employs a range of more specific strategies to include financial management strategies, human resource strategies that include recruitment and retention practices, as well as stakeholder relationship and social responsibilities, among others.