Apple Corporation
Business-level strategies for Apple
Apple is a leading technology company that relies on several business-level strategies to compete in the market. The business-level strategies are informed by a market characterized by rapid technological advancements. This forces the company to rely on continuous innovation in order to develop a competitive advantage. Apple’s target market is the middle to upper-class people of society who have the taste and ability to pay premium prices for very innovative products and services. One of the strategies adopted by Apple is the differentiation strategy. The company invests a lot in research and development so as to ensure its products and services are unique and of the highest quality possible. Most Apple products and services are designed to meet simplicity and performance criteria, which are also supported by technology’s seamless integration.
The differentiation strategy, in my view, is the foundation of Apple. Innovation separates the company from its competitors, and I believe this is a viable long-term strategy. The company does not just rely on innovative products alone, but it also develops the existing line of products by improving the performance and design of the products in line with consumer tastes and preferences. For example, its iPhone series has been developed from iPhone 11 to iPhone 11 Pro, and recently the company launched the iPhone 11 Pro Max. Other products such as the Mac, iPad, and unique wearables make the company stand out of the pack. Then, the company offers innovative services, such as streaming services through the TV app, digital content storage, Apple Care, iCloud, licensing of its intellectual property, and other subscription services like Apple pay and Apple News+. This variety of highly innovative products with unique designs and services makes the company better placed to develop a highly profitable business because of the cult-like consumer loyalty worldwide.
The cost leadership strategy is also used at Apple to maximize efficiency and reduce waste and costs. The company minimizes manufacturing, scale facility, and sales costs by tapping into third-party companies who compete in terms of offering high-quality work for the minimum cost. This allows the company to focus on innovation and research on the needs of the consumer. The distribution of Apple products also makes it easier for the company to gain a competitive advantage when it comes to meeting customer needs. Through an elaborate manufacturing and robust supply chain, Apple is able to address risks and lower operating costs by outsourcing third party companies operating in Asia. A lean, agile, and efficient supply system enables the company to eliminate waste and reduce the time a product takes to achieve the last-mile delivery. By achieving efficiency, the company can focus on its key strengths, which are innovation, forming strategic alliances, and concentrating on the customer’s needs.
Corporate-level strategies for Apple
One of the strategies adopted by Apple at the corporate level is the expansion strategy. One of the most critical aspects of this strategy for Apple is forging strategic alliances downstream, which allow it to focus on the consumer and innovation. For example, Accenture provides digital transformation for Apple to ensure that its products and services are not only secure but straightforward and easy to use. IBM is also another strategic partner when it comes to developing effective back end technology. At the same time, Cisco is procured to provide the company’s leading networking and security solutions through partnerships. Strategic alliances such as the ones with AT & T in the production of complex software for iPhones and Intel for the production of processors have allowed the company to manage risks better, enjoy economies of scale, and reduce operating costs.
Apple aims to achieve substantial growth in the coming years. However, that has to be powered by innovation and efficiency when it comes to meeting consumer needs. The company recently adopted the dual sourcing strategy, which allowed it to address risks and boost its negotiating ability. By having multiple suppliers and sources for its customized components for manufacturing, the company can reduce its dependence on one supplier and improve the quality of its components. Internationalization is another strategy that has allowed Apple to have a seamless supply chain and distribution system. The company can access leverage on its physical and online stores to target untapped distant markets. For example, Apple’s production base is in China. However, the company can supply its products worldwide thanks to an efficient and seamless supply chain system.
Diversification is also another strategy that has been adopted by Apple. Apple has proved that it is not just a one-product company and that it can venture into other areas to provide a wide array of innovative products such as home accessories, wearables, Mac computers, iPhones, and iPads. For example, iCloud is a service that targets companies and individuals who want to experience high-quality cloud services. The firm has diversified to produce digital on-demand entertainment, subscription services such as Apple News+, streaming services through the TV, and Watch App store. One of Apple’s advantages that have been brought about by this strategy is that customers can get high-quality services enabled by a highly integrated and seamless operating system. There is no doubt that the backward and forward integration strategy will be determinant of Apple’s success in the long term. This is because of a highly integrated and compatible operating system for users to use its multiple services without purchasing numerous devices. The high-quality innovation, coupled with seamless outsourcing, production, and distribution, has given Apple a competitive advantage in the market.
The competitive environment
Apple operates in a highly competitive industry with aggressive competitors in all areas of its operation. Technological advancements are changing every day, and this has come with the need to always be innovative and anticipate the needs of the target customers in order to survive. Some of Apple’s top competitors are Samsung, Lenovo, Microsoft, Google, and Sony. However, Samsung comes out as an aggressive competitor, especially in the smartphone market, by challenging Apple’s iPhone because of the smartphone’s strategic position in the modern world. Some of the enhanced competition areas include product features, price, performance, innovative design, and reliability of the products and services. The companies also compete based on the supply chain, customer response capabilities, marketing, distribution, and corporate strategies adopted by each organization. Samsung is one of Apple’s most vicious competitors, with a market share of 31.49% when compared to Apple’s 22.09% in the global smartphone industry. The company has the producer of Apple’s iPhone through the Samsung Galaxy and Note series. The Note series tablets compete directly in the market with Apple’s iPad. Recently the company has also produced the Smartwatch to compete with Apple Watch. The Samsung Notebook has also been produced by Samsung to challenge the dominance of the MacBook. Another point of the competition is the operating system, where Samsung’s use of Android has always competed with Apple’s Mac OS because of the lucrative smartphone market.
Despite Samsung being a robust competitor, it may not match Apple’s market dominance in the years to come based on the two players’ business and corporate strategies. The strategy used by Samsung is mainly vertical integration while leveraging heavily on product volume. This means that the company is always looking to take control of its supplies, hence reducing production costs. Product volume is vital for Samsung since, unlike Apple, it has a more extensive distribution network both across all markets. In addition, the company has a wide array of products that suits the purchasing power of low, middle, and upper-class consumers. Then there is Apple, which leverages robust innovation, seamless integration, deep market intelligence, and an unmatchable outsourcing strategy. In terms of the business strategy, Apple products are always flying off shelves immediately; they are launched because of consumer loyalty. The elegant designs, innovative features, and the seamless integration offered allow the brand to use a premium pricing strategy. Its supply chain network enables the company to have low costs and risks and thus maximize profits. Simultaneously, the corporate strategy to create alliances and divest allows the firm not to be too reliant on a single product and develop new series products continuously.
Apple’s survival in slow-cycle and fast-cycle markets
Apple operates in slow cycle markets where the competitive edge of the market players is protected from imitation. This means that in case design is unfairly used, then the infringing party has a heavy price to pay. This means that in the long term, competitive advantages are more sustainable. On the other hand, in fast cycle markets, the organization’s competitive edge is not protected from imitation, meaning that market players find it quite inexpensive to infringe copyright laws. Apple faces a threat if its competitive advantage is not protected against imitation by industry competitors. Of course, the law prohibits any imitation forms on product designs because of the copyright laws that come with hefty penalties for the infringing party. However, at the same time, these cases might drag on for years, while competitors continue to make profits based on imitated product designs. Some of Apple’s key competitive edge aspects include cutting edge designs and products that might be copied. Hardware and software patent protection will be vital in the long run if Apple is to survive in this highly dynamic industry where designs are increasingly being based on certain consumer preferences. For Apple to survive, it must operate in the slow cycle markets where imitation costs are high. This will deter competitors from taking advantage of the company’s unique innovations and designs. This is unlike the fast cycle markets where Apple is unlikely to survive because any competitor would easily infringe copyright rules and simply edge Apple out of the market using lower prices for all market segments hence affecting consumer loyalty and the premium pricing strategy.