Apple computer Inc. is a multinational corporation that creates consumer electronic, personal computer, computer software, commercial servers and digital media. Apple‘s core product lines were iPhone, smart phones, iPads, tablet computers iPods, portable media players and Macintosh computers. The founder, Steve Jobs, and Steve Woziak started Apple Computers in 1976 and incorporated it into a company on January 3, 1977 (Cusumano, 2002). For more than two decades, Apple Computers predominantly manufactured computers, which included the Apple II and Macintosh computer product lines. The company upon establishment was successful, but later faced a slump in sales and low market share in the 1990s. Jobs, who had been ousted out of the company in 1985, returned to Apple in 1996 after his company NeXT was purchased by Apple. The following year he became the company’s interim CEO, and afterwards became the CEO. Because of his leadership style and philosophy, Job subsequently instilled a new corporate philosophy of products and simple design, which began with the introduction of the Mac computer. Apple success can be attributed to the aggressive business strategy to become a leader in the computer industry mainly due to the effort input in product innovation and development.
Apple computer product expansion and competiveness enables them to become successfully in order to meet the demand of the consumer. Through Steve Job leadership, Apple introduced products that were considered new entrants in the market (Siameki, pg 50 2012). Some of competitors introduced products that were similar to Apple’s, but the company products were different, due to the fact that they had unique features, in which the products made were of high quality. The features were of the highest quality in materials and industrial design which made Apple a leader in the computer industry. In 1987, with the introduction of the Mac book, it failed to be successful because there were only limited features and only targeted specific segments of the population, such as, business professionals that had interest in desktop publishing and other programs. When the Mac book failed to obtain the intended market share, he examined consumer behavior and advanced the business strategy tone, then applied competitive strategies, which would allow them to beat rivals and introduced products to the consumers that were easily accessible. Because of Steve Job leadership qualities he was the driving force towards innovation and the ability to revamp the computer business industry because he foresaw the need for constant innovation.
With the introduction of the iPod player in 2001, and iTunes Store in 2003, Apple established itself as a leader in the consumer electronic and media industries. The company is also known as a leader in smart phone, media player and tablet computer products that started with the iPhone, followed by the iPod Touch and then the IPads. As of 2012, Apple was the largest publicly traded corporation in the word with an estimated value of 626 billion in September 2012. And Apple’s worldwide annual revenue is larger than Google and Microsoft worldwide.
1. In reviewing the basic generic strategies that apple implemented, I concluded that apple use a broad differentiation strategy. According to (Thompson, Gamble pg, 115,) this strategy seeks to differentiate the company product offering from rivals in ways that would establish a brand name for the new products. Apple was able to use this strategy by offering a variety of products with the attributes not offered by the other company, such as the expansion with the IPhone, IPads and IPods. He was able to incorporate the Apple brand and display each product with its own identity with little or no overlap between the models, thereby minimizing any cannibalization (Sustic, pg 378). Since products are unique to Apple, they give the company a huge competitive advantage and market share; as a result, they were able to introduce products that were of quality and ones that could attract clients in all business sectors. In addition, to the product differentiation strategy, Apple was able to introduce the iPod. During that time when no other company was able to market this product or incorporate any similar ideas or innovation, which represent a break thorough in digital media.
IPods were unique in that consumers were able to hold much data in music and video in a small gadget which represented tremendous success. While apple was experiencing this success, the company also tried to advance the computer products by establishing a market share for the IPhone and IPods. Another strategy that Steve Jobs implemented was best cost provider strategy, while competing for market in IPhone and IPads, which became popular in 2011. Consumers o were willing to pay a reasonable price for the new products that entered the market. Because of this strategy, Apple was able to create products which were better and had greater consumer satisfaction than the competitors. This enabled Apple to consistently create and maintain higher levels of quality, and also have control over the price because of the uniqueness that is built into every product. Moreover, once users experience Apple products, they rarely complained about the price. Because of this strategy, Apple became a success, as a result, they were able to increase the market share in all category of products from 1998-2013. Apple has also been able to maintain a sustainable competitive advantage against rivals by expansion in the personal computer industry.
The company was able to improve profit advancement in innovation and technology, with added features, easy accessibility and programming to adopt strategic moves to acquire early entrants of product before competitors were able to expand. For example, Apple believes in marketing products that consumers want such as products that are easy to use, smaller and flexible. Steve believes that for success to be effective they should concentrate on what consumers need and demonstrate o how their lives can be improved with the increase in technology. Apple was able to maintain competition by brand recognition, in that if one of the products was successful, consumers were able to identify with the brand and are willing to purchase products from Apple. This came after the successful launch of the IPod and consumers were able to willingly purchase Apple computers after the purchase of the IPod. Apple was able to use vertical integration strategy which enabled the company to maintain formidable competitive activities which can be attributed to the capability to design and develop its own operating system. In addition, vertical integration dictates that one company controls the end product as well as the components part.
For 25 years, Apple has championed a vertical model, which features an integrated hardware and software approach. For instance, the IPhone and iPads have hardware and software designed by Apple which also designed its own processors for the devices. Performance/Implementation
Apple was able to dominate a strong financial position because they created a frame work for structural characteristics of the company which can be attributed to the primary force of competitive advantage in which the company achieved a more favorable position than other the rival companies. According to (Renk, Sustic, pg 377), competitive advantage is the combination of factors that distinguish a company from the competitors thus ensuring a unique position in the marker. It can be concluded that Apple explores business strategies that would satisfy the consumer demands, in an era when technology was increasing. The products that were created were valued by buyers and ware not easy to imitate by rivals. Porter forces analysis can be used as it has a framework for business strategy development. One of the forces that Apple faced was the threat of new rival entrants. For example, Apple faced the threats of new company entry in the market in that Hewlett Packard was gaining the access to increase their market share and had diversified some of their product by increasing desktop and portable computers, software, personal computer, imaging device and financial services.
A firm such as Apple develops its marketing strategies by developing strategies applicable to the Porter competitive force in order to compete effectively. As a result of the entrant of new firms in the market, Apple was able to established brand loyalty from its customers. During Apples’ success they were least vulnerable to competitive forces and had the advantage that developed unique ways to take the lead in development of new products by developing a framework to take advantage of capital resources that new firms could not easily duplicate. During the start of 2011, Apple’s main competitors were Hewlett Packard and Dell which were gaining market shares through the sale of personal computers. During that time Apple was trying to create more products that were hard to duplicate in order to be ahead in the market. Apple had also increased competition and was trying to preserve their market share through being certain that rivals didn’t gain a competitive edge.
Apple applied secrecy to the products through the supply chain break up components processing steps across multiple vendors, which gave them control over the manufacturing process. With competition it is important that Apple take the necessary action applicable to these forces to achieve profitability. Dell was the second largest seller of computers and was able to market the products to a specific sector of the industry at a low cost. Despite Dells ability to sell cheaper computers, the company’s overall ability to diversify their products revenue declined between 2008 and 2011. Apple Inc continues to dominate the success in the computer industry which can be attributed to best selling media players, which resulted in 300 million units in sales in 2012. Also because of success, rivals were unable to gain or duplicate product that Apple was marketing for their customers. During that time Apple was able to be competitive because they were able to diversify their products to offer streaming TV, different categories of the IPod, and Apple TV which became a success because no other company was able to match the competitiveness in diversification. This had made Apple the global leader in the distribution of digital music. The revenue growth rate achieved by the company was a result of increase unit sales and pricing power.
While the growth was derived from the appeal of its products and popularity of their products the successful product lines through diversification has resulted in Apple gaining a dominant position, which has helped the company to incorporate high pricing power. Although Apple products were considered pricey because of their superiority, customers are always willing to spend money to acquire the products which has helped it command a high pricing power. For example the price that apple charges for its iPhone is higher than the average selling price of a PC. Apple’s strong product line has been responsible for the company’s industry growth rates. The product success also commanded premium prices which enabled the company to enjoy strong profit margins. With each successful product launch, the company enhanced its brand positioning which is the main force behind the success of its other products. Providing an integrated line of tablets, mobile phones, and computers running on the same operating system platform offers the company a competitive edge in the computer and electronics industry. In contrast, Google and Samsung don’t offer integrated software and hardware system to compete in the market for smart phone and tablet. In addition, growing popularity of mobile payments on the market will provide a significant growth opportunity for the company.
Apple should implement a low cost strategy to command more of the market share. Some of Apple products are costly for the cost conscious consumers who are willing to pay a reasonable price, which can be directed to more socio economic sectors of the population. Although Apple has gained significant financial opportunity, it fails to capture the full growth potential offered by these markets (Sustic, Renko, pg 380). Unlike developed markets, the lack of carrier subsidies and price sensitive customer, are some of the challenges that are facing in emerging market. However, the popularity of the products enable the company to gain traction and Apple is set to capture the huge potential offered by these economies. In addition the average selling price of an iPhone is remain above $ 600 dollars putting Apple gadgets out of reach for most buyers, in comparison to other Samsung, that have products at a lower price. Apple should perform pricing strategy, which could increase market share by offering products at a lower price to address price sensitive customers.
Currently, the company successes are dependent on the profitability of the iPhone and iPad, which represent 72% of total revenue. In the future, if a there is a change in economic condition or slump in sales this can significantly affect revenue, because there is a dependence of only a few product line. Apple Inc. needs to explore opportunities with other business enterprises such as government and educational entities to increase market share. The popularity of phone and iPod with consumer are becoming common in the business world as mobile users increasingly use their personal device for business purposes. Apple under Steve Job’s leadership had a platform that was limited in which the technical interface and licensing terms were set so as to discourage other firms from making complementary products.
Apple should extend opportunities to other firm which would enable more users to participate in external innovation so that firms could contribute to a platform for technical innovation. Apple continues to operate in a complex and challenging environment which could impact its market share. The market for the company’s products is highly competitive and complex and the company is confronted by aggressive competition and challenges in all areas of business. These markets are characterized by frequent product introductions and rapid technological advances that have substantially increased the capabilities and the use of mobile communication and media devices. By having strategic business units dealing with different products, the company is able to ensure that the goods are consumer friendly hence customer retention in the market.
Azadi Siamek and Rahimzadeh, E. (2012). Developing Marketing Strategy for Electronic Business by Using Porter’s Five Competitive Forces Volume 2 pg 47-57 Cusumano, M. (2002). Technological Strategy and Management. The Puzzle of Apple Inc. Harvard Business School Press, Boston MA. Renko. N. Sustic I. (2004). Designing Market Strategy Using the Five Competitive Forces by Michael Porter International Journal of Management Cases. Pg 376-382 Thompson, A and Gamble. J (2006) Strategy, Core Concepts and Analytical Tools: Copyright the McGraw-Hill Companies.