Introduction
Apple Inc. company is situated in Santa Clara Valley, California; it has revolutionized the personal computer, consumer electronics, and computer software, with its developments, inventions, and innovations. It was incorporated on April 1 of 1979 (Apple Inc, 2010. The company’s first product was Apple I, which was a single board monitor and keyboard-free personal computer, the model was sold at $580.
Almost instantly, the demand for a similar computer soared; the company invented Apple 2 model, which had a mouse, keyboard, and colored monitor. Macintosh model was innovated in 1984, which were silicon technology computers targeting learners and business customers. Since then, the company has had a success story, despite having different issues calling for strategic interventions. This paper is divided into two parts where part one discusses Apples Inc’s strategies since 1990, and the second part discusses the competitive advantage that the company has both internal and external advantages.
Apples Inc strategies
To remain a leader in the fast-changing computer world, the company has embarked on different strategic measures. Measures are both in internal and external processes. To measure this we use S.W.O.T. /T.W.O.S analysis
These measures include:
S.W.O.T. analysis
Strengths
Innovation
Apple is respected for its innovativeness; it was voted as the most innovative company in the world for three consecutive years, 2006-2008 by Fortune 500. The company aims at improving its products and services, through innovations and inventions. It adopts a customer-based approach where it aims at producing products that satisfy its target customers. Different products target different markets, thus increasing the market base. It does not rely on one market base but keeps changing its products to meet rising demands.
The company’s products which include Computers, Software, consumer electronics like iPod and iPhones, MP3 players, and mobile phones, have been used by other companies in the same industry as a benchmark for their products. The products are increasingly being innovated to make them different and convenient to the users. For example, they have made extra thin products in their efforts to attract more customers. iPod is seen as one of the most innovations that the country has ever had, it was a target to a “green” market; it paid well (Camillus, 2008)
Other than innovations in product development, the company has embarked on measures that made its products affordable and accessible. The company has embarked on measures that reduce its operational costs to enable it to sell its products cheaply and maintain a good profit margin. Such projects include recycling and automation of its processes.
Strategic alliances
Since the 1990s, the company has embarked on strategic alliances with other companies in the computer and electronic industries to come up with unique and customer-oriented products. The first major alliance in the 1990s was an alliance with IBM, and Motorola, to launch computers driven by a PowerPC processor chip. The alliance was aimed at combining different technologies and innovations of the three companies and coming up with cost reduction mechanisms. The model was superior to the Apple 2 model of 1990.
The model was also compatible with Intel Chip computers, a character that increase the demand and customer base of the product. The compatibility made an increase in demand for the products at the expanse of Pentium chips computers. In response, Intel chip manufactures, slashed their prices by 40 percent, the demand then shifted in their favor. The increased competition between the two companies made the company think of other strategies to remain competitive and cut its prices (DE WIT and MEYER, 2010).
Opportunities
Research and development
The company has embarked on massive research to establish what the people want and probably give the same. The company is referred to as a change-oriented company. It aims at changing its processes and products to fit the needs of the people. The research and development team has the mandate of ensuring the company understands the society and external environment so as it can make timely and relevant decisions.
Hardware’s’ are composed of high tech software that makes them unique and has increased the utility customers derive from them. This is possible through the advice of the research and development team on the requirements of society. The development has facilitated the existence of computer clubs and synergies in the company. When making decisions, they are from a knowledge point of view supported by the rich information it maintains.
Timely decision-making and change management
After the company’s poor performance between 1989 and 1997, the management started focusing on making decisions that were responsive to their internal needs. They vetted the kind of alliance they made and ensured that only those that benefited the company was entered (Fred, 2008).
Weaknesses and threats
Why apple had been through a difficult time
The most remarkable problem that the company faced was in the lackluster between 1989 and 1997, where the company’s product demand reduced drastically. The main cause of the poor performance was poor strategic decisions made by the company’s then management. It was also facing competition from cheap personal computers like Intel and IBM. The company operated in a closed proprietary, without a visionary strategy while its competitors like IBM and other computer manufacturers were aggressively entering the computer market. The company was facing reduced demand and profits; three chief executive officers were not able to turn it around.
John Sculley, who was the company’s C.E.O. in 1993, made alliances with IBM, Intel, and Novel, however, the alliance lead to a reduction of the company’s profit by about 16%. Steve Job, who was against the alliance termed it as international growth and cost-cutting strategy, which forgot internal expansion and business growth. The state of the company was seen to be deteriorating. The company’s misfortunes were made worse by the invention of Window 95, which its PCs could not handle; it lead to a deepening of the company’s profit by 3% (Wheelen and Hunger, 1998).
Turnaround of Apple Inc
With the company’s state in 1996, there was a change in management team particularly the C.E.O. The first decision to be made by the new team was to acquire NeXT Software Company, which provided the company with software compatible with Window 95, named Copland. This is seen as the start-point of the company’s comeback. Steve Job became the company’s acting C.E.O. in 1997; and full C.E.O. in 2000; he is credited to have used his knowledge, experience and creativity to turn the company’s performance around. He took the company when its share price was as low as $3.30 and had a net loss of $580million.
Apple’s recovery from lackluster of between 1989 and 1997 was strong and commendable. It came out strong and more focused to meet the demands of the customers effectively. Other than embarking on internal processes improvement, it looked into all stakeholders, according to Fortune 500 survey, the company had among the highest shareholders return between 1998 and 2000 with 51%. From 2003 to 2008, Fortune 500, named the company as having the highest shareholders returns at 94%.
In 2007, the company’s products were ranked as the 33rd most favored brands in the world, a year later the brands had raised nine points higher to be the 24th most favored product in the world. It was valued at $13.7billion (Sadler, 2003).
Apple’s competitive landscape
To evaluate the company’s competitive landscape, we the paper will use P.E.S.T.L.E. analysis and porters five forces:
Porter’s five forces
In 2005, the computer technology industry took a completely different angle when IBM, which was a leader in computer hardware production, decided to sell its PC Company to a Chinese company called Lenovo. It aimed at the concentration on software and operating system a sector that had been dominated by Microsoft. Apple was still making computer hardware, laptops, peripherals, phone and software.
The market was proving to be more competitive since Lenovo concentrated on the manufacture and improvement of PCs while IBM and Microsoft concentrated on operating systems and software. Four companies in 2007 accounted for over 50% of the world’s total computers sales; they are HP, Dell, Lenovo and Apple. During the time, over 85% of the computers in the world used one version of Windows or another. Apple did not set back and watch the competition ruin its business but it did put on measures to compete effectively, in 2009, the company was one of the major producers of PCs and offered high competition to Microsoft (Peter, 2006).
Apple’s position in this industry and its competitive advantages
The company has developed and maintained a strong brand name and uses different branding strategies to beat its competitors. In 2008, the company surpassed its profit margin expectations, to reach $1.61 Billion, this was followed by a 98% dividend payout becoming the number one company according to the Fortune 500, 2009, report in the United States in terms of dividend outflow. From 2006 to 2008 consequently, it was voted as the most innovative company and the most admired company in the United States of America. This shows a company that has built dominance and a strong brand name in the United States of America.
Internationally, the company is doing well among other players; its success story of innovation has given it the lead. In 2008, the company was voted the 24th most favored company in the world. 2008 performance was nine points improvement from the 33rd position the company recorded in 2007 (Peelen, 2006).
Computer-based products approach
The company’s products are consumer-based and target a certain population according to its needs. Initially, the company was focused on PCs and software. However, it has diversified its products to consumer electronics like Ipods and Iphones in an effort of keeping up with the changes in society. The company introduced the first iPod in 2001; it could record 1000 songs in ten minutes and a continuous play for over ten hours. Such a move was made to ensure that the company tapped the increasing need of the young who are the majority in the world. The innovativeness of the company is seen in how the market embraced Ipods, in 2002, the company upgraded the first iPod to have one that could play with windows, the movie made the sales of iPods increase. In 2007, the company announced that it had sold over 100million Ipods.
Proprietary approach
The company analyses the market and develops products, which are compatible with the current technology in the market and the needs of the people this makes its product marketable and competitive across a large population. The major threat that the company has had is to keep pace with development in windows, the acquisition of NeXT Software Company, was in a move to ensure that the company has Copland technology that made its PCs compatible with windows. In 2002, to ensure that the company sells its innovation, iPod, it ensured that it could be played with windows a move that assisted in tapping a large population.
In 2003, the company diversified the use of iPod to iTunes that could be played with all operating systems. This ensured that there was a more customer base.
Strategic alliance
Apple makes a strategic alliance with companies that it is sure will benefit its operations; it aims at becoming a center of digital hub. An example is the development of iPod, iPhones and iTunes, which could only be possible with alliances with companies like EMI, Sony BMG, Universal and Warner Brothers. When choosing the company to make an alliance with, the company ensures that it interpolates the benefits it will get from the alliance. For a company to qualify as a partner, Apple must benefit. The company also undertakes acquisitions of companies that can lead to its benefit (Oster, 1994).
Marketing and research teams
Apple has a robust marketing team that ensures products and services are well marketed. When an innovation has been developed, the team takes up the product; presents it to customers in the most attractive, and appropriate manner. When marketers are in the field, they collect data from customers on the expectations that they have and use the data for decision-making; this ensures timely and customer-oriented products (Haberbeg and Rieple, 2001)
Pestle Analysis
Impact of the external environment upon Apple’s strategic development
Companies operate in an environment with factors affecting their development but beyond what they can control. The world is facing an increase in technology; this has called for more consumer-oriented products and services. The technology development has kept Apple on its toes as it aims at developing products to fit in the market. Competition from other similar companies like Dell, HP, Lenovo, Microsoft and IBM has affected the rate at which the company has developed (Michael, 1997).
The world is recovering from the global financial crisis of 2008; this has affected businesses negatively as the disposable income of people reduces. This has had a negative effect on the technology industry.
The world is facing an increased population, with the majority of the population being young people. Products like iPods and iPhones have increased sales because of the needs of the youthful population. Enlightenment, globalization and increase in education level have resulted to increase demand for computers; this has acted to the benefit of the company (Goold and Campbell, 2002).
Conclusion
Apple Inc. is American-based computers hardware, electronics and software-development Company; it is respected for its innovativeness. The company has maintained a leading position in the electronic industry because of its management and employees’ timely decisions that are responsive to the needs of its target market at a particular time. Such decisions saw the company turn around from lackluster it was facing between 1987 and 1997: to become the most favored company in the United States of America in 2008. Internationally the company is competing effectively; it was named the 24th most favored company in the world in 2008.
References
Apple Inc. 2010. Apple Computers Inc. Web.
Camillus, J., 2008. Strategy as a wicked problem. Harvard Business Review. 86(5), pp. 98-106.
DE WIT, B. and MEYER, R., 2010. Strategy Process, Content, Context: An International Perspective. South-Western: Cengage Learning.
Fred, D., 2008. Strategic Management: Concepts and Cases. New Jersey: Pearson Education.
Goold, M. and Campbell, A. 2002. Do you have a well-designed organization? Harvard Business Review, 80(3). Pp.117-124.
Haberbeg, A. and Rieple, A., 2001. The Strategic Management of Organisations. Prentice-Hall: London.
Michael, P., 1997. Competitive Advantage: Creating and Sustaining Superior Performance. Beijing: Hua Xia Press.
Oster, M.,1994. Modern Competitive Analysis. New York: Oxford University.
Peelen, E., 2006.Customer Relationship Management. Amsterdam: Pearson Education.
Peter, D., 2006. Marketing Management and Strategy. London: Post & Telecom Press.
Sadler, P., 2003. Strategic Management. Binghamton: New Down Press.
Wheelen, L. and Hunger, J.,1998. Strategic Management and Business Policy: Entering 21st Century Global Society. Massachusetts: Addison Wesley.