Apple Company’s Strategic Analysis

Introduction

Apple is one of the leading multinational technology companies in the world. It was created by Steve Jobs in 1977 and had pioneered the computer industries in the 1980s. Apple singlehandedly created the smartphone industry by presenting the first iPhone in 2007. Associated with quality, innovation, and status, Apple products are highly sought after around the world, bringing over 230 billion dollars in revenue every year and making the company the world’s largest technological corporation by revenue and the second-largest smartphone manufacturer after Samsung (Khan et al. 955). The company’s total assets are worth well over 700 billion dollars. It employs over 123,000 people in Apple Inc. and affiliated companies as well as over 350,000 workers through its affiliation with Foxconn (Khan et al. 958). The company enjoys a high level of brand recognition, brand value, and customer loyalty. Under the visionary leadership of Steve Jobs, Apple managed to stay on top of the competition. However, with the death of the company creator and the subsequent ascension of Tim Cook as the new CEO, many began wondering if Apple’s advantage could be sustained in the long-term perspective. The purpose of this paper is to analyze Apple Inc. based on their strategy, their vision and mission, their core competencies and competitive values as well as the external environment.

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Apple’s Vision and Mission: Old vs. New

Under Steve Jobs, Apple operated using a short, simple, and moving vision statement, which was “To make a contribution to the world by making tools for the mind to advance mankind” (Khan et al. 957). The core of this statement establishes the company as consumer-centric, as it is seeking to address the customer’s wants and needs by making tools for the mind. These values reflected in every innovative product that Steve Jobs’ Apple brought to the market. Every iPhone had a unique set of features that made it stand out – Apple was the first to pioneer the classic smartphone design, high-quality frontal and back cameras, fingerprint scan, face recognition, and a unique OS, among others. The company thrived on innovation, caring more about serving the customer rather than trying to maintain a steady position on the market.

Tim Cook’s vision and mission statements are much more conventional: “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” (Khan et al. 957) There is not a single mention of the customer, their wants or needs, or an overarching goal. Essentially, the new vision and mission statements that Apple goes by is a list of products and past successes. Apple turned from a customer-centric company driven by innovation to a product-centered supergiant concerned with keeping its leading position on the market through any means other than innovation.

The External Environment and Competition of Apple Inc.

Apple Inc. exists in a highly competitive technology market, which is rife with constant attempts at upgrading, innovation, and technological espionage. In order to remain at the top of the market, the leading company needs to constantly upgrade its products and services, as any innovation presented to the general public is likely to be copied by the competitors in less than half a year.

Apple competes with other companies in several areas of the technology market. The three largest segments where Apple holds a significant market share are the smartphone segment, which accounts for more than 60% of revenue flows, followed by Macbooks (7%) and iPads (6%). The remainder of the profits is associated with services such as Apple Pay and a myriad of smaller products that did not see large success on the market (Khan et al. 960).

The smartphone segment is where Apple Inc. is the strongest. It holds roughly 40% of market share in the USA, 50% of market share in Japan, 24% of market share in China, and 15-25% market share across Europe (“Smartphones”). In the first quarter of 2018, Apple generated over 61 billion dollars in iPhone sales alone. Its major competitors are Samsung, Sony, and Huawei, all of which are Asian companies. Samsung is the primary competitor with Apple in terms of producing luxury phones, and it holds 18.5% of the global market share. Its total number of employees as of 2017 is 489.000 workers (“Smartphones”). The company has a well-diversified array of products ranging from TV to smartphones, computers, and household appliances. Samsung is a vicious competitor. In terms of capabilities, Samsung phones tend to be ahead of Apple, but do not yet have the same status as Apple phones do (Cecere et al. 166).

Huawei is second in the line of competitors, with an overall 11% market share. It has over 180.000 workers in its employ and is a primary smartphone producer (“Smartphones”). The company prides itself on innovation and is stated to have a goal to take Apple back step by step. It enjoys the support of the Chinese government as well as access to Chinese cheap labor markets. It offers smartphones in all price ranges, thus being able to grasp a much larger market. Its Flagship smartphones are capable of competing with Apple in terms of innovation and performance (Cecere et al. 167).

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Sony holds over 7% of overall market share in the global smartphone market. The company’s flagship smartphones, the Xperia line, have always been known for their excellent cameras and fast processors, which caters a certain niche on the market. Sony’s greatest strengths lie in product diversification, soft alliances with other Korean tech companies, and the ability to integrate its technological advancements from other fields into its newest smartphones (Cecere et al. 167). Sony’s number of employees stands at 128.400 workers (“Smartphones”).

In the laptop and computer market, Apple has to compete with many giants such as HP, Dell, Lenovo, Asus, Acer, and many other major companies in the segment. Although MacBooks have their own unique features, these features are not enough for the company to reinvent the industry as it did with smartphones, in order to claim a significant market share (Cecere et al. 170).

Core Competencies and Sustainable Advantage of Apple Inc.

Apple’s core competencies include the capability for innovation, a famous brand name along with a loyal customer base, as well as a solid financial and production base, which comes with being a multinational technological giant (Khan et al. 965). The company’s primary competence lies in its capability for innovation, which has always been the selling point for iPhones and other Apple-branded products. Having a famous brand along with a loyal customer base ensures that Apple can generate higher revenues by charging extra money for brand and luxury products, effectively getting more money for the same product. In addition, having a loyal market ensures relatively stable market share. Lastly, the financial and technological base of the company provides the capacity for the creation of products en-masse at a quick rate as well as the potential for adding new products into the production line in order to claim new markets.

Apple’s sustainable advantage, due to the company’s focus on smartphones, has to rely on constant innovation. Due to the presence of powerful and viciously competitive smartphone companies on the market, Apple’s only way is to stay ahead of them by promoting innovation in both hardware and software design for their smartphones. Should iPhones fall behind in both, it might as well herald the end of Apple, as the company cannot sustain itself on brand name alone (Khan et al. 965).

The shift from innovation to reactive retention in Apple’s market strategy may have buried the company’s greatest sustainable advantage. The last few iPhone models, including the current flagship model, iPhone X, did not bring anything remotely innovative to the market. At the same time, the “groundbreaking” invention of wireless headphones and the removal of the headphone jack has been widely regarded as the most hated innovation in the history of the smartphone market.

Apple’s current sustainable market strategy largely revolves around marketing and using its brand name to sell mediocre innovative efforts as something incredible. It is based on generating hype and inflating the expectations of buyers while reinforcing their perceptions of exceptionality. This strategy is already showing signs of failure, as new phones do not generate the same amount of hype as before, while the company’s market share has been steadily plummeting (Khan et al. 963).

Lastly, in order to maintain its competitive advantage, Apple decided to try and curb the advancement of other companies rather than trying to actively improve its own design features. The company is engaged in a myriad of copyright lawsuits for questionable reasons such as the overall shape of a smartphone, the slide-to-unlock feature, the tap link feature, and several others (Khan et al. 958).

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Recommendations

Apple’s maintainable competitive advantage was built on generating groundbreaking innovations in every product offered to the market. However, true innovations cannot be churned out on a consistent basis, making them a poor substitute for a sustainable market strategy. The lack of other means of sustenance paired with an inability to generate innovation is what setting Apple behind. With the company centered on a single line of products, the company is doomed the moment they suffer several consecutive failures in a row. Samsung and Sony have no such fears, as they possess a diversified line of products to fall back on. Therefore, in order to ensure long-term success, Apple has to do the following steps:

– Diversify its product line to tap into the new markets (Rothaermel 111). Although Apple is a luxury company selling high-end items, it can use some of its assets to create a daughter company specializing in cheaper smartphones in order to claim new market shares.

– Abandon unnecessary lawsuits and address the complaints about utilizing cheap Chinese labor force and materials from questionable sources in pursuit of super-profits. An honorable reputation goes a long way toward creating a sustainable advantage (Rothaermel 125).

– Return to being a consumer-centric company, rather than a product-centered one (Rothaermel 39). Past achievements mean nothing in the quickly changing technological market. Only by offering value and true innovation to the customers would Apple manage to stay on top of the competition.

Works Cited

Cecere, Grazia, et al. “Innovation and Competition in the Smartphone Industry: Is there a Dominant Design?” Telecommunications Policy, vol. 39, no. 3, pp.162-175.

Khan, Uslaman Ali, et al. “A Critical Analysis of Internal and External Environment of Apple Inc.” International Journal of Economics, Commerce, and Management, vol. 3, no. 6, 2015, pp. 955-967.

Rothaermel, Frank. Strategic Management. 2nd ed., McGraw-Hill Education, 2015.

“Smartphones: Statistics and Facts.” Statista. 2018,

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StudyCorgi. (2021, April 9). Apple Company's Strategic Analysis. Retrieved from https://studycorgi.com/apple-companys-strategic-analysis/

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