Every business develops a plan to conduct its operations in a way that leads to the growth of company in future. These plans are called business strategy. Innovation is imperative in today's world as it helps the entity in remaining aligned with organisational goal. This report is based upon Apple in mobile phone industry. In this report, the resources and core competencies associated with the company have been assessed. Different external factors and their impact on business operations are included. The effectiveness of strategic techniques applied in the strategic planning have also been covered in th
a) Critically analyse the internal resources and capabilities that give the organisation a competitive advantage
Apple is one of the most trusted brand in smartphone industry. Analysis of internal environment of Apple in context of smartphone industry can be done with the help of Value Chain Analysis and SWOT .
Value Chain Analysis
Value Chain provides an analysis of stages starting from raw material procurement to after sales service. There are two kinds of activities namely, primary the support activities, both of these explained in context of Apple below:-
Apple has a very large supply chain when it comes to procurement of raw materials. Its major suppliers include 3M and Foxconn.
Manufacturing of Apple products takes place in many countries but mainly assembling is done in China (Dewangan and Godse, 2014). Company emphasizes upon eliminating the use of toxic substances in manufacturing and assembling.
Apple has a large distribution channel including direct and indirect methods. Products are available from retail stores to online sites to Apple Stores.
Marketing and sales:
Apple makes use of unique ads including television, online commercials and print ads for marketing and promotion.
Products and services:
Most of Apple products possess 90 days complementary support and one year warranty. Also, online store help is available for customers (AppleCare+: Everything you need to know about Apple’s extended warranty program,2018).
Known for technological innovation, unique design and superlative quality of its products, company focuses on increased in-house technology development.
Human Resource Management:
Apple emphasizes both on hiring potentially viable employees and paying them off well. Company does not compromise with its quality.
Company has maintained healthy relationship with its suppliers who provide products and services as per brand standards.
Infrastructure for Apple is its management, finances and other resources including the corporate culture and working strategy of company (Edgeman, 2013).
It provides knowledge of the internal environment of company. iPhone's SWOT is dome below:-
·Apple Inc.’s ability of designing and developing its own software, hardware and applications aid the company in introducing innovative and unique style and features of iPhone with every model (SWOT Analysis Of The iPhone, 2018).
·Company's brand positioning and customer loyalty makes iPhone one of the most well-known and purchased smartphones in world.
·iPhone has app for everything, out of which some apps are exclusive to iOS, Apple's operating system.
·iPhone being recognised for sleek build and slim design quality is highly expensive for many people to afford it.
·iPhone battery isn’t removable which indicates that for occurrence of any issue with phone, it has to be sent to headquarters for fixing.
·There are unnecessary restrictions in iPhone like absence of Bluetooth and expandable memory.
·There is a lot of scope for the company to expand the reach of iPhones to locations still not covered.
·With high brand recognition in market, expectations of customers about latest features in every model that unleashes in market gives an opportunity to company to use innovation to develop iPhones.
·With the availability of cheaper smartphones in market, company faces a threat in terms of loss of customers.
·The biggest threat to Apple iPhone is Android operating system. Developed by Google, this system is widely used by people across the globe and its market will continue to grow.
b) Key drivers of change in external environment and evaluate their impact on entrepreneurial activities of organisation
External environment of Apple can be evaluated by using PESTEL analysis, explained below:-
Political Factors: These factors define the extent of government intervention in business conduct. Apple is highly dependent on China for lower cost manufacturing (Lapalme, 2012). But political and social instability in China can create interruption in manufacturing or increase overall manufacturing cost.
Economic Factors: These factors constitute the economic drivers of economy like interest rate, inflation rate, labour costs etc (Lechner and Gudmundsson, 2014). Apple products are known for premium pricing, thus, they are not suitable for lower end markets. This is the reason Apple has been unable to dominate countries like India where still other brands rule.
Social Factors: These include factors like customer preferences, changes in trends etc. Ethical concerns about Apple’s manufacturing in China could limit its products’ appeal among socially-conscious consumers (Lapalme, 2012). Lifestyle of people affect the demand of Apple products like iPhone as some people link possession of Apple products with status symbol in society. Thus can generate revenue for company.
Technological Factors: Over years, there have been many technological advancements across the globe (Edgeman, R., 2013). Apple is technology friendly and uses innovation in its products to attract people. But increasing number of smartphone brands offering same features at lower cost can hamper the revenue for Apple.
Environmental Factors: It is imperative for businesses to keep environmental factors like sustainable development, use of chemicals, recycling of waste etc (Lechner and Godse, 2014). in mind. Manufacturing of Apple products includes the use of chemical. With time, company has become aware of its ill effects and emphasized upon reducing toxins from its products.
Legal Factors: Compliance of laws related to health and safety, employment, manufacturing etc. are considered by organisations (Dodgson, 2018). Apple follows all the laws including patents, copyright and trademarks as in past, company has been involved in legal cases because of patents issue.
c) Using appropriate framework, evaluation of impact of competitive forces influencing entrepreneurial activities and profitability within the industry
Apple uses Porter’s Five Force model to monitor the entrepreneurial activities and profitability within the mobile phone industry. Application of this framework in Apple is explained below:-
- Threat of New Entrant– The mobile phone industry is a well developed marketplace with negligible chances of new entrants (Gobble, 2012). This is because the capital requirement in this industry is quite high along with the resources required to develop products. Also, customer loyalty towards already established brands makes it difficult for new entrants. Since Apple invest high on research and development and also on advertisement and setting up of brand value, it is difficult for new companies to pose threat to the company.
- Competitors– Presence and availability of substituted products can pose threat to mobile phone industry as nowadays, many companies are coming up with same applications and features. This can lead the organization to cut the price of its product which reflects that there is huge competition in industry (Eesley, Hsu, and Roberts, 2014).iPhone models have always been a symbol of new ideas like introduction of touch screen. However, the rival companies develop the products having same features and sell it at cheaper prices which urge the company to produce something that can differentiate itself from other brands.
- Threat of Substitute product- The power of substitute products in this industry is moderate and it depends on the impact of the substitute products that they can offer the same applications and features at an economic price for customers to consider the substitution of products (Lechner and Gudmundsson, 2014). With android operating system of Google, there is always a threat of substitution for Apple products like iPhone.
- Power of Suppliers- The bargaining power of suppliers is low as there is huge competition in the industry along with the threat of substitution.Apple has set standards for suppliers in relation to delivery of products and services. The unique material supplied by them enhances the quality and features of iPhone. This assisted the company in launching innovative products to compete with rivals.
- Buyer Power– The bargaining power of customers is very high in mobile phone industry as they possess the power to substitute any product if they think another company is offering same features at lesser rates (Lechner and Gudmundsson, 2014). Apple has been successful in gaining customer loyalty in American and European markets but Asian countries stiff prefer to choose other substitute smartphones because of lower cost price.
a) Selection and critical evaluation of two strategic options that could be recommended for the selected organisation in order to increase its entrepreneurial opportunities on the market
Apple is the tech giant in current scenario and definitely the leader in smartphone segment. Still there is immense scope for iPhone to improve its market position. Various strategic tools can be taken to improve customer attraction for iPhone, explained below:-
Corporate level strategies
In context with an iPhone, Ansoff matrix is useful for finding scope and development of marketing scenario of the Apple's current and future iPhone (Lechner and Godse, 2014). The various components of the Ansoff matrix are as follow:
Market penetration- Apple's iPhone are high price ended smartphone and their accessories also. Apple can acquire maximum attention of their existing customer of iPhone by adding more innovative features to the new products and selling them at reduced prices than previous model of iPhone. Here, focus is on retaining existing customers.
Product development- As Apple is continuously working towards upgrading their existing iPhone by giving quarterly iOS updates to the existing customers. Profitability of the Apple is connected with selling new developed iPhone, this could be possible with the help of adding new technical advancement, classy features such as top notch, thermal face unlock in the product. Company believes in investing a huge amount in Research & Development so as to gather knowledge of the demands and requirements of consumers especially the millennials. This is done with the objective of bringing phones with upgraded and unimaginable features and applications in front of customers (Gronum, Verreynne and Kastelle, 2012).
Market development- Apple can attract new customer base by selling their existing iPhone at lower price, in a way to gain users trust and belief about the Apple. Company can acquire customer's trust by giving free demonstration of the new product to the user to create interest and faith (Lechner and Gudmundsson, 2014).
Diversification- Apple has recently come up with iWatch which can be easily connected with iPhone to see messages, calls and time through the smartphone. Company must innovate additional product such as wireless charging, Bluetooth sound amplifier or navigation software for the driving convenience.
Business unit level
Porter's Generic Model:
Cost leadership- There are several factors which leads to increase in price of the iPhone. But still users have faith, trust and they are loyal about their choice. Apple's iPhone is considered as “Style Statement” and customer are ready to pay for iPhone (Gronum, Verreynne and Kastelle, 2012).
Differentiation- Apple's generic strategy in context with iPhone is broad differentiation. There are various function in the iPhone which makes it different from the other brands of smartphone such as notch feature, thermal face unlock etc. Thus, the major aim of company is to focus upon this aspect and continuously bring innovation and development in iPhone by bringing latest features in new models (Eesley, Hsu and Roberts, 2014).
Cost focus- Cost of the iPhone is quite high because of Apple manufactures iPhone only in USA and export it to different regions and countries. Apple.
Differentiation focus- Samsung is considered as the biggest rival of Apple's iPhone. Samsung provides pen stylus feature in their smartphone, which iPhone is lacking. It means customer shifting towards Samsung which is a threat for the Apple.
b) Justification of selection of each strategic choice using Suitability, Acceptability, Feasibility (SAFe) criteria
SAFe criteria is used by companies to evaluate the application of strategies in the entity and to provide justification of those strategic choices.
Suitability: Top management of Apple adopted Ansoff Matrix to analyse the present and future scope for iPhone. It can be used by management for carrying out research about preference and requirements of people (Dodgson, 2018). This helps the company in modifying the existing product to meet the new trends of technology and demand of customers in relation to latest features being incorporated in the phone.
Acceptability: This strategy has helped the company in analysing the external environment of Apple in relation to market penetration and development of updated iPhones, thus its widely used by the enterprise.
Feasibility: By using this strategy, company has been feasible in achieving the desired goals by matching the needs of customers through development of products with innovation.
Porter's Generic Model
Suitability: This model gives an insight into the costing and differentiation of iPhones when compared to smartphones of other companies. By using this strategic option, management develops an understanding of suitability of prices of iPhones and alignment of features of phone with the latest technology.
Acceptability: This model is largely used by Apple to know the extent to which the products of company differ from other business organisations that operate at same level and deal in smartphones (Lambert and Davidson, 2013).
Feasibility: This strategy applied by company is feasible as it results in company being able to recognise the level of differentiation in their products from rival and gives them an opportunity to add more new features to iPhones to gain competitive edge in market.
From the above report, it is concluded that there are various aspects of a business strategy. Business strategies and their related concepts have to be considered by every organisation to approach a wide range of customers. Strategic planning is essential to ensure that the approaches which the organisations have applied result in increasing its reach to markets. Also, it is concluded that internal as well as external factors of an organisation have to be analysed in order to keep track of any potential threat to company and its products.
- Lambert, S. C. and Davidson, R. A., 2013. Applications of the business model in studies of enterprise success, innovation and classification: An analysis of empirical research from 1996 to 2010. European management journal. 31(6). pp.668-681.
- Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and internationalization in innovation. Routledge.
- Gronum, S., Verreynne, M. L. and Kastelle, T., 2012. The role of networks in small and mediumâ€sized enterprise innovation and firm performance. Journal of Small Business Management. 50(2). pp.257-282.
- Lechner, C. and Gudmundsson, S. V., 2014. Entrepreneurial orientation, firm strategy and small firm performance. International Small Business Journal. 32(1). pp.36-60.
- Dewangan, V. and Godse, M., 2014. Towards a holistic enterprise innovation performance measurement system. Technovation. 34(9). pp.536-545.
- Rexhepi, G., Ibraimi, S. and Veseli, N., 2013. Role of intellectual capital in creating enterprise strategy. Procedia-Social and Behavioral Sciences. 75. pp.44-51.
- Gobble, M. M., 2012. Innovation and strategy. Research-Technology Management. 55(3). pp.63-67.