Apple – Strategic Position:

The Apple Inc . have become the market leader in their industry by supplying price worthy
products which possess high value in terms of their genius technological design from their I-
pods, I-phones to Macbook and extending it to their software like I-tunes and games which
are at reasonable prices. It is very clear that the company which has adapted or improved
wonderful supply chain will mostly successful in their industry. Here the reason for the
Apple’s current strategic position is explained using different strategic management concepts
for ease understanding of their performance in the context of supply chain.

The main competitors in their industry are Microsoft, Blackberry, Nintendo, Sony, Rhapsody,
DELL, Nokia, HP, Samsung and LG. The Apple is known for their innovation in the
technology and so do is supply chain. The figure below illustrates the product life cycle and
the position of apple in that life cycle. We infer from the below figure that apple is in the
shakeout stage of its life cycle where their concentration mainly in improving the purchase of
their products. At this stage they even concentrate on how they can extend their business in
other fields. They also do concentrate on price cutting and increase in productivity to enhance
their business with high productivity. In this stage they offer tuff business to the weak
competitors and it may results in shakeout of their competitors’ business. In other context of
Apple in their PC business, they are in the growth stage of the product life cycle by showing
their steady growth in their sales.

Apples Product Life Cycle

Currently Apple finds itself in the growth stage of its product life cycle. It
has shown a steady growth rate as demonstrated in the sales reported by
Apple Computers for the past 15 quarters

Strategic Group Analysis:

As per the figure given below, it is clear that Apple’s product line in the industry is
comparatively low than Dell, HP, and Samsung. But the price that they offer their product is
very high when compared to the above mentioned competitors because their product worth is
very high due to their excellent technology offered by them to the industry.
 Tulip Ego

The companies like Microsoft and Tulip Ego are performing better than Apple because of
appropriate, suitable and excellent supply chain followed by them. But their product range is
less when compared to Apple. By offering various range of products at the reasonable price
which, the customers feel that its value for money, the apple can become the market leader in
their industry. To achieve this they need to shape their supply chain in such a way that it
should be more customers focused and the process of making it should be more cost
effective.

The value chain of Apple which also indicates the elements of its supply chain which
explained in the earlier segment states that the Apple has very good corporate management
and geographical segmentation in to various countries like USA, Japan, Europe, India, etc,.
They also possess well-trained employees who are trained to be the best in customer services
and orientation. When it comes to technology, the Apple is the Market leaders in their
industry offering various ranges of products with their innovative technologies. Their
purchasing phase have different segments in which few of their items are outsourced like,
processors, optical drives etc. Their products are distributed to various places where they
have followed a segmented distribution of their products. Then their products are distributed
to the end users or the retailers by means of online stores, retail stores, distributors, direct
sellers and Third party sellers where the products will be distributed.
Porters Generic Strategy for Apple:

The below figure illustrates the competitive advantage of Apple over its other competitors. It
defines that Apple Inc . is in its differentiation phase by offering highly technological
products to its customers which are innovative too. When it refers to the Dell and HP, they
are the cost leaders in the industry and the Microsoft lies partially in cost leadership and
partially in differentiation. Apple can concentrate on their supply chain and improve its
processes internally and externally, thereby they may migrate to the cost leadership without
compensating their technologically innovative products.

Tulip Ego

To meet up the customer demands and to go beyond customer demands, Apple Inc uses the
advance design concepts and product engineering in highly competitive world-wide
markets while concentrating on profitable expansion for the business.

To make sure steadiness in working across all the functions of the business, Apple Inc uses
integrated team work in every stage of project and also to ensure the improve programme
objectives for, quality, cost and timeliness.

To attain high levels in process design and assurance, Apple Inc uses computer assisted
information technologies preface of creative quality tools and techniques while ensuring
training employees in new skills.

Apple Inc ensures the steadiness in delivery of the product in line with design specifications
and quality objectives in launch process, manufacturing and quality.

Apple Inc with the range of world class supplier base and their involvement all through the
project life time helps to attain the world class standards of quality and delivery.

PEST Analysis
The developments in the external environment which affect the external organisation are
identified using PEST analysis. PEST analysis is done by analysing the Technological,
Economical, Social and Political aspects of the organisation.

Political Factors

 As Apple Inc functions in multiple countries across Europe, Asia, Africa, Australia
and the Middle East, it is necessary to pay close notice to the political climate and
also to the regulations and laws in all the countries functions and also to pay attention
to regional governing bodies. Laws governing growth, commerce, trade and
investment are reliant on the local government as well as how successful economies
and market will be due to regional, local and national influence.
 The planning and congestion restrictions forced by the government on construction of
warehouses and stores considerably affect the choice of site and the location for the
warehouses and stores. This has significant impact on the company’s warehouse
management policy which sequentially affects the level of customer service provided
by Apple Inc .
 Certain environmental policies issued by the government impose the company to use
specific kind of packing material and labelling for certain products. This has
considerable impact on packing cost of goods.

Economic Factors

 Apple Inc have to notice the fluctuations in currency rates throughout the world.
Currency shifts can associate to lower or higher demands for Apple Inc which in turn
affect profitability.
 Apple Inc logistics strategy can be affected by any increase in fuel prices as the
increase in fuel prices will directly affect the cost of distribution and transportation
which result in decrease in net profit of the company.
 Decrease in cost of house ownership is due to lower interest rates, which gives the
customers a chance to expend on alternatives like home improvement. Hence low
interest rates trigger the demand for home improvement goods and the ripples of this
will be visible through the entire supply chain.

Social Factors
  Now-a-days there is a raise in consumer awareness. Customers are demanding for
superior quality goods at extremely competitive prices and as a result the company is
in constant pressure to supply quality and reliable goods at greatly cheaper prices.
This has a major effect on all the factors of logistics strategy and the company has to
re-align its supply chain in order to deliver the expected level of customer service.
 In the current years there has been a turn down in the population of the young age
group and this would critically affect Apple Inc ., performance as most of the
customers it has fall in the young age category. A decrease in their population would
mean a decrease in the sales of the company which again would affect its decisions
from sourcing to distribution.

Technological Factors

 The rapid expansion of e-shopping has significantly boosted the sales of Apple Inc .
Goods are ordered by the customers over the internet and the company’s supply chain
has to deal with the additional burden of processing the order, notifying the
store/warehouse about the order and then deliver it to the door step of the customer.

 The development of technology has brought drastic changes in the products in the
DIY market. As customer demand is increasing for these specialised products the
company either has to pressurise its existing suppliers or look for new suppliers
around the world in order to procure these specialised and unique goods to cater to its
customer needs. This also compels the company to alter its existing logistics strategy.

Strategic Approaches could be used by Apple Inc Logistics Management

To reduce costs of operation, improve its supply chain and to provide outstanding levels of
service to its customers Apple Inc can adopt the below strategic approaches:

Total Quality Management (TQM)

Not only physical attributes of a product are related by Total quality management, customer
satisfaction and the levels of service provided are also related. In the customer point of view
it is not that the product should have desired feature, in addition to that the product should be
available in a suitable manner and on time. Hence key importance of logistics management is
total quality. 

Total Quality Management involves all the internal and external members to the supply chain
to meet all the customer requirements at the lowest achievable cost. Apple Inc can implement
Total Quality Management with the commitment and support from the top management by
maintaining a customer centric focus in all of its services, products and processes.

4.2 Quick Response (QR)

To improve the active logistics strategy Apple Inc can adopt Quick Response approach too.
The distribution process between the organisation and the suppliers is focused in Quick
Response. By using this approach Apple Inc can improve the speed of inventory replacement
through closely understanding and monitoring the customer buying patters. To implement the
QR Apple Inc has to share its sales details with suppliers for specific products across its
supply chain to assist the availability of the right level inventory when and where it is
required.

4.3 Agile Supply Chain

Responding to the end customer demands is focused in Agile Supply Chain, hence it is
customer responsive. These supply chains are demand driven not forecast drive. These supply
chains captures the demand data directly and benefit from understanding the variations in
demand and these are fast supply chains in terms of responding to the demands of market.
Apple Inc can improve its slow activities and respond quickly to its dynamic customer
demands by adopting Agile Supply Chain.

4.4 Lean Thinking

Lean thinking emphasises on operating with minimum wastes in the supply chain. Lean
identifies seven wastes namely

 the waste of overproduction; producing too much

 the waste of waiting; not utilising and resources properly
 the waste of transporting; moving goods between processes
 the waste of inappropriate processing; incapable of meeting quality standards
 the waste of unnecessary inventory; not keeping too much of inventory
 the waste of unnecessary motion; unnecessary movements within the warehouse
 the waste of defects; producing defective products

By improving lean management process Apple Inc has, it can be more efficient in terms of
cost effective and better quality to the customer.

4.5 Vendor Managed Inventory (VMI)

Levels of inventory are monitored by the supplier in Vendor Managed Inventory; hence
whenever refill is required at stock levels supplier will do it automatically. In VMI
information sharing is crucial; to have effective information sharing, the computer systems of
supplier and retailer should be interconnected. This permits the supplier to track product sales
and manage inventory levels.

By adopting Vendor Managed Inventory Apple Inc can maintain the availability of stock at
all times and refill the inventory with no delays, hence it can deliver the excepted level of
customer service.