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Table of Contents
1. Introduction ........................................................................................................................ 2
2. Global strategy .................................................................................................................... 2
2.1 Porters 5 forces analysis............................................................................................. 2
2.1.1 Competitive rivalry .................................................................................................... 2
2.1.2 New entrants .............................................................................................................. 2
2.1.3 Suppliers bargaining power ....................................................................................... 3
2.1.4 Buyers bargaining power ........................................................................................... 3
2.1.5 Substitute products .................................................................................................... 3
2.2 PESTEL analysis .............................................................................................................. 3
2.2.1 Political factors .......................................................................................................... 3
2.2.2 Economic factors ....................................................................................................... 3
2.2.3 Sociological ............................................................................................................... 4
2.2.4 Technological ............................................................................................................ 4
2.2.5 Legal factors .............................................................................................................. 4
2.2.6 Environmental ........................................................................................................... 4
2.3 Market segmentation ........................................................................................................ 5
2.4 SWOT analysis ................................................................................................................. 6
2.4.1 Opportunities ............................................................................................................. 6
2.4.2 Threats ....................................................................................................................... 7
3. Apples internal analysis .................................................................................................... 7
3.1 Boston matrix ................................................................................................................... 8
3.2 Ansoff matrix ................................................................................................................... 9
4. Strategic Options ................................................................................................................ 9





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1. Introduction
Because of the globalisation effect, the companies are expanding their businesses to various
countries and into diversified business sectors to attract more customers and to make good
revenues. In light of this, this essay is aimed at identifying the strategic paradoxes which an
organisation is experience and how this can be overcome with the help of the strategic
directions. Also this essay will discuss the strategic implementation challenges which need to
be addressed and solutions to overcome these challenges.
Apple Inc. is one of the largest companies in terms of revenues and sales and this
extraordinary success has been achieved through the implementation of the innovative
strategies. With the innovative products, Apple reached the customers of many countries and
these versatile products include iPod, iPad, IPhone, ITunes, Mac books (computers) and
software application online market store. The company has its manufacturing plants in United
States and China but most of the products will be manufactured in China because of the cost
cutting strategy and will be assembled in California, United States.
2. Global strategy
The core analytical tools which have been used to analyse the external position of Apple Inc.
are Porters five forces, PESTEL analysis and partial SWOT.
2.1 Porters 5 forces analysis
2.1.1 Competitive rivalry
The most important competitors are Samsung, HTC, Sony, Blackberry, Google Android and
Microsoft Windows. Because of the strong competition, Apple needs to revisit its innovation
strategy. Though Apples products are innovative, many companies are copying the design
and functionality of these products because of which the company is losing the business to
the competitors.
2.1.2 New entrants
Though the entry of the new competitors is tougher in the segments of Apple, there are still
few products which support the competitors of Apple. For example, the competitor product of
Apple, Microsoft windows operating system is being supported by the personal computers
which are being manufactured by many companies. Apple Macintosh is not supported by
many computers and the competitor operating system is being supported by any computer in
the world.
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2.1.3 Suppliers bargaining power
A competitive supply chain is necessary for a continuous supply of the products or services to
the customers. But the supply chain of Apple is not stronger to meet the demands of the
customers and whenever a new product is launched the customers are not being satisfied in
terms of delivery. But it is very important to maintain a strong supply chain in order to serve
the customers.
2.1.4 Buyers bargaining power
The products and services of Apple are highly demanded and the buyers have strong affinity
towards the brand. Because of the various types of products and wide accepted variations,
Apple is able to gain a high valued customer base. The customization of the products, multi
benefitted products, high quality and stylish products and brand image helped the company to
reach more customers. However the Apple products are never cheaper but the value for
money can be guaranteed by the company. A typical Apple iPhone will work for at least 5
years and this says about the quality of the products of Apple.
2.1.5 Substitute products
The substitute products always will have a strong impact on any product. The products of
Apple themselves act as the substitute products. The Apple MacBook Air customers cannot
buy Apple iPad as both of them will serve the customers with the same purpose and thus
those two products themselves compete with each other. Apple iPhone and iPod will have the
same features expect that a cellular signal is restricted in Apple iPod. So, the customers who
wish to buy iPod can buy iPhone and can avoid buying an iPod. So, Apple needs to take
necessary steps in order to prevent such a competitive market which establishes a substitute
product model.
2.2 PESTEL analysis
2.2.1 Political factors
The government taxes, import and export duties are highly affecting the business of Apple.
The price variation of Apples products between US and the rest of the world is higher and
the company is directly being affected by the political factors. Also Apple is being benefitted
from incentives from the governments of different countries for its operations.
2.2.2 Economic factors
The customers spending capacity, unemployment rate and the recession periods are affecting
the sales of Apple worldwide. The sales dropped during the recent recession period of 2008
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because of the loss of the jobs across the globe. Though the prices of Apple are higher
compared to the competitors, the customers are ready to buy these products. The customer
spending capacity for Apple brand is higher than the other companies.
But the taxes and VAT are increasingly bothering Apples products. For example, the VAT is
20% in UK on every product which is increasing the product price of Apple. The disposable
income of the customers has been reduced during 2008 which reduced the sales of Apple.
Also there are few provisions for any offers on Apple products which is prompting few
customers to go for competitor products.
2.2.3 Sociological
Though Apples products caused high pollution and reached worst position in terms of
toxicity, the situation has been changed considerably currently. The life style, education,
income groups and cultural factors had severe impact on the Apple business.
2.2.4 Technological
The technical innovation is higher in the Apple business however there is a need to improve
the supply chain competency which requires a technological involvement and cooperation
between Apple Inc, suppliers and logistics.
2.2.5 Legal factors
The legal obligations include the introduction of Europe standard electronic device chargers,
recycling etc. which are making Apple to spend additional funds to meet these legal
requirements. Also, few court cases with Samsung regarding the privacy and patent issues are
still pending in the European courts.
2.2.6 Environmental
The criticism includes the protests against environmental unfriendly manufacturing processes
followed by Apple Inc. The toxicity of the manufacturing wastes in Apple manufacturing
units is increasingly higher than the industrial average. So, there is a need to implement a
green production strategy to satisfy every customer and to safeguard the environment.
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2.3 Market segmentation
The main strategy followed by Apple in defining the market segmentation is multiple
products and multiple market segments. The variables that are defined for Apple are
geographic, demographic, socioeconomic and psychographic factors.
Geographic: Developed economies, cities, population density etc. are considered by Apple.
Demographic: Professionals, business people, age, IT developers and companies.
Socioeconomic: Different income groups, education, people culture etc.
Psychographic: Lifestyle, personal needs, ethics and values.
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(Figure 1: Market segmentation: product differentiation)
Every product which has been described in figure 1 is unique and there exists few
competitors to these products. All these products are enjoying the monopoly in their
respective segments and this has been achieved by Apple because of its product
differentiation strategy.
2.4 SWOT analysis
Based on the above factors, the threats and opportunities for Apple Inc. are identified as
follows:
2.4.1 Opportunities
The growth of the business is essential and expansion plans have to be implemented to enter
the emerging markets like India, Brazil etc. Encouraging new manufacturers will be useful to
Apple to meet the global demand and develop strong relations with the customers. There is a
need to introduce the developed versions of the old products to overcome the competition
from the competitors. Because of the growing market in terms of green energy efficient
products, Apple can make use of these manufacturing techniques to attract many customers.
Enhanced cloud services like iCloud to reach more customers and encourage them to buy
online music to reduce piracy.
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2.4.2 Threats
Too much diversification of the products is a threat to Apple and success is not countable in
many of the products like MacBook Air, iPod shuffle etc. Incompatibility of Apple products
on other technical platforms and difficulties in operating the same are contributing as a
serious threat to the business. The extraordinary performance of Microsoft and Samsung may
outrage the market of Apple in the next few years.
3. Apples internal analysis
The company is successful in identifying right market segmentation which is based on the
following factors:
Apple targeted mainly the developed economies and provided extended support to the
customers in the cities and densely populated second grade cities. The business people,
professionals and families, people aged between 18 and 45 are highly targeted so as to sell
the products. Though the cost of the products is higher every income group has been targeted
by Apple but this strategy did not give better results for the company. The products have been
placed according to the lifestyle of the customers. IPod is targeted at every potential customer
and different variations have been introduced so as to attract different customer segments.
IPad is introduced to target the business people and IPhone has been introduced for every
customer. However the contract deals, with the help of the mobile network partners, and the
flexible finance options also added up to the sales of Apple.
Apple follows generic strategy and always targets broad market scope so as to gain the
benefits of product differentiation and cost leadership. This strategy has been followed by
Apple because of the differentiation of the products, effective segmentation of the customers
and cost leadership achieved because of the low cost manufacturing techniques. However the
company is operating at low profit margins on every hardware product that is sold to the
customers. But the software products like Macintosh, iTunes, Apple app store etc. have large
margins because of the low operating costs and interactive cloud technologies.
Apples physical resources include the manufacturing units and machinery, customer care
and sales service locations, stock points and storage units, software management centres to
host the hosting servers and energy resource locations (wind energy and solar energy).
Apples core competencies are the innovative and elegant design, technology, product
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lifecycle management (PLM), marketing mix which includes the product, price, promotion
and place, holistic operations and high end intuitive hardware design.
3.1 Boston matrix

The star business of Apple lays in the strong brand image the company because of which it
has become the market leader in technology and mobile technology. Apple invests heavily in
the innovation technology to develop the products like the iPod, iPhone, iPad etc.
The less developed and highly competitive area (cash cows) of Apple includes the Mac
operating system and iOS which needs to be provided to the normal PC users. Right now,
Apple Mac can be used only on the Apple computers and iOS can be used only on the Apple
mobile devices, which are contrast to Microsofts windows OS and Google Android OS.
The software applications like Office, email clients, web servers, iOS technologies etc. are
not widely distributed to different countries, though it is well established in United States
(dogs low development and low share of the region). The cost of the product is the main
hurdle for the growth of the business to different parts of the world.
The high development and low share of the region (question marks) include the Apple
computers which are actually not distributed to different countries. The cost of the product
and the difficulty in using Apple computers are the main reasons for the low penetration into
the global markets.
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3.2 Ansoff matrix
The ansoff matrix can be illustrated in the following figure.

Almost every product of Apple is introduced in the existing markets and particularly in the
developed economies. The marketing development and diversification strategies of Apple
should include the low pricing or optimized pricing strategies to gain access to the new
markets with both the existing and new products. Marketing mix will play a major role in
developing a marketing strategy for Apple.
4. Strategic Options
The most important strategic option that can be applied for Apple is to lower the cost of the
products. When compared to the competitors, Apples products cost higher and thus the
competitive edge to conquer new customers is being lost by Apple. The competitors are
posing a challenge to the existing market of Apple and thus an optimized cost strategy needs
to be implemented by Apple.
Joint venturing and partnership are very important for Apple to increase the market share and
to reach the unexplored countries. Apples presence is limited in African and Asian countries
but there is a huge demand for Apples products in some of those countries. Hence, it is very
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important for Apple to consider and expansion strategy which is aimed at expanding the
business to the Asian and African countries.
Though Apple is following a unique strategy by providing Apples only operating systems,
this will not alone fetch good business to Apple. So, Apple needs to support out of bound
products like personal computers, other mobile phones through which the Apples operating
system market can be enhanced. The knowledge management and customer service
management have to be handled even effectively so as to train the employees according to the
customers needs.
The physical resources available to Apple are limited in terms of sales locations and service
stations and it is recommended for Apple to expand the number of retail stores to overcome
the shortage of the space and to increase the customer interactions. Mainly the supply chain
of Apple is not competitive and hence just-in-time approach can be applied to Apple to
develop and market the products.













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