XLRI

Strategic
Management

Abhimanyu Kr Singh (MP15002)

Abhinandan Singh (MP15003)
Kumar Gopal (MP15017)
Shipra (MP15041)
Subrata Basak (MP15043)
Professor: Dr Saurabh Pandya

Date: 5th February, 2017

[APPLE INC. IN 2015]

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1. Introduction:
Apple founded by Steve Jobs and Steve Wozniak in 1976. Apple operates in various
lines of the computer and music industry today and its operations include not only
the designing but also the manufacturing of its computers and software. Apples
competitive position in the smartphone industry has been studied and Apples
strategy for its smartwatch has also been discussed along with suggestions.

2. Key Persons:
Mr. Tim Cook (CEO Apple from 2011-Present) and Late Mr. Steve Jobs (Apples CEO from
1997-2011)

3. Porters 5 forces model:

Every market including the financial industry can be evaluated through the use of Porter's
five-force theory. Porter's uses the five forces, supplier power, barriers to entry, threat of
substitutes, buyer power and intensity of rivalry to analyse industry attractiveness. (+)
signs indicates Apple has significant advantages over other competitors and (-) sign
indicates unattractive /disadvantages of Apple.

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Since, we find that there are two strong forces (from Buyers, Competitors) and one moderate force
(from New Entrants) are working on apple, so their strategy must be built on these aspects mainly

3.1 Industry attractiveness:

Positive Factors for Attractiveness Factors for dis-attractiveness

Consumers still demanding new high Few players catering to 90% of the market demand
tech products
Natural move to a higher tech moreLow growth rate in developed
service countries
based economy
Economic conditions have started to R&D intensive industry and High exit
improve cost

Increased demand in Asia-Africa Volatile industry due to changing

markets technology

4. Apples Competitive Position in the Smartphone Industry

Apples competitive position in the industry is based on product differentiation, product innovation, sustainable
competitive strategy and vertical integration. It focuses on building strong customer loyalty by meeting
customer needs more effectively than competitors through their unique design and product innovation. Here we
will discuss Apples position in the Smartphone industry and strategies that it has followed to become leader in
this segment. Apple was the first to produce an all in one device back in 2007, which was the original iPhone.
The first model of the iPhone was a great success and it hit the world by storm. They sold 6.1 million units in
the first 5 quarters after its initial release. Following the success of the first iPhone, Apple today still continues
to produce a newer model each year to keep up with its high demand. Of course, when demand is high for a
certain type of product it will bring in competition. Google's mobile OS, Android, was introduced in 2008 in
response.
The growth of Android has now surpassed Apple. However, Apple is able to compete even though their device
is less advanced because of 3 reasons - brand recognition, ease of use, and the app market. It holds revenue
share of more than 60% with just 8.3% of device share in the market.

Porters Generic Strategies Model

Cost Differentiati CHALLENGER LEADERS

Leadership on S
Total Market Apple
(Xiaomi, (Samsung,
Lenovo, Xiaomi
Lenovo, LG)
Huawei) Ability
Scope to
Cost Focus Differentia Execut
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tion Focus e
(Apple)
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Samsung

Niche Market

NICHE VISIONARIES
PLAYERS
Cost Differentiation Completeness of Vision

Monthly Switching rate for Different Smartphone Operating Systems

Apple market has been the dominate force
that causes people not to switch devices. The
apps purchased through these apps can only
be used by Apple products. Thus, once you
switch, you lose all your apps and you would
have to purchase them again on your new
Android device. This has caused many Apple
users to stay with Apple because the cost of
switching is a lot more than just the cost of
the device itself.

Apple integrates hardware software and

service. It has become a status symbol which
has spurred its demand to a very high level.

Graph node denotes existing User base (size is proportional

to number of users. Arrow denotes users switching to a new
device (which is proportional to the percentage of switching
users during a month)

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5. Strategic issues and Problems:

6. Strategic Objectives:
5.1 Corporate level:
5.2 Business level:
5.3 Functional level:

7. Recommendations:

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