STRATEGIC MANAGEMENT PLAN OF APPLE INC

Strategic Management Plan of Apple Inc

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Date: 16.04.2018

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 STRATEGIC MANAGEMENT PLAN OF APPLE INC

Executive Summary
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The report on strategic management plan of Apple Inc, has defined that the company holds to be
the market leaders on all aspects of product line from iWatch to iPhones. This report summarizes
Apple’s micro and macro environment, which is defined with Pestel and SWOT analysis at first.
In order, the five forces model of Porter is also defined, and hence the growth strategies are been
formulated with product development to market penetration. Thus, with strategic objectives
defined for Apple, the company has showed positive performance in contrast to Samsung, LG
and HTC in mobile market division.
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Table of Contents
1.0. Introduction .............................................................................................................................. 4 3

Part A (Lo1 and Lo2) ...................................................................................................................... 4

2.0. Apple’s Mission and Vision statement .................................................................................... 4

3.0. Macro environment of Apple Inc (LO1) .................................................................................. 4

4.0. Internal environment of Apple with SWOT analysis (LO2) ................................................... 7

Part B (LO3 and LO4) .................................................................................................................... 9

5.0. Five forces Model of Porter (LO3) .......................................................................................... 9

5.1. Strategic Capabilities of Apple (LO2) ................................................................................... 11

6.0. Strategic Objectives of Apple ................................................................................................ 11

7.0. Growth Strategies of Apple (LO4) ........................................................................................ 12

7.1. Cost Benefit Analysis (LO3) ................................................................................................. 13

7.2. Porter’s Generic Strategies (L04) .......................................................................................... 13

8.0. Tactics of Apple (LO4) .......................................................................................................... 14

9.0. Recommendations .................................................................................................................. 14

10.0. Conclusion ........................................................................................................................... 15

11.0. References ............................................................................................................................ 16

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1.0. Introduction
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Apple Inc is regarded as an American MNC located in California in Silicon Valley and it focuses
on developing PCs, and other software products such as iPods and Mp3 players. Apple’s main
products are iPod, iMac, iPhone, iWatch and Macbook. The company however was founded in
1976, and has been directing the way it is innovating the new products (Armstrong et al. 2014).
Apple then has produced the successful PCs, and it has been in the front door to innovate the
new products. This certainly has developed a large market share in their product line, but also
has altered its figure from the creative computer to the customer electronics company. The
company has also revolutionized with its new interactive iPhone models (iPhone 8 and iPhone X
recently), and have developed Macbook with developed iMac processors. Globally, the company
as of 2017 ha 499 retail stores and their current revenue is $229.234 billion. In this report, the
work is to analyse Pestel and SWOT analysis of Apple, with Porter’s five forces Model through
strategic objectives and the growth strategies in future.

Part A (Lo1 and Lo2)

2.0. Apple’s Mission and Vision statement

Mission statement: Apple designs the Macs that are the best PCs in the world, along with their
OS, iWork, iLife, and the specialized software. Besides, Apple also leads with digital insurgency
with iTunes and iPods online stores (The Balance, 2016). Further, Apple reinvented the mobile
phones with innovative App Stores and iPhone, and discovered the magical iPad that defines
future of the computing devices and the mobile media.

Vision Statement: Apple lives the vision through technologies, which develops for corporations
and customers. This also strives to create the consumers masters of the products, which are been
bought. Thus, this has also put the systems in place, which can enable in smooth interaction with
customers.

3.0. Macro environment of Apple Inc (LO1)

The Macro-environment of Apple Inc is analysed with the help of Pestel analysis.
 STRATEGIC MANAGEMENT PLAN OF APPLE INC

Political factors: According to Lombardo (2017), political confronts continues to trouble Apple,
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mainly with the EU curved on cultivating tech giants. In 2016, the EU confirmed that Apple has
owned about $14.6bn in terms of taxes in Ireland while Apple’s tax disputes with the EU also
pose a major threat to the US-EU relations. Apple also feels that the company is being embattled
harshly, as Ireland is feeling that the EU regulators infers with the dominion. Besides, Apple also
has shifted large part for manufacturing in China since the supply chain is complex while the raw
material and labour costs makes it attractive location for production (Contributor, 2017).
Moreover, Apple has been targeting the Indian market with iPhone sales, as it is 3rd largest
Smartphone market.

Economic Analysis: As opined by Lombardo (2017), the economic factors also add a large
significance for the business context whether the market is towards national, global and regional
level. It is shown that Asian markets have grown heavily for Apple where India and China have
emerged to be the possible markets for brands (Jobber and Ellis-Chadwick, 2012). Besides, for
improved economic performance for Apple, the overall economy has developed with the high
buying power of the customers (Marketingmixx.com, 2016). Further, the products are relatively
recognized for the best prices, which mean they are not destined for the low-end market. Thus,
the main motive Apple has not capable to go through the market is because of Samsung.

Social factors: The social factors of Apple are understood from anti US responses in several
markets that affect profits and sales for the US brands. Besides, changing tastes and the
preferences also affect sales of its product. Further, urban and demographic trends in China and
Indi could prove favourable to the brand (Contributor, 2017). However, it is witnessed that
economic expansion in Africa has also accelerated products of Apple in low areas whereas the
brand popularity is also not good in Asian markets.

Technological factors: As Apple is regarded as the tech giant, it is also affected by the technical
changes. In the last decade, it is been witnessed that technological change has altered the market
with dynamic change. Certainly, Apple is also verge on losing the position to remain as the most
expensive brands (Marketingmixx.com, 2016). This has showed that HP and Lenovo have
maintained an effective market position in the PC industry in order to remain technological.
Thus, in Asian markets, Google and Samsung are regarded popular because the features are
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relatively less while local competitors have brought competing services and products with low
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costs.

Environmental factors: Most of Apple’s greenhouse gas effect comes from the manufacturing
process while the rest of waste are generated during disposal. E-waste if not predisposed
effectively, it could lead to the environmental pollution (Contributor, 2017). For instance, in
2015, about 93% of energy that is being used by Apple comes from the renewable sources. Thus,
this has showed that Apple has been focused in decreasing the toxins from the products.

Legal issues:

According to Lombardo (2017), the regulations and laws pose a serious challenge to any
business. The IP laws and the patent-associated regulations could also be a huge confront for
tech players. Besides, Apple is also regarded as the tax player, and such kind of legal concerns
are bound to influence their revenue. Thus, EU has kept aiming big technological companies
such as Amazon, Apple and Google, and sources states that Apple has also entered to the foggy
waters with the Apple pay.

Figure 1: Pestel Analysis

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(Source: Armstrong et al. 2014)

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4.0. Internal environment of Apple with SWOT analysis (LO2)

Strengths

Apple’s foremost strength is its technical edge over Samsung and Google. IPhone has turned to
be a huge success, and this has relatively generated huge revenue with the sales of iPhone,
Macbook and other devices in the domestic and international markets (Jurevicius, 2017).
Besides, for improved result for company’s sales and its products, Apple always uses an
advanced technology while the trust gained by customers is imperative for brand equity of the
company (Jurevicius, 2017). Over the years, the major advantage Apple has over its competitors
is design of products, which are reliable to use like iPhone X and iPhone 7, which have been
made with sleek design and interface. Hence, Apple’s brand loyalty has also sustained with their
development and research team.

Weaknesses

According to Bhasin (2018), the major weakness that Apple has showed is their hindrance to
attain business goals for the chosen organisation. Besides, the poor relation within Microsoft in
terms of their PCs is certainly a disadvantage. Apple’s income also depends on the launch of
products and the services, rather to focus on development of products. Gradually, it is seen that
company’s value is weak for the business sector due to small population (Patanakul and Shenhar,
2012). However, it is observed that Apple has low presence towards their advertisements, as it
has little market profession when compared to its competitor Microsoft.

Opportunities

As opined by Bhasin (2018), the company has evenly showed opportunities from very beginning
being the market leader with its iPhone models. Apple has showed that by introducing advanced
versions of their laptops, they can seek attention of people easily. Further, Apple also maintains
effective relations for having a long survival in the current market. However, it is prioritized that
online sales of the company is increasing heavily and this has relatively increased the bond
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partnerships in the last few years (Jurevicius, 2017). Thus, products like iPhone have heavily
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created a set of possible consumers that will be embattled in future.

Threats

Thus, the major threat Apple has faced in the last decade is in the laptop territory that includes
Sony, Dell, Toshiba, and HP. Besides, another threat could be the consumers that have started in
downloading song free in place of buying at iTunes (Bhasin, 2018). Thus, product costs are
regarded as a huge threat since substitutes are available easily with low prices.

Figure 2: SWOT Analysis

(Source: Armstrong et al. 2014)

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Part B (LO3 and LO4)

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5.0. Five forces Model of Porter (LO3)

The Porter’s model for Apple is analysed below where individual forces shapes the extent of
competition in the mobile industry.

Threat of New Entrants

According to Ferguson (2017), the threat of the new entrants into the electronics sector has not
been effective. This is because of the considerable entry barriers like necessity to possess the
intangible assets like knowledge and creativity. Besides, Apple experiences moderate threat
force due to the high capital supplies, high price of the growth of brand and capability of the new
entrants. Thus, setting up business to contend with firm such as Apple needs huge capitalisation,
and it is costly as well (Maverick, 2015). Further, large firms having economic capacity also
enters the market but Google has already completed through the Nexus Smartphone while
Samsung with its new models such as Galaxy S9 has also defined potential to compete with
Apple.

Suppliers bargaining power

Apple also experiences a fragile force due to bargaining control of its suppliers. According to
Maverick (2015), the suppliers of Apple have fragile bargaining power that is defined on high
overall supply and high supplier’s number. Even if Apple has about 200 suppliers of mechanisms
for its products, the company still shows large options because of huge suppliers. In relation,
there could be also high supply level for the mechanisms of Apple’s main products (Maverick,
2015). Hence, this shows that Apple do not require to prioritize their bargaining power of the
suppliers in increasing their strategies for industry leadership and innovation.

Buyer’s bargaining power

According to Ferguson (2017), bargaining power for buyers is relatively strong since it affects
Apple’s business hugely. Thus, the buyer’s supremacy is mainly based on small switching cost
and the small size of buyers. Besides, it is quite easy for consumers for changing their brand and
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hence making powerful in the company to ensure customer satisfaction (Medium, 2016). Each of
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the purchaser’s buying is small in contrast to total revenues of Apple. Since it is simple to move
Apple to the other brands, the purchasers still applies a powerful force.

Threat of Substitutes

Apple’s threat of substitute is comparatively weaker, as this determines strength of substitute

products to attract customers. Besides, Apple exerts weak force because of high accessibility of
the substitutes and low presentation of the substitutes (Medium, 2016). For example, individuals
could use the digital cameras as a substitute of iPhone to capture pictures while they can use the
landline to make certain calls (Hill, Jones and Schilling, 2014). Hence, most of the customers
rather use the Apple products, as they have higher features, which affect the business hugely.

Competitive Rivalry

According to Ferguson (2017), Apple faces a strong competition or competitive rivalry while for
this case; the influence is based on low switching cost and high aggressiveness. Besides,
companies such as LG, Samsung, Sony and HTC are competing aggressively with Apple. This
kind of aggressiveness is observable towards fast innovation, and simulation (Hitt, Ireland and
Hoskisson, 2012). However, the switching price of Apple is very low, and this means that it is
effective for the consumers to change from Apple to some other brands.
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Figure 3: Porter’s five forces model

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(Source: Ferguson, 2017)

From the Porter’ s five forces model, the major stakeholders that are involved for the company
are creditors, customers, supplies, workers, and directors of Apple board. Thus, some of the
external stakeholders are the local communities, trade unions and the government.

5.1. Strategic Capabilities of Apple (LO2)

According to Maverick (2015), for creating sustainable competitive advantage, Apple uses
correct deployment of resources. In case of value capabilities, Apple is possessed highly with
capabilities as they have certain factors that satisfies customers for attractive and unique design.
Besides, Apple has their Apple stores that offer its unique retail experience for customers, which
might be used in brand recognition while the company also creates high revenues (Maverick,
2015). The company is also possessed with capabilities such as its own OS, hardware, and
integrated application software. In the PC industry, Apple should attain capabilities largely with
standardized components used in building mouse and keyboards. Further, Apple has showed
costly to imitate, which might not be copied by some other firms since it attains competitive
advantage highly,

6.0. Strategic Objectives of Apple

According to Maverick (2015), Apple is working hard to present the expertise, which will result
in introducing new production technology for distribution of network. Besides, the company is
also involved in its effective manufacturing process with their variety of computer products, and
accessories mainly projectors and printers (Ernst, et al. 2011). Thus, the objectives that Apple
will achieve in the coming year are given as follows:

 To gain market share of 20% in 2018-19 by introducing new Smartphone models with a
cheaper rate
 To develop a media campaign strategy for 6 months where Apple can re-design its old
products to successfully target customers of India and China mainly
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 To achieve sales figure by 15% in 2018-19 by launching iPhone XI and their new
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Macbook with prices comparable to its competitors

7.0. Growth Strategies of Apple (LO4)

With the growth strategic driver of Apple, the company has expanded largely at the international
level. This has provided best experiences to users with the help of personal computing (Inc.,
2018). Apple has also in the line to increase its technical advancement by which it could use
creativity and innovation. Hence, to attain the growth objectives, few strategies are been defined.

Product development

According to Meyer (2016), Apple uses their product development function, as the effective
measure of growth. The product expansion needs Apple to offer striking products, which will
help to increase its performance and the market share. Besides, Apple also implements their
growth measure through modernization with R&D processes (Time, 2018). Since Apple sees
innovation as a significant success aspect, the firm has also developed new product for their
mobile market. Thus, Apple’s growth strategy is defined upon by focusing on the unique
products of Apple to increase profit.

Market penetration

According to Meyer (2016), Apple also uses the market penetration, as its growth strategy. It is
showed that the market penetration includes gaining a greater market share by selling current
products of the company. For instance, Apple applies this strategy by selling its iPads and
iPhones to the target market it has presently. While in particular, Apple also tries to attain more
sales by adding the authorized sellers in the market. Thus, this approach is effective to penetrate
markets where Apple has not achieved an important position (Time, 2018). However, it is argued
that the company also used effective promotion using the media outlets and websites. Thus,
Apple’s market penetration agrees with the extensive differentiation strategy, as this addresses
the requirement to capture the ongoing market.

Market development
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However, Apple also uses market development area, which is regarded as intensive. According
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to Meyer (2016), the development of market mainly creates the new markets for their product
variety for entering markets like India and China. With the help of this strategy, Apple authorizes
the new sellers in the present market but the company has not showed a large impact until now.
On the other hand, Apple also implements market development through its innovative products
such as iWatch, iPhone X and iPads (Inc., 2018). However, it is witnessed that Apple innovates
its offers with Apple watch that is completely a new line of product for the company. Thus, with
this strategy, Apple tends to make a presence in smart-watch market.

7.1. Cost Benefit Analysis (LO3)

Benefits

Apple with its product variety gives large number of jobs to the local communities of US market
and globally. Apple also has its new line of Smartphones and Macbook, which are completely
different from other companies (Time, 2018). The company also pays large incentives to their
employees with motivation so that they can build an effective culture.

Costs

The company has products, which are categorized in different cost-metric platforms ranging
from their iPhone to Macbook. Along with the costs, the services are also maintained properly
starting from phone repair to other value-added services.

7.2. Porter’s Generic Strategies (L04)

According to Meyer (2016), Porter’s generic strategy could be used to attain competitive
advantage over its competitors. Apple can examine their environment, and decide a strategic
position to achieve. Through Apple’s cost leadership strategy, Apple can enhance its profits by
decreasing the cost of its product while as the competition is high in the market, it can use cost
leadership formula to earn benefit over competitors. On the other hand, Apple’s differentiation
strategy also helps to bring some innovative products, which can help to increase market share
effectively to attract customers through unique offerings.
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8.0. Tactics of Apple (LO4)

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According to Javed (2017), Apple always has been in the line to be the most valued company in
the world, as they create better products for the target market. Apple’s secret lies in transforming
the major purchasers into the brand ambassadors, which could be easily applied in any niche or
business industry. With the strategy of 4Ps, the company’s key tactics are been defined
(Marketingmixx.com, 2016). In case of the product strategy, Apple has developed its base line of
iPhone, Mac, iPod, iPad, Apple TV and iWatch to target huge number of customers, which other
companies are been left far behind. Apple’s key tactic was also to keep their operating system its
own brand so that no other firms can counterfeit it (Marketingmixx.com, 2016). Apple with its
new base of iPhone X and iPhone 8+ has revolutionized the Smartphone industry, as SME
companies (Vivo and Oppo) are copying this model relatively in Chinese and Indian markets.

Apple has also been the key liner of its premium products, as they do not target all sectors in a
community (Javed, 2017). Thus, being the market leader in the industry, Apple has shown the
way where shape of innovation and technology could be readily applied in its iPhones, and thus
upper and mid-class customers will surely attract. Further, Apple also adopts an aggrieve
strategy, which could easily reach to the potential (premium) customers. This is where Apple has
come to develop their own outlets by collaborating with distribution channels and trade partners
(Marketingmixx.com, 2016). As Apple mainly targets specific people segment, its promotional
strategy is built on the differentiating factors, which will be unique from Samsung, HTC or LG.
Moreover, the company is heavily relied on relation with public, and for every product, it tries to
update its consumers.

9.0. Recommendations

It is observed that the market prospect of Apple is mainly focused to compete with organisations,
which are in line for promoting its products. Thus, the company defines its stability in ongoing
market by managing prices, and enhancing features associated with products. Besides, it is been
recommended that Apple should use a cost skimming strategy, which will negatively affect sales
in the ongoing market, and limit consumers to the specific people as well (Javed, 2017).
However, the firm faces threat of imitation and competition that is regarded as a major challenge
in the industry (Ketchen Jr, Ireland and Baker, 2013). Hence, for this, it is recommended that the
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company must build a strong portfolio that will show continuous innovation for ensuring
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competitive advantage for Apple’s products. Every time, the company releases its new product,
mostly iPhone series, it should scale up with the production abilities with the help of just-in time
manufacturing structure.

10.0. Conclusion

The report on Apple’s strategic formulation concludes on the way Apple has stayed firm with its
competitive strategy. Being the market leader, Apple has also showed a wide category on its
product line where upper and mid-class customers heavily get attracted to it. Apple also develops
its strategic position so that it can achieve competitive position in the international market. On
the other hand, as Apple is eyeing Chinese and Indian market to develop sales because of the
large population base, it would surely come up with a strategy to attract customers, may be with
a cheaper price on iPhones. Further, it is witnessed that increasing its core competencies and
capabilities have defined its market to capture competitive position globally.
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11.0. References
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Medium. (2016). Porter’s five forces analysis: Apple’s fall and rise. [online]
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