Free Apple Strategic Review Report Essay Sample
For most people the Apple Inc. has become well known player in the Smartphone and tablet sector globally. Apple Inc. is an American corporation that is a designer and seller of electronics which include software’s for personal computers (Grady, 2009, p. 5). Apple is best known for its products that include; the iPod, iPad, iPhone and the Macintosh computer. In addition, there is apple is recognized for the Mac OS X. Apple was established on April 1, 1976 in California after which it was incorporated in 1977. Initially it was known as Apple Computer, Inc. and this continued for a period 30 years. Later on the word "Computer" on the company name was removed in the year 2007. This took place at the same time the company was shifting its focus from personal computers to the now much growing area of consumer electronics (Grady, 2009, p. 8).
In recent years Apple has become a crucial player in the global Smartphone and tablet industry with a loyal consumer growing base. For instance, in the year 2011 had a total of 357 stores in about ten countries worldwide. Moreover, apple has a wide presence in the online market with online stores (Grady, 2009, p.16). Apple is also among the major corporations which are traded in the stock exchange by measure of the market capitalization. In revenue and profit terms, Apple has become one of the world largest technology corporations and more Microsoft and Google combined.
By the year 2011, Apple had about 60,400 permanent employees who work on a full time basis, 2,900 temporary employees. In 2011, the company had total global revenues of 108 billion dollars up from 65 billion dollars in the year 2010. The fortune magazine listed Apples as the most admired corporations in the United States in the year 2008 and globally it is still the most admired company. Nonetheless, Apple has been on the receiving end of criticisms on different issues ranging from labor issues by its contractors', its business as well as environmental practices.
This is an independent report on the review of Apple Inc. strategies in the smartphone and tablet industry from the year 2011 and onwards. This report is designed to undertake an evaluation as well as an analysis of the Apple Inc. as a key player in the smartphone and tablet. It is aimed to offer a review of the smartphone and the tablet industry.
The Global Smartphone and Tablet Industry
The smartphone and the tablet industry has become amazingly advancement in the technology world. In particular the growth has been extraordinary (KICKHAM, 2011, p. 12). The idea behind the development of the smartphone and tablet technologies has been in existence for a while but their introduction into the consumer electronics market has become serious within the last two years. The best example to illustrate this is the Apples’ iPad and iPhone which have revolutionized the tablet and the smartphone markets ever their launch into the market (Kickham, 2011, p. 10).
The growth of the smartphone and tablet industry can be best emphasized by this fact, that it took the radio about 38 years to get to 50 million users but it has taken the tablets and the smartphones only 1year to get to 50 million users. Following the launch of the iPad one of the major tablets, many other technology companies sprung to design and produce tablets and this has led to increase as well as growth of the smartphone and tablet market.
It has been predicted that tablet and smartphone industry will continue to grow in sales to about 300 million by the year 2015. This means that technology firms such as Apple will continue to grow since they need to expand in order to meet the growing demand. Currently this industry is considered enormous and with the forecast of the industry is now so big, and with such immense growth continued immense growth it is expected that more firms will start up and therefore this means issues of competition will grow (Edwards, 2012, p. 17).
The Competitive Forces Shaping the Smartphone and Tablet Industry
The year 2011 witnessed an increase to about more than 50 percent of all the computer devices that were sold globally were not personal computers or desktops. Rather the devices that were sold most were the smartphones and tablets. The estimated combined sales that were made for the smartphones and the tablets in the year 2011 reached about 400 million units (Edwards, 2012, p. 21). The introduction of tablets and Smartphones has revolutionized the manner in which the world is communicating in the daily life. As we progress the smartphones are becoming more advanced in that they are able to perform a myriad of tasks and on the other hand the tablets are becoming smaller, hence more convenient to carry and use as opposed to the personal computers.
For most players in the technology world, the prospects of joining into the tablets and smartphones industry are a challenging one. On the other hand the issue of sustaining and at the same time working on the expansion of the market share of the players that are already in the industry such as Apple Inc. is much more challenging. This does not mean that there no new entrants or that the competition level is at all-time low, in fact competition is quite stiff since this is a high capital business sector and therefore the players tend to have a substantial amount of both financial as well as human resources so as to thrive in this industry. There are a handful of key competitors in the smartphone and tablet industry (Edwards, 2012, p. 24). By dividing the competitors’ amount of the value chain and the share of the market share can give a good glimpse into the kind as well as competitive forces available in the smartphone and the tablet industry.
A look at shows how Apple Inc. has been integrated in its value chain by offering one product which is set in two price ranges. On the other hand Microsoft tends to supply its OS to the manufacturers’ of smartphones since it does not do the actual manufacturing. This is so because of its well established Windows OS for the desktop computers which has a high penetration into the computing market. Google on the hand has implemented a similar approach just like Microsoft. Google has sought to be involved only in distributing its Android software to the smartphone and tablet industry.
The Porter's Five Force Model
Porter's 5 force models is an appropriate tool for analyzing industry of both the smartphones and the tablets. The Porter's 5 force model undertakes a wholesome outlook of all the available threats such as the competitive forces facing the smartphone and the tablet industry. Within the smartphone and tablet industry which Apple is a major player, experiences a great threat from the sellers of the electronic products (Rice, 2010, p. 12). Currently there are about five competitors who are highly profitable and hence are the key players in the industry. They all have considerable experience in the area of innovation as well as in the use competitive tactics. They have become because this is a prerequisite for one’s survival in the smartphone and the tablet industry.
Every one of these players is known to be substantially stable since they are in a position to utilize the cash reserves in efforts to promote as well as advertise their products efficiently. In addition, they are in a position to engage in any kind of acquisition that is deemed to be strategic in increasing the market share (Rice, 2010, p. 24).
There are very moderate threats from the new entrants into the smartphone and the tablet industry. As result the presence of the ever growing new edge technology in the global market, this tends to make it impossible for any new entrant to make a full jump apart from the existing big corporations like Apple Inc. Although the smaller technology firms may join the smartphone and tablet sector by using the similar approach used by Google joining through the selling of Operating System for both tablets and smartphones to the existing manufacturers.
There is the threat of a strong supplier power. The need to be supplied with low cast materials for manufacturing of smartphones and tablets is very central to most technology companies like Apple. There are only very few manufacturers who are currently manufacturing processors for smartphones and tablets, therefore this gives the manufacturers as well as suppliers a lot of weight in the industry. There is the threat from the power of the buyer. Today the trends in the technology world have left the buyer with no choice when it comes to buying smartphones and tablets.
For the buyers they only have power when it comes to changing from one brand to the other and for the smartphone and tablet firms, the competitive force is on how to not only expand its market share but also make sure they have maintained the market share. Under the leadership of Steve Jobs Apple has been focused on making consumer electronic products that easily integrate into the life of the consumer whether in the business or the social settings.
Strategic Issues Shaping the Smartphone and Tablet Industry
There are several strategic issues that contribute towards the growth of the smartphone and the tablet industry. They can be categorized into some key factors.
The growth and expansion of the use of the internet globally
The internet has become a crucial part of the daily business and social life. In terms of infrastructure, the internet has been developed. Today the internet is not a preserve for the people in the developed world only but is now accessed in the developing countries such Kenya and Nigeria. This growth of the internet has led to the need for computing devices that are user friendly for the consumers. The introduction of the smartphones and tablet has come at a time when the use of personal computers has somehow limited the experience to the users.
Presence of a generation that has constant access to cash
Most economies have been experiencing constant growth in the last ten years, this has led to the emergence of a middle income class in the society which has the desire to improve their ways of living as well as enjoy some of the technological devices being introduced. A good example is China where in the last ten years about 400 million citizens have been pulled from poverty to the middle income status. As a result, they want to spend their money a few luxuries such as cars and consumer electronics. China now has become a major market for most technology firms such as Apple Inc., Dell, Google, Intel and Microsoft.
Increased global competition and a culture of fast-paced way of working
We are living in a global village and the need for people to become more connected and in constant contact is greatly growing as a result of the growth of the internet. People have experienced how technology can make working or socializing become sweet, cost effective as well as efficient and therefore there is constant growing demand for even better technology devices such as smartphones and tablets.
Presence of cheap manufacturing services for smartphones and tablets
The presence of cheap manufacturing services from manufacturers in the developing world such as China is a strategic advantage that makes the smartphone and tablet industry more attractive. This makes the smartphone and tablet industry quite attractive as there profit margin I guaranteed to increase. This is unlike the case when the technology corporations used to acquire the services of manufacturing firms in the developed countries where the cost was quite high. China is one of the beneficiaries of this outsourcing of manufacturing since its labor laws are less strict and cheap labor is widely available.
The growth of the cellular coverage
The developing countries and in particular have become the fastest growing cellular market globally. More and more people increasingly own mobile phones. This is an expanding market for the smartphones and tablets for technology firms. Most of these consumers in the developing world will need to upgrade to even better phones after their experience using the normal cellular phones.
Apple’s Internal Strategic Audit
Financial and Resources Appraisal
Both the performance and the financial strength of Apple Inc. within the past three years show a continued growth. Apple has been having a high liquidity trend although lately it has been reducing as a result of the increase in the time it takes for a sale as well as a reduction in the a day’s sales (Grady, 2009, p. 34). The increase in profit for the last three years has been very promising with an increase in the gross profit from 33.97% in the year 2007 to about 34.31% in the year 2008 and followed by an increase of 35.96% in the year 2009.
In addition, the percentage operating income also witnessed a substantial growth from 18.37% to 19.32% and 20.96% in 2007, 2008 and 2009 consecutively. During the same period, there the company experienced a return on the equity as well as on the assets which reduced. This reduction was as a result of accumulations in the profits from the earnings retained as well as from long term investments (Grady, 2009, p. 40). This is the similar case on the cash that returned on the assets of the company. From a business growth perspective, Apple is enjoying strong levels of growth as well as its making substantial profits. The firm’s upward financial growth can be attributed to an increase in the liabilities such as the increase in the company’s differed revenue. In September 2011, Apple Inc. made $108 billion from revenues.
Value Chain Linkages
In order to identify which areas that Apple has developed and established its critical capabilities an analysis of the value chain linkages is essential. The primary activities of Apple consist of production, sales and marketing, product design, consumer and legal services. The product design and technology activity forms the base or the core the Apple Corporation. Apple Inc. has a history of designing technology that is cutting-edge. Apple is focused on being the best as well as the first technology firm globally. Its Apple operating system is globally recognized and appreciated as a more reliable as well as a stable OS compared to Windows.
Since Apple has for long rejected the calls to make give out its OS license to other firms. The combination of both the hardware and software forms the cornerstone of the production process for Apple Inc. This is a competitive advantage for the firm. Although not all of its products introduced have been successful, Apple continues to believe in the component production process as a natural extension of the product design process.
By delivering superior electronic products to its consumers, Apple has managed to not only maintain a constant customer base but continues to expand its market share in the smartphone and tablet industry. This has led to the growth of its cash reserves as well as gains a much coveted position in the technology world. Every Apple store is designed to create a customer friendly world where the customers have an opportunity to interact and experience the pleasure that comes with the Apple products.
Apple’s Leadership and Decision Making Steve Jobs before his demise provided a unique type of leadership for Apple. He was well known for his strong as well as an awareness of the consumer market is accredited for the growth of the company to where it is currently. It has been argued that Steve Jobs left a culture that will live on in the company for a long time to come. In addition, this is expected to have an influence in the politics as well as management decisions of the firm in the coming decades. This is expected to maintain the growth and the market share of the firm in the period beyond 2011.
The external stakeholder issues facing Apple since 2008
Since the year 2008, Apple has been a focus of many media houses, not necessarily because of launches of new technologies, and iPhones as it has commonly been, but due to the Public Relations problems it is involved in either directly or indirectly. For instance Apple has been associated with employment of underage, exposing the workers to hazardous substances, overworking the workers, and ailing to provide them with amenities such as good housing.
The explosion that ripped through a building that harbored the Foxconn factory affiliated with Apple as it one of its key suppliers led to more focus made on Apple regarding its Public Relations (Duhigg and Barboza , 2012, par. 2). This explosion led to revelation of the ill treatments that the supplier companies to Apple pose to their workers. Following the explosion, Apple was under pressure to carry out audits on several of its suppliers as well as the suppliers’ suppliers so that it could heighten up the conditions of their workers. This occurrence and others raises concern on the significance of the external stake holders of Apple Inc.
The stakeholders to apple are its international pool of customers, stockholders, government, media, environmentalists, humanitarian welfare organizations, employees, labor unions, environmentalists, suppliers and bankers. Each of the stakeholders has their wants and needs from the company and the extent of these wants and needs are of varying degrees. In one way or another, the stakeholders are connected to each other, which imply that an effect on one can cause a significant effect on the other as well as to the company. Since the public relation is significant as it sends the image of the company to the stakeholders, there is a need to address the PR problems noted in Apple Inc. from the year 2008.
Apple has crucial issues with its suppliers. This is evident from the fact that Apple has faced pressure to deal with its suppliers PR problems. For example, Foxconn is a key supplier to Apple, and it has been focused on by the government and the media (Duhigg and Barboza , 2012, par. 5). The company is reported to be employing under-age workers; it has improperly disposed of its hazardous waste and has falsified records. These issues have drawn the concerns of advocacy groups, environmentalists and the government. This particular supplier raised the attention to other suppliers of Apple who revealed considerable inconsistencies with the general accord of Apple.
The impact of the suppliers company to Apple as disregarding workers’ health is that the company loses the trust from the people. This can have a profound effect to the company and drastically reduce its sales (Prichard, 2002, p. 271). The negative picture about the public relations problems to the suppliers of Apple has made the media to report negatively about the company for the last few years. This added to the health record of Steve Jobs and his eventual death has had a blow to the marketing strategy of Apple.
Moreover, Apple has had some problems with its stakeholders. This has especially been castigated by the health status and death of the CEO Steve Jobs, who was very iconic in the marketing of Apple products. Furthermore, he was the public figure associated with the products of Apple. He was still a threat to the competitors of Apple, and his contribution to the human resource and Executive Team of Apple had far reaching effects. Therefore, his death was another blow to the public relations of Apple. The death of Jobs could have caused lack of trust to the company by the stakeholders.
Still, Apple has had to perform audits to its suppliers, which has caused it to breach its code of conduct that has always demanded secrecy with its suppliers (Duhigg and Barboza , 2012, par. 9). This has unveiled a series of consequences each calling to questioning of the deal of secrecy by Apple. Following the fact that Apple has consistently withheld its audit reports of the suppliers, who are evidently disregarding their workers’ health, sends a signal that Apple is in a conspiracy deal with the suppliers. The need for secrecy by Apple is also a threat to the company’s management. This is because, time and again, there are reported cases of inconsistencies over their reporting and strategies of handling the PR problem facing Apple. This has raised an eyebrow, especially following the disastrous consequences of inconsistencies by their China based suppliers.
The supplier’s disregard to human health, especially those from China have varied consequences to the company. Following the loss of death, due to the Blast that happened at Foxconn, Apple has received blames from different individuals and groups of individuals. It has even shown some level of disagreement amongst the Executives of Apple, as some have been reported pointing fingers to the Company for having ignored their concerns in the past. A disagreement in the Executive Team of a company like Apple can be a big blow. This is mainly because the public will lose trust with the company, and stockholders can withdraw their shares from the company. The competitors can take advantage and before long the popularity of Apple can reduce drastically.
Following the PR problems facing Apple from the year 2008, the competitors to Apple such as characterized by rapid innovators of hardware and software, including Google, IBM and others have gained an upper hand in the developing countries. Markets analyses have shown that developing countries such as China, India, Indonesia, and Brazil have more chances of business growth than the already saturated developed world markets. A negative representation of Apple in these countries, like it is happening in China means that the company will have difficulties in its entry into these markets. Losing a good entry will lead to the company not enjoying the possibilities of growth posed by the countries, and thus it will lose its international reputation. Therefore, the public Relations problems facing Apple need to be addressed speedily and effectively.
Summary of the appropriate strategic options available for Apple as well as the definitive recommendations for Apple to sustain its future position in the Smartphone & Tablet Industry
Following the competitive forces and strategic issues shaping the Smartphone & Tablet industry as discussed above, Apple can benefit from some of the m so as to retain its competitive status internationally in the Smartphone industry. Moreover, the internal strategic audit of the issues facing Apple as the organizational and strategic models critical assessment reveal, Apple need to heighten its effort in the state of its organizational and strategic models it uses at all levels of its operations. Furthermore, as Tim Cooke concern goes, the various Public Relations crises that has impacted Apple since 2008 have led to external stakeholders raising a finger to the organization and it has drastically affected Apples reputation and brand equity of Apple Inc. There is therefore the need for Apple to employ some strategies to save its state of Affairs. The required strategies ought to be objective and unbiased, while considering the contribution of its outsourcing resources overseas. In this regard therefore, Apple has a pool of options from which to choose.
Obviously, organization strategy had once saved Apple from a public debacle at the time before Jobs set in as its CEO. Jobs setting in as a CEO show it that the organizational strategy of simplicity was put in place and adhered. Such a potential for a strategic organizational strategy can be tapped by Apple now to save its reputation. This will call for the CEO and the Executive Team to come on board recognize the problem and determine to fight it (Ashkenas, et al. 2002, p.76). The iconic simplicity of the Apple organization structure as was spearheaded by Job ought to be felt even in other level of its operations, rather than just in the capital base. The focus and simplicity mantras of job meant that every employee of Apple knew his or her responsibilities. Such a structure can certainly save Apple from the turmoil of PR it is facing today.
Furthermore, the organizational structure of Apple incorporated the directly responsible individual (DRI) at every project, held responsible to oversee how things worked out in his or her level of operation (Montgomery, 2008, p.58). As it is, such DRIs were congratulated or blamed in regard to how they performed. Although the DRI were emphasized at the points of production, it is a high time that apple borrowed a leaf from the outcome of such an organizational strategy and employed DRI on issues of HR. Although the international interplay that Apple is in today regarding its suppliers and its suppliers’ suppliers means that the modes of business operations have to be compromised due to varying policies and culture, Apple can still incorporate its cultures by placing some of its United States based personnel in the management of the suppliers organizations. Such a strategy has for example been employed by Japan while entering the United States based markets (Boyne and Meier, 2009, p.840). Therefore, Apple can consider incorporating some of its personnel at the suppliers companies in China such as Foxconn, which is worst hit by the crises of human resources.
The supremacy of the Executive team common in Apple has to be made a reality even to the companies with which it is outsourcing (Montgomery, 2008, p. 55). The parallel organization of products movement obviously worked in favor of Apple, and it is the time to extend the same to the suppliers. As it is, Apple is popular, and companies are competing to win its bids, as their supplier. Apple should take advantage of this and strain the bidders by imposing their culture. This does not however mean exposing its secrecy, it simply means that the suppliers to Apple should be loyal to it, and extend the same loyalty to their subjects, the workers as well. Backslashes can even work at this juncture as Apple has nothing as much to lose, but everything to gain, after all, Steve Jobs acted so himself: sometimes harsh and other times friendly so as to get the best from his subjects.
As a recommendation, Apple should strive for the best Human Resources within its jurisdiction and affiliations as well. This Apple should do by allowing for transparency and insisting on the same from its affiliate companies. Apple should time and again let known publicly its state of affairs with the suppliers. The audits carried out should be made available to the press, as this will lead to more openness. Who knows, it might even unravel probabilities of conspiracy against the company.
Apple has worn the focus of the media and it should use this to its advantage. Any company punished by Apple is not likely to miss the public eye on the reasons behind it. It is time that Apple acted the big brother, and influenced the Human Resources conditions in companies that supplies to it. Since most of such companies have already been reported by the media negatively on their humanitarian conditions, Apple should show-up, and extend its slashes to the companies as well as insisting on the human resources evident in its capital base. Such an action will obviously win Apple the favor of the humanitarian welfare organization together with that of the general public. Apple should therefore take the lead, change the event and save itself from the snare it is in currently.
Apple may also need to deploy secret teams dedicated to spy on the internal state of affairs regarding its suppliers adherence to the code of conducted that they mutually agree on. This is because most of the discoveries are surprises to Apple’s executive. Once Apple discovered the need for secrecy in its operations, it deployed teams to ensure that the recommendations were adhered to. Since this worked in favor of the company, it can also use the same strategy to spy on the adherence of the laid down conditions to their suppliers, after which the defaulters, receive considerable punishment including termination of associations (Savage, et al. 1991, 68). Apple has the capacity to do that due to its history, international reputation favor from the humanitarian welfare organizations and the media, technology and resource base.Analysis of Apple’s strength shows that Apple has established a loyal customer base. It has done this through creating a culture in the Smart phones industry and its launches for new products is waited by many eagerly. It home base customer have developed the affordances to the smart phones it produces, and it can take advantage of the loyalty in its effort to align its public relations.
Similarly, Apple Inc. has had a history of reputation in shifting strategies and cooling down a seemingly great threat to its survival. The current Executive Team should take advantage of such a reputation and history and solve the current situation it is in. This Apple can do by aligning its management and taking swift actions to extend across the board to its external stakeholders, so as to save its international reputation.
Even in the situation of a failing PR to Apple as a weakness, added to the fact that it has to rely on outsourcing so as to gain its supply, the Apple Company has opportunities in the international market. This is because it remains ahead of the Smart Phones and Tablets industry, and the global market still esteems the American lifestyle, to which Apple has a lion’s share in, it can enter into the global market using similar strategies as it used in the United States. Therefore, even with the threats of losing reputation due to the failing Public Relations, Apple can still remain competitive in the Smart Phone and Tablet industry by utilizing the Strengths, and Opportunities at stakes, while taking tough measures on the external stake holders who act as a threat, and strengthening its noted weaknesses.