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Corporations Strategic Choices Essay

Corporations Strategic Choices

Introduction

Apple Inc was established in 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne. Ronald Wayne later sold his shares to the other two partners and ceased to be a partner. During the foundation of the company Mark Markkula provided with funds and expertise to operate the company. The headquarters of the company are based in Cupertino, California. The company manufactures computer software, electronics and commercial servers. The software manufactured by the company includes Mac OS X operating system, iTunes, iLife, iWork, Aperture, Final Cut Studio, and Logic Studio. The computer hardware manufactured by the company includes iPod, iPhone, iPad and the Macintosh computers (Linzmayer, 2009). Steve Jobs is the current CEO of the company and has been in that position since 1997. Due to the health problems that Steve Jobs has encountered of late, Tim Cook has been the acting president of the company as Jobs recovers from illness.

The company is managed by a board of directors who are the supreme decision makers. There are committees elected to conduct projects by the company. The basic operations areas are departments where employees are assigned jobs. Team work has been encouraged to improve performance of each member of the

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organization (Linzmayer, 2009). Apple Inc has been very successful in the use of technology to produce products which are competitive in the market. Product differentiation has been a strategy the company has used to achieve a competitive advantage in the market. The management of the company has used leadership to encourage the employees comes up with innovative products. Apple has improved the status of its employees to improve their productivity. Some of the competitors to the company are Microsoft, IBM among others. Apple liaises with suppliers to provide with raw materials as well as to market the products of the company (Linzmayer, 2004). Both internal and external environments have been favorable for Apple Inc and this has resulted into tremendous progress in penetrating new global; markets.

External environment analysis for the Apple Inc.

PEST analysis for Apple Inc.

This is analysis for political, economic, social and technological factors affecting a company. PEST analysis helps identify external factors affecting an organization in any business environment.

Political factors

Apple operates in a political friendly market environment where there are no disruptions. Most of the countries where the company has opened its subsidiaries are very peaceful and this has promoted the performance of the company in a variety of market environments. Apple has enjoyed political stability in most of the countries it has established its operations. The headquarters of the company are located in California where the political climate has been very favourable for any business activity. The company has been able to invest in technology since there has been no interference by the political systems. The company adheres to the legal systems of the countries in which it is established.  This has been a success factor since many governments have accepted the activities of the company in their countries (Hubbard, 1992). However, there have been other influential political and environmental groups which have had a negative impact on the activities of the organization. Environmental groups have challenged Apple due to the manufacture of hardware which cannot be recycled. Toxins within the iPhone model have been identified. The chemical policies of the company have been criticized, for example, the use of PVC and BFRs in most of the products of the company (Linzmayer, 2009). The management of the company has taken various precautions to solve these problems. Alternative materials for manufacturing products have been identified and the company has introduced products which are not controversial.

Economic factors

The computing industry is very sensitive to global economic changes. Changes in the economic performance have affected the sales volume of the industry leading to reduction in the profits accrued from the business. Global economic factors have impacted a lot to the activities of Apple Inc. The recent global recession affected most of the activities of the company. The recession was experienced in 2007/2008 and many economies were affected. Since Apple is an international company the sales of the company reduced in almost all its retail stores. The increasing inflation in the world economies has also affected the pricing strategies of the company. Apple has been forced to increase the prices for its products to cater for the increasing cost of production (Linzmayer, 2009). There has been an improvement in most global markets after the crisis and Apple has started the process of regaining its market position.

Social factors

The socio-cultural trends in the market have changed in favour of Apple Inc. It is estimated that 3 out of 4 households in US have a personal computer. This culture has created more opportunity for companies in the industry to market their products. Developing countries have become aware about the changing climate in information technology and have started to buy computers in large numbers. Apple continues to enjoy customer loyalty from its customers and this creates more opportunities for the emerging markets in the global scene (Linzmayer, 2009).

Technological factors

Apple has been successful in developing differentiated products by the use of new technologies. The company has employed a team of researchers to come up with better strategies of promoting new methods of production. Apple has a wide variety of products which are manufactured according to the current demand in the market. New products have been manufactured, for example, the MacBook Pro and iMac. The high level of technology adopted by the company has placed it in a very high competitive position. Apple was the first to manufacture computers that could use Core Duo CPU. The Boot Camp products have been designed to install Windows XP or Windows Vista on the Macs as well as on the Mac OS X (Colvin, 2010). Apple has linked with universities and research organizations. These organizations provide professionals for conducting the activities of the company. The company sponsors research by these organizations. Most of the innovations are done through the organizations. Apple has invested a lot in research and most of the products have been generated through the research programmes (Kaplan, 1997).

SWOT analysis

Strengths

Apple has been able to diversify the product range sold in the global markets. The company has also diversified in the customer categories it sells its products to. The customers of the company include educational institutions, individuals, professionals, governmental organizations and others. Apple has a competitive advantage in the use of technology to produce differentiated products. This has increased the competitive strength of the company since most of its products are too unique. Apple has manufactured a range of products to improve its market share in the industry. Some of the most recent products introduced by the company in the market are the iMovie, the iPod, iPhone among others. The management of the company has played a greater role in the implementation of innovative ideas in the manufacture of products which match the market demand. Steve Jobs has been the president of the company since 1997 and this has contributed to a great success of the company. The leadership of the company has provided the employees opportunities to improve their skills and to establish innovative ideas. Apple Inc. has been very successful in the globalization of its activities. The technology of using the online retail stores has improved the marketing strategies of the company. Apple has also introduced retail stores in many countries to market its products. The e-retailing strategy has created success to the company and Apple is quoted as one of the most successful companies applying the technology (Linzmayer, 2004).

Weaknesses

Apple has high cash holding in its accounts and this suggests that the management has been unable to invest the cash in other profitable projects. This is a great risk to the company and future investments may be delayed if the management continues holding large sums of cash. There are several criticisms levelled against the e-business activities of the company. Apple disabled the Google Voice from the online store for iPhone. The company takes long to approve or disapprove third party iPhone software. It has also disabled iTunes syncing with third party devices.  The iPhones are exclusively used on the AT&T. the company has rejected most of the applications as well as creating long approval processes for the iPhone application stores (Kaplan, 1997).

Opportunities

Digital music market is not yet well provided with enough products and Apple should come up with strategies to add more brands on top of iPod. More electronic devices are required by a large number of young people. There is an emerging lifestyle where people are adopting computerization of systems. This provides an expanded market for the company and there is need to expand the operations to capture these consumer groups. Apple has a large capital base which helps conduct many investment activities in the industry. Penetrating other markets in the global is very possible since there are adequate resources to carry out different strategies. The capital base of the company should be used as a pillar to support expansion and globalization programmes.

Threats

There is stiff competition in the industry and Apple has been facing a lot of challenges from well established companies such as Microsoft, IBM and others. Competition has increased as many companies enter the industry. The global market is democratic and few restrictions are placed for entry or exit of the companies. There has been a decreasing trend in the sales made by the companies in the industry. The computer software and hardware are not consumable and most of the customers who buy the products in a particular year are unlikely to buy the same products in the following 2-3 years. Price wars have been experienced in the computing industry. Due to the existence of a large number of companies in the industry and the large number of differentiated products, prices have been very competitive leading to reduction of prices below profitable levels. This aspect has affected negatively the profits made by the companies in the industry and in the future companies may experience losses (Warnke, 1996). Steve Jobs has been having poor health for a long period of time and currently Tim Cook is acting as the president of the company. Steve Jobs has a wealth of experience in running the company and his absence will have an adverse impact on the performance of the company. Most of the activities of the company have been introduced during the reign of Steve Jobs and any other person taking his position should have adequate knowledge and experience. This places the company at a risk of under performing in the future due to managerial inefficiency.

Core resources and competencies of Apple Inc

Apple has penetrated different market segments and its doing good business in the personal computing industry. Apple has adequate technological knowledge about production and this has enabled the management in coming up with differentiated and innovative products. Apple has adopted modern technologies in the manufacture of its products and this has placed it at a competitive position in the global markets. The company has differentiated its products to improve global competition. The company has a strong leadership strategy where employees are encouraged to contribute willingly to the goals and objectives of the company. This has made the company achieve innovative products which increase sales volume. Customers to the company are very loyal and they have a tendency of repurchasing products from the company. The computing industry has been very profitable and Apple has been able to benefit a lot. Apple has a competitive advantage in the use of technology to produce differentiated products. This has increased the competitive strength of the company since most of its products are too unique. Apple has manufactured a range of products to improve its market share in the industry. Some of the most recent products introduced by the company in the market are the iMovie, the iPod, iPhone among others (Linzmayer, 2004).

Strategic choices for Apple Inc

Apple adopted the strategy of opening many retail stores in different parts of the world. More than 102 retail stores were opened in different parts in 2005. This strategy has improved the sales volume of the company since there are more retail places where customers can purchase products made by the company. However, resellers of the company products have been greatly hurt by this strategy since their business has declined. Many reseller businesses have been unable to survive due to intense competition from the retail stores. Resellers contribute more than half of the sales made in the domestic markets. This is a great risk and the company will suffer huge losses if the reseller businesses collapse (Linzmayer, 2009).

Apple has adopted a vertical growth strategy to capture as many consumers as possible. Through this strategy the company has introduced online retail stores where people can purchase products.  The company sells directly to the consumers through the online retail stores. In addition, this strategy has been implemented by introducing retail stores in different parts of the country where the company can access consumers directly. Vertical integration is a process where a company expands its operation by accessing more distribution channels. Through this process the company is able to identify specific needs of its consumers and solve problems related to the products. Intensive advertising strategy by Apple Inc. has been adopted as a measure of making many consumers aware of the brands and products of the company. This strategy has been implemented by carrying out online advertising and promotional activities as well as using other media to create awareness to as many people as possible. Apple spends a lot of money in promotion to create acceptance for its products in different markets and to access potential consumers (Linzmayer, 2009).

A strategy that Apple Inc should be pursuing

Cost leadership strategy should be adopted to reduce the costs incurred in the production process and in return improve the prices offered in the market. Several consumer groups are not motivated to purchase products from the company due to the high prices attached to them. The company should come up with a better manufacturing process to reduce costs and offer affordable prices. Lean manufacturing is a strategy that has made Dell Company very successful in cost leadership and the management of Apple Inc should come up with policies of adopting a similar strategy. Through lean manufacturing strategy an organization seeks to maximize production with minimum inputs. The management eliminates wastes while maintaining quality in the production systems. Products are properly examined after they come out of the manufacturing process to ensure they adhere to the set standards. Operations managers stop the process of production immediately when problems in the system are noticed.  The overall aim is to maintain least costs while producing quality products. Workers operating on the assembly departments have a lot of knowledge about the production system and they can detect changes in the products released out of the system. Eliminating wastes in a production system is done by delivering small outputs. Suppliers are required to provide materials when the company is in need of manufacturing specific number of products. The management avoids large inventories which may lead to waste of resources. Workers are empowered to make decisions at the lowest level so that they can use their own discretion about the appropriate amount of output to be released from the system. For successful implementation of lean manufacturing system a company should partner with suppliers to ensure materials are provided when necessary (or just-in-time production system). Advantages of lean manufacturing are: reduced lead times and set-up time, equipment expenses are reduced and the overall profitability of the company is improved. Cost reduction policies are achieved through lean manufacturing and the manufacturers are able to respond to the customers promptly (Blacharski, 2010).

Conclusion

Apple Inc is a multinational company in the computing industry. The company specializes in the manufacture of electronics, computer hardware and software. The management of the company has used several strategies to promote success in the industry. Apple has established innovation in the production of its products.  Apple Inc has been very successful in the use of technology to produce products which are competitive in the market. The company has experienced several challenges in the global markets and different strategies have been adopted to overcome them. Apple has been successful in establishing products which match the market demand. The company has attained a competitive position in the market by producing innovative products. The leadership of the organization has been excellent. Socio-cultural trends in the market have promoted the sales of the company. The customers of the company have been very loyal and this has been a great advantage to the company. Steve Jobs has established management strategies which have placed the company in a competitive position. The external environment of the company has been favorable by creating more opportunities for investment. Challenges in the turbulent global markets the management of the company should come up with better policies to improve cost reduction measures in the production systems.

Bibliography

Blacharski, Dan. (18 June 2010). “What is Lean Manufacturing?” conjecture corporation. Retrieved 16 July 2010 from;

<http://www.wisegeek.com/what-is-lean-manufacturing.htm>

Colvin, G. (March 16, 2010). World’s Most Admired Companies”. Fortune. March 2010. <http://money.cnn.com/magazines/fortune/mostadmired/2010/snapshots/670.html. Retrieved March 7, 2010.>

Hubbard, D. (1992). Forecasting Process at Apple Computer. The Journal of Business Forecasting Methods & Systems, Vol. 11.

Kaplan, P. (January 8, 1997). Apple Plans to Sell New Operating System by Mid-1998. The Washington Times.

Linzmayer, O. (2004). Apple Confidential 2.0, No Starch Press ISBN 1-59327-010-0

Warnke, J. (August, 1996). Computer Manufacturing: Change and Competition. Monthly Labor Review. Volume: 119. Issue: 8.

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