Once the World’s Most Valuable CompanyLevine Jade L. Lulu

BA 190 - Strategic ManagementUniversity of the Philippines

Prof. Mita Angela M. Dimalanta

August 20, 2012Stock Market Valuation = $ 623 billion”Most Valuable Company of All Time”

Apple Map is inferiorTop management turnoverShare price dropped more than 45%Wiping out $290 billion in shareholder value

“If it is difficult to gain a competitive advantage in the first place, it is much more difficult to sustain it”

We believe that we are on the face of the earth to make great products and that’s not changing. We are constantly focusing on innovating. We believe in the simple not the complex. We believe that we need to own and control the primary technologies behind the products that we make, and participate only in markets where we can make a significant contribution. We believe in saying no to thousands of projects, so that we can really focus on the few that are truly important and meaningful to us. We believe in deep collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot. And frankly, we don’t settle for anything less than excellence in every group in the company, and we have the self- honesty to admit when we’re wrong and the courage to change. And I think regardless of who is in what job those values are so embedded in this company that Apple will do extremely well.”

Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App store, and is defining the future of mobile media and computing devices with iPad

-Tim Cook

"To make a contribution to the world by making tools for the mind that advance humankind.“

-Steve Jobs

Product Strategy

Desktops and Laptops

Competitive Challenge

Competitive Challenge

PC Competitors

Portable Devices

Guiding Policy

Smartphone Competitors

Product Strategy

Conclusion

For sustainability… Seize opportunities

1. Explain Apple’s success over the last decade.

Apple has grown into a multi-million dollar corporation because of a powerful competitive strategy.

Due to Microsoft’s investment in Apple, Steve Jobs innovated and tapped into another market by introducing iPod in 2001 and iTunes in 2002. Tremendous success was achieved with iPod & iMac sales, as people instantly had compatibility and accessibility in all of their devices.

In 2007, Apple introduced the iPhone, which started the smartphone revolution.

In 2010, Apple created the iPad for the tablet industry. Apple continued to make incremental product innovations extending

to each product category. Through simplicity, innovation and excellence, Apple enjoyed increases in revenue and dominated a large market through time.

Since Apple shifted away from personal computers to mobile devices, it disrupted several industries through its product and business-model innovations. The company’s new products challenged the existing personal computer market because people who already bought their products wanted the simplicity of having the same operating system in all their devices and laptops.

Apple’s main competitors - Personal computer industry are those that run in Microsoft

operating system which are Dell, Hewlett-Packard, Acer and Lenovo. - In the smartphone industry, Huawei, Samsung, Sone, HTC, Lenovo and others.

Because of Apple’s revolutionary business model, an entire new industry of mobile computers emerged. Even though Apple is the biggest selling company in this market, it has competitors like Google, Samsung, Nokia and Asus.

Which industries has it disrupted and how?Look at Apple’s main competitors.

2. Is Apple’s success attributable to industry effects or firm effects, or a combination of both? Explain. Attributable to both the firm and industry effects.

The unchanging market share of Apple in the desktop computer industry led to its development and innovative products.

Because of the high competition in the industry, the company entered niche markets which gave them the competitive advantage among others.

The firm effect was effective in challenging Apple, its management and innovators, in improving every year with their products.

3. Apply the three-step process for developing a good strategy (diagnose the competitive challenge, derive a guiding policy, and implement a set of coherent actions) to Apple’s situation today. Which recommendations would you have for Apple to outperform its competitors in the future?

Diagnosis of the competitive challenge (Strategy Analysis)

Before Apple became successful, its competitive challenge was other large firms were dominating the desktop computer industry. In the present, Apple’s competitive challenge is based on the following external factors: low switching cost and high aggressiveness of firms. Aggressiveness of other companies in the smartphone and laptop industry can be seen through their extensive innovation of their products and advertising. In the context of switching costs, customers of Apple can easily switch from Apple’s products to others (Ferguson, 2015). For example, an iPhone 5s user can easily buy a Samsung Galaxy 7 after its introduction.

Deriving a guiding policy (Strategy Formulation)

Apple’s new guiding policy should be a newer business model. Instead of just looking into different markets, they should also create their own. Patents for a new state of the art technology should be developed because smartphones are already saturated in the market and people are always wanting for more. In the case of technological products, the company should employ uniqueness without being too complex.

Implementation of coherent actions (Strategy Implementation)

The foremost advantage Apple could do is to innovate. With so many opportunities to expand and improve their product line, the company can brush off its competitors. Continuous innovation alongside the expansion of their distribution networks is the key to continued success. They should keep on delivering excellence in all their products and people will keep on subscribing to them for a long time. It is also important to be two steps ahead so that nobody can anticipate and imitate their designs easily.

4. Why do you think it is so hard not only to gain but also to sustain a competitive advantage?

It takes just as much effort, time and money to do both. A competitive advantage is the company’s core competency. If Apple had years to build up their competitive advantage, they should try as hard to make their company grow and stay as a market leader. They should stick to their brand value (and key success factors) which are simplicity, innovation alongside excellence, so that they can meet the demands and expectations of people and enjoy success for a long time.

ReferencesFerguson, E. (2015). Apple Inc. five forces analysis (Porter’s model).

Retrieved from http://panmore.com/apple-inc-five-forces-analysis-porters-model-case-study

Liu, L. (2013). Distribution policy-apple-1227810589544805-9 [PowerPoint Slides]. Retrieved from http://www.slideshare.net/liuliu77715/distribution-policyapple12278105895448059

Rothaermel, F. T. (2015). Strategic management (2nd ed). New York, NY: McGraw-Hill Education

Tim, B. (2012, May 07). 6 reasons Apple is so successful. Retrieved from http://techland.time.com/2012/05/07/six-reasons-why-apple-is-successful/