Analyze the Strategies of Apple

Analyze the strategies of Apple

FNAG LILI

FANLP1503

Count:

Introduction

BusinessWeek(2009) presents that Apple Crop is the most innovative and outstanding firm in the world. Apple, the largest company in the U.S, is a ‘multinational technology company which design, develops and sells consumer electronics, computer software, online services, and personal computers’ (financialpost, 2014). In April 2012, Apple’s shareholders gained $636.00 and the capital market raised up to $570 billion, which was more than the value of Google, Microsoft, Hewlett-Packard, Dell, and Yahoo combined (Russolillo, 2012).  As of March 2015, the permanent full-time employees of Apple reached 98,000 and valued at over $700 billion. Meanwhile, it maintains 453 retail stores in sixteen countries (financialpost, 2014). Moreover, the images of Apple can be divided into 5 stages and it shows as below, see Fig 1.[pic 1]

(Fig 1: jump, 2015)

From the picture, it can be seen that Apple changed its logo for five times. The reason why Jobs use apple as its own image is that apple means happiness, energy and not awful(CBC news, 2011). The first one shows Newton sitting under the apple tree, as well as the beginning of the company. From 1976 to 1998, Apple firstly changed the logo because of Jobs thought that the brand logo may make something differ from other firms and why it designed in a colorful way is that the manager wanted to driver apple away from cherry. In addition, this organization were succeed in Macintosh, however, it faced with several problems, including decline, restructure and acquit. In doing so, during the period from 1998 to 2000, the logo of Apple is black which means the company was recession by a series of problem. Coming to the stage of 2001 to 2007, Apple was returned to the market and made profits again by pushing out the new products: iPod. Meanwhile, the most significant event for Apple was it succeed in mobile devices, iPad, iwatch, even iTV during the last decade. Although the color always transferred, the logo still kept. This is because the company wants to have a deeper awareness in customer’s mind and gain brand loyalty from consumers.

 Explanation of Theories and Analysis                                                                                                                                                                                                                                 In this part,  Porter’s Five Forces will be used to analysis why Apple become one of the most biggest company in the world, linking with Four Ps strategy.[pic 2]

Definition of Porter’s Five Forces and Competitive Advantage

In general, Competitive Advantage can be defined as an organization has a particular advantage in developing or acquiring when compare with others(Furrer, Thomas and Goussevskaia, 2008). As for Porter(1985) claims that the Competitive Advantage could divided into two types which helps the firms to achieve and make differ from its competitors, including lower cost and differentiation. See Fig 2.[pic 3]

(Fig 2: businesssetfree, 2015)

Firstly, this project will explain Porter’s theory from the picture upon, and he put it into four parts. According to Porter(1979), Cost leadership means a company needs an even low price of products with high better goods and services, in other words, the firm should minimize its costs and use it for customer, like IKEA or Tesco, while the Differentiation shows during the development of one company, it owns unique characters or aspects in its products and services which sends a sense of awareness to customers(Lynch, 1999). However, it maybe more expensive than the rivals, it still followed by a large amount of consumers(Grundy, 2006), such as Burberry or FedEx. The next part is Focus, which also have some difference in Cost and Differentiation. As for the Cost focus, indeed, in the niche market, this kind of companies can keep a bit high price than the Cost Leadership companies(Stalk, 1988), for example Redbox, which sells DVDs and videos online in a lower price than the cinema. Therefore, it makes profits from lower price and higher convinces. On the other hand, unique feature and specifically services are offered in the Differentiation Focus companies, which means even if the product-self is cheaper, it can sell in a higher price which double or treble or more than its cost, and at the same time, popular among the market. For instance,  Kopi Luwak coffee beans which is not accepted by all of the people, but it hold as one of the most expensive coffee beans in the world and harder to purchase.

Analysis Apple’s strategy with Five Forces

Linking the Competitive Advantage with Five Forces: Competitive rivalry, Bargaining power of suppliers, Bargaining power of customers, Threat of new entrants and Threat of substitute products(Porter,1985). Based on the above explanation, Apple has a strong competition among others, such as Samsung, LG or BlackBerry(Jackson, 2014).

At first, Apple Inc has a strong Competitive Rivalry, it means the company has the advantage of innovation, advertising and it is hard to imitate(Burke, Stel and Thurik, 2010). On the other hand, switching cost is low, which means Apple may lose its customers by changing the brand, leading to stronger competition. However, ‘Apple alone stood 62% of profits, while Samsung hold 26.1%. The third one is occupied by Nokia, which took around 9%’(rivalfox, 2015). Hence, Apple is good at  compete with others.

Secondary, the power of suppliers is weak. Although Apple has nearly 200 suppliers, it also has a large number of choice, due to there are hundreds and thousands of suppliers in the world(Dobbs, 2014).  Meanwhile, this condition makes individual supplier even more weak when compared with large ones. The important thing for Apple is to pick the best one from those suppliers. In doing so, Apple pays less focus on this factor.

Thirdly,  the company has a strong Customer Purchases, it also means customer loyalty. This is because the products of Apple stand at a high level that it mainly focus on high-income groups. In addition, the logo is obviously and simply which put a deep image on buyer’s mind.