Business-Level and Corporate-Level Strategies
An exploration of business level and corporate strategies of Apple Company is provided with an aim of determining the long-term success of the company. The primary reason for the formation of Apple was to construct and develop personal computers, consumer electronics, and computer software. Apple entered the market and propelled its way to become an efficient market leader. The company had numerous positive attributes that made it draw attention and maintain a large pool of loyal customers that that promoted its progress and sustainability. The initial strategy of the firm was cost leadership, which gave the firm a competitive edge. The business methods and procedures of Apple were implemented in such a way to make the company an efficient cost producer and distributor. This paper asserts that Apple has sound business-level and corporate level strategies and that it perform better currently and in the long-term than its competitor, Samsung.
Apple has extensively used the strategy of cost leadership to gain competitiveness in the technology industry. The management of Apple formulates policies and strategies that aim at keep in Apple as the lowest cost producer and distributor. The cost leadership strategy strengthens Apples cost effectiveness, sustainability and success. Apple strategizes on cost efficiency by cutting the production and management costs. The business-level strategies help the company to make right decisions on products and prices that improved its competitive advantage. Cutting the production and management costs has enabled Apple to set competitive prices for its products and enhance gross profit margins. The practices adopted by Apple to achieve cost leadership include cutting distribution costs, minimizing operating costs and tight control over labor costs.
The second business-level strategy is differentiation. In this strategy, Apple provides exclusive features and characteristics to its products. Apple adds new features to its products, modernizes the products, makes high quality products with state-of- the art technology features and conducts proper image management for the firm. This strategy differentiates Apples products from those of the competitors, increasing its competitiveness, market widening and profitability. By manufacturing high quality products, Apple increases the buyers performance because they enjoy high level of satisfaction by using Apples products.
However, cost leadership was the most important business-level strategy than differentiation for the long-term success of Apple. Cost leadership business level strategy was particularly helpful in generating high return and readiness for making generic products in-house. The business level strategy facilitated Apple to build art effective facilities, maintain control over production, and derogate the cost of sales, research and development and services. This business level strategy has been beneficial for the overall success of Apple and it was a good choice for the company.
Corporate-level strategies are beneficial in acquiring a competitive advantage. These strategies involve selection of management preferences for from a wide range of choices available to Apple. The strategies are developed and implemented for the multiple segments of the corporation with the aim of taking advantage of the excess resources, abilities and core competencies. Corporate level strategies initiate sharing of activities, which leads to cutting of costs for the corporation. Sharing of activities is also associated with the economic aspect of increased resource utilization. This is one of the core competencies of Apple which enables the organization obtain a competitive advantage. Sharing resources as a corporate level strategy also bolsters correlations amidst the divisions in Apple Corporation. Sharing of activities enables the transfer of know-how across value chains. Through the strategy, Apple shares the same distribution pathways and sales efforts to recognize the full capability of the corporation.
Apple only enters a new market only if it is based on its core competencies. Appe is a personal computer company dealing with both hardware and software. All its businesses use Apples core competencies to develop hardware and software. Apples products which include iPhone, iPad, Macintosh and AppleTV demonstrate the concept of sharing of resources between Apples businesses. All these products use the OS operation system, a product of Apple. The sharing of resources across multiple businesses creates economies of scope and a cost saving for Apple.
The second corporate level strategy is the platform advantage. Apple focuses on creating separate products which share resources and complement each other. Each of the Apple businesses is a focused platform that has no extraneous products. For example, the Macintosh comprise of two kinds, the notebook and the desktop. These products share resources and complement each other. The MacBook and the iMac are constructed from glass and aluminum, which means they share the same products. Each of the platforms also complements each other. The Macintosh computers seamlessly sync their media and personal data with other platforms. These products work so well together such that the user who owns products from each platform generates great benefits of synchronizing data.
The platform advantage is the most important corporate level strategy for Apple in the long term. Apple carefully chooses the businesses to venture. All the platforms create enhancements within themselves for a greater customer experience. Customers owning the Apple brands for different uses obtain greater benefits than a customer with a single Apple brand. The Apple devices match perfectly than any other brands in the market. Apple provides a complete package for consumers to choose. The platform strategy is a good choice and important for the long term success of Apple because it makes each individual business valuable than when they operate autonomously. Further, a customer who acquires one Apple device such as iPhone will seek to own another device such as the MacBook to enjoy the great experience of sharing and synchronization.
Strategy in Apple requires the company to address forces in the external environment. This study will use the Porters model of five forces analysis to evaluate the external environment. According to this analysis, Apple needs to focus on bargaining power of buyers and competitive rivalry. According to this analysis, Apple is most likely to be successful than Samsung in the long term.
Apple faces a strong competitive rivalry. This means that the competitors in the technology industry have a strong influence on each other. The two characteristics that make this industry to have high rivalry is the aggressiveness of the firms and the low switching costs. Samsung aggressively competes with Apple, which make the firms aggressive in advertising and innovation. Generally, switching costs is low from Apple to other brands. However, Apples corporate strategy of platform advantage increases the switching costs from its products to those of the competitors. Thus, an individual owning an iPhone and a MacBook will not switch easily to other products because of the advantage of sharing data across these devices. According to this component of the five forces analysis, Apple should significantly consider competitive rivalry in its strategic formulation.
Bargaining Power of Customers
The market in which Apple operates has a strong bargaining power of buyers. The factors in the market that make buyers have a strong power include low switching costs and a small size of individual buyers. Though it is easy for buyers to switch from Apple to other brands such as Samsung, Apple products are considered to be at the apex of high end devices and the competitors at a lower social class. This makes switching between Apple and another brand such as Samsung hard. Apple captures the high end class and its products are associated with this social class . Therefore, individuals in this class will not easily switch to devices associated with a lower social status. This component of the Porters model indicates that bargaining power of suppliers is not a priority area for Apple in developing its strategies.
Bargaining Power of Suppliers
Firms in the technology industry have a low bargaining power of suppliers. The factors that make firms have a low power are because of the high number of suppliers and high overall supply. However, Apple has a high level of supply for its products and does not need to concentrate on strategies of developing the bargaining power of suppliers.
Threat of Substitutes
The threat of substitutes for Apples business is weak. This component indicates the substitutes have a weak effect in attracting customers. The weak force of substitutes is based on the low performance of substitutes and the moderate availability of substitutes. The products for Apple have many other substitutes in the market. However, the substitutes such as Samsung have a lesser performance than Apple because Apple has more advanced features. Therefore, the competitors have a weak force in impacting the business of Apple. From this analysis, Apple does not need to concentrate on the threat of substitutes.
Threat of New Entrants
Apple faces a moderate force of threat of new entrants. This component shows the likelihood of new firms entering the market. The reasons for the moderate force of new entrants in Apples market include huge capital requirements required to join the market and a high cost of brand development. For a firm to compete against Apple, it requires high capital outlay. Developing a brand to compete with Apple is also costly as it requires promotions such as advertisements. However, the main competitors of Apple such as Samsung have a large capacity to compete with Apple directly. Therefore, the market where Apple operates faces a moderate threat of entry.