Introduction
With today’s international market becoming increasingly sophisticated, volatile, ambiguous, and fast-paced, the need for situation analysis and implementation has never been more substantial. A technique is a series of steps administrators take to accomplish the organization’s overall and subsidiary objectives, and it frequently defines a firm’s performance. Strategic analysis is the criteria for gathering information about a business and its working environment to develop a strategy (Tian et al., 2018). Strategic planning refers to an institution’s ambitions and expectations regarding how it purports to forecast future growth for its shareholders (Tian et al., 2018). A competitive plan involves purposefully selecting a set of functions and procedures that together deliver an unmatched combination of significance (Setiawan and Soedarto, 2021). For instance, as the smartphone market slowed, both Apple and Samsung adopted a strategy of charging a high premium for their top brands (Tien, 2019). Apple has succeeded admirably with this strategy, whereas Samsung has faltered. Apple enhances the iPhone and its operating system, and consumers have been willing to pay the higher rates.
A Brief Description of the Organization
Product-Markets Served
Apple operates a number of retail and online locations through which they sell their commodities and those of third parties straight to consumers. Additionally, they market their services through indirect sales channels such as mobile network operators, distributors, and merchants. Apple’s massive retail stores are often positioned in high-traffic areas in prime areas to capture its desired shoppers (Tian et al., 2018). The storefronts are all streamlined to simplify and improve the items to provide a high-quality customer shopping experience and attract more buyers. The corporation’s brands include the Mac, the iPhone, the iPad, wearables, home devices, and accouterments. The iPhone is the name given to the business’s line of handsets that run on the iOS operating system. Smartwatch is the brand name for the group’s smartwatch series (Tian et al., 2018). Digital Content, Marketing, Cloud Services, Payment Services, and AppleCare are among the organization’s services.
Location
Apple Inc., whose principal office is Cupertino, is a California-based technology company that manufactures home computers, mobile phones, tablet devices, computer accessories, and software applications. Although Taiwan is Apple’s largest vendor market, this is a bit of a mirage. Hon Hai Foxconn is one of the primary reasons Taiwan is on Apple’s radar (Meredig, 2017). Additionally, China is a critical global market for Apple’s products. Goertek and Luxshare are two major Chinese corporations that have garnered Apple’s attention as distributors (Meredig, 2017). Both firms decided to establish manufacturing plants in Vietnam to reduce the Airpod’s cost of production.
Notwithstanding its global distribution network, Apple relies on several domestic firms. They include On (ON), Intel (INTC), Texas Instruments (TXN), Jabil (JBL), 3M (MMM), Qualcomm (QCOM), Broadcom (AVGO), and Micron (M.U.) (Meredig, 2017). Murata is headquartered in Kyoto, Japan, and services Apple through a network of 26 production establishments, Japan, Thailand, Vietnam, China, and Singapore (Meredig, 2017). In the United Arab Emirates, Apple Inc. has its branches in Dubai, Saudi Arabia, and Abu Dhabi. These locations in the UAE act as outlet avenues for their various products that have grown in demand over the years.
Current Strategy
Apple’s business approach falls under the category of differentiation strategy. To be more precise, the international technology corporation defines its goods and services by their basic yet appealing architecture and excellent usability. Apple’s corporate strategy is comprised of the three components listed below. First, the organization is devoted to providing its clients with the greatest possible consumer experience via new hardware, programming, connections, and backgrounds (Ross et al., 2017). The firm’s strategy capitalizes on the institution’s unique capacity to create and build its operating systems, equipment, software application, and operations to offer its clients new commodities and services that are easier to use, more integrated, and more inventive.
Second, the corporation thinks that continuous financing in innovation, promotion, and advertisement is critical for the growth and commercialization of creative products and technology. The business extends its framework for identifying and distributing third-party online media and apps via the iTunes Store as part of its efforts (Ross et al., 2017). As a component of the iTunes Store, the corporation’s App Store and iBook store enable users to check and acquire software and books via a Mac or Windows desktop or an iOS device, specifically an iPhone, iPad, or iPod touch (Ross et al., 2017). The brand launched the Mac App Store to make it easier for users to explore, purchase, and activate Mac programs. Finally, the institution’s plan calls for growing its supply chain to successfully reach more clients and provide them with superior sales and after-sales assistance services (Ross et al., 2017). The company’s objective, ambition, direction, and aims help define decision-making and give a foundation for daily business operations.
Internal and External Analysis of Apple Inc.
VRIO Framework
Despite a transforming worldwide business environment, Apple Inc. thrives in the computing innovation and home entertainment markets. The business takes advantage of its key strengths, which have been determined through this VRIO framework. The VRIO conceptual model quantifies the firm’s value, rarity, imitability, and organization (Mubarak and Yusoff, 2019). Thus, this internal strategic factor establishes the corporation’s key capabilities and competitive strengths using the VRIO parameters. In this instance, Apple Inc. leverages its core strengths to create sustainable competitiveness against fierce rivals. The business’s tactical strategies and aspirations focus on corporate development in underserved markets. By doing a VRIO study of Apple, management can determine the best possible options for strengthening the firm depending on the company’s areas of expertise that fulfill all four VRIO factors.
Value
Valuable abilities assist Apple in capitalizing on possible improvements and mitigating challenges from both the micro and macro environment. These capabilities enable a business to extend, progress and thrive (Barley et al., 2020). Apple’s commitment to efficiency and technological advancement has propelled the company to the sector’s top. Additionally, excellent product performance and enhanced customer service have increased awareness and a significant strategic edge over competitors (Barley et al., 2020). Apple has robust product recognition, which has resulted in increased customer retention. Company equity is a critical enabler of competitive advantage for any significant brand, given the importance of public confidence in today’s intensely competitive climate (Barley et al., 2020). The degree to which clients trust a corporation affects its revenue growth.
Apple earned its buyers’ trust with a persistent commitment to excellence and inventiveness. That is why, despite their high pricing, Apple products continue to sell well. Apple places a premium on privacy protection, which contributes to the company’s better brand equity and general trust (Barley et al., 2020). Furthermore, logistics management has become vital to economic success. As rivalry in the technology industry has increased, it has become critical to ensure access to high-quality raw materials to develop exceptional items and accelerate corporate growth (Barley et al., 2020). Distribution network management innovation provides reduced operational costs and on-time output. Apple’s procurement is extensive and global in scope as it sources from various countries (Barley et al., 2020). Nonetheless, most of its supply chain is located in Asia; specifically, China, owing to the accessibility of high-quality raw materials and labor.
Rare
Rare natural abilities are owned and cultivated by a few companies in the sector, contributing to Apple’s competitiveness. Apple Inc. is a worldwide renowned brand known for its creative items, superior quality, and creative marketing (Barley et al., 2020). Strong brand awareness equates to effortless brand recall and increased revenue. Additionally, the organization increased consumer engagement and confidence by steadily emphasizing quality and user experience. Its widespread familiarity is also one of the key elements contributing to its rapid rise. Apple maintains an extensive network of distributors that includes physical and online stores. The firm sells its products through various channels, notably authorized retailers, e-commerce, and physical storefronts. Apple has created branded retail locations in several of its most significant regions, which serve as advertising and distribution platforms for the corporation.
The company is a worldwide company with operations in numerous nations and regions. Apple’s global network has enabled it to grow its user base and generate income in different locations (Barley et al., 2020). Therefore, the brand has developed capital adequacy, social sensitivity, and international reputation. Apple’s growth has been facilitated by its global background and experience. Additionally, Apple nurtures a problem-solving mentality among its workers and administration. As a result, the organization benefits from increased collaboration, inventiveness, and entrepreneurship (Barley et al., 2020). Creativity, in turn, results in increased competitiveness, which results in a strategic advantage and value for the business in the long and short run.
Inimitable
Unique competencies contribute to a company’s competitive edge and long-term viability. Rival entities will find it difficult and expensive to replicate these skills and capacities. Numerous factors, including attractiveness, consumer loyalty, revenues, and brand awareness, are intimately related to promotion in a period of fierce competition. Nevertheless, when it comes to advertising, Apple is unmatched, as Steve Jobs was widely regarded as one of the most forward-thinking entrepreneurs in the history of the technology sector (Barley et al., 2020). While a large part of Apple’s appeal is due to the quality of its products, the corporation has maintained a firm grip in the marketplace through inventive marketing.
Even if a firm places a high premium on technological advancement, it can collapse if it does not prioritize creative advertisement. Apple has always been a pioneer in various promotional innovations. It markets and promotes itself through a multitude of different channels. The primary reason for its marketing scheme’s success is its emphasis on client experience. The company makes unique and original items, and its business plan is also distinctive (Barley et al., 2020). Not only does it advertise through digital platforms and media, but it also markets heavily through its physical stores. Thus, the promotion provides a durable competitive advantage for the brand, assisting it in establishing itself as a frontrunner in the technology business and establishing a special and separate identity.
Organization
These resources are designed only for Apple and cannot be used by other industry participants. They are non-replaceable and cannot be used by entities other than Apple, allowing the corporation to capitalize on opportunities and efficiently utilize assets for market expansion. Apple is a financially strong company in addition to its corporate reputation. Financial power enables the organization to explore new product development and rollout options (Barley et al., 2020). Liquidity is also critical since it allows a business to assess possible mergers and acquisitions to gain a competitive edge. Technology developments and incorporation at Apple contribute significantly to the company’s strategic advantage (Barley et al., 2020). Due to technological advancements, Apple can sustain effectiveness and efficiency throughout its numerous activities and functions.
Additionally, technical progress and unification enable the organization to execute worldwide operations efficiently, which is critical for maintaining good logistic administration. Finally, the organization gives in-house training to its personnel tailored to their job roles and job designs, assisting them in accomplishing their intended job duties (Barley et al., 2020). The institution’s training prepares employees for their career paths, continuing education, and individual development. The organization’s instruction and engagement results in strong job involvement, which is crucial for Apple to benefit from solid and devoted personnel.
PESTEL Analysis
Political Factors
The external political forces affecting Apple’s remoteness create opportunities. Over time, substantially better free trade rules are developed, and this outer tactical aspect boosts Apple Inc.’s prospects to disseminate its commodities globally. Apple sees the steadiness of the industrialized world’s political climate as a potential for advancement, given the fewer political issues affecting company activities in those countries (Greg, 2020). Despite these positive tendencies, the external political issue of trade conflicts, particularly between the U.S. and China, constitutes a danger to the institution’s future growth and revenues, sales of its merchandise, such as electronics products (Greg, 2020). For instance, rising tensions between China and the United States could prompt China to increase tariffs on imported electronic systems used in Apple’s production process.
Economic Factors
Most external economic elements affecting Apple’s geographical or macroeconomic environment generate opportunities. The financial security of industrialized nations facilitates Apple’s progress. Nonetheless, emerging economies’ fast growth is a more substantial external economic element in promoting the development of technology businesses (Greg, 2020). For instance, Apple can leverage the high economic development rates of Asian economies to enhance income through sales in these international markets. Increased disposable income, in turn, creates additional opportunities for the corporation to market its comparatively high-priced innovative items (Greg, 2020). These external strategic elements reflect the entity’s and its rivals’ upside potential, particularly substantial international corporations like Samsung (Greg, 2020). According to this assessment, Apple Inc.’s business expansion initiatives must be swift and comprehensive, as opponents are also pursuing these economic prospects.
Social Factors
Social and societal trends influence Apple’s operation include the growing widespread mobile connectivity is an opportunity for Apple Inc. to increase its income. This sociocultural element is related to the ever-increasing consumption of mobile devices and computers (Greg, 2020). Increased reliance on internet systems is another social phenomenon that presents Apple with the potential to increase product sales in response to increased demand (Greg, 2020). Despite these prospects, the firm faces widespread resistance to its activities. Anti-Apple views are growing stronger, casting doubt on the firm’s business methods, such as its litigation against third-party maintenance service providers who repair Apple goods such as the MacBook and iPhone.
Technological Factors
The increased need for cloud computing as a means of corporate expansion offers an opportunity for Apple to grow. The corporation currently provides cloud computing services, albeit in a limited capacity. By capitalizing on this potential and leveraging the backing of Apple Inc.’s corporate model, establishing an enlarged cloud network might significantly increase the income of the firm’s cloud computing solutions (Greg, 2020). In this regard, the external strategic aspect of expanding technical convergence enables the enterprise to strengthen its services and expand its business by selling its electronic goods and services to a broader range of consumers, including companies (Greg, 2020). The expansion of the mobile industry as a stream of income for Apple Inc. includes revenue from the App Store and other digital entertainment channels. However, as other corporations improve technologically, the company faces a threat from new entrants.
Environmental Factors
Corporate sustainability is an environmental phenomenon associated with a rising preference among firms for green technologies, prompted by worries about commercial activities’ harmful ecological consequences. Such an environmental trend creates an opportunity to bolster a business’s corporate reputation (Greg, 2020). Additionally, the energy-saving pattern is an external ecological element that encourages consumers and businesses to embrace newer, more appropriate technology (Greg, 2020). Apple can increase productivity improvements in this area while also delivering more attractive packages to a growing environmentally conscious client base.
Legal Factors
In the electronic era, legislatures’ insistence on confidentiality has culminated in increased privacy restrictions for firms such as Apple Inc. This extrinsic legal aspect risks the technological operator since it may entail expensive compliance obligations and other restrictions (Greg, 2020). Nevertheless, this PESTEL investigation suggests the same external influence as a pattern that allows Apple to grow its business through increased privacy safeguards. Additionally, the corporation faces legal issues about its after-sales support procedures and standards and other aspects of its operation. For instance, the corporation has faced degrading treatment and legal challenges in the European Union, Australia, and the United States, among other nations, over its rules involving third-party maintenance services (Greg, 2020). Therefore, Apple must prioritize confidentiality and legal requirements across all of its items and consider altering its practices and policies in response to current legal demands on the firm.
Industry Analysis
Porter’s Five Force Analysis
Porter’s five factors model is a framework for identifying and analyzing the five competitive elements that shape any sector and assisting in determining an industry’s flaws and capabilities. Five forces assessment is generally used to evaluate the competitive landscape of an industry and thus strategic orientation (Kabeyi, 2018). Porter’s concept can be extended to the smartphone market segment of the economy to ascertain the sector’s level of competitiveness and improve an entity’s long-term prosperity (Kabeyi, 2018). Moreover, the five dimensions are widely used to assess a market’s competitiveness, desirability, and viability.
Competitive Rivalry
Apple is up against a formidable intense rivalry or competitive pressures. Thus, this implies that Apple’s rivals exert considerable influence over one another. Apple competes directly with companies such as Google, Microsoft, and Samsung (Kabeyi, 2018). These organizations, including Apple, invest significant resources in research and development and advertising to compete with and conceivably outperform one another. The high efficiency of transitioning businesses is essential in maintaining the sector’s competitiveness (Kabeyi, 2018). For example, switching from an Apple iPad to a Google Chromebook or another tablet device does not involve significant investment.
Apple prioritizes economic competitiveness, which it has addressed through continuous development of new and exceptional commodities to bolster its customer base. Apple also competes on price by avoiding low-end marketplaces and focusing on high-end merchandise (Kabeyi, 2018). Since Apple items are never on sale, they have established a reputation as high-end materials with enhanced quality, exceptional customer service, and differentiated products in customers’ memory.
Bargaining Power of Buyers
As previously stated, this sector has a cheap switching cost for buyers. This factor increases the negotiating power of purchasers and is a critical factor that Apple should consider when making decisions. Nevertheless, the paper evaluates two distinct types of bargaining influence of customers: personal consumer bargaining power and group buying negotiating power (Kabeyi, 2018). As an individual consumer, the bargaining effect is controlled because the money lost due to the loss of a single customer is insignificant. Conversely, the aggregate purchaser’s bargaining position is considerable, and the failure of multiple buyers to rivals could damage the enterprise and have a major impact on sales (Kabeyi, 2018). Apple has fought against this influence by spending consistently on research and innovation to design new items like the Apple Watch and Apple Pay (Kabeyi, 2018). Apple also attempts to enhance the switching prices of the goods by ensuring that essential product capabilities such as Numbers, addresses, calendars, iPhoto, Pages, iCloud, and iMovie are consistent across Apple products.
Bargaining Power of Suppliers
Vendors’ bargaining leverage is quite limited in this sector. Due to the enormous number of possible manufacturers, Apple must pick, providers have poor negotiating influence. Apple is free to select element suppliers for all of its items from a large selection of potential sources (Kabeyi, 2018). Apple’s transition costs are relatively modest and do not pose a substantial barrier, providing Apple with increased power over suppliers. Additionally, Apple requires a tremendous amount of merchandise, which offers them greater negotiating leverage with suppliers (Kabeyi, 2018). Due to Apple’s high quantity of products, Apple is a significant client for any supplier; as a result, vendors would battle to retain Apple as a user to avoid losing external investors. Apple has increased its strength by developing its semiconductors. Apple significantly eroded chip vendors’ supplier dominance by creating their processors. Apple has also acquired the manufacturing equipment required to manufacture its key elements and restricts its manufacture of Apple equipment (Kabeyi, 2018). Apple strengthens its negotiating position with providers and drives down its expenses, causing competitors to seek out other producers and suppliers.
Threats of Substitutes
Substitutes would not be identical merchandise but rather products that meet the exact demand as the original. Apple remains ahead of the competition in this area by developing goods that can substitute their products before anyone else can. Apple created a less expensive MacBook to counteract the challenge of a competitor’s alternative (Kabeyi, 2018). Apple introduced a replacement for their brand to continue profiting from it rather than losing it to rival companies. Additionally, Apple developed the Apple Watch to eliminate the need for an iPhone. The Apple Watch has the same capabilities as the iPhone but is more compact and convenient to carry around. Another alternative to an iPhone is a landline smartphone (Kabeyi, 2018). Still, the risk posed by a landline is shallow, as an iPhone can perform many more capabilities than a landline. A desktop could be used in place of a MacBook; nevertheless, a MacBook can accomplish all of the operations of a desktop at the same or even quicker, reducing the potential danger of this supplement (Kabeyi, 2018). Apple strives to stay one step ahead of the competition in all areas, even if it implies discontinuing existing goods in favor of new ones.
Threat of New Entrants
The threat of new entry affecting market position is relatively minimal in this business. It occurs as a result, the cost of setting up a reliable firm within a sector that has well-established, recognized, and dependable organizations is incredibly high. Additionally, a considerable expense is required to build a company’s reputation superior to existing businesses. Any new entry into the desktop or smartphone industry would require investing significant cash in research, innovation, and production to design and build devices before joining the market. Clients are already devoted to established businesses that have been there since the inception, and severing this attachment would also require significant advertising costs. While it is feasible for new entrants to join the sector and succeed, it is exceptionally improbable at the moment. Apple has built a value chain that works to its advantage and provides an excellent barrier versus low-end upheaval by new competitors. Newcomers would struggle to keep up with Apple’s distribution network cost framework.
How Changes in the Internal and Industry Levels Affect Apple’s Competitive Position
Organizations’ Increasing Reliance on Technology
The external tactical aspect of expanding technical connectivity enables the firm to improve its operations and expand its business by selling its electronic products and services to a broader consumer base, including enterprises. The corporation thinks that continuous financing in research and development, promotion, and branding is crucial to creating and selling creative items and technology. The company extends its infrastructure for identifying and providing third-party online media and apps via the iTunes Store as part of its efforts (Zhang and Wan, 2018). Therefore, this improves its capabilities to compete among other well-established businesses in the smartphone sector like Samsung.
Energy Efficiency Trend
The energy-saving pattern is an environmental force that encourages businesses and consumers to embrace newer, more appropriate technology. Apple can increase productivity improvements in this area while also offering more appealing products to an expanding ecologically aware client base. The corporation has deliberately adapted its technical and commercial goods to this environmental trend. Apple Inc.’s operations strategy strengthens its competitive advantage in the market by assisting business initiatives to capitalize on these changes.
Robust Organizational Culture
Apple’s company culture is critical to the company’s ongoing growth. The organizational culture generates and sustains the firm’s strategy, ethics, convictions, and associated behaviors among its personnel. Apple Inc. has a dynamic entrepreneurial spirit. The institution’s cultural characteristics emphasize sustaining creativity, which requires innovation and a mentality that challenges established rules and expectations (Pathiranage et al., 2020). Apple’s corporate culture is characterized by a high level of competence, inventiveness, and ingenuity, which contributes to the business’s market leadership. These cultural attributes enable Apple and its people resources to differentiate themselves and keep one step ahead of the competition (Pathiranage et al., 2020). This workplace culture facilitates productivity and competitive edge and the continued reinforcement of the corporate brand, one of the firm’s strategic advantages.
Major Strategic Issues and Challenges Apple Inc. should address
Planning for the Arrival of 5G Network
In 2019, the introduction of 5G might significantly alter smartphones’ market environment. Samsung (SSNLF) and Huawei were expected to introduce 5G-enabled handsets in 2019, which was seen negatively from Apple’s competitive stance (Shamout and Elayan, 2020). Apple Inc., on the other hand, forecasted a “no-growth scenario” for Apple in 5G in 2019 and early 2020. There is still reason to be optimistic, even if Apple is a little late to the 5G event. Until 2020, the bulk of the United States’ demographic lacked connectivity to 5G (Shamout and Elayan, 2020). Thus, Apple may resolve this challenge by introducing a portfolio of 5G smartphones, allowing investors to begin factoring in Apple’s 5G prospects.
Decline of Smartphones
Apple shareholders have gained significant dividends since smartphones became the center of customers’ universes. However, Feng and Yu (2020) enumerated that cellphones may not always occupy such a central part in individuals’ activities in the long run. Today, the smartphone is still the primary way to engage with the Internet. There is a possibility that the smartphone’s function could decline in the coming years as users frequently engage with linked devices outside of their devices, such as Amazon’s (AMZN) or Alphabet’s (GOOG) (Feng and Yu, 2020). As a result, Apple’s Siri and HomePod technologies have fallen behind, but a prospect less reliant on smartphones could erode Apple’s operating effectiveness in the long run. Apple should therefore invest more in research and development to come up with better products to match those of Amazon and Alphabet.
Recommendations for New Strategic Directions and Implementation
Reorganization of Its Corporate Culture
Apple’s organizational culture presents difficulties due to its insistence on privacy and mild aggressiveness. A veil of secrecy prevents workers from forming bonds. Moderate belligerence can detract from or diminish employee motivation. These cultural concerns can negatively influence corporate productivity and staff attrition. Apple Inc. can solve this scenario by altering its company culture to reduce stridency but not eliminate. This implementation tactic mitigates the problems of combativeness in the workplace while maintaining the rewards of combative tactics. Additionally, Apple can incorporate new cultural characteristics to maintain its position in the face of changing trends and patterns in the digital technologies, cloud computing, online content dissemination, and buyer electronics industries.
Development of an Alternative Charging System
A thorough examination of numerous internet forums reveals that the primary issue with smartphones is that they nearly always need to be connected to load, as they never maintain a charge long enough. Indeed, this is true of all devices, irrespective of the maker. Apple can implement this through its extensive research and development department. Given that Apple has a robust R&D facility staffed by excellent developers and technicians, the unit should be tasked with designing a system that charges the gadgets whenever a specific key is pressed. For instance, it should replicate the auto-spinning smartwatch where the widget charged whenever the owners raised their hand. If Apple is fortunate in inventing such a method, it will help Apple maintain its market leadership position. Additionally, the technique should be patentable, which means that Apple would charge extra to any rival that wishes to incorporate it into their products.
Increase the Emphasis on Corporate Social Responsibility
Corporate social responsibility refers to the techniques taken by a business to fulfill the demands of shareholders and limit the institution’s influence on the environment while also promoting the development of a solid reputation and favorable image of the business. Even though Apple currently has corporate social responsibility programs in place, there is a need for the corporation to become more active. Apple could be involved in various measures, including the formation of technical schools in emerging economies, the donation of unsold inventory to educational systems in industrialized nations, and the advancement of more affordable Apple MacBooks for schools in industrialized countries.
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