Apple Inc. Business Strategy
Apple Inc has been a landmark computer manufacture for about 30 years. The company has emerged as one of the well established and highly recognized corporations in computer industry and other IT related solutions (Mcgirt, 2011). The giant multinational company is mostly known for its famous iPhones, iPods as well as other products such as laptops and desktop computers.
For a long time, Apple Inc. has been relentlessly attempting to maintain its sizeable market share notwithstanding myriad of both internal and external setbacks which have continually affected its overall performance. For instance, stiff competition from other players like Dell and Microsoft has been a great business challenge for the company. In addition, the company has not eluded the aftermath of recent global recession which has been felt by the majority of business organizations dealing in both goods and services.
Apple Inc. operates in a very dynamic business environment where technology is rapidly changing forcing all players in this industry to devise very effective strategies for survival. Indeed, there is no single company in manufacture of computers that has control over new technology. Therefore, they should adapt themselves quickly as the technology changes so the company remains relevant in the market.
It is unfavorable that many companies in this industry are in state of dilemma on whether to invest in traditional models such as basic computers or fully engage in newer products such as iPhones and iPods. This paper, therefore, analyzes the strategies that have been put in place by Apple Inc. to survive tough economic times. The study also proposes some of the latent yet potential strategies that can be employed by the company to improve its future economic outlook and performance.
From the financial statements of Apple company, it is evident that it has a healthy financial growth and performance since its profitability has been improving on each successive year (Finkle & Mallin, 2010). For instance, the annual financial statement ending September 2010 shows that the profitability of the company has risen from $ 42.9 billion reported in 2009 to $65.2 billion in 2010.
Besides, sales revenue of the company has also been growing steadily in the past few years. This positive financial growth of the company can be attributed to assortment strategies deployed by its management as part of boosting its financial performance in spite of unstable economic conditions experienced worldwide. The following are some of the strategies that Apple Inc. has applied in the last thirty years of its existence.
Building a large customer base
The Company has millions of customers who are loyal to its products distributed in most parts of the world. Moreover, it has maintained a competitive edge in the market largely due to quality of products offered. The management of the company has continued to attract new customers as well as retaining existing ones by offering satisfactory services. This has enabled Apple Inc. to attract large customer base (both current and prospective) whenever they introduce a new product in the market.
Creativity and innovation
The Company uses creative and authentic designs when advertising its products. These adverts are designed in a way that not only persuade customers but also convince them buying its products. For instance, over the years, the company has successfully used celebrity musicians to advertise such products as iPhone and iPod which attracted the customers of younger generation. These types of adverts continued to build good reputation for the company’s products.
Offering a wide range of products and services remains a vital operating strategy for Apple Inc. In order to increase its sales, the company has come up with many types of products and services which suit different types of customers. These include hardware products like Macintosh computers and laptops, commercial software like e-books or itunes and such gadgets as iPods, iPhones and iPads. Offering a wide variety of products has enabled the company to retain its customers who feel that all their needs and preferences are well catered for. Again different products and services perform differently in the market depending on internal and external forces affecting specific item. So offering a variety of products ensures that the sales of the company are maximized year-around even despite of some products which perform poorly in the market.
Team dynamics and innovation
A highly competent innovative team has been part and parcel of Apple Inc. since its inception. The company has employed an impressive team of researchers and innovators who have made it possible for the company to maintain market leadership in the world of growing information technology (Mcgirt, 2011). Through research, their hardware and software engineers have been able to keep at pace with the changing technology where they managed to invent new devices that meet their customers’ needs. Each and every year, the company is coming up with new updated versions of its products or creates brand new advanced laptops which enables the company to compete effectively with the rival companies like IBM in the market.
Apple Inc. has efficient management team comprising of board of governors, CEO and other subordinate management staff who control company’s growth and develop regulatory steps in development agenda. The highly competent team has driven Apple Inc. to greater heights of prosperity in spite of global economic meltdown.
The management team is driven by the vision of the company and it is committed to accomplish company’s goals and objectives. This team oversees all company’s operations at different levels and makes strategic decisions such as expansion strategies that enabled Apple Inc. to be a market leader in the world of technology.
Apple Inc and recession
Similar to other multinational corporations, Apple Inc. as been adversely affected by the recent global recession. However, compared with other companies, it may be termed as recession resistant company according to how effectively it operated in spite of tough economic times.
The company reported increased profit and revenue in its first quarterly financial report thus proving the predictions of the analysts were wrong. The company has been able to go through the first wave of recession successfully amidst closure of many businesses that have not managed to withstand pressure in the market.
The growth of company’s sales in the United States was only 2 percent during this period of recession which could have affected the performance of the company in large way. In fact, the computer sales dropped by 25 percent in this period; however, to the surprise of many if not all analysts, the company’s sales in the overseas markets increased by 16 percent and elevated its overall profitability. Again iPod sales during this period also rose drastically worldwide which made it possible for the company to increase its revenue significantly.
The company’s analyst had predicted that the iPod sales in this period would reach around 18.5 million units but it reached 22 million units which were shipped to different countries. The increased sale can be attributed to the company’s strategy to innovate products that are appealing to the company despite changing economic conditions. The customers realized that iPod is one of the best and valuable products offered by the company and public acknowledgement is one of the main reasons of unplanned purchases for many people.
The company also remained aggressive when it came to sales. During this period of recession, the marketing strategies were aimed at reaching new customers. Many offers and promotions were given to encourage customers to buy more products. The company did not apply the strategy of cost offering relatively low prices like many other companies did during the recession; instead Apple Inc. used the cost optimization strategy.
The company used its research and development department to come up with innovative ways that helped the company to survive economic downturn (Finkle & Mallin, 2010). New innovations in the computer industry gave the competitive long-term advantage to the company. Such new product as iPad was launched in the midst of recession which made the company to increase its sales despite tough economic times.
The role of human resource management
Human resource department is one the most important departments in any organization since it manages the entre workforce in an organization. Without an effective human resource management, it is difficult for the company to achieve its goals and objectives.
The department plays an important role in any organization because it uses its intelligence to compile and analyze each and every. By analyzing the performance, the human resource manager knows if the organization is moving in the right direction. Moreover, the human resource department determines whether the company will increase its profit or not.
Human resource management has been the centre bolt in driving Apple Inc. to high level of performance. The company has an effective human resource department that is mandated to manage workforce of the entire corporation. The department is very sensitive to human relations. As such, it enabled the company to develop a strong and effective workforce to carry out all its operations.
For instance, the department has enabled the company to hire and maintain a team of highly qualified personnel from all the fields who have used their expertise to perform different tasks. The company has also employed engineers, designers, computer scientists, business analysts, salespeople among other professionals who have been playing a key role in achieving company’s goals and objectives.
The human resource department created a good working environment for all employees which enabled to increase the productivity in all departments. A good working environment was created through well defined rules and regulations that stipulate employees’ performance in the work place. Clear rules and regulations ensured that all employees conduct themselves properly and they treat their fellow employees with dignity and respect. This enhances good personal relationships among all employees which can eliminate all forms of discrimination enabling employees to work as one team for the common goal.
Human resource department also played a crucial role in motivating employees of Apple Inc. The department recognized the importance of a well motivated workforce in the achievements of goals and objectives of the organization. The company came up with initiatives to increase employees’ morale such as rewarding program which recognizes hardworking employees, promotions and above all, good compensation which motivates them to work harder.
The human resource department assesses the performance of all employees and ranks them according to their performance in a specific period. Promotions and recognition are then based on the ranking list where at times employees are given an opportunity to choose the employee of the year for awarding him/her. These rewarding initiatives have motivated the employees and thus increased their productivity.
In addition, the human resource department also introduced an employee counseling program which deals with their personal or family problems, relation with other people or employees, financial problems and other personal issues. The human resource managers or other personnel in this department assist their employees when faced with life challenges that may affect their performance in the work place. In general, all these human relation strategies have contributed positively to the performance in the company.
The future of Apple Inc
From the above analysis, every financial analyst will agree that the future of the company is very promising although there are many challenges expected on the way. But there is another side of the coin- an increased competition from rival companies like IBM, Dell and Microsoft alongside other computer manufactures and dynamic world of technology continue offering new opportunities that cannot be exhausted. Advanced technology and globalization increased the demand for computers and laptops particularly in the developing countries (Finkle & Mallin, 2010). This offers a large market to the company which has the potential to increase the sales in the coming years.
Hence, for the company to maintain its current market position, it ought to formulate and implement quite a number of strategies. First, the management at Apple Inc. should come up with new products through research and innovation that will meet diverse needs of their customers that are not yet met by current product portfolio.
For example, products like super portable laptops are yet to be released in the market and it is expected that once they are brought into the market, they will attract large number of customers who are not fully satisfied with the current offers of laptops. Additionally, iPods, iPhones and other similar products can be improved to meet the needs of the customers who are not satisfied with them. Secondly, the company needs to consider a possible acquisition or merger in order to retain its position in a dynamic market of technology.
Acquiring or merging with such company as Adobe will give Apple Inc. an added advantage in computer applications. Such acquisitions will help the company to improve the value of its famous Macintosh computers and laptops. This will, therefore, improve competitive advantage of its products in the market (Finkle & Mallin, 2010).
Finally, the company needs to improve and maintain its management team who are dynamic and ready to change as the market changes. Maintaining qualified and competent staff is very crucial for the company particularly in the field of computer programming since its performance and the ability to keep in pace with the advancing technology are interrelated.
From the financial analysis of the Apple Inc. one can see that the company is financially healthy, with improved profitability being reported on yearly basis. I would, therefore, like to invest in the company as a fund manager since I have assurance that my investments in the company are likely to grow. The management of the company has adopted very effective strategies that have enabled it to thrive in tough economic times.
New innovations have assured the company a large market share despite stiff competition from rival companies that are also striving to increase and retain their market share. An efficient and effective human resource management has also attracted and retained a team of professionals from all fields who steered the company to greater heights.
The future company’s outlook is very promising, though the management of the company needs remain alerted since computer industry is changing rapidly depending on the new technologies. Dynamic strategies are necessary to ensure the company remains competitive in the coming years and it does not lose its market share. Hence, I will not hesitate to invest in Apple Inc. as a fund manager due to its past impressive financial records even though the analysts predicted opposite in tough economic times of financial crises.
Finkle, T. & Mallin, M. (2010). Steve Jobs and Apple, Inc. Journal of the International Academy for Case Studies, 16(7): 31-40.
Mcgirt, E. (2011). . Fast Company, 153: 66- 125. Web.
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