Apple Computer is currently facing many strategic challenges, the first challenge is competition from new and existing companies. Apple’s iTunes, an online music store, faces competition from companies that seek to begin offering online music and video downloading services whether legally or illegally, and from existing companies that plan to modify its current strategies to become better aligned with the strategy of Apple. Many of Apple’s brands including the iPod, Apple TV, and iPhone face competition from rivals who are beginning to offer lower-prices and substitutes (Hitt and Hoskisson and Ireland, 2011).
Apple Computer also faces the strategic challenge of keeping up with the pace of technological change. The technology entertainment industries are changing at a rapid rate, and it is uncertain if Apple will be able to keep a positive brand image.
It is also uncertain if Apple will be able to sustain its brand reputation of innovative design, continuous release of technological breakthroughs, and the launching of new products that will meet and exceed the consumer expectations (Hitt and Hoskisson and Ireland, 2011). Apple Computer also faces another strategic challenge with the death of visionary Steve Jobs. Jobs was considered the face of Apple Computers; he provided vision, charisma, and public communication and relationship skills that help Apple strategically. The loss of Jobs puts Apple at risk if a reliable successor, succession plan, and talented individuals were not put in place. Describe the dimensions along which company success can be measured.
Apple’s success can be measured by the success of new product introductions. For instance, net sales of the iPad and related products were $5 billion and unit sales of iPad were 7.5 million during 2010 alone. Success can also be measured by research and development investments as well. Investment in research and development has allowed Apple to continue to launch and upgrade current products. For example, in 2011, Apple introduced the iPad 2, which is the next generation of the iPad and has features of an entirely new design with 33% thinner and about 15% lighter than the original (Datamonitor, 2011).
Describe the critical external and internal environmental factors that have strategic implications for Apple’s future
The forces in the external and internal environments can impact the success of a organization’s strategy; therefore, an in-depth assessment is necessary to move toward a positive future. An internal assessment recognizes the core competencies, which support the implementation of selected strategies, and company weaknesses, which may hinder strategic plans. The internal environmental factors that have strategic implications for Apple’s future can be identified with the evaluation of Apple’s internal strengths and weaknesses. Apple has been acknowledged for having a strong brand image over many of their competitors. Apple’s products benefit from brand recognition and brand awareness throughout all its markets (Datamonitor 2011). In addition, Apple has been strong internally due to it having a positive focus on research and development. Apple’s investment in research and development is vital for the advancement and improvement of innovative products and technologies.
Apple is also strong in its unique ability to create and develop its own operating system, application software, hardware, and services to offer its customers with new products and answers with greater ease-of-use, innovative manufacturing designs, and flawless integration (Datamonitor, 2011). The other internal environmental factors that have strategic implications for Apple’s future can be recognized through the understanding of their weaknesses. Apple launched a new product in 2007 called Apple TV, this product was created to revolutionize the internet video industry, like the music downloading industry, however, Apple has been unsuccessful in creating features with Apple TV that would make the product successful (Hitt and Hoskisson and Ireland, 2011). Another internal weakness of Apple are product recalls that may hinder Apple’s reputation. The products that Apple sells are highly complex and from time to time they experience quality problems because of defects in design and manufacture. Unfortunately, Apple can not detect and resolve all defects in software, services, and hardware before products are released to consumers (Datamonitor, 2011).
The factors external to Apple that have strategic implications for the future include their competitors within the industry. Apple’s competitors consist of several existing and new competitors who are focused on obtaining strong market share. Apple’s entrance into the mobile communications field with the creation and launch of the iPhone has put Apple into another highly competitive market, where many large competitors already exist like Motorola. In order for Apple to gain an edge, consistent product evolution and design must occur, and rapid implementation of technological and product advancements will be essential (Hitt and Hoskisson and Ireland, 2011). Describe how Apple’s strategy stands up against industry rivalry Apple’s strategy stands against rivals in the way they focus on revealing drastic concepts and attractive designs, which make their products different. The differentiation of its products improves brand loyalty and reduces price sensitivity.
Also, Apple’s strategy to be first movers in the industry by introducing ground-breaking new products causes rivals to have to imitate rather than having the advantage of being first in the industry (Hitt and Hoskisson and Ireland, 2011). Apple’s strategy also involves the quest for opportunities to create demand for products globally. In the business environment today, it is not uncommon to expand into international markets when the markets domestically have matured, and when product-pricing plans penetrate the industry. The iPhone, a high-tech product should expect immediate success in many different cultures, and selling and operating beyond the home market can improve Apple’s ability to compete with major rivals, while also expanding its pool of original ideas (Hitt and Hoskisson and Ireland, 2011). Describe the recommendations you would make to enhance the effectiveness of the company’s strategy or to change its strategic approach for better results
To enhance the effectiveness of the company’s strategy I would recommend that Apple carefully manage their brand exposure and continue to invest in research and development to stay abreast of and continue to lead in the industry. I would also recommend that Apple sustain and continue to improve the design appeal of its products to reduce the possibility of new entrants. The completion of these recommendations will call for a protected strategic process, which means Apple will have to be protective of the Apple brand image and invest in Apple’s competitive advantages in advancement and marketing (Hitt and Hoskisson and Ireland, 2011).
It is also recommended that Apple follow the following suggestions to enhance effectiveness of the company’s strategy, Apple should create a top management team and a succession approach to reduce the extreme dependence on one individual Steve Jobs in order to advance the interests of the company. Apple should also consider cautious management of costs in order to continue price elasticity and improve competitive positioning compared to low-priced competitors (Hitt and Hoskisson and Ireland, 2011).
Datamonitor: Apple Inc. (2011). Apple Computer, Inc. SWOT Analysis, 1-9 Hitt., M & Hoskisson., R & Ireland, R. (2011). Strategic Management Concepts and Cases
Competitiveness and Globalization. Cengage Learning