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According to Mahsmr (2012), Apple Inc. started in 1976 as an American manufacturer of personal computers, computer software and peripherals. Originally, it was Apple Computer Inc. for 30 years, and its principal office is based in Cupertino, California. It is the very first thriving personal computer firm that has started the popularized usage of the graphical interface. During its starting years, Steve Jobs and Wozniak were responsible for the introduction of the company¿½¿½s first innovation that was put on sale. The first personal computer product was sold then, after which, the two founders continued to produce more and more innovative personal computers. However, not all years were lucky years for Apple Inc, there were also times that the company experienced some financial struggles that led to several changes in the management.
The Strategic Purpose of the Apple Inc.
The Mission Statement, Global Vision, and Values of Apple, Inc.
Steve Jobs¿½¿½ famous quote goes like this: "Man is the creator of change in this world. As such he should be above systems and structures, and not subordinate to them."
"Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings." (Apple Inc. Mission Statement..., 2012).
From the above perspective, this study strongly agrees that the company has a unique and excellent concept and applications of creating innovative products that meet the world¿½¿½s latest computer design and modernization. There are other companies that attempted to imitate the work of Apple Inc, but, they just failed. The iMac and iBook, Power Book and G Series product lines of Apple Inc. only showcase the Apple¿½¿½s leadership on the revolutionary technology that integrates in its music, images, and animation lines.
In 1997, Steve Jobs took over the operations, and became a CEO during the struggling period of the organization. Then, in 2001, he introduced the iPod which eventually became so popular in the market, and even turned out to be the forefront in the music players industry. Subsequently, in 2007, Apple Inc. started its stint in the phone industry with its innovative I Phone, which also turned out to be one of the most successful products of the company. The company not only recognized for its consumer goods but, most of all, for its expertise in producing electronic products. Shortly after, Apple Inc introduced the tablet computers that have become a phenomenon in the computer market in every part of the globe.
Culture of the Business
At Apple Inc., organizational culture plays a very important role in the innovations and passion of the employees to produce unique and innovative products. (Zakomurnaya, 2007). Relatively, Steve Jobs had influenced so much in the ways that people think and work within the organization, the innovation-venerating culture is the core principle of the people to sustain the artistic and ground-breaking culture of the company. Apple has been the most successful computer and electronic company worldwide that stems from the original nature of the employees ¿½K and that is the individuality and excellence, for the company only accepts talented people that are always ready to take challenges and become a leader of innovation. Apple Inc. has been able to foster leadership through continued motivation program that it implements for the valuable employees through Fellows program that rewards employees who have showcase their outstanding technical leadership contributions to the organization.
Zakomurnaya (2007) claims that Apple Inc. in 2006, has reached a global annual revenues of $ 19.3 billion for its product lines that comprised of Macintosh desktop and notebook, iPod digital music player, Mac OS X operating system, iTunes Music store, X server G5 server among others. These products are sold through online and third-party wholesalers. Apple has 170 stores worldwide, specifically in Canada, Italy, and Japan, in the UK and in the USA. In addition, Apple employs more than 20,000 workers from all parts of the globe.
Corporate Governance and Stakeholder Relationships
Leadership has been incorporated in the corporate governance of Apple Inc which first all initiated by Steve Jobs before he left the company. Though, there were several downturns in the organization, still through the brilliant mind of Steve Jobs, he was still able to save the company by overhauling the management when he came back to office in 1997. Jobs¿½¿½ eyes for details, consistency for high-quality creations, as well as world-class product designs have taught the employees to become a big part of the world¿½¿½s revolution of technology.
The extraordinary skills and knowledge that acquired by the existing leaders and employees were just being inherited from the late Steve Jobs¿½¿½ exceptional governance of the people in the organization. The training and working principles that employees acquired from the management of late Steve Jobs had taught the entire people in Apple Inc so many things which serve as guiding principles for them to continue the legacy of the man behind the tremendous successes that Apple Inc. is enjoying nowadays.
As Chandler (2000) mentioned that the most unique trait of Apple Inc is its entire implementation and practices of bureaucracy among its people. However, the accountability always a part of that freedom. Being responsible and answerable to even small mistakes and ready to take initiative to correct it right away, and make the product close to perfection is the values and principles that Apple Inc. want to impart to the world. It is still a little bit understandable to commit mistakes while in creating the products, but once, the products are about to pass the quality control, they should be all perfectly created and assembled.
The Opportunities and Threats from the External Environment of Apple Inc
PESTEL Analysis of Apple Inc.
¿½E Apple has opened domestic recycling facilities instead of shipping wastes overseas.
¿½E The US government has announced incentives for those US-based manufacturing companies.
¿½E Exploiting global sales with no per country product variation means accepting highest national appraisal standards.
¿½E Consumers expect for its strong commitment of the Apple Inc. to its ¿½¿½Consumer¿½¿½s Green My Apple Campaign¿½¿½
¿½E Apple¿½¿½s rating for toxicity became worst as ever in 2007.
¿½E The integration of revolutionary technologies and latest innovations has contributed tremendously to the high standard of supply chain systems, as well as to the creation of the products, so as to the company¿½¿½s success, growth and profitability worldwide.
¿½E The company has enhanced the expectations of the people in the community that it may double its efforts and initiatives in recycling the plant wastes.
¿½E The recycling enhancement program of Apple Inc. is specifically designed only for the elite category of customers.
¿½E Apple Inc has been also active in the green production program in the communities where it operates.
¿½E New regulatory policies in the US require manufacturers to take initiatives and be responsible enough for the wastes recycling.
¿½E The European RoHS standards hold manufactures into account.
PORTER¿½¿½s Five Forces Model of Apple Inc.
Bargaining Power of the Suppliers
¿½E The bargaining power of the suppliers is only moderate since the time that Apple Inc. decided to use Intel processors, it has lowered the production costs of the company.
¿½E The strong vertical integration helps a lot Apple Inc. of not to rely too much on the 3rd party suppliers.
¿½E The product differentiation strategy justifies the costs of the products to the customers, and with that, the supply costs are being recovered through the pricing strategy of the products.
¿½E Getting big discounts from buying large volume of raw materials from the suppliers.
The bargaining power of the suppliers of Apple Inc like the partnership Apple has with the Intel has created new amazing product lines that are lower in production costs, so much so, they are also sold in affordable prices in the market.
Bargaining Power of the Buyer
¿½E In order to counteract the bargaining power of the buyers, Apple Inc has been focusing on its niche market.
¿½E They hire more technicians for the repair of the software.
¿½E There are other computer companies such s Dell, HP, ASUS, ACER, and Sony among many others; with these rival companies they have a lot of choices for the customers that most likely lead them into difficulty of choosing the right one for them.
¿½E Unlike in Apple Inc, there are limited choices that have high quality and elegance that can easily attract customers to make a choice.
Threat of Substitution
¿½E The market-skim pricing is set for their products.
¿½E The rivals¿½¿½ products provide many features and benefits.
¿½E However the competitive advantage of Apple is it offers hosting of products to serve as its own substitute must be sustained.
¿½E Apple Inc should also continue to retain the uniqueness of the products to be able to sustain the loyalty and patronage of the consumers.
Threats of New Entrants
¿½E The uniqueness of the marketing strategy and the elegance of the Apple¿½¿½s products have been enhancing the competitive advantage of the products over the new entrants in the same industry.
¿½E Customers of Apple are most likely increasing their market demands for new products from the company.
Nelson (2010) admits that Apple Inc. is currently operating in a highly competitive industry of highly technological consumer electronics / computer product lines. The existing opportunities of the company can be utilized further in the leverage of the intellectual optimization of the employees as well as in the further promotion of the brand image of the company together with its strong digital strategies in creating new products in order to sustain steadily the competitive advantage of the organization as well as the products in the international market.
A SWOT Analysis (Strength, Weaknesses, Opportunities and Threats)
¿½¿½SWOT analysis¿½¿½ (2012) asserts that it is pivotal for Apple Inc to apply SWOT analysis to examine both the opportunities and threats that the organization faces at present. And, for the weak areas of the company, through data and findings from SWOT analysis, the management has a great chance to identify the weaknesses, and be able to find solutions. On the other hand, SWOT analysis will also help the management to take Apple Inc. to the right direction where the mission, vision and goals of the company lie.
First and foremost, Apple products are made perfect. Apple Inc. has been recognized as the perfectionist company that creates its products perfectly even in one or two attempts. The company¿½¿½s world-class and high-quality designs of products like the Macintosh computers, iPhone, and iPod are the existing proofs.
The weak areas of Apple Inc. is the fact that most of its products are all out in the market, and most of the consumers around the world have been already exposed and bought by the consumers despite the fact that it is not widely utilized in the business purposes. Since, PCs are the one that are mostly found in the business world. Another downside of Apple products, they are significantly expensive as to compare to the products created by its rival company IBM, which really designs its products for business and office purposes.
However, business analysts also believe that the market gap between Apple and its rivals makes also an opportunity do some business transactions even on that small device. In addition, it is very handy, that for Apple to promote its highly profiled products to corporate world. For instance, businesses nowadays start using iPhones already because of the diversified features of the devices that even the employees can search on the web, email and anyone else can just put it inside their pocket and can take it anytime and anywhere.
Rival phone companies like HTC and Motorola have been marketing their Android smart phones in the market, and it is obvious that consumers are started to increasingly use the device today, more than that, the growing tablet computer market from these competitors also a threat for Apple Inc in spite of the continuous reigning of iPod in the market. Still, the market and revenues can be divided among its rival products. And, it will decrease definitely the gross sales of Apple Inc.
Evaluation of Apple¿½¿½s Current Business-Level Strategies in relation to SWOT Analysis
Competitive/ Interactive strategies
1. Enderie (2004) established a fact that the utmost competitive advantage of Apple Inc. is its marketing approach and methodologies for the company really understands how to make the consumers get excited about its new products that come out in the market. It is apparent that the company has not been focusing on the latest technological features of its products on its marketing, advertisements and campaigns; rather, it stresses the benefits that the consumers can get from using the products. How the product can help the consumers to live a life in a better way.
2. Another effective business strategy that has been used in Apple Inc. is its ever unique and innovative hardware design that creates elegance impression in the eyes of the meticulous consumers. (Enderie, 2004). There is no other company that can imitate the best-designed hardware that Apple has in each product, best example of this are its iPod and MP3.
3. Apple Inc. knows very well the significant role of using the company logo on its products. As the consumers can see, the Apple logo is always put on the upper right side of the laptop where the screen is open. Other vendors do not focus on the importance of the strong presence of the company logo on the product itself. (Enderie, 2004). In fact, it is the most effective and cost-efficient form of advertisement that always calls the attention of every person who sees it. Obviously, in TV advertisements, Apple logo always has a larger part and the concept of the commercial which really centers in the significant symbol. It even started to show up in TV shows which really promote Apple logo and its significant benefits to the lives of the consumers. As a result, Apple logo has been a phenomenon symbol in Apple computers. Apple logo says all about the products.
4. Apple's Steve Jobs Up-Closed Marketing
Steve Jobs even came up on stage to give a talk for the benefits that the people can get from Apple products. (Enderie, 2004). This man never got tired of educating the people in any events about the wonderful contributions of their products in the new generation as well as to the next generation to come. He always emphasized that people should live in a better world with the use of revolutionary technology through innovative products. The ever relentless back-up made by Jobs even led to the strong competency of the products as well as the company over its rivals in the market.
Evaluation of the fitness of current corporate-level strategy in relation to SWOT Analysis
Apple Inc. started to use a corporate-related diversification strategy in 2001, where it added digital music through the launching of the portable mp3 player, as well as the iPod and after which was the iTunes Music store. to its business software and computer technology market. The brilliant idea has come to mind because of the strong relationship between the computer products and the personal entertainment needs of the consumers. As a result, the company has been able to reduce its operational expenses and it manifested in the higher margins and lowering the costs of the products.
¿½¿½Strategic Management¿½¿½ (n. d.) found that the most effective international strategy of Apple Inc. is having global standardized products. The only change that Apple makes in their products is the power source since not all countries have the same power voltage. Other that that, the engineering, design and manufacturing is centrally controlled. The main concept of the products is adopted from the U.S., but the complete creation of the products is done in China by IT solution companies such as Foxconn and Inventec due to its cheaper labor costs.
Innovation is the major reason why there is a boldness associated in every launching of Apple product. Though, the company had some uncertainties in every product launching on how the new product could surpass the success of the former ones. However, it is amazing that every product always turned out to be a success. And, the company strongly believes that it is just for the company¿½¿½s genuine commitment to give the latest innovation and modern application of technology to the world with every invention that Apple has completed.
Apple Inc. was about to merge with AdMob, however, it was quickly acquired by Google. After that incident, Apple learned its lesson well; afterwards, it closed the deal immediately with the online music site Lala.com. In view thereof, it is just appropriate to take this merging initiative in order to become more flexible as the company has started to move from conventional personal computers to iPhones and mobile computers.
Since from the start of its operation, Apple Inc. has already acquired 21 software companies, as well as purchased stocks in two software firms, and bought 11 small companies.(Strategic Management, n. d.).
Alliances have contributed a lot to the sustainability of the operation of the company. And, the very reasons that Apple Inc. join in the strategic alliances are to exploit economies of scales, monitor and learn the competitors¿½¿½ strategies, manage risks and limit and share operational costs, acquired all economic values in every industry. The most valuable alliance that Apple has is with the AT&T for the production and launching of iPhone; another one is with Microsoft for the development of the Microsoft Office software for the Mac and to return the favor, Apple Inc has to incorporate Internet Explorer in all Apple¿½¿½s computers. It also has alliance with both Intel and HP.
Assessment for the need to enhance the company¿½¿½s governance, ethics, culture, structure and control systems to match with its strategy.
Current Structure and Control Systems
The evangelism has been embodied in the organizational structure of Apple Inc. And, it would not be possible without the great contributions of its valuable employees who have been dedicated and willing enough to sacrifice even their time for their personal stuff just to meet the deadline of every project. It is instill in the minds of the employees that their input is very important in attaining the goals of the organization. Jobs had created cultural values among employees that they are bigger than what they think. Meaning, the corporate employees are well motivated to excel in the workplace and give their 100 percent loyalty to the company. In return, the management gives more and more financial privileges to the employees who remained loyal and committed to their jobs after all these years. And, the way the management motivates and trains the employees is somewhat a control system in the workplace that lead the workforce to be self-driven and become perfectionists at all times. With trained and oriented with the same concept and principles and that is to be remained in controlled to be ahead of every competition despite of all legal issues the strong integration of revolutionary technology and innovation, the company structure remains competitive in the stiff competition. At the same manner, the employees have been and labor-related criticisms that were thrown to the company in the previous years.
Nevertheless, not all workers have received better compensation, and experienced pleasant working environment. Take the case of China factories, there were media reports that the working and living conditions of the factory workers in Foxconn plant and its subsidiaries are experiencing malpractices by the management. There are number of employees who were involved in accidents in the plant due to inefficient and ineffective safety and hazard preventive measures implemented by the management. All these downsides of the labor structure of the company must be given top priority of the mother company in order to prevent bigger problems in the near future.
With the current issues, patrons may withdraw their trust and patronage from the company and it may consequently hurt the selling performance of the products in the international market that may also affect tremendously the profitability of the business. The downsides could happen in just a short period of time when there is negative issues that associated with any company, especially, if the public will find out that the company is liable to the issues.
Apple Inc. is the one of the world¿½¿½s most admired companies. Apple brand has marked significantly both in the hearts and minds of millions of consumers for its recognized high-quality products, prestige, integrity and unique innovation. The company has been able to reach its peak of success as well as growth and profitability in just a short period of time due to its highly regarded brand name and reputation in the computer and electronic industries.
Nonetheless, Apple Inc. has somewhat forgotten something very crucial in the long-term sustainability of the business and that is the human capital. There has been a lot of labor issues pertaining to the manufacturers and legal cases filed in court as regards to this aspect. Apparently, the Apple headquarters has not shown full support of resolving the labor problems that might impact on the entire operation of the Apple business from other parts of the world.
Recommendations for Improvement
¿½E Apple Inc. should continue to use its product differentiation strategy.
¿½E It must continue inventing new and most innovative products.
¿½E R & D should exert more effort in finding more efficient and effective ways to cut further production costs in order to reduce the prices of the products to remain competitive
¿½E Maintain the highest level of innovation.
¿½E Most of all, Apple headquarters should give utmost considerable attention on the increasing labor problems, pressures and psychological issues that Chinese workers are experiencing nowadays. The company should form an investigative committee to resolve the labor issues that occur in Foxconn plant and its subsidiaries in the country. If these issues would continue to be on the global news, definitely, it will ruin the good reputation that Apple Inc. has projected in the eyes of the consumers. It will cause bigger problems especially to the entire Apple organization, and it may cause the consumers to withdraw their trust and confidence from the Apple¿½¿½s products.