Introduction
Apple Computers Inc. was incorporated in early 1977. Its primary business was the manufacture of personal computers. Apple’s primary target was to make privet individuals to own a computer. This strategy has changed over the years. It has incorporated other devices into its production line (Chapman & Hoskisson, 2012). Over the years, Apple’s innovations have revolutionized the smart devices market.
The company was reluctant to venture into the mobile phone market at first. Steve Jobs once said that Apple would not manufacture a phone. His reason was the company’s incapacity to control what went into the device (Meyer, 2010). A few years later, Apple produced the iPhone.
The iPhone is just one of Apple’s leading products. ITunes allows subscribers to download music and movies at a fee. This innovation fundamentally changed music distribution worldwide. The company does not earn substantial amounts from this service. Apple capitalizes on its influence on other products instead.
It significantly increases iPod’s sales as many customers use it to store their music and movies (Chapman & Hoskisson, 2012). The iPod is Apples cash cow, generating up to 40% of its revenues (Meyer, 2010). Apple’s iPhone combines mobile phone and iPod features.
The company operates in a highly competitive industry, competing directly with cell phones, computers, digital content and consumer electronics. Apple combines innovation and smart marketing strategies to maintain its competitive advantage (Meyer, 2010).
Strategic challenges facing Apple Computer
Apple Computer keeps a tight control over the quality of its products (Chapman & Hoskisson, 2012). This has assured its customers of high quality products and services from the company. Keeping this control and maintaining quality is a challenge facing the company.
Various companies supply its product components. These include; Texas Instruments, Phillips and Samsung. Some of these suppliers have expressed concern over Jobs’ controlling nature (Chapman & Hoskisson, 2012). Maintaining a balance between quality controls and good relationships with suppliers is a major challenge for the company.
Apple’s innovative ability has always been the hallmark of its success. It produces attractive pieces which competitors keep reproducing (Chapman & Hoskisson, 2012). The challenge to Apple is maintaining these abilities.
Remaining innovative helps to keep its products unique and different from its competitors. As it expands globally, keeping its innovations secret will be another challenge. Information on designs and other important details may leak from its factories worldwide.
Apple’s traditional clients were technology savvy fanatics. Its customer base has widened with an increase in its products. Some of its products aim at specific consumer groups such as students (Chapman & Hoskisson, 2012). Marketing to these diverse markets and meeting their expectations is going to be a huge challenge. Eye-catching marketing ads have always been associated with Apple.
With a wider and varied customer base, the company needs to remain relevant. Satisfying a varied customer base is not going to be easy for Apple. There are customers who prefer products that are compatible with different devices. Apple has always preferred services that are only compatible with its products. Meeting these expectations require a change of tactics.
The company is expanding globally (Chapman & Hoskisson, 2012). This will require a professional team to handle the increased exposure. It will also need to create and maintain good relationships with all the stakeholders. This is a significant challenge for Apple.
This is because it has always relied on Steve Jobs for this. It needs other faces to show passion for the brand and boost its popularity. Jobs could not do it alone after the expansion. There should be a succession plan in place.
Measuring company success
There are various ways by which a company’s success can be measured. Accounting measures are popular methods of measuring company success along financial lines. These include; profitability, return of assets and return on equity ratios among others.
They give a snapshot of the financial status of a company. Data that can be quantified is used in this method. The problem is that these methods do not take qualitative data into account. A company’s success is only measured in financial aspects (Hitt, Ireland & Hoskisson, 2010).
Using a balanced scorecard can give a balanced assessment of a company’s success. Accounting measures are applied alongside three other measures. This method considers different perspectives. These are; the internal processes, accounting measures, learning and growth, and customer perspectives. By considering both qualitative and quantitative data, one gets a balanced analysis s of the company.
The balanced scorecard reveals the weaknesses and strengths of a company. This measure is similar to the triple bottom line method of measuring company success. When applying the triple bottom line, one considers both the environmental and social successes of the company (Hitt, Ireland & Hoskisson, 2010).
Benchmarking focuses on the current success of a company in different aspects. It also looks at ways of improving or maintaining that success. Significant factors affecting a company’s success are identified. These are then measured and used as a yardstick. The company must aim at meeting and surpassing these measures. Customer satisfaction, return on assets, profitability and return on equity are commonly used as benchmarks.
Internal and external environmental factors affecting Apple’s future
A company’s future significantly depends on its competitive advantage in the market (Hitt, Ireland & Hoskisson, 2010). This is heavily influenced by factors in its internal and external environment. Apple has a rich well of resources, both tangible and intangible.
The company’s wealth, however, lies in its intangible resources. Apple’s employees have a knack for innovative designs. Its CEO-Steve Jobs is a good example of an innovative mind within Apple. He has been the brain behind many of its innovations.
The company’s brand is another internal resource. It is associated with attractive, high quality devices (Chapman & Hoskisson, 2012). It has also created a network of good relationships with other players in the industry. This has enabled it to make agreements with music record companies and movie makers.
These partnerships have been the bedrock of iTunes’s success. The personal qualities of Steve Jobs have helped the company to maintain a good public image. He has also helped to maintain good relations between the company and its customers.
Apple’s internal capabilities are in advertising, production and marketing. It produces products that cater for its diverse markets. Its creative adverts and marketing strategies reward it with high sales. Its core competence is innovation. The company comes up with new technology and devices regularly. This gives it a healthy competitive edge over its competitors (Chapman & Hoskisson, 2012).
In the external environment, a variety of factors are likely to affect Apple’s future strategies and success. The digital media industry that Apple has ventured into is fiercely competitive. Entry barriers are low. The capital required is not prohibitive and many firms with resources can easily invest.
ITunes, iPod and the iPhone face stiff competition from new and existing entrants in the market (Chapman & Hoskisson, 2012). The future of Apple depends on how well it maintains its competitive advantage.
Apple’s products face competition from cheaper brands. Its customers have easy access to products that can substitute Apple’s products. Its competitors, who produce and sell similar products at a cheaper price, threaten Apple’s dominance. Global markets such as Japan are saturated with competitors. Apple has found it hard to penetrate this market because local manufacturers have a strong hold over it (Chapman & Hoskisson, 2012).
Its operations are affected by copyright laws. It sells protected material on iTunes (Chapman & Hoskisson, 2012). It, therefore, has to protect these products from copyright violations. This is a significant factor in the arrangements it makes with music records and movie companies.
Technological advancements also affect Apple’s business significantly. As technology changes, it has to be innovative to remain relevant. Consumers want the latest technological devices. Its survival depends on how well it keeps pace with changes in technology.
Apple’s strategy in the face of rivalry
Apple’s marketing and innovative strategies make it a leader in the industry. It consistently produces innovative products whose popularity is unrivaled in the industry. Though similar products exist, they do not match apple in quality. Apple’s customers have become accustomed to superior experiences (Chapman & Hoskisson, 2012). However, the incompatibility of its services with other products could be its undoing.
Competitors such as Microsoft and Samsung manufacture products that are compatible with many devices. The company’s advertising and marketing strategies maintain its competitiveness. It operates its own outlets that increase its products’ exposure. Apple’s strategies have fared favorably even with fierce rivalry within the industry.
Recommendations
The popularity of the iPhone and other products exposes Apple to increased malware threats. The company should increase the security of its products. Assuring customers of the safety of their devices will maintain customer confidence.
As the company enters the music industry, it should maintain the core values of the Apple brand. Innovative, high quality products should be maintained. Customers’ expectations of the Apple brand should be satisfied even in new markets.
Current products; phones, iPods computers and other should be updated. This will differentiate them from the competing products. It will also ensure that they remain relevant as technology changes. The company should craft a succession plan.
It relies significantly on Steve Jobs for its public image. He is Mr. “fix it” when things go wrong. The company should groom other persons for the role. The press and other stakeholders should have other faces to associate the brand with.
Apple has a reputation of concentrating on its customers and not on competitors. This is a good strategy as the company establishes an intimate bond with them. It learns what customers prefer and focuses on satisfying them. However, the competition it faces is increasing by the day. It faces threats not only from established companies but also startups.
It should pay more attention to competitors without becoming obsessed with them. As the company seeks to partner with different companies, it should not lose its control over quality. These partnerships are necessary in its global expansion plant. As it grows big, it may lose its original strengths. It should guard against this to maintain customer loyalty.
References
Chapman, R & Hoskisson, R (2012), Apple Computer Inc.: Maintaining the Music Business While Introducing iPhone, Case Study.
Hitt, M , Ireland, R & Hoskisson, R (2010), Strategic Management: Concepts and Cases: Competitiveness and Globalization, South Western Educational Publishing, Sydney.
Meyer, C (2010), 7 Challenges Facing Apple after Surpassing Microsoft’s Market Cap, Retrieved from http://www.workingwider.com/strategic_innovation/7-challenges-facing-apple-after-surpassing-microsofts-market-cap/