Competition in the electronics industry has stiffened in recent years due to technological developments that have characterized the global era. Organizations that operate in this industry are indulging in competitive wars whereby firms are striving to get as many customers as they can. One of the reasons why the level of competition has increased is due to innovation.
Organizations are capable of producing mobile phone devices that have advanced features that can satisfy most of their customers’ needs (Hitt, Ireland & Hoskisson, 2013). It is important to note that companies use resources to compete.
A company has to be vigilant to take note of what its competitors are doing so that it can respond in a way that will enable it to remain competitive in the industry. Apple Inc., as one of the companies in the electronics industry, has been affected by competition in several ways. This article focuses on the way the business model of Apple Inc. has been affected by the company’s response to its competitors’ actions.
Apple Inc. has improved its performance tremendously over the last two decades to become one of the leading organizations in its industry. The success has not come without challenges. Apple had to compete with already established companies on its way to success. Even after reaching its peak, the company still faces a lot of competition from companies such as Samsung and Nokia, among others. The business model adopted by Apple can be analyzed from two perspectives.
One perspective is the pre-1996 model before the late Steve Jobs’ return in the company, and the second perspective is the post-1996 model after the return of Steve Jobs. Apple almost entirely dealt with personal computers during the pre-1996 era. Its major competitor, Samsung, had dominated the electronics market at the time. Also, Apple faced a lot of competition from companies such as HP and IBM in the computer market (Hitt, Ireland & Hoskisson, 2013).
Steve Jobs returned and changed the focus of Apple to the production and sale of iPads, iPods, as well as iPhones. Jobs introduced change in the Apple business model in a bid to overcome Samsung’s dominance in the electronics market (Hitt, Ireland & Hoskisson, 2013). Currently, one of the main competition areas between the two companies is price wars.
Each of the companies tries to produce at the lowest cost possible to sell at a low price and attract more customers. As a result, Apple has changed its business model to the virtual integration model. Under this model, the company sources most of its inputs from outside the United States. Apple goes for a source that will offer these inputs at the lowest prices possible.
The model is generally aimed at reducing the level of expenditure as much as possible. Apple has been able to reduce the cost of production by outsourcing the manufacture of most hardware. Also, Apple can spend relatively more on promotions and attract more customers. Low production cost helps Apple sell its products at competitive prices.
The company still faces a lot of competition, even after Jobs’ death. Apple, therefore, has to keep changing its model to stay competitive (Hitt, Ireland & Hoskisson, 2013). It is argued that Apple lost its innovation ability after Jobs passed away. However, the company remains a force to reckon with in the industry, and its current leadership is working tirelessly to maintain the company’s competitive advantage by adopting a winning business model.
Reference
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2013). Strategic management: Competitiveness & globalization. Mason, OH: South-Western Cengage Learning.