Apple Inc. is one of the companies that have managed to cope with the competitive market to emerge as one of the best companies with a market share that spans various countries in the world. However, reaching this position has not been a bed of roses. There have been numerous challenges that this firm has had to overcome, some of which were threatening to bring it down completely. The corporate world has gotten more and more competitive. It is therefore necessary that these firms develop corporate strategies that would make them be competitive in the corporate world. Apple had to develop a competitive corporate strategy in order to avoid being eliminated from the market by competitors like IBM which was the market leader.
In order to manage the competition in the market, it would require a company to develop competitive tactics that would enable it acquire a unique position in the market. From the case study about Apple Inc. it is evident that this company employed some tactics in its competitive strategy to help it manage market competition. The first strategy was an alliance with IBM and Microsoft.
According to Javidan (992), the best competitive strategy is the formation of alliance with the market rival. From this alliance, a firm would not only learn the tactics of the other firm that makes it more successful in the market, but it will also eliminate such unhealthy practices as price wars. Another tactic is lowering prices, though this strategy should be employed with a lot of keenness. Another strategy is being innovative, always bringing in new products to the market at regular intervals.
This brings us to the three aspects of corporate strategy. Corporate strategy, as portrayed in the case study about Apple Inc. is concerned with the need to ensure that a given firm gains relevance in the market by always responding to the market demands, and being in a position to predict what the market would need tomorrow, today. This way, a firm would develop tactics that would be applied tomorrow early enough. There are various aspects of corporate strategy in use in the current market, and many more are being discovered. However, this study will only focus on the fundamental three. These strategies include stability, growth, and retrenchment.
Apple In. grew from a small firm that manufactured products for a smaller market within a small locality. In fact this case study reveals that this firm started out as a personal laboratory where Woz would make various computers just for fun. They were machines that were not able to perform many applications. When Woz partnered with Steve Jobs, they commercialized this business, culminating into one of the most successful companies in the world, with products that have continued to capture new markets. Another important strategy has been stability.
It is very important to ensure that as a firm increases its market share; care should be taken to ensure that it remains stable in the market (Kline, 2010). It should not lose the market share it has already gained. The company has ensured this by investing more in research and extension. The last strategy, which is not very advisable, is retrenchment. In case the profits are reduced, cost cutting must then be employed. One of the best strategies of cutting cost is through retrenching some of the employees.
It is important to understand the difference between vertical and horizontal growth, as well as concentric and conglomerate diversification. For some time, Apple was concentrated in producing one line of products. It would develop this line of products to capture larger market shares. This growth is referred to as vertical growth. It is witnessed from the case study, that there are occasions when this firm would diversify its products. These are occasions where the firm would produce more lines of products. This would be referred to as horizontal growth. Concentric diversification refers to a situation where a firm creates new but related products to the existing ones, while conglomerate diversification would occur when a firm introduces new products that are not related to the current products.
When a firm gets into a foreign country, it is important to employ a strategy that would ensure that it is successful. One of the strategies that have come out strongly is the formation of alliance. A firm can opt to form an alliance with another firm in this foreign country to help reduce the cost of research into this new environment. This would also make the firm be viewed as a local firm, thereby receive acceptance in this new market. Another strategy would be take-over. A firm can opt to take over another firm in this foreign country whose performance is not very attractive. In the process, it would retain its employees who have a better understanding of the local market. Apple opted to split part of its operations to be done in Japan, as a way of getting to understand this market better.
Portfolio analysis can be a very important tool in guiding the decision in companies with multiple products. Apple Inc. as a company has various products each with its own target market. In such a case, a firm should ensure that it has a clearly defined market for each of the products, and the objective of the product (Majer, 2011). The top management should give departmental heads opportunity to define tactical plans that would ensure that their departments are successful. Steve Jobs was fired as the C.E.O of the firm when he exerted excessive pressure on the departments, never letting them make their own independent decision. As was witnessed, the company failed to achieve its objectives because of lack of independence of the departments.
As such, the top management should only act as a parental arm of the firm. Parental strategy for a multiple business corporation is the answer to firms that have various units producing different products. In the case of Apple, the firm could develop a parenting strategy, where the firm would have the top management enacting the strategic goals of the firm. The other units would be allowed to operate in semi-autonomous way, without any interference from the top management. The units would be allocated funds and then given the target that they should achieve within a specified period of time. The top management would then come in just as an adviser or a moderator.
This would help such a firm note weak department and determine corrective measures. Organizational goals and objectives can be achieved through a variety of functional strategies. One such strategy is through innovation. For a given firm to be successful and for it to realize its objectives in the best way so far, it must maintain innovations and creativeness. The market is very competitive and providing the same products in the same old manner would render a firm irrelevant in the market. Another strategy is by letting employees feel appreciated and responsible for their actions. This way, they will always be precise in their actions, always appreciating the fact that the firm is depending on them for their actions to ensure that the firm succeeds. This is what Steve Jobs failed to do initially as the chief executive of this firm.
At times, it would be realized that some services are better outsourced than having them produced within the firm. For a long time, IBM tried to make all the parts of the personal computers but the attempts failed, resulting in very huge losses for the firm. However, when it outsourced, it became the lead company in this industry. It is important to outsource for those activities and functions that the firm realizes that it may not produce economically. Those services that the firm realizes that it produces at higher costs than it would have when outsourced, should be outsourced. A firm should also outsource the services that its workforce is not able to produce, either due to limited skills, or need for technology that it lacks.
Another factor that comes out clearly from this case study is the need to understand various programs appropriate for a firm’s success, the budget, and various procedures that should be undertaken in realizing a given objective of the firm. The management should have a clearly spelt programs that a firm should implement to achieve various objectives, and the procedures to be followed when implementing them. Each program should be allocated appropriate budget that would ensure that the policies that should be implemented are successfully implemented. As witnessed in the case study, and as Panagariya (2008) says, each program should be given finance based on the expected rewards and the relevance to the current competitive market.
As Weiss (2011) says, within the organization, in every organization, there is a structure that helps ensure that the organization is run appropriately. The most common strictures include traditional structures which are based on functional departments. The other is divisional structures based on geographical and market structure and the third is matrix structure which has its basis on the functionality of the product. The three organizational structures relate very closely to the organizational strategy. As explained above, the rationality behind having various units within the firm is to ensure that different individuals are assigned different duties all geared towards the realization of the firm’s strategic objectives.
This would be very helpful when staffing various sections of the firm and directing. Staffing is one of the challenging duties in a firm. As seen in this case study, Apple had to employ different individuals in various sections of the firm depending on their skills and experience. When assigning any individual employees any duty, care should be taken to ensure that the individual has an understanding of the task at hand. The marketing department would require an individual with some knowledge of marketing, while the designs would be done by an individual with a sound knowledge of engineering to ensure that Apple as a company accomplishes its objectives. This would also make the process of directing the employees much easier. However, care should be taken to ensure that the employees are directed to do that which is within their limits. Pushing individuals to perform beyond their capacity- as Jobs did before he was fired- would be irrational.
Staffing decision is always left for the Human Resource Department. However, according to Yukongdi (2010), employees are the most important assets of any organization. As such, staffing as a faction would keenly be monitored by the top management. There is therefore a direct link between strategy and staffing decision. When laying down a strategy to be applied by the firm in achieving its goals, employees are always at the center of this strategy. For this reason therefore, staffing decisions must be incorporated in a strategy if success is to be achieved.
For every strategy, there would be an appropriate manager that would be in the best position to implement it. The discussion above identifies three strategies of growth, stability and retrenchment. For the growth strategy, the research and extension manager must work hand in hand with the production manager, quality assurance manager and marketing manager to ensure that the firm remains creative, produces quality products and reaches out for the right market within the right time. For stability, the marketing manager would have the burden to ensure that the firm remains competitive in the market. For the retrenchment strategy, the human resource manager would be in a position to determine which employee to lay-off and at which time.
At given instances, downsizing is one of the strategies that a firm may be forced to employ. Though not very attractive, this may be the only strategy, especially in cases where the firm has various units that are underperforming. Apple was forced to shut down some of its units in order to remain competitive in the market. When downsizing, it would be very important to ensure that the firm is not subjected to a lot of negativity, especially in the market previously served.
Bird (1977) says that when a firm is downsizing, it should make an effort to ensure that its customers are taken care of so that they are not left with the impression that the firm has failed. The strategy may involve selling off the units that the firm wishes to shut down to another firm to ensure that customers are continuously taken care of. The employees who were serving in such sections should either be reabsorbed in the remaining section, or released to the new firm. In case the two options are not possible, then they should appropriately be compensated.
This way, it would maintain its image in the corporate world. Managing the corporate culture is one factor that managers should keenly take care of. The behavior of people within the organization should be managed to ensure that the firm achieves its set objectives. Steve Jobs was able to maintain a positive value among all the members of this firm, a fact that has seen the company grow to its current glamorous position in the electronics market. The combination of strategies used has made this firm very successful, beating most of competitors in this market.
References
Bird, A. (1977). Team structure and success as related to cohesiveness and leadership. Journal of Social Psychology, 103(2), 217-223.
Javidan, M. (1992). “Managers on Leaders: Developing a Profile of Effective Leadership in Top Management.” In K. E. Clark, M. B. Clark, and D. P. Campbell, eds. Impact of Leadership. Greensboro, NC: Center for Creative Leadership.
Kline, J. (2010). Ethics for International Business: Decision-Making in a Global Political Economy. New York: Routledge.
Majer, C. (2011). The silent killers of productivity and profit. T+D, 65(2), 62
Panagariya, A. (2008). India: The Emerging Giant. Oxford: Oxford University Press.
Weiss, W. H. (2011). Building morale, motivating, and empowering employees. Supervision, 72(9), 23.
Yukongdi, V. (2010). A study of Thai employees’ preferred leadership style. Asia Pacific Business Review, 16(1), 161-181.