List and briefly discuss 3 distinctive competencies of Apple
- Innovation in design.
- Cutting edge Technology.
- Marketing mix.
Since its inception, Apple has worked hard to develop products that have unique designs. In the 70s when design did not matter, Apple was particular to develop a very appealing PC.
In the early 80s, Jobs decided to include Graphical User Interface into Apple products. The use of GUI later became the standard in all PCs.
Apple uses the 4Ps of marketing in a way none of its competitors has ever done. The products are appealing and sold at a premium. Products are promoted innovatively and sold in their well designed and extremely presentable stores.
How has the structure of the personal computer industry changed over the last 20 years? What impact did the structural changes have on Apple’s competitiveness/profitability?
Porter’s analysis focuses on the following competitive forces:
- Degree of rivalry: value within the industry is determined by the extent of competition. The more intense the rivalry, the more firms seek to differentiate from others to carve out a niche (Grant, 2010).
- The threat of entry: the threat can increase competitiveness (or lack of it). Barriers to entry hinder entry into a market.
- The threat of substitutes: a substitute is a threat to an industry’s profitability. If switching costs are low, customers can easily switch to alternative products (Grant, 2010).
- Buyer power: concentration and size of the buying group determine buyer power. The more informed consumers are the more power they wield.
- Supplier power: just like buyers, supplier power is determined by the size and concentration of suppliers. The fewer the suppliers, the more power they have.
The structure of the computer industry has changed in the following ways:
- The rivalry has increased: after Apple pioneered the market, it was joined IBM, Dell, Compaq, and software vendors such as Microsoft.
- Buyers have gained more power: customers have become more informed over the years on what they exactly want from a computer. This has placed more pressure on manufacturers to produce easy-to-use machines for a low price.
- Supplier power: suppliers such as Intel who manufacture processors have gained more leverage over PC makers. Software vendors like Microsoft have also become influential.
initially, Apple started to perform badly as a result of the structural changes. It soon started to adapt by differentiating itself from competitors. It started to produce innovative and well-designed products targeting niche markets. As a result, the company started posting massive profits.
Evaluate Apple’s strategies since 1990
Shutting down Lisa
This was a good decision as the company was able to concentrate on Macintosh which was more promising.
Introducing a line of low-cost Macintosh line
Although it appeared to the most appropriate decision at the time, introducing low cost was not appropriate because it worsened the company’s profit margins.
He reduced the price of some products
Reducing prices reduced Apple from a niche player to an ordinary competitor. This was a bad decision because it did not improve the company’s margin.
Evaluate Apple’s strategies since the return of Steve Jobs
He terminated the licensing deal with clone makers. This allowed the company to produce unique products over proprietary architecture.
He opened Apple stores. This wise move allowed Apple to sell products to reach out to more potential consumers.
He invested more in innovation, technology, and design. This move allowed apple to develop signature products such as iPods.
List and briefly discuss two opportunities and two threats facing Apple at the end of 2008
Opportunities
Improved brand: the brand was visible, admired, respected, and trusted for superior products.
Great sales prospects: iPhone was the first product of its kind for its functionally, design, and ease of use. The sales prospects were very good.
Threats
Inability to maintain innovation momentum: apple had raised hopes of consumers about their ability to continually produce good products to unrealistic levels. Failure to maintain momentum would be a disaster.
There was also the threat of Competitors who could release a similar product and eat into Apple’s margin.
Recommend a strategy for Apple that can help the company improve its competitiveness and profitability
Apple should continue with its differentiation strategy and leverage on R&D to continue producing unique products.
References
Grant, R. M. (2010). Contemporary strategy analysis (7th ed.). Hoboken, NJ: John Wiley & Sons.