1.What are the chief elements of Apple's overall competitive strategy? How well do the pieces fit together? Is the strategy evolving?
Innovation is the strongest element of Apple's overall competitive strategy. From the introduction of Macintosh in the year 1984, there are numerous challenges that the company has had to contend with, internal and external problems. However, the setbacks notwithstanding, the company never stopped introducing innovative products into the market. While doing this, Apple ensured that the secrets behind success were strongly protected. The differentiation and innovative strategy that has largely been used by this company has helped Apple achieve a competitive advantage in the market. This is proof to the fact that the company's strategies fit together. It is my strong belief that the strategy of the company is constantly evolving. This is attributed to the fact that the company operates in the technology sector which will keep changing as time goes. It is an important sector that requires all the participants to keep abreast of modern development so as to remain successful and relevant. Moreover, it is my hope that the company stays way ahead of its competitors given their ability to change with technology. Initially, attention was riveted on personal computers. However, years later, the company is a leader in tablets, mobile phones in addition to media players. This is confirmation enough that their strategy keeps evolving.
2.What are the key elements of Apple's strategy in computers, personal media players, tablet computers, and smartphones? Have its strategies in its core businesses yielded success? Explain.
The company keeps adopting a strategy that revolves around innovation and differentiation in its product market. Embracing a strategy that looks to meet the technological needs of the customers, the company has been in a position to implement a strong pillar for any electronic device they desire to release. Besides their innovative strategy, they moved with speed to have the company revamped in the year 1997. In the process, all the non-profitable sectors were dropped as they generated little to no success to the company. In these markers, the company became the first to release the most recent technology. With reference to computer, Apple targeted its products to different consumers. For instance, their notebook provided top-class technology and high-end graphics with reduced weight. This is one thing that the rivals of Apple were unable to keep up with. In regard to the personal media sector, the company designed various iPod lines so as to meet all consumer needs. Apple also provided iTunes that could not be offered by any other personal media device. Finally, the innovative strategy of Apple was important in making them successful in the phone industry, providing high-resolution displays, connection to Wi-Fi and cameras. Moreover, there were iTunes coming at affordable prices. The strategy adopted by this company has proven to be successful in all areas.
3.What does a competitive strength assessment reveal about Apple's computer business, as compared to the leaders in the computer industry? Use the methodology in Table 4.4 to support your answer. Does it appear that the company's competitive positions in personal media players, tablet computers, and smartphones are stronger or weaker than its position in computers?
Today, Apple enjoys tremendous sector in the market. Moreover, based on its present position in the industry, many would be forgiven to believe that it is untouchable. The stock price of this company keeps growing. In addition, all the devices made by the company are often re-released with the best and recent technology. Given its innovation and the ability to remain consistent, the company has been able to achieve the highest heights of success. Looking at Table 4.4, one can see that the company has been able to use resources, tangible and intangible so as to get to its present position. Some of their tangible resources are rare technology, software and hardware. Effective leadership would be its intangible asset. It is not in dispute that these assets have helped the company to achieve competitive advantage in the market. I am of the opinion that the position of this company in smartphones and personal media players is stronger compared to that of computers. My reason is that smartphones and personal media players are still growing as opposed to computers with the company being able to remain ahead of its rivals. In the computer industry, customers will always go for cheaper products. Despite this, in the event Apple remains proactive, it will certainly uphold its dominant status in all these areas.
4.Does it make good strategic sense for Apple to be a competitor in the computer, personal media player, smartphone, and tablet computer industries? Are the value chain activities that Apple performs in computers, personal media players, tablet computers and smartphones very similar and compatible or are there very important differences from product to product? Which of the four product lines computers, tablet computers, personal media players, or smartphones do you think is most important to Apple's future growth and profitability? Why?
It is my belief that it makes a perfect strategic sense for this company to be a major competitor in the tablet, computer, smartphone and personal medial player industry.
Moreover, I am strongly of the opinion that the value chain activities are not only the same but compatible. This is because all the devices operate on the same iOS system. As a result, it becomes easier for the consumers to use them with ease. Moreover, the consumers can have seamless integration into the products of the company. Given the large footprint of this company in the online music sector, it is also in order for the company to provide all the available products that can perfectly integrate with iTunes. Furthermore, the company is in a position to appeal to different consumers based on their different product lines in addition to the numerous industry markets. The most important product for the company's future growth and sustainability is the mobile phone market. This is because it is the fastest growing market. Even as emerging markets keep developing globally, they will create more users of mobile phones. Today, mobile phones remain integral components of life. They are important communication tools in addition to promoting online commerce, learning and entertainment. In this regard, it will be important for the company to keep innovating if it seeks to continue being a major player in the cell phone industry.
5.What is your assessment of Apple Computers' financial performance the past three years? (Use the financial ratios in the Appendix of the text as a guide in doing your financial analysis.)
On the basis of the financial ratios in the Appendix, one can see the differences of ratios in the company between 2005 and 2007. First and foremost, the gross profit margin of Apple reduced from 40.9 percent in 2005 to 40.8 percent in the year 2006. However, it increased to 51.4 percent in 2007. This demonstrates that the company's gross profit experienced an upward growth pattern. This was favorable to the company and investors. In addition, in regard to operating profit margins, this ratio keeps increasing throughout 2005, 2006 and 2007. It shows that the company was profitability in its operations in comparison to the overall profit. Furthermore, the company demonstrated that they had great credit in addition to a great balance sheet where debt-to-equity was below 10 percent. This is remarkable for an organization based on innovative technology. There has been a significant increase in overall sales through the 80s, 90s, to date. Since the 90s when Apple was almost bankrupt, the company has learned from their experience and used the best available resources to create and manage its hardware and software. Using innovation, the company has been able to rise to its present financial status. It prices have also been affordable.
6.What recommendations would you make to allow Apple to strengthen its position in its most important markets? What steps should it take to ensure that the iPad becomes a major contributor to the company's overall performance?
The most important markets of this company would include personal computers, mobile phones, personal media player without forgetting tablet computers. The first recommendation would be for the mobile phone market. Here, Apple has to keep innovating given that is marketplace is always changing sparked by changing technology and increasing customer demand across the globe. Third world economies will still strive to develop their middle class. In this regard, Apple will have to capitalize with different phones with different prices. The company seems careful not to make mistakes in the personal media player market. However, this is the reason why competitors are on their neck. Apple needs to adopt competitive strategies which can win market share. In addition, the company must devise strategies that are in tandem with their innovative skills while establishing entry barriers. With reference to personal computer market, the company can succeed by focusing on the provision of customized solutions. In so doing, it will go on offensive against the likes of Dell. Apple will also win over customers who cherish customization brought to the market by Dell. There are also steps that Apple can take to ensure that the iPad becomes a success in the marketplace and a major contributor to the company's overall performance. Here, the company needs to borrow more from its first mover strategy. In addition, Apple must create effective entry barriers by ensuring that tablet capabilities are enhanced. Another suggestion would be for the company to build upon App Store. This will help ensure customers are driven toward iPad as opposed to the rival products.
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