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STRATEGIC MANAGEMENT AND STRATEGIC COMPETITIVENESS 2

Apple Incorporation

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Apple Incorporation

A good strategy is seriously critical for business. A strategy describes a plan documenting how a company is setting out to fulfill its business goals in business. It covers several key principles outlining the process through which it will attain the goals. Business strategies identify future business trends and opportunities to modify and develop them to suit the future changes and create a vision and direction for the whole organization. Thus, through their strategy, firms can create a competitive advantage within their operational sector and ultimately understand more about themselves and their future directions. The strategy ensures that businesses optimally use their limited resources to achieve the business goals since it helps firms set goals and priorities, identify actions to realize the goals, and mobilize the necessary resources to execute the actions through strategic planning and strategic thinking (Simeone, 2020). This essay will describe Apple Corporation's strategic management and strategic competitiveness by assessing the impact of globalization and technology on the firm, applying the industrial organization model and the resource-based model to determine how it could earn above-average returns, assessing the company's vision and mission statement's and each stakeholder category's impact on its overall success.

Apple is currently amongst the most valued brands worldwide. It has significantly revolutionized the world of electronic devices and accessories like computers and smartphones (Apple Inc, nd). Headquartered in Cupertino, California, the United States of America (USA), the company has experienced tremendous growth due to an amalgamation of both internal and external factors. Thanks to its massive growth, in 2018 and 2020, Apple Inc. became the first publicly-traded US company in history to be worth $1 trillion and $2 trillion in 2020, respectively (Lindsay, 2018; Gandel, 2020). Apple’s market value more than doubled in the years between 2015 and 2018 (Macrotrends LLC, 2021). As a publicly-traded firm, Apple does not have a single owner. Steve Jobs, Steve Wozniak, and Ronald Wayne in April 1976, and went public in 1980. Essentially, the company has come a long way since the era of the first Apple 1 computer and is now the biggest information technology firm globally. Generally, Apple has general public ownership since the general public holds a substantial ownership of 37.23% in AAPL.

The huge public ownership size gives retail investors a broad collective power in deciding on major policy decisions affecting the company, including directors' appointments, business acquisitions, and executive compensation. In terms of Apple's largest private shareholders, Arthur Levinson (Apple's board chairperson and CEO of Calico) is the company's largest shareholder with 1.16 million shares, followed by Tim Cook with 901,474 shares, and then Craig Federighi with 460,367 shares, amongst others (Lindsay, 2018). Apple’s largest institutional shareholders, including The Vanguard Group, BlackRock Fund Advisors, Berkshire Hathaway, Inc., SSgA Funds Management, Inc., and Fidelity Management & Research Co., about 16% of the firm’s outstanding shares. Essentially, the value of Apple’s shares has tremendously grown, with various financial commentators positing that an investment of $990 in the company in 1980 would be about $521,740, excluding dividends. By August 2020, Apple’s stocks neared $468 for the first time, and its shares are now up by a remarkable 60% despite the novel COVID-19 pandemic’s effects (Gandel, 2020).

Globalization and technological changes have been at the core of the companies' growth. The firm is at the vanguard of a group of Big Tech organizations – others including Amazon, Microsoft, Facebook, and Google parent Alphabet - that are increasingly taking over people's lives and the stock market with a storm. Combined, these companies' hyperdisruptive technologies, coupled with a fast-expanding global presence and rich, currently account for nearly a quarter of the entire value of the S&P 500. Apple's products and services, including iPhone, Mac, iPad, Apple TV, Apple Watch, iCloud, Apple Pay, OS X, and watchOS operating systems, iPhone OS ((iOS), and a broad range of other services, accessory, and support offerings have been known to rely on top-notch and secretive technology and aesthetics compared to its competitors' that are highly appealing to a broader customer base (Apple Inc, nd). Its investment in the best IT technology products and services has enabled it to attain a current market capitalization of about $508 billion, making it the largest company worldwide.

Thanks to globalization, the company can reach a wider range of customers globally, and global interconnectedness has ensured that it commands a worldwide supply chain. Even though its products and services are more expensive than its competitors', the company has managed to attract and retain a wider and loyal customer base. Therefore, it currently enjoys a substantive competitive advantage within the IT sector globally. Although the firm started as an American company, globalization has enabled it to grow and develop into a publicly-traded multinational corporation with a global footprint. It currently sells globally, deriving only a third of its sales from the US, and its sales from the rest of the world are increasingly staggering (Statista, 2020; Montgomerie & Roscoe, 2013). Globalization has had a significant impact on Apple's supply chain. It earns colossal revenues and profits due to its ability to produce its products at a relatively low-cost locally and sell them at higher prices globally (Lak, 2017; Wilson, 2012). Globalization has also ensured that Apple leverages the benefits of cheap assembly labor from other parts of the world and transports the finished goods using several supply and logistics hubs worldwide. Technology has enabled Apple to produce high-quality products and services, thus transforming it into a Love Mark brand. Apple's products' quality is so high that even though it sells millions of products worldwide, the defective products are almost non-existent (Görpeli, 2019). This attribute has made the company to be so successful.

However, despite its previous successes, Apple Inc. faces enormous threats from its competitors who have benefited from the information age, globalization and technology, and technological change factors. To survive this competition, Apple must maintain its investment in hyper-disruptive technologies and perpetual innovativeness. Apple needs to have strategic flexibility in its dealing to enable it to adapt quickly to achieve strategic competitiveness. Apple's strategy to achieve the above-average returns can be explained using the industrial organization (I/O) model and the resource-based view (RBV) (Poudel, 2016). The I/O model stipulates that the firm’s industry has a stronger impact on the firm’s performance than the managerial choices. It posits that economies of scale, barriers to market entry, diversification, product differentiation, and firm’s concentration degree (Jurevicius, 2013). Based on this theory, Apple needs to concentrate more on the broader information technology sectors when designing, creating, marketing, and distributing its products and services. The industry needs to be given immediate attention when designing the strategic management and competitiveness plan and the company must be responsive and flexible to strategic industry factors that enable it to attain above-average performance.

In contrast, RBV holds that firms can only achieve sustained competitive advantage and above-average performance more easily by exploiting internal or managerial factors rather than external or industry-level factors. Based on this model, Apple needs to concentrate on internal factors that make its business unique, including excellent leadership, brand portfolio, partnerships, teamwork, strong financial position, global presence, well-managed processes, top-notch technologies and aesthetics, and innovative ideas (Jurevicius, 2013). Unfortunately, whereas all these models are correct, there is never a definitive answer to the best approach that Apple should follow. According to Rothaermel (2012), firm effects, industry effects, and other effects like the corporate parent, year effects, and unexplained variances can be used to explain companies' performance. The researcher further asserts that firm effects (RBV) can explain between ~30% and ~45% of superior organizational performance while industry effects (I/O model) can explain ~20%. Consequently, Apple needs to look at both the internal and external effects and combine them to attain and sustain competitive advantage and above-average performance.

Finally, Apple's vision and mission statements, and each of its stakeholder categories, will continue to impact its overall success. A company's vision and mission statements play a critical role in any company's overall success. They help communicate the organization's purpose to its stakeholders, inform strategy development, and develop measurable goals and objectives to gauge the organization's strategy's success. Apple's mission statement is to bring ''the best user experience to its customers through its innovative hardware, software, and services'' while its vision is ''to make great products'' (Cuofano, nd). Thanks to these mission and vision commitments, the company has been able to design and develop great products and services continuously and highly innovative hardware and software and bring better user experience through its core goal of making great products and services, focusing on innovation, striving for simplicity instead of complexity, controlling the primary technologies behind its products, focusing on a few key projects, and having excellence as its standard. The company also has a richly diverse and dynamic range of internal and external stakeholders who support and push it to bring nothing but the best value to the market (Thompson, 2017).

Its main internal stakeholders, including its leadership, shareholders, and employees, directly affect the firm's overall success, especially concerning strategic decision-making, product designs and creation, sales, financing, corporate culture, etc. However, external stakeholders like competitors, the government, local communities, pressure groups, customers, etc., are critical for its overall success. For instance, the company has built a broad and loyal supplier and customer base that has ensured its sustained operations and sales (David, 2020). The remaining stakeholders have also pushed Apple to offer the best quality products and services in the market, thus ensuring its competitive advantage. Therefore, all the stakeholder categories will continue to impact the company's overall success in the future.

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