Strategy Formulation

Running Head: Environment Scan 1

Environment Scan 7

Apple Incorporated

Timothy D. Jensen

Eligah King

MGT/498 4 Oct 2019

Introduction

Apple Inc. is one of the largest tech companies in the world today. Apple is in the business of manufacture of mobile phones, music players, media devices, computers, various digital devices, as well as the accompanying software. The headquarters of Apple are in California in the United States. This analysis examines the external and internal environments of the company as well as the competitive advantage that is experiences. The analysis will also focus on what Apple does to gain the competitive advantage as well as create value and achieve effectiveness in its operations.

Internal and External Environment

An environmental scan of the company internal shows that it has several internal strengths as well as opportunities that are available to it. The company, however, still experiences various weaknesses as well as threats as it continues to be a top tech company. One of the major strengths of the company is that it has witnessed growth in sales revenue and profits over the years. It has also expanded its cash flows because of the continued growth of its market shared. The increase in the revenue as well as market growth is what has enabled it to invest more in research and development (Khan, Alam & Alam, 2015). The company has enjoyed better growth because of its innovative nature. The continuous development by the company has made it stay at the top and continue being ahead of the competition. The other strength that one cannot ignore is the power of the brand. The brand has grown stronger over the years with products such as iPad, iPhone, and iTunes. The other strength that one can see in the brand of Apple is the quality of its products. Apple products are of high quality and consumers knowing this continue to support it over the years.

Despite the successes by Apple, there are still a number of weaknesses that are witnessed. One of the weaknesses that are there is seen in its distribution strategy. Apple has a direct sales approach which is behind other strong brands such as Samsung and Huawei (Khan, Alam & Alam, 2015). Apple has several sales locations around the world but this cannot match the distribution channels which are set up by the competition. Products such as those of Samsung can be found in several places around the world unlike Apple. The next weakness with Apple today is the dependency which it has on its phones for its revenue. The other parts that it has diversified into seem to generate limited profits. Apple gets more than half of its revenues from the sale of phones which puts it at risk. The next weakness that one can see in their products is running their devices on iOS which has today continued to be threatened by android. Android is more common and the computability issues have been witnessed with most consumers avoiding the iOS.

Opportunities and Threats

There are various opportunities that Apple is yet to exploit in the market. The major one that can be seen is chance to expand in the developing markets. The developing markets have been the area where competitors have their strength and Apple should ensure they get into these areas. The developing markets have a growing population with increasing incomes. Because of the competition that is there, it is important to come in with affordable phones which can compete with local products. The other brands like Huawei continue to dominate in these areas because of their fair pricing. One of the greatest threats that it faces is disruption of its supply chain because of political instability especially in Asian countries. It is possible to stall operations in these areas when such conditions exist with no alternative in site for the organization (Khan, Alam & Alam, 2015).

Competitive Advantage

Apple is one of the largest tech companies in the world and it, therefore, enjoys significant competitive advantages. The competitive advantage is what has enabled it to have the large market share and continue to hold onto it. The first advantage that they have is the ability for quick innovation which ensures it has top products that are the favorite of consumers. Every year the company introduces a better improved version of its iPhone series. Customers are always looking forward to something us and better. Even though other brands such as Samsung have high end phones also, it is important to note that they have not seen the successes of the iPhone. The iPhone is seen as a luxury brand and this has continued to propel its growth and continuous popularity. The android devices have lower prices every year but the majority of new Apple products still come at high prices. Any firm in the world can assemble the android devices but the iOS is only for the Apple products. The operating system, therefore, gives them a competitive advantage to users who prefer it to the others.

Strategies for Value Creation and Competition

Apple has various strategies that it uses in remaining at the top. The company makes use of a premium pricing strategy to keep itself as a premium brand in the market. The differentiation is also good because it helps the company build a competitive advantage. The premium pricing strategy is seen in the way it has an amazing range of products which dazzles the consumers. The excellent products also come at a premium price (Nielson, 2014). The products come with a high quality user experience with features that catch user’s attention. The consumers will pay an extra dollar to get the premium product even when other options are available.

The differentiation strategy by Apple also involves having brand loyalty and using innovative advertising. Apple sells the brand majorly as compared to selling the product. The focus of the company is a consumer who will pay more for a product. The iOS also differentiates the market because of its uniqueness and availability only on the Apple products.

Measurement Guidelines on Strategies

The measurement of the strategies is seen in the results at the end of every year. Apple also has a culture of reviewing adoption rates by consumers as well as product reviews. The customer reviews also help in ensuring that it is reaching down to the end consumer and using their thoughts as a basis for strategy. Listening to consumers is a top measurement guideline. I believe this strategic measurement by Apple is effective because it assists in understanding the customer and their feelings. The company continues to be innovative and consumers are still cooperating with it. The premium pricing strategy, however, needs to be closely monitored especially in the developing world as it seeks more market share.

Conclusion

In conclusion, Apple is a top tech company that has witnessed success in its operations over the years. The strengths which it has guide it into financial and brand growth. There are opportunities, however, which it has to exploit in the developing economies. The supply chain and increased competition are strong threats to its market share around the world. The company has continued to gain a competitive advantage because of its premium products and premium pricing.

References

Ferrers, R. (2013). Apple's Innovation Success and how to measure it. Retrieved at: http://www.managementexchange.com/hack/Apples-innovation-success-and-how-measure-it

Khan, U. A., Alam, M. N., & Alam, S. (2015). A Critical Analysis of Internal and External Environment of Apple Inc. International Journal of Economics, Commerce and Management, 3(6), 955-961.

Nielson, S. (2014). Apple’s premium pricing strategy and product differentiation. Retrieved at: http://marketrealist.com/2014/02/Apples-premium-pricing-strategy-product-differentiation/