Unit 05 and Unit 06

Strategic Canvas

Computer Industry: Apple, IBM, and Dell

GB580-01N: Strategic Management

Unit 4

Team C Assignment:

Ishanti Johnson, Venkia Jones, Amy Larsen, Grace-Ann Long, and Tonya Mallory

Kaplan University

October 14, 2014

Abstract

The strategy canvas is both an action framework and a diagnostic for making a blue ocean strategy that is compelling. It contains horizontal axis that show a variety of factors that the company invests and competes and the vertical axis for the buyers' purpose. The strategy canvas serves two major purposes. This paper will analyze the strategy canvas of Apple Company in comparison to that of IBM Company and Dell Company, who are its competitors.

Keywords: Strategy canvas

Table of Contents Introduction 4 Strategic Canvas 4 Buyer Utility Map 6 Blocks to Utility 6 Synopsis 6 Removing Blocks of Utility 7 Three Tiers of Non-Customers Analysis 7 Conclusion 7 References 8 Appendix 9

Strategic Canvas

Apple has a product that range from; Personal computers, phones, digital music systems, and software among others. In comparison with Dell who has singled out one product (computers); whereas, IBM has computers, windows operating system that has recently entered the phone world through windows phones. However, Dell and IBM still lag behind in relation to Apple. Apple has been able to venture into the music market. Although it is a technology company, Apple has expanded its product line to products such as, iPods and iTunes. This enables music lovers and those who are necessarily not customers of Apple Company can still be part of them. This shows the importance of strategy canvas, unlike IBM and Dell Company; Apple has been able to influence noncustomers to purchase its products. This is a good use strategy canvas in that it ignores competition and aims at increasing technology, creating brand loyalty, and enhancing the Apple brand.

Also, unlike Dell and IBM, Apple has continued to make strides in other products like phones, for example, the iPhones. This is a big difference compared to a company like Dell that has confined itself to the world of personal computers where competitors are many.

Apple Company compared to the two other companies has been able to capture the six utility levels that include:

· Customer productivity: This utility lever seems that customers are able to do things faster, better and in different ways. This can be seen by the way customers of Apple Company are able to listen to countless number of songs from one platform, iTunes, and can carry these songs in a small digital music device known as the iPod.

· Simplicity: This is seen by the way Apple Company has strived in making their gadgets smaller and more portable compared to IBM and Dell.

· Convenience: The luxury that Apple has brought when using their products like the visual specks that are user friendly compared to dell and IBM is a time saver and avoids customer frustration as one tries to understand how to use a company’s product.

· Risk: In line with strategy canvas, Apple has taken different risk when it comes to trying out new products that its wide range of products compared to IBM and Dell.

· Fun and image: The image that a customer obtains when he/she has an Apple product is one of the things Apple has been able to achieve compared to IBM and Dell. It has also been able to capture an aspect of fun, and that is the reason Apple products have much hypes when being released compared to the other two companies.

· Environmental friendliness: Apple Company has strived to be Eco-friendly in that the energy used in their products is in line with the world standards and their products are recyclable.

Apple’s Buyer Utility Map

The buyer utility map for Apple is as follows:

· Locating the new product. Apple has now released iPhone six and continues to venture into other markets. iOS found in phones and the mac operating system continue to be modified in the urge of locating new company’s product.

· Analyzing the market. Apple has an online popular platform compared to IBM and Dell that it uses to analyze its market before and after release of the product.

· Locating the existing products. When information is acquired after market analysis, the company locates existing products to see whether there is space for improvement of the current company proposition.

Apple can identify blue ocean opportunities, because they’re not a startup company. It is difficult for start-ups and existing businesses to identify blue ocean opportunities. With Phone competition gets fiercer with more companies such as AT& T and T-Mobile and so on fighting who has the best phone and deals, identifying and successfully implementing a blue ocean strategy are imperative to the success for many.

Looking in reference to the IPhone 6 the buyer unity map will let Apple see on whether their marketing is working and what is missing. The new idea of the IPhone 6 creates a different utility proposition from existing offerings but also removes the biggest blocks to utility that stand in the way of converting noncustomers into customers. According to Apple, the “iPhone 6 isn’t simply bigger, it’s better in every way. Larger, yet dramatically thinner. More powerful, but remarkably power efficient. With a smooth metal surface that seamlessly meets the new Retina HD display. It’s one continuous form where hardware and software function in perfect unison, creating a new generation of iPhone that’s better by any measure”.

When evaluating the Buyer Utility Map, one can see that there are multiple factors and layers that make-up Apple’s map, which include blocks to utility. As Kim and Mauborgne, 2005, state “the greatest blocks to utility often represent the greatest and most pressing opportunities”. When one looks at companies such as Apple, IBM and Dell, there are blocks to utility to address and focus in on to make sure that the competitive advantage is met at the level the company is working to achieve.

The main block of utility for Apple is the cost of their products far exceeding the competitors’ products. Noncustomers, especially, will see the cost as a factor that will push them in the way of a competitor if there are not strong reasons or factors to choice the Apple product over the competition. It is important to look at the parts that make up the utility blocks for Apple including cost, convenience and image.

Convenience: what are the blocks that exist for Apple when one looks at convenience? Apple has a process in place for the release of their products, which can lead to certain customers feeling the need to wait in a long line for several hours to get the newest product first. This can be frustrating as well as unappealing to other customers who just want the convenience of walking in and buying the product the day it is for sale. For instance, on the first day of the iPhone 6 release, if you were not one of the first customers in a retail store, you did not get the product that day. You may have been able to order the product or may have preordered, but to some this is not convenient. Apple needs to continue to find ways to maximize the customer buy-in on release of products with more units available for purchase day of instead of inconvenience customers with ordering and waiting.

Cost: what are the blocks that exist for Apple when one looks at cost? Apple remains competitive despite the fact that the products have an increased cost in comparison to their competition. Apple works through this block by continually showing that their product technology, design and offering is better than the competitor. Apple continues to increase their advanced technology finding ways to stay above the competition even with the higher product costs.

Image: What are the blocks that need to be worked through with Apple’s image? Apple has a distinct product image that has been working for many years, but how to they maintain this as an advantage when competitors are making similar products and offering them at less cost. Apple needs to continue to find ways to show their products are superior. One way they are continually doing this is with their Apple Campus Program where entire school systems are using the Apple products for all aspects of technology. This program not only gives Apple the competitive advantage with this school system but it also places their products in the hands of students who are the upcoming buyers of their products as well as the influence of the current buyer, their parents.

According to Kim and Mauborgne (2005), there are three tiers of noncustomers: first tier “soon-to-be” noncustomers, second tier refusing noncustomers, and third tier unexplored noncustomers. Noncustomers offer organizations the ability to access big blue ocean opportunities that can give them competitive advantage within their industry. To convert this into a successful strategy, companies must identify noncustomers and then gather insight on their demands and needs. By doing so, they are able to convert a “latent demand into real demand in the form of thriving new customers” (Kim &Mauborgne, 2005, p.103).

First tier “soon-to-be” noncustomers are current customers who are waiting for the right opportunity to depart. According to the American Customer Satisfaction Index ranking for 2013, Apple has the highest customer satisfaction ranking at 87% for personal computers which is 1% higher than the previous year (Padilla, 2013). Nonetheless, this suggests that at least 13% of Apple’s current customers are dissatisfied with Apple’s products. Customer’s dissatisfaction can be a result of Apple’s products not meeting expectation, perception of quality, and/or perception of value for price. For example, Apple developed the iCloud, a cloud storage and computing service that allows users to store data and iOS applications on remote computer servers for download to multiple devices (Apple, 2014). This replaced Apple’s MobileMe service. Software clichés and the products inability to sync databases enabled the product from working efficiently. For customers, this resulted in long hours with customer’s services, loss of data, and in some cases permanent corruption of users accounts (Hamburger, 2013).Nonetheless, iCloud failed to create customer satisfaction and angered many of its consumers, who in some cases had acquired brand loyalty to the Apple’s brand. At this point, brand loyalty became irrelevant and the value of Apple’s iCloud program decreased in value for its consumers. This opened the door for current customers to becoming noncustomers in order to identify other organizations or brands that would meet their demands and needs.

Second tier refusing noncustomers are individual who refuse to do business within an industry or company. This may be individuals who don’t use any form of technology (some older generations) or individual who may have loyalty with another organization or its brand. For example, Dell has been ranked as the No. 1 IT service provider for the Healthcare providers. For more than 20 years, Dell has been chosen by top customers help identify solutions in hardware, software, application implementation and support, systems integration, etc. (Pennic, 2014). The strategy used by Dell is identified by Michael Porter as the focused differentiation. The focused differentiation strategy enables organizations to create the best value offering for chosen customers and provide them with products and services that are tailored to meet their price and demands (Porter, 2008). These factors has enable Dell to create an uncontested market; thereby, making Apple and other competition irrelevant.

Financial constraints can also result in second tier noncustomers. Individuals may also refuse to purchase Apple’s products, because they cannot afford to. Economic issues such as, unemployment, inflation, and other issues may result in consumers buying less or looking for cheaper substitutes. Apple has built a reputable brand by developing strategies that are technology driven and increasing innovation. Apple’s refusal to follow the conventional approach of the red ocean strategies implemented by its competitors, has enabled the organization to focus on a blue ocean strategy that would make is competition irrelevant. In doing so, the organization has been able to create brand loyalty and attract middle to upper range income level customers. This has enabled the organization to offer it products to consumers who are not concern with cost or insensitive to price. For customers who are in demand for a new computer, technology, and/or products offered by Apple, cost may be an issue; out of necessity they may be looking to Apple’s competition to meet their demands at a lower cost.

Third tier unexplored noncustomers are individuals whom an organization has not yet targeted. Apple’s computer line is upscale and targets the demands of high end market. According to Kim and Mauborgne (2005), in red ocean industries, organizations strategies compete to gain a dominant share of the industry; thereby, they struggle to grow and increase profits. Nonetheless, Apple has decided not to target low end markets, because organizations would be competing on price, which would be influence by consumers. The computer industry is highly competitive and consumer’s perception often influences demand.

Conclusion

Apple has a lot of innovative products and continues to give its clients more compared to its competitors. Although its products are said to be high in price they are still high in quality and thus them still being purchased by the customers of the company. This said strategy canvas use has seen this company reach great heights in its profits and its relation with the public in line with their products. Apple’s success is that it is more a design-driven company rather than a technology-driven company, putting customers at the center of its product innovation. Apple is just genius who created the need for its products and then exploited its newly created market share quickly, making it very difficult for competitors.

Competitive Alternative Map