Discussion Questions Assignment
jusleag1510
presentation_2.pptx
Apple (in 2013): How to Sustain a Competitive Advantage?
History of Apple
Apple SWOT 2013
Performance
Apple’s greater economic value creation due to superior product differentiation.
Superior quality and user friendly features. 78% of the iPhone owners cannot imagine owning a different phone.
Brand appeal. 59% confessed to blind loyalty to Apple’s product, Another anecdotal evidence is the long lines in front of Apple stores to get its latest products.
Performance
Apple’s integrated ecosystem, end-to-end strategy gives it a competitive advantage.
Performance
Between 2011 and 2012 gross value for Apple increased by 200% due to higher perceived value by customers as well as efficient supply chain.
Apple Revenue And Compounded Growth ratio (CAGR) 2002-2009
Apple’s Revenue in Billions U.S Dollars
Triple Bottom Line
Triple Bottom Line
Measurement Index
Economic Measures:
Economic variables measures bottom line and flow of money
Personal income
Cost of underemployment
Establishment churn
Job growth
Revenue by sector contributing to gross state product
Environmental Measures
Environmental variables represent measurements of natural resources and reflect potential influences to its viability.
It incorporate air and water quality, energy consumption, natural resources, solid and toxic waste, and land use/land cover.
Fossil fuel consumption.
Selected priority pollutants.
Social Measures
Social variables deals with social dimensions of a community or region.
Measurements of education.
Equity and access to social resources.
Health and well-being, quality of life, and social capital.
Unemployment rate
Female labor force participation rate
Apple on TBL
Apple on TBL
Examples of Apple’s TBL Engagement
Training of 2.3 million of workers about their rights and 92% of compliance regarding the norm of 60 working hours per week maximum.
Apple Supplier EHS Academy : Training of best practices in terms of environment, safety & health.
Clean Water Program: To help suppliers to process water and recycling it.
Apple’s flawed TBL Strategy
Apple hasn’t adopted TBL thinking. Its practice shows it is all about profits.
Apple has no CSR leadership team.
Apple does not release sustainability report.
Apple lack stakeholder engagement strategy.
Apple does not have a holistic approach to sustainability.
Foxconn
Foxconn is the 10th largest employer in the world in the world
Foxconn manufactures; PC’s, game consoles, and network gear for many top companies
Foxconn and Apple’s partnership started in early 2000s and by 2004 most of Apple’s products were being manufactured by Foxconn.
In 2010 Foxconn was pushed into the public spotlight
Ten Foxconn employees committed suicide and many more attempted. Employees cited poor working conditions, excruciating hours, minimal pay, skipped meals, restricted bathroom breaks, and no/lack of training.
In response to the suicides Foxconn put up “suicide net” to deter further actions
Foxconn
“THE CRISIS”
An audit of Foxconn Technology Group revealed “serious and pressing” violations of Chinese labor laws. Employees were given the ultimatum by their Foxconn supervisors to either obey the rules and work grueling hours or to leave their employment positions
Competitors - Apple’s largest competitor
Competitors - Apple’s largest competitor
Competitors
Apple has managed to merge both consumer surplus as well as product surplus for greater ROI. Through its product differentiation and marketing, Apple has been successful in creating economic value in the minds of its customers, and customers are willing to pay a premium price for its products, hence the steep profits when compared to Google.
Competitors
Founded in 1994 by Jeff Bezos
1995 Annual Sales $20,000
1998 Launched Music and Video Service
2007 Amazon Kindle launched
2012 Sales $61 Billion, 51,300 employees
Mostly an online retailer but has pushed into Apple’s market with the Kindle Fire
Amazon is also rumored to be looking into its own line of smartphones
Apple Practical Example #1
“Brand”
“Sure, other brands are cheaper. But nothing beats going to the Apple store and having them fix it on the spot.”
Apple Customer
Apple uses a premium pricing strategy in a market where competitors sell handsets for half the price. Their strategy leaves them vulnerable to (Refer to slide 2):
Pricing competition from competitors who can sell similar technology,--Samsung for example—at lower prices to consumers. This point is made worse by –
Patent Infringement. In the case of competitor Samsung, the technology is identical because Samsung manufactures components for the iphone and then infringes on Apple's technology by incorporating the design into their reduced price handsets.
So with cheaper identical substitutes, How does Apple maintain lead market position using premium pricing? The answer is the brand. Everything from the inviting retail locations, hands on service, extensive warranty coverage, carefully curated peripherals (software and hardware), user friendly interfaces and design all provide the competitive edge over cheaper identical competitors. It is all built into the brand.
Apple Practical Example #2
“Network Effect”
“I have to buy the next Iphone. If I get another brand it may not work with my TV, or stereo, car radio, or the scale in my bathroom” - Apple Customer
Apple leverages the Network Effect to maintain a competitive advantage. The large market share incentivises other related related technology into a symbiosis with the brand products :
Critical Mass. Apple’s mass market share is a weapon against competitors. Companies that make other products (anything from televisions to thermometers) can leverage Apple's market share to bolster their sales. This requires integration with Apple devices. So if your company makes bathroom scales , then you are almost guaranteed more sales if that bathroom scale connects to the Iphone.
Product Synergy. Apple products work best when paired with other apple products. You own an Iphone? It syncs much simpler with a Mac than with a PC. Controlling a large share of the cellphone market gave Apple a larger share of the computer market because Iphone owners switched to Macs.
In so many words, the network effect gives Apple a leverage over its competitors because the ubiquity of their products forces integration into daily consumer life.
References
Rothaermel, F. (April 22, 2013). Apple (in 2013) How to Sustain a Competitive Advantage?. Strategic Management Edition 2.
http://www.cnet.com/news/riots-suicides-and-other-issues-in-foxconns-iphone-factories/
www.ibrc.indiana.edu/ibr/2011/spring/article
http://marketrealist.com/2014/02/ecosystem/
www.cnet.com
http://blogs.wsj.com/digits/2015/01/29/samsung-vs-apple-who-was-no-1/
http://appjeed.com/samsung-galaxy-s5-vs-iphone-5s/
http://www.prnewswire.com/news-releases/virnetx-wins-6256-million-patent-infringement-verdict-against-apple-in-east-texas-300214979.html
http://fortune.com/2016/02/26/apple-samsung-patent-appeal/
https://www.statista.com/search/
http://www.apple.com/supplier-responsibility/
http://www.strategicmanagementinsight.com/swot-analyses/apple-swot-analysis.html
www.calvin.edu
