Advanced Strategic Management
Question A: Industry Evolution and Strategic Change
Apple Inc. is popular for its consistent investment in innovation when compared to its well-established competitors. Without a doubt, Apple Inc. is the most successful company in the Technology industry which commands more than third the profit across the entire industry. Apple’s success is credited to its first mover advantage. In other words, Apple represents the world’s leader in terms of innovation and profitability. In other words, it is not challenging for the company to dominate the market it invented on its own. The firm has for decades showed its efficiency and dominance in embracing technology and developing high-end innovative products which aligns with the needs of the modern society. Since the establishment of the corporation, it is evident that technology serves as a strategic plan for enhancing and maintaining its competitive advantage. With the development of the iPhone and its highly customized Applications store, the company has created a challenging smartphone network for the competitors which is difficult to imitate. The invention of its products such as iPhone transformed the manner in which tech companies and consumers thought with respect to innovation and perspective of smartphones, and the company held one huge advantage when launching the innovative product because it was the first of its kind.
According to Dustin, Bharat and Jitendra (2014 p.1) the tech industry has become intensely competitive over the last couple of years due to the domination of established companies such as Apple, Samsung, and Sony and so on. Thus technological innovations are the strategic plan that is being used across the industry to gain as well as sustain competitive advantage. With the rising changes, in consumer preferences, technological advancement, and globalization Apple has embraced innovation as its survival tactic an aspect that its competitors are following closely in the recent. The company boasts of being the first mover in the industry as it has disrupted not only the industry but also developed a new perspective of what innovation entails. Apple relies on socio-environmental trends as well as technology changes to enhance its general ability to implement disruptive technologies particularly innovation. First mover advantage with respect to Apple refers to the commitment made by the firm to make some rather crucial decisions with regard to product development and operational strategies in the early industrial development stages. Actually, Apple as the first mover of innovative gadgets has established a fresh foundation throughout the industry where others are following (Babkin, Lipatnikov and Muraveva, 2015 p.40). The company is normally the first to recognize emerging trends in relation to portable gadgets and develop satisfactory products that meet the needs and technological preferences of the consumers prior to all its competitors.
According to Kenney and Pon, (2011 p.240) Apple is successful in achieving the first-mover advantage in the tech industry mainly with regard to electronics and personal computing products. Some of the dominant characteristics of its products include unique design, innovative and customized software and operating system as well as innovative features such as high pixel cameras. The company was the first to develop a modernized MP3 player that overweighed all the other bulky and less innovative products that offer the same services. In addition, with the revolutionary trends in the industry at the beginning of the century, it became the leader in the integration of cellular devices with the internet connection. This has thus created an utmost level of uniqueness and prestige for the firm as more and more customers are demanding for technological and yet convenient and user-friendly products thus the competition is driven by quality and prices (Purkayastha and Sharma, 2016 p.139). Even though the company produces high-end products, its market share has significantly expanded globally over the last couple of years due to its consistency when it comes to innovation. Innovation and sustainability have thus played a crucial role in ensuring that the company retains its competitiveness as the innovation leader.
The successful adaptation of technological change has been useful for the company in promoting invention as its competitive advantage foundation. Based on the Resource-based View (RBV) model, it is evident that resources availability is the source of Apple’s superior performance and ability to remain innovative (Grant and Jordan, 2012 p.12). Apple has numerous intangible resources that contribute superiority of its strategic technique. In that, its consistent success over the years has enhanced its brand image across the globe not just as an innovative firm but also a leader when it comes to quality and embracing socio-environmental trends. This has also boosted its reputation since it has gained loyalty from its customers who normally use the products. It is worth noting that today, the success of any given firm regardless of its size is dependent on the ability to meet the growing needs and technological preferences of the consumers. Through, the consistency in addressing the needs of the market Apple benefits from customer loyalty since it is highly trusted in the development of reliable products as a whole. The brand image that it has developed over the years serves as one of its most valuable assets to the company thus aligning with its focus of incorporating technology in all its developments (West, Ford and Ibrahim, 2015 p.32). In addition, unlike its competitors, it takes time to innovate a product, and thus it has not experienced issues related to the development of defects products.
Figure 1: Resource Based Competencies
The of the company's most essential aspect lies in the recruitment and retaining of capable staffs with the quest of sustaining innovation given that skilled and innovative staffs are highly required in guarding its competitiveness in the market. In addition, this helps in encouraging consistent workflow which ensures that its operating expenses are rather lower to accommodate the needs of the ever-evolving technology. The company maximizes these resources as its strength to overcome the intensifying Competition in the market (Coccia, 2018 p.41). The company mainly demonstrated this strategic approach during the leadership of Steve Jobs whose main focus was to disrupt the market for the advantage of the company. In that, the company acknowledges that the development of a different software remains to be its leading strength. This is because the differentiation of its products and competencies have created a unique image to the company which has, in turn, emerged to be a source of its competitiveness in the market today. In this context, it is evident that the differentiated capabilities are the aspects that make the firm when aligned and equipped in fighting competition (Kull, Mena and Korschun, 2016 p.5554). Thus, when compared to all the other products in the market that are produced by its competitors iPhone has emerged as highly successful based on its uniqueness, innovation and ability to meet the growing needs of the users.
The smartphone industry is in the maturity life cycle since the demands for the products such as iPhone has gradually decreased over the years. This is reflected by the prevalent controversial debate that Apple has hit the rock when it comes to innovation since the exit of Steve Jobs. There has been less focus on innovation which is indicated by the rising competition and dominance of other firms. As illustrated by the graph below that the demand for the iPhone operating system, when compared to Android, has decreased drastically.
In that, the company has not disrupted the industry since given that its technology remains the same. This can best be illustrated by Porter’s five model. In that, with the increase of more affordable and yet innovative products the bargaining power of the consumers has increased rather drastically. In addition, the threat of new entrants is medium which implies that affordable products are dominating the market more. The domination of well-established firms has also contributed to the intensity of competition throughout the market. The company, therefore, lacks the needed innovation to retain its competitiveness as an aspect that is likely to affect its stability in the future as imitation is increasing rather drastically which has also fueled the existing competition.
Question B: Global Strategy
Coca-Cola is the world’s leading company in terms of market share, profit generation, and competitiveness. In the business landscape today, competition is rather high, and it is therefore essential for any given brand to poses more than a single source for its competitive advantage. It is rather surprising that Coca-Cola has been able to maintain its competitiveness over the years despite the rapidly changing preferences and demands in the beverage sector. However, its dominance over competitors such as PepsiCo has illustrated that durable and maintainable competitive advantage is only achievable with the existence of a few competencies. The fact that Coca-Cola is an American based corporation has not equipped the company with a competitive advantage, but its strategic focus has been rather beneficial. Each brand in the business industry today is struggling to attain a leading position and the ability to develop and maintain a competitive advantage is more crucial than any other operation (Menon and Yao, 2017 p.1954). In this case, Coca-Cola is the global leader when it comes to the production of non-alcoholic drinks. However, its popularity is grounded on a number of vital competencies rather than its American origin since PepsiCo would have benefitted from the same.
Coca-Cola boosts of its high presence in the global sector which has also been a major competence over the years. Its brand name and global presence are therefore the keys to its competitiveness. The company has established itself in more than two hundred countries with the aim of increasing its presence and recognition. This has made its name very recognizable beyond the American borders. It is worth noting that in all the countries where it is present it does not market itself as an American firm but strategizes on meeting the growing needs of the consumers based on their preferences and differences (Gillespie and Riddle, 2015 p.14). Its brand name is also an essential competence that has facilitated increased dominance and competitiveness throughout the market. Its image is highly linked to the young people given that it depicts youthfulness as well as energy. This is a vital capability which demonstrates that the brand is highly appreciated by youths across the globe. However, the products are enjoyed by individuals of all ages as it ensures that it offers different flavors to meet the needs of each segment in the market. In this context, the company has built a reputable image that is highly trusted and enjoyed by most individuals. Its high presence across the globe implies that it enjoys higher revenues than any other firm in the industry which supports its domination.
An additional competence rather than the American origin is the extensive supply and distribution system. Based on its vast resources the company has an established supply and distribution system which ensures that the products are delivered in a timely manner to all the consumers throughout the market. Its strategic approach mainly involves the development of bottling partners, and this also helps in the distribution of the products. The company understands that with the intensifying competition, increased, substitution and buyers high bargaining authority there is a necessity to work closely with its customers (Mcgrath, & Gourlay, 2012 p.54). Thus, it relies on vendors who interact directly with the consumers. In addition, the company is focused on creating as well as guarding more enhanced and long-run relationships with the respective suppliers. In achieving this, the company has created strategic initiatives to assist suppliers as well as farmers in addition to empowering communities. Investment in human resource and marketing competencies have also been key in its competitiveness. The company is popular for its skilled and unique marketing abilities globally which allow consumers to connect best with all that it offers in general. In addition, the company believes that employees are very valuable to its success and works to retaining and recruiting the best to guard its competitiveness.
Coca-Cola is globally celebrated as the leader and manager of diverse global brands but on its differentiation strategy (Sharp, 2016 p.19). Besides marketing the company is able to strike a balance between global integration and national differentiation. Due to its entrance in different countries where the culture and language aspects differ from that of the American society, Coca-Cola mainly relies upon producing products that meet the demands of a specific population. Consumers are likely to different posse preferences, demands, and experience with a product based on their location and cultural assertions. Thus, the company normally amends its strategic focus to ensure that it taps the market regardless of their differences which is also illustrated in their differentiated marketing and branding. The effectiveness of the company in the integration and regional products differentiation is without a doubt supported by the existence of an authoritative competitive advantage as well as extensive market share in the markets as a whole.
International corporations are always challenged by the need to maintain originality and lawfulness in different national borders. Thus it is a common strategic approach for the organizations to amend their business approaches when expanding their operations to the international market in responding to the diverse preferences and demands as guided by cultural and regulatory expectations (Sharp, 2016 p.19). The natural culture consists of underlying beliefs, perceptions, and values of a given society that influence an individual’s behavior and expectations. Thus, the existing differences in any given national culture normally determine the level of adaptation that is needed by the firm to facilitate effective business. In addition, the company works to ensure that it guards the assured quality, convenience and affordability of the product as a means of upholding its brand image.
The ability of the firm to balance global integration and national differentiation can best be explained using Porter's five forces model. In that, the company faces competition from the local and international beverage firms in the respective market which thus forces them to strategize on how to overcome competition. Thus, the company operates by assuring its customers of providing tasty, convenient and affordable products, unlike its competitors. This is also supported by the fact that it has a large finance source and supply system which works to ensure that the needs and preferences of the consumers are met in a timely manner (Mcgrath, & Gourlay, 2012 p.54). Its strategic approach also makes it rather difficult for new entrants to survive in the market because the company on its own offers large supplies that are based on socio-cultural aspects and trends. For instance, in the recent, the company has developed a sugar-free beverage with the intention of satisfying the needs of the consumers who are conscious about weight and unhealthy products. This also shows that the power that is held by its respective consumers plays a part in shaping its strategy.
Figure 2: Porter’s five forces – Coca-Cola Company.
Coca-Cola is a customer-centered corporation that focuses on meeting the needs of the consumers, and therefore it customizes the products based on what they are demanding which entails the differentiation system. Diversity is also key since it ensures that the needs of all its consumers are addressed without fail (Sharp, 2016 p.20). Diversification is essential due to the growing availability of substitute products which appears to be taking a significant share of the market. Most of the substitutes are cheap which has continuously required the company to design its prices based on the economic status of each nation. Therefore, in the developing nations, the prices are a bit lower than those of the developed ones who seek to attract more buyers while maintaining loyalty. These aspects contribute mainly to the development of its competitive advantage, sustainability, differentiation, and global integration.
Question C: The Future
Apple Inc. remains to be the global leader in the technology industry. However, since the industry has reached maturity where sales reduction and market share are common characteristics the company needs to integrate other strategy actions in securing its competitiveness. Brand imitation has been quite high, and the company is no longer capable of guarding product’s design unique and innovative. Most established companies in the industry such as Samsung are currently producing goods of the same level, and the corporation might not, therefore, retain the competitive advantage for long. Post the exit of Jobs it appears as though the use of innovation to disrupt the market weakened and the competitors are slowly expanding their presence in the market. It is without any possible doubt that rather than being an innovative leader the ability to achieve sustainability by dominating the market is essential in the running of the multinational company. With reference to Porter's five forces model, it is clear that competition is intensifying in the beverage due to the low threat of entrants for new companies and the availability of substitution. Thus, it is suggested that the company should adapt product diversity as one of the strategic action in preserving competitiveness.
Figure 3: Porter Five Model – Apple Inc.
For the longest time, Apple has been producing a few models per year which are credited to its focus on innovation. However, while the lifecycle of its products is long, the competitors are launching a variety of products annually which further threatens the stability of Apple in the market. By investing in diversity, this, therefore, means that the company should not only produce more products within a short time but also to produce diverse products that meet the needs of the low class and high-class individuals (Kenney and Pon, 2011 p.342). In this context, the company is mainly involved in the production of high-end products which is reflected by the small market share that the company occupies when compared to the competitors. It is rather clear that those within the high-class group is smaller and thus integrating the group with the middle and low lass segment would be useful in expanding the market share of the company. Due to the increasing demand for innovative and affordable products, more companies are offering products that meet the needs of these people. Thus, the longtime cycle for developing the product is also driving more and more consumers to buy products from the competitors. Consumers are becoming quick adopters to technology and Apple is not able to meet this demand. In addition, it is worth noting that the companies are providing the product of related designs and innovative as well.
Thus, the company should integrate diversity and differentiation. Most companies in the tech industry are using cost leadership as the strategic approaches in overcoming the intensifying competition. However, since Apple spends so much on innovating products and thus the approach would mean that the company would suffer major losses that would also affect the competitiveness of the company. In addition, this is essential in preserving the ability of the company to sustain its competitiveness as well as meeting the increasing demands and ever-changing preferences. It is not very correct to assert that the company is likely to retain its competitiveness over the years since its competitors are becoming highly innovative as they imitate the disruption that the firm created. Based on statistics it is evident that companies such as Samsung are slowly taking over the market due to their consistency in innovating products quickly. Thus, it is justified to say that in addition to innovation the company should ensure that they integrate diversity to tap a larger market share.
References
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