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Apple Inc is one of the leading influential companies in technology today. Apple has had an enormous impact on technology, society and the world. O'Grady (2008) noted that using a personal computer as a foundation, Apple has turned technology into an essential tool of our daily lives. Hitt, Ireland & Hoskisson (2012) say that Apple Inc was one of the few companies to emerge from the recession stronger than ever as one of the most well known and respected companies in the world. This is because by spring 2011, Apple had an array of impressive products such as iPod, iPhone, iPod shuffle, iPod Nano, iPod touch, iPod classic, Apple TV, MacBook, MacBook Pro, MacBook Air, Mac mini, iMac and MacPro (Hitt, Ireland & Hoskisson, 2012). Through its business strategy, Apple was the only company to maintain its status as number one for innovativeness on Fortunes list of the world’s most admired companies in both pre-recession 2007 and post recession 2011.
Apple’s focus on innovation has assisted the company to maintain a competitive advantage and marketing prowess over other industry players that have historically been mu?h stronger than Apple Inc. Hitt, Ireland & Hoskisson (2012), on the other hand, noted that Apple must continue to beat the competition on a number of levels. This is because iTunes faces stiff competition from new and existing online music and video download services. According to Hitt, Ireland & Hoskisson (2012), projections suggest that smart phones sales will surge over the next few years. These projections include a 200% increase in the sales of high end mobile phones by 2013, to 300 million in annual sales (Hitt, Ireland & Hoskisson, 2012).
Defining Strategic Management
Strategic management at Apple Inc refers to the set of decisions and actions used to formulate and execute strategies that will provide a competitively superior fir between the organization and its environment in order to attain organizational goals (Daft & Marcic, 2010). Strategic management helps managers to make choices about how to position their organizations in the environments with respect to rival companies. Daft & Marcic (2010), thus, says that superior organizational performance is not a matter of luck but it is determined by the choices that managers make. The first step in strategic management is to define an explicit strategy, which is the plan of action that describes resource allocation and activities for dealing with the environments, achieving a competitive advantage and achieving the company’s goals (Daft & Marcic, 2010).
The essence of formulating strategy at Apple Inc is the choice on how the company will be different. Managers at Apple Inc make decisions about whether the company will perform different activities or will execute the same activities differently than its competitors do. Daft & Marcic (2010) says that strategic management at Apple has changed over the time to fit environmental condition, but to remain competitive Apple Inc has developed strategies that focus on core competencies, develop synergy and create value for its customers over the time. At Apple Inc, strategic management process begins when executives evaluate their current position with respect to mission, goals and strategies (Daft & Marcic, 2010). During strategic management, Apple Inc scans the organization’s internal and external environments and identifies strategic factors that might require change. Daft & Marcic (2010) further says that internal and external events might indicate the need for Apple to redefine the mission or goals, or to formulate a new strategy at the corporate, business or functional levels.
Hitt, Ireland & Hoskisson (2010) indicated that Apple’s strong performance in poor economic times in 2008 is largely credited to its innovation capabilities. Through the company’s business strategy, Apple Inc has continued to upgrade its current products such as laptops with enhancements. Hitt, Ireland & Hoskisson (2010) noted that managers at Apple Inc use persuasion, new equipment, changes in organization structure or revised reward system to ensure that employees and resources are used to make formulated strategy a reality.
Strategy formulation in Apple often begins with an assessment of internal and external factors that will affect the Apple’s competitive situation. Daft & Marcic (2010) says that SWOT analysis includes a search for strengths, weaknesses, opportunities and threats that affect Apple’s performance. External information about opportunities may be obtained from a variety of sources such as customers, government reports, professional journals, suppliers, bankers, and friends in other organizations (Daft & Marcic, 2010). This form of analysis provides managers with a critical view of the company’s internal and external environment and helps them evaluate the Apple’s fulfillment of its basic mission (Boone & Kurtz, 2012).
The Apple’s Inc strengths reflect its core competencies, that are what Apple Computers does so well. Boone & Kurtz (2012) noted that core competencies are capabilities that customers value and competitors find difficult to duplicate. Matching an internal strength and an external opportunity produces a situation known as leverage. Marketers face a major problem when environmental threats attack their organization’s weakness. The major strengths of Apple Computers Inc include its cost advantages associated with its products, the availability of financial resources to foster innovation, customer loyalty to Apple brands and products and modern production facilities (Boone & Kurtz, 2012). Another major strength of Apple Inc is the availability of patents for its products. Apple Inc enjoys superior research and development, expert technological know-how, process efficiency and exceptional customer services. Hitt, Ireland & Hoskisson (2010) says that Apple Inc garnered major success for iPod and iTunes through the way of strategic partnerships with other well known brands. By affiliating itself with different brands, Apple gained consumer confidence as well as exposure through marketing partner advertisements.
The internal weaknesses faced by Apple Computers Inc may include weak spending on product research and development, limited distribution globally and higher costs of raw materials or processes. Ferrell & Hartline (2010) noted that the emergence of counterfeit smart phones from China at reduced costs has changed the way Apple customers look at their products. In this context, today many users of computer based products see iPhones, iPods and the related products as a readily available product with price being the only real distinguishing feature among competing brands. Samsung has been a major threat because of its introduction of low cost products whose functionalities rival Apple’s products. Ferrell & Hartline (2010), thus, say that the internal weaknesses of Apple’s major products will lead to additional competition in the market.
The external opportunities that Apple can benefit from include rapid market growth, complacent rival firms, changing customer’s needs, such as the need for iPhone5, and opening of foreign markets such as China and Africa. Ferrell & Hartline (2010) indicated that Apple Inc is set to benefit from new product discoveries, economic boom arising from the recent recession, demographic shifts of Apple product users and sales decline for substitute products. The external threats that Apple Inc is set to face include entry of foreign competitors, introduction of new substitute products, changing customer needs and declining consumer confidence. Foreign trade barriers from countries such as China and other Asian countries and weakening currency exchange rates are also the potential external threats (Ferrell & Hartline, 2010). After defining threats and opportunities, the manager should develop strategies to take advantage of opportunities and minimize or overcome the Apple’s threats.
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The management of Apple Inc should realize that stressing internal strengths while ignoring external issues can lead to the company’s failure, even despite using efficient marketing techniques; there will be no benefit for the company if external changes either enhance or impede its ability to serve the needs of its customers. Hitt, Ireland & Hoskisson (2010) noted that Apple will continue to dominate the tablet market through 2015. They also noted that much of Apple’s continued success and dominance over the competition has been due to the ingenuity of its marketing efforts. Marketing has over the time been one of Apple’s strengths, but staying on the top of the game has become more difficult as Apple develops a broader range of products for the mainstream customer rather than just normal users in the fields of education and design.
With competition increasing, Apple and many other companies are spending more time and resources on strategic planning. Pride & Ferrell (2012) say that strategic planning helps to determine how to use resources and capabilities to achieve their objectives and satisfy their customers. Strategic planning will enable Apple Inc to come up with an organizational mission and formulate goals and a corporate strategy. Pride & Ferrell (2012) noted that, based on this analysis, the company can develop corporate strategies to achieve those goals.
Throughout the entire process strategic planners at Apple Inc should realize that the strategic performance capabilities depend on how resources are carefully allocated to different business units. For example, Pride & Ferrell (2012) say that Apple controls 76% of the market for digital music players in the United States with its iPod line, while Microsoft’s Zune has only 1%. This implies that at Apple Inc such issues as product quality, order of entry into the market, and market share have been associated with strategic business units.
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Over the years, Apple has earned a strong reputation for beauty, simplicity and quality. O'Grady (2008) says that Apple Inc focuses on the entire user experience and is rewarded with strong sales and fierce loyalty as a result. In order to execute its strategy properly, Apple is always quite and secretive about its future plans, especially when it comes to new products. O'Grady (2008) mentioned that Apple enjoys much commercial success with little, if any, focus on group testing, barely any beta testing, and a public relations department that wound tighter than a drum. A new Apple product announcement generates millions of dollars in free publicity on the internet and in mainstream media, and the bigger the surprise, the greater the amount of free coverage (O'Grady, 2008).
Apple’s strategy is simple and it outlines that mediocrity is the enemy of excellence. O'Grady (2008) says that Apple Computer’s Inc success is not just luck or good fortune. The company has spent the last decade perfecting an intricate strategy that yields a seamless mix of hardware, software and services. Apple products achieve a goal of being easy to use, yet powerful. Within the company’s strategic plan, Apple’s underlying philosophy is to design products that are easy to use and beautifully designed.
A strategic plan will assist Apple Inc organize and manage successful organizational change process and determine what to modify. Through a strategic plan, the new chief executive officer Tom Cook will be able to build perspectives on the nature of decision making in Apple Inc. It acts as a reaction to incidents that require combined and, often, fresh response. Strategic plan will help Apple Inc to build strengths and take advantage of major opportunities available in the market, while they minimize limitations and serious challenges. Apple’s Inc strategic plan will encourage intelligent strategic consideration on behalf of the company and its key stakeholders.
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Mohr, Sengupta & Slater (2010) noted that Apple Inc should create product innovations and learn to create innovations through strategic planning. Developing a strategic plan requires that Apple Inc brings a unique and innovative perspective to creating customer value (Mohr, Sengupta & Slater, 2010). Strategic planning at Apple Inc requires the creation of a deeply embedded skill and it is a way of Apple Inc to understand what is going on in the industry and then envision new opportunities (Mohr, Sengupta & Slater, 2010). The management at Apple should not become enamored with a specific strategy, but should be prepared to adapt and change basing on developments in the marketplace. Mohr, Sengupta & Slater (2010) noted that effective strategy creation at Apple Inc is based on the paradoxical notion that one can make serendipity happen.
Through its strategic planning process, Apple Inc chose not to follow the conventional wisdom that it pays to extend products’ shelf life. This implies that Apple keeps making its own computer chips obsolete with better designs. Mohr, Sengupta & Slater (2010) say that Apple Inc has proved that with an effective advertising campaign it is possible to brand a component with another product. Being in high technology products market, Apple requires a flexible strategic posture. This is because the managers of the computer giant company, Apple Inc, can be overwhelmed with the complexities they face; hence they must modify and adapt their strategy making process to rapidly changing environment (Mohr, Sengupta & Slater, 2010).
Strategic planning process within Apple Inc must take into account that rapidly changing customer expectations, competitor actions, and technologies, such as those found in high technology environments, do not follow such rational process. The company should, therefore, continue using emergent strategic planning process whereby the strategy is improvised or emerges from lower levels of organizations.
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Through the emergent strategic planning process employed by Apple Inc, the company has been able to come up with beautiful designs by ensuring that its products are visually appealing. Emergent strategic planning process ensures that Apple’s iMac, iPod and iPhone are universally recognized for their beautiful design and enjoy amazing sales as a result. O'Grady (2008) says that in addition to its beautiful hardware design, Apple ensures tight control over its software look and feel. In order to execute this strategy, Apple publishes user interface guidelines that software developers must follow and the result is a consistent and predictable experience for users (O'Grady, 2008). Through its emergent strategic planning process, Apple has ensured low entry points for its products. Apple began offering inexpensive products that got people in the door, like the $49 iPod shuffle and the $499 Mac mini, then enticing them to upgrade later on.
The major component of Apple’s strategic planning is differentiation. Daft & Marcic (2010) says that the differentiation strategy involves an attempt to distinguish Apple’s products, such as iPhone, iMac, iPod and iTunes, from others in the industry. Apple Inc should apply creative advertising, distinctive product features, exceptional service or new technology to achieve a product perceived as unique (Daft & Marcic, 2010). In addition, Daft & Marcic (2010) indicated that a differentiation strategy can reduce rivalry with competitors if buyers are loyal to Apple’s brand. During strategic planning, successful differentiation can also reduce the bargaining power of large buyers because other products are less attractive. This helps to fight off threats of substitute products such as Samsung Galaxy Mini III.
Benefits of Strategic Planning
Through a strategic plan, Apple Inc will achieve five main advantages. Firstly, it will promote strategic thinking, acting and learning. It will play a major task in ordinary negotiations about key apprehensions of moving the company forward and increasing its efficiency and innovation (Bryson, 2004). In this context, Apple Inc will be able to systematize and manage successful organizational alteration processes. Secondly, strategic planning will encourage improved decision making at Apple Inc. Bryson (2004) says that the Apple Inc senior management team will, through the strategic plan, develop a sound and justifiable basis for decision making and then harmonize the resulting resolution across all levels of Apple Inc.
The third advantage of developing a strategic plan is that it will ensure improved efficacy, receptiveness and pliability within Apple Inc. Bryson (2004) noted that the plan will assist Apple Inc to deal successfully with swiftly changing conditions. Apple Inc, through the strategic plan, will be able to react wisely to internal and external hassles and forces, as well as those associated with accountability (Bryson, 2004). The fourth benefit of strategic planning to Apple Inc is that it ensures enhanced legitimacy within the company. Through the strategic plan, Apple Inc will satisfy its key stakeholders according to the stakeholder’s criteria at a reasonable cost.
Fifthly, strategic planning for Apple Inc will help to produce improved effectiveness of broader public systems (Bryson, 2004). Through strategic planning, Apple Inc will be able to take the broader environment into consideration, including the task on how to partner with other companies in the best way possible to create better working atmosphere. Finally, Apple Inc will directly benefit the people involved. This implies that policy makers and key decision makers can be helped to fulfill their functions and tasks, teamwork and expertise are likely to be built among the members in the process.
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Mistakes of Strategic Planning and How to Avoid Them
Strategic planners can make the mistake of conducting one generic SWOT analysis for Apple Inc as an entire organization (Ferrell & Hartline, 2010). Such an approach produces stale, meaningless generalizations that come from the tops of manager’s heads or from press release files. Haines (2007) says that another common mistake is failing to define the ideal future vision in the beginning. To avoid this failure, development of a new vision and ethics should come out of consideration about Apple Inc’s identity, its abiding principle, and required reactions from its stakeholders.
Another major mistake, according to Haines (2007), is failing to integrate planning at all levels. To counter this mistake, Apple Inc develops an effective implementation process whereby in this step approved strategies are executed throughout the appropriate systems. The senior leadership should also be aware that an effective implementation process and action plan must be developed (Bryson, 2004).
In addition, another common mistake is developing only superficial vision, mission, and values statements. To avoid this mistake it is important for Apple Inc to identify its mandate and mission (Haines, 2007). Those involved in the strategic planning process should identify the official and informal directives placed on Apple Inc. Haines (2007) noted that these will be the various needs, boundaries, prospects, strains and constrictions it faces. It will be important for Apple Inc to examine the relevant legislation, guidelines, decrees, contracts, critiques and agreements that draw Apple’s prescribed mandates.
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Failing to design and complete an effective implementation process is a major mistake that can occur during the strategic planning process (Haines, 2007). Bryson (2004) noted that Apple should, thus, reassess strategies and the strategic planning process in order to re-examine implemented strategies and the strategic planning process. Its main aim is to find out what worked for Apple, what did not work and why it did not, and, therefore, prepare the next strategic planning process (Bryson, 2004).
In conclusion, adopting the differentiation and emergent strategic planning will ensure that the Apple Inc incorporates innovations and, more importantly, moves the relationship from customer point of view to a fully integrated chain which revolves around customer satisfaction. Adopting this strategy will ensure that the company moves to a competitive edge with its competitors and ensure a more wide global scope market for the company. While carrying out the strategic planning process, Apple Inc should monitor future regulatory political climates or global economic conditions despite the fact that we are in a global marketplace and economy.