Apple Inc.

A Case Study

In partial fulfillment of the requirements

In the subject of Strategic Management

To be submitted to

Prof. Gelita Colon

Submitted by

Atienza, Christine Joy

Banzuela, Rex Lenard
Batobalonos, Juliann Joseph
Bermudo, Hazel
Beso, Regine
Buela, Lucky Angel
Bugay, Nick Lourence
Burlaos, Willard

BM602
 Apple Inc.
Apple, Inc. According to an article published in CNN Business website, Apple, Inc. engages in the
design, manufacture, and marketing of mobile communication, media devices, personal
computers, and portable digital music players. It operates through the following geographical
segments: Americas, Europe, Greater China, Japan, and Rest of Asia Pacific. The Americas
segment includes North and South America. The Europe segment consists of European countries,
as well as India, the Middle East, and Africa. The Greater China segment comprises of China,
Hong Kong, and Taiwan. The Rest of Asia Pacific segment includes Australia and Asian countries.
The company was founded by Steven Paul Jobs, Ronald Gerald Wayne, and Stephen G. Wozniak
on April 1, 1976, and is headquartered in Cupertino, CA.

I. Company Background

a. Current Performance
Apple today announced financial results for its fiscal 2021 first quarter ended
December 26, 2020. The Company posted all-time record revenue of $111.4 billion,
up 21 percent year over year, and quarterly earnings per diluted share of $1.68, up 35
percent. International sales accounted for 64 percent of the quarter’s revenue.

b. Strategic Posture
i. Mission
“To bring the best user experience to its customers through its innovative
hardware, software, and services.”

ii. Vision
“We believe that we are on the face of the earth to make great products
and that’s not changing. “Apple’s mission is committed to providing the
best innovations and technologies in the world.”

iii. Objectives
“Our goal, in a nutshell, is to obtain stellar products and services within
tight timeframes, at a cost that represents the possible value to our
customers and shareholders. If that sounds like a daunting task, it’s the
same one we assign ourselves.”

iv. Policy
“Apple cares about protecting your personal information online, and we
stand behind our products and services.”
II. External Environment
Apple’s strategies are partly based on the need to address forces in the external
business environment. These forces can limit or reduce the firm’s market share,
revenues, profitability, and business development potential.

 Supplier Power - Apple Inc. have a lot of exposure to the worldwide to the
worldwide supply market. Apple Inc. have some of the largest market caps/
market shares and consumer appeal.

 Buyer power - Apple has many substantial ties worldwide, due to the fact that
they are present in multiple markets and have a wide variety of costumers it is
safe to say that the company product output is fairly distributed across many
buyers. With the amount of product sales, comes from the sellers annual
revenue they make off these products, Apple is a large company and very
profitable due to highly differentiated products.

 Competitive Rivalry- Apple produces many products to penetrate many

markets, which creates many different competitors. One reason why apple is
ahead because they were the first revolutionize the consumer markets with
their products.

 Threat of Substitution - The costs associated with switching from Apple

products to one of its competitors is very high. Apple products run their own
operating system, and all of the other apps will not be compatible with other
competitor’s operating system. This may cause the costumers perceived costs
of switching products because of the hassle. Apple is a market leader, thus
many competitors will emulate them by offering similar products at reduced
prices or with unique features.

 Threat of New Entrants - Apple has been in an industry for a while to have
a leg up on competitors by figuring out how to lower their production costs
and analyzing their market better. California is the mecca for computer
industry in the U.S as such suppliers naturally flock their and computer
workers can easily share their ideas and build off another, therefore Apple
gains a significant advantage of lower supply costs and a more intelligent
labor pool. The technology sector is a tough market to enter regarding product
differentiation because of the innovative powerhouse of Apple, these barriers
give Apple an advantage and form of protection against new up and coming
companies who try to compete.
 III. Internal Environment

The Apple Inc. is known all over the world for its unmatched technologies and devices such as the
Mac and iPhone. Apple is best known for its great marketing. The company brought several market
leading products like the Mac Operating system, iPhone, iTunes, iPad and several more. The
Internal Environment will be discuss in this such as the resources, capabilities and Apple’s
competencies.

The Apple’s resources are the following:

Tangible Resources:

 Outsourced manufacturing facilities in China

 Apple retail store locations

Intangible Resources:

 Research and development teams – CEO Tim Cook aims to attract the “best and the brightest key
personnel”
 Brand recognition and reputation among suppliers and customers
 Customer loyalty
 Partnerships with third party developers (i.e. Microsoft Office and Adobe)
 Visionary leaders

APPLE’S CAPABILITIES

Apple's innovation and technological growth skills, as well as its creative capabilities, are critical
factors and strategic assets. This is due to Apple's "out of the box" innovations and innovative
product design, which drew in customers from all over the world and made its products pioneers of
innovative technology. Also, Apple’s superior innovation is the most important source of
competitive advantage for the company in the long run.

The Apple’s capabilities are the following:

The Strategic capabilities of Apple Inc. is that it has the technology and money to develop up to
date with current demand trends and competitors.

Innovation and engineering excellence: technological developments and inventions

Creativity and design: high-end marketing, product design

HRM policy: HRM department and employees contribute effectively to company’s success

APPLE’S COMPETENCIES

Apple’s greatest core competency is knowing how to implement elegant but functional
design. The consumer benefit is getting a product that works intuitively, while making everyone
else envious.Other businesses have attempted to copy, but have failed miserably. Apple has
replicated its design success across a variety of platforms, including computers, music players,
mobile phones, and retail locations.

Apple’s competencies include innovation in mobile device technology, strong marketing teams,
high quality customer service and a strong financial performance. It also has a strong brand
reputation for its products, which include the iPad, iPod, iPhone, Apple TV, and Mac computer
hardware and software.
 IV. Corporate Level Strategies

From Apple’s humble beginnings as a garage-headquartered startup, it has been in the genetic
makeup of the company to be user-friendly. Correspondingly, a large portion of Apple Inc.’s
corporate strategy revolves around the use of its resources to produce and integrate both
hardware and software placed into its product offerings. In the consumer electronics industry,
this is a major difference between Apple and its competitors, since many competing firms build
products using other firms’ hardware or software in its devices, driving profit margins
downward. Because Apple can focus on pairing all self-produced hardware and software
components in its offerings, it is able to eliminate the higher costs and poorer quality of third-
party companies’ programming.

Quality is, of course, a huge focus for Apple in its corporate-level strategy, allocating many
resources to the upkeep of its distinguishingly high-quality goods and services. Apple has
continued to produce technologically advanced goods that are also designed to be extremely
sleek and ahead of their times. The innovative design planning, whether the products are proven
successful or not by sales, give way to further progress and trendsetting, eventually translating
directly to higher profit margins. Apple’s strategy is to target those consumers willing to spend
enough for its products, all of which fall into the upper echelon of the industry in terms of
quality, price, and, occasionally, the midrange price level. It is by these methods that Apple
effectively captures customers and profit margins, and keeps a long-run grasp on both.

There are three general directional strategies a company can take: growth, stability, and
retrenchment. Apple Inc. is clearly moving in the direction of a growth strategy as it looks to
continually expand its product lines, thereby dominating the consumer electronics market,
especially in terms of mobile electronics. Once the company selects this grand directional
strategy, it must decide which specific sub-strategy it needs to implement in order to indeed
move in the direction of continued growth. Within its growth strategy, Apple has chosen
concentration methods, through both vertical and horizontal growth, as a means to achieving that
end.

Apple Inc. has been increasing its direct involvement in the operation of its value chain by both
backward integration and continuing forward integration. In the 1980s, Apple’s involvement in
the front-end of its value chain came to an end with the closing of all its retail stores, as mass
merchandisers, such as Sears and Circuit City, emerged and prospered. However, by May 2001,
Jobs revitalized, restructured, and re-implemented forward integration within Apple Inc. once
again. Jobs’ return saw the reopening Apple Retail Stores in places of heavy traffic by
individuals of the company’s target market, and the company continues to do so today, as can be
seen by the increase in average stores from 288 in 2010 to 326 in 2011. This strategy has
worked extremely well for Apple.
There are two common ways in which a firm achieves horizontal growth. One is to expand
operations geographically in order to penetrate new markets, and the other is to expand product
and service offerings to markets already penetrated. What is great about Apple Inc. is that it has
and currently continues to do both. In fiscal 2011, the company distributed its iPhone to 105
countries worldwide through 228 mobile carriers, as opposed to only 89 countries through a
mere 166 carriers in fiscal 2010. In just a year’s time, Apple has made notable progress in its
geographic expansion, entering many new markets around the world. Apple Inc. has also
increased its product range and services by introducing altogether new products, like 2010’s third
quarter introduction of the iPad, as well as 2011’s fourth quarter introduction of Apple’s iCloud.

Apple has even made some reasonable progress in the way of environmental sustainability and
turning the company more “green”. Although not directly affecting consumers, the company
has undergone a strong series of changes to its corporate-level strategy with the implementation
of new environmentally conscious manufacturing and shipping practices. Apple Inc. designs its
products to now use less material, and it packages and ships them in less material as well. The
company strives to build its products to be as energy efficient and recyclable as possible, even
insofar as entirely ridding its product lines of harmful substances its industry is scrutinized for
such as arsenic, brominated flame retardants (BFRs), mercury, phthalates, and polyvinyl chloride
(PVC). Apple has recognized problems within its industry, relating to harm done to the
environment, and has effectively made changes in an attempt to minimize the affect its continual
growth has on the ecosystem.
V. Analysis of Strategic Factors

a. SWOT Analysis

Strength Weakness

 Most recognizable brand  Slowed down its innovation

 Expanded its portfolio into  Sell the products at a premium
services, hardware and price
services  Unfair business practices
 Strong financial positions

Opportunity Threat

 Develop products to compete  Consumer technology

in more cost-effective markets  Labor cost
 Green Technology  Supply Chain
 Research and Innovation

i. Strength

1. Apple is one of the most recognizable brands in the world. Its

brand image identity is so firmly woven into the design language
of its products that you can easily distinguish an Apple product
through its sleek elegant design.
2. Apple has expanded its portfolio into services, as well as
hardware and software. Apple’s services and non-hardware
revenue presently represents for two-thirds of Apple’s revenue,
effectively broadening its portfolio. This is fundamental to
alleviate chances that by and large present themselves to hardware
producers, in the same way as other of its competitors.
3. Apple has one of the strongest financial positions. With one of
the highest gross margins in the industry, Apple’s ability to
generate cash is exemplary. This places Apple in a position to
focus on the future, to be bold with its brand image and its
industrial design, and to properly invest in innovative
developments in the various industries in which it is a stakeholder.
Furthermore, this strong financial position offers risk mitigation
during times of economic uncertainty.
ii. Weaknesses

1. Apple has slowed down its innovation in the last few years. In
spite of the fact that Apple has gotten inseparable from forefront
innovation, promising electronic products that highlight latest and
greatest that the market has to offer, in reality, this has been less
and less so throughout the years.
2. Apple continues to sell its products at a premium price. Apple
continues to market its products at a price point above its
competitors, even if its competitors’ devices are technologically
superior to Apple’s products. Although in the short term this
strategy can yield greater returns, in the long run, Apple will find it
hard to retain its hard-won consumers.
3. Apple has been accused of unfair business practices. An issue
with guaranteeing that you persistently create quality products with
cutting-edge technology is that your items wind up enduring quite
a while. This is fantastic for the consumer, yet not as useful for
sales volumes, as ideally, you’d like your customers to be
replacing their devices frequently from your stores. Through
updates that Apple occasionally executes, it purposefully hindered
gadgets that were over a particular age and diminished the gadget's
battery life, making an upgrade seem worthwhile.

iii. Opportunities

1. Apple can develop products to compete in more cost-effective

markets. Now in its second generation, Apple’s SE range of
iPhones has proven to be a resilient phone during an economic
downturn. This line has offered a break from a decrease in
spending on high-end consumer goods. While the SE line is
thriving, Apple still derives most of its hardware revenue from
high-end products. There is an opportunity to further developing its
cost-effective products.
 2. Green technology is proving to be more viable and more
marketable. An eco-imperative is getting more of a driving force
within most companies’ activities. However, Apple has been
delayed to the beginning in rolling out eco-friendly initiatives in its
cycles. The materials that the company utilizes, as well as the
manufacturing process, are yet to change to be more
environmentally responsible.
3. With further research and innovation in its existing markets,
Apple can once again be an innovation leader. While Apple is
still synonymous with cutting-edge technology, its deployment of
innovative technology is no longer a differentiating strategy. Its
differentiation strategy has thus far focused on the size of its
devices, aesthetics and camera capabilities. Research and
development leading to innovative technology in the consumer
tech environment still offer a good opportunity to win over more
customers.

iv. Threat
1. The consumer technology industry is one of the most
competitive industries. The industry is characterized by
innovation and technological development, and can fairly be
driven by the significant market members, like Apple. But
disruption is widespread. Apple needs to guarantee that it works at
the most effective levels and conveys inventive results of a specific
quality reliably, with zero deformities.
2. Labor costs have a big impact on Apple’s profits. Considering
Apple's mission to convey good quality items at a rate that offers
its investors the best worth, it requires its info expenses to be just
about as low as could be expected and its cycles to work at
unimaginable degrees of proficiency. Thus, its manufacturing
process are outsourced to regions of the world with cheaper labor.
Any variance in the costs of labor, whether driven by exchange
rates or human rights lobbying for example, will adversely affect
the organization's productivity.
3. Any supply chain shocks negatively impact Apple’s
performance. Considering the levels of efficiencies required to
develop consumer electronics, any shocks that present themselves
in the supply chain of these lines will impact deliveries of the
product and, ultimately, the bottom line. The security of the supply
of a manufacturing input is exceptionally important in the
manufacturing process for consumer electronics to ensure that
expensive and cumbersome unforeseen stoppages have a limited
chance of occurring.
VI. Strategic Alternatives and Recommended Strategy

a. Three directional strategies

1. Growth strategies: Horizontal growth

- Apple’s growth has been booming since the 2010 with their product and
marketing that directly competes with other big-tech companies. With this much
resources, Apple has been purchasing different companies to expand their line of
products through and through. With every acquisition, they aimed to improve
their products to be sold to the end-consumer. But concentrating so much on
expanding the market can lead to a decrease in quality and attention to developing
or maintaining a good product line.

2. Stability Strategy: No-change Strategy

- With the way apple experiments and innovates on their way to success as far as
strategy, there really is no question as to continuing and not changing it to their
way of consistency. As of 2020, their profit has reached $28.7 billion with a 29%
increase from last year with no sign of stopping. Although the strategy seems to
be on a good pace, not trying to find alternatives to strategy can cause for great,
like with the battery gate scandal with which there is a deliberate change to the
strategy in a way of leading to consumer fraud, ergo leading apple to pay more
than they profit for.

3. Retrenchment Strategy: Turnaround Strategy

- The turnaround strategy for apple can be considered due to their recent mistakes
and mishaps. Overpricing on products, ineffective R&D, less than stellar working
environments and so on. The three phases, which are contraction, consolidation,
and rebirth are what seemed to work for Apple. With the cutbacks and reducing of
unnecessary expenses can give turn to a better profit more in the long term. It is
definitely not the answer to every problem presented to conflate the industry into
solving it. One must be alert to control the company in doing so in this strategy.

b. Best strategic option for the firm

- The No-change should be the go to route of Apple in this age as to mirror the
success of Apple with their present years and continuing to do so amidst the
scandals they have faced. As stated previously, they are making profits with their
best and all-time record profit and revenue so case-in-point it is the most suitable.
VII. Management Lesson Learned

Apple is well known for its innovations in hardware, software, and services. Apple is one of
the most successful companies in history. Apple began its rise to dominance in a range of
technology areas and established itself as the trendsetter in mobile devices. There’s a various
reasons why Apple Inc. is successful, and what are the things that they learned; For any
product that Apple creates, the people who create it have to want it themselves, the engineers
of apple they make device for themselves It has to be something that they personally couldn’t
live without. The products have to be easy to use All of the products they create have to be
easy to understand and learn. As technology has become users want more features, the task of
keeping things simple is sometimes difficult. Technology is always evolving. Tomorrow’s
product is too old. Apple keeps up with times and doesn’t fall back on the Steve Jobs legacy
forever.
VIII. Bibliography
Apple Inc. (2021) Apple Reports First Quarter Results. Retrieved on January 27, 2021, from
https://www.apple.com/newsroom/2021/01/apple-reports-first-quarter-
results/#:~:text=The%20Company%20posted%20all%2Dtime,percent%20of%20the%20quarter's%2
0revenue
Gaille (2020) Apple’s Mission Statement and Vision Statement Explained,
https://brandongaille.com/apples-mission-statement/

Rothman (2019) Apple’s 5 most profitable Business Regions,

https://www.investopedia.com/articles/markets/031316/apples-5-most-profitable-lines-business-
aapl.asp
Johnson, Li, Phan, Singer, Trinh (2012) The Innovative Success that is Apple Inc.,
https://mds.marshall.edu/cgi/viewcontent.cgi?article=1420&context=etd

Gaille (2021) SWOT Analysis of Apple Inc. for 2021,

https://brandongaille.com/apple-inc-swot-analysis/

Cronce, M. (n.d) Resources- Apple Inc.

https://mackenziecronce.sites.gettysburg.edu/resources-assets/

Makhijani, P. (2021). Apple

https://www.slideshare.net/prernamakhijani/apple-12292889

What are Apple Inc Core Competencies. (2020, March 27). Reference
https://www.reference.com/business-finance/apple-core-competencies-
8225e00267c13af5#:~:text=According%20to%20Strategic%20Management%20Insight,and%20a%20
strong%20financial%20performance.

Harper, J. (2021). Apple buys a company every three to four weeks

https://www.bbc.com/news/business-56178792

Rushe, D. (2021). Apple records most profitable quarter ever as sales soar amid pandemic
https://www.theguardian.com/technology/2021/jan/27/apple-profits-latest-quarter-surge-
pandemic

Lee, J. (2017 - Updated in 2019). 5 pple Scandals You’ll Never Forget

https://www.idropnews.com/news/5-apple-scandals-youll-never-forget/38414/

Cronce, M. (n.d) Resources- Apple Inc.

https://mackenziecronce.sites.gettysburg.edu/resources-assets/

Makhijani, P. (2021). Apple

https://www.slideshare.net/prernamakhijani/apple-12292889

What are Apple Inc Core Competencies. (2020, March 27). Reference

https://www.reference.com/business-finance/apple-core-competencies-
8225e00267c13af5#:~:text=According%20to%20Strategic%20Management%20Insight,and%20a
%20strong%20financial%20performance.
Member’s Contribution
 Company Background
o Bermudo
o Buela
 External Environment
o Bermudo
o Bugay
 Internal Environment
o Atienza
 Corporate Level Strategies
o Beso
 Analysis of Strategic Factors
o Buela
 Strategic Alternatives and Recommended Strategy
o Batobalonos
o Burlaos
 Management Lesson Learned
o Banzuela