GALGOTIAS UNIVERSITY, GREATER NOIDA

CASE STUDY ON APPLE AND ITS SUPPLIERS:CSR

GROUP NO
MEMBERS TUSHAR JAIN
TARAB AFROZ
YASH SAXENA
UDESHYA MOHAN
SEM 3
SUBJECT STRATEGIC
MANAGEMENT SUBMITTED RAVI KANT
CODE MBDS6003 TO SHARMA SIR
Q. Consider fundamental of module1, Apply the resource-based view model
of the firm to determine core and distinctive competencies of your selected
company. CO1, Intermediaries?

An Overview of the Resource-Based View and Positional View of

Strategy

There are two most widely cited approaches to strategy, namely the
RBV and the Positional View.business entities should consider both
internal and external factors to meet business goals and remain
competitive successfully. This ‘philosophy’ is also reflected in the
mentioned approaches to strategy. The RBV is more focused upon
internal factors as a means of competitive advantage. This approach to
strategy implies that companies build and maintain competitive
advantage using organisational resources and capabilities. Firms select
the competitive position or strategy, which best exploits their internal
resources and capabilities to take advantage of external market
opportunities. However, these resources should fulfil the VRIO criteria,
meaning they should be rare, inimitable, valuable, and organised to
capture value. Besides, by focusing on internal factors, organisations
cannot adequately assess the current market situation and adapt their
strategy to the rapidly changing business environment. For instance, by
ignoring such an important external aspect as consumer preferences
and needs, business entities will be unable to make sure their goods and
services address these needs.
On the other hand, the positional view of strategy is concerned with
external factors, which can affect firms’ performance and
competitiveness. The competitive positioning approaches an
organisation chooses to occupy can be viewed as a combination of the
target market it selects and the differential advantage it is attempting to
create, securing the chosen market. The theories are commonly
considered to be at the forefront of the positioning approach to strategy.
For example, five forces framework helps organisations develop a
competitive advantage in the industry by its attractiveness and
competitive intensity. In turn, the generic strategies framework outlines
three types of positioning strategies (i.e. cost leadership, differentiation,
and focus strategies), which companies can employ to develop and
sustain competitive advantage. However, the positional view of strategy
is somewhat limited because of the static nature of the discussed
strategic frameworks and models used for analysis. Given that the
business environment is changing really fast nowadays, the application
of static frameworks is even more questionable.
Apple’s Success from the Resource-Based View Perspective and Positional
View
The adoption of the positioning approach to strategy helps companies better
understand consumer wants and needs and offer a product or service fully
tailored to these needs (Martin et al., 2017, p.527). At the same time, this view
of strategy can be criticised as market research may prove ineffective because
consumers may not precisely know what they want until it is shown to them
(Chen et al., 2019, p.1). This ‘backwards’ approach to market strategy is
reminiscent of the RBV, according to which organisations use their resources
and capabilities (e.g. tangible and intangible assets, reputation, innovation,
information, and know-how) to create a value proposition for consumers
(Kaliappen and Hilman, 2017, p.257). In this section, we compare and discuss
Apple's success since the launch of the first iPhone from the perspective of
these two views of strategy.
The RBV implies that Apple’s ability to effectively allocate and deploy both
tangible and intangible resources determined its success. Regarding tangible
resources, Apple opted for an owned network of branded stores as the primary
distribution channel (Edwards, 2010, p.1). In 2007 the first iPhone was
launched, and at that time Apple was running more than 200 brick and mortar
stores globally (Statista, 2015, p.1). Also, the company had a strategic
partnership with Foxconn that manufactured iPhones for Apple. By
outsourcing its manufacturing operations, Apple managed to significantly
reduce costs and expenditures, while maximising its profit margins (Edwards,
2010, p.1). While these tangible resources helped the company successfully
compete with the major market players, they were not rare or inimitable.
Hence, its competitors could easily imitate these resources, meaning they were
not the source of Apple’s competitive advantage. The company had to rely on
more unique resources to distinguish it from competitors

DEVOLPMENT OF COMPENTENCIES
To develop and maintain a competitive advantage, Apple relied
heavily on intangible resources, such as human resources and
intellectual property. The company used its brand as the essential
intangible resource in its attempt to develop sustainable competitive
advantage. In 2007, Apple was a well-known company for its
innovative products, high product quality, and high-quality customer
service. As a result, Apple used its brand image and customer loyalty
to establish its presence in the smartphone market. Human
resources were also among the vital intangible resources employed
by Apple to achieve complete dominance in the marketplace.
Alternatively, to its rivals, Apple emphasised highly skilled workers
and software development teams to develop its revolutionary iPhone
OS, which is known as iOS nowadays. Finally, the company had a rich
patent portfolio, which allowed it to create a highly innovative
product and become a trendsetter for more than a decade. However,
how did Apple know what patents to use and what technologies
should not be implemented in the first iPhone? In order to address
this question, it is relevant to take a look at the positional view of
strategy.
Although the RBV allowed Apple to take advantage of external
market opportunities, the company had to research into consumer
needs and favourable external factors first, which is in line with the
positional view of strategy.By exploring the external business
environment, Apple was able to identify the factors that had to be
reduced or raised well above the industry's standard as well as
eliminated or created from scratch.For example, the analysis of the
smartphone industry demonstrated that the market was dominated
by phones with a physical keyboard. Also, the market was
oversaturated by a wide range of products with similar functions
from the same manufacturers.On the contrary, mobile phones of
that time did not have a multi-touch interface, while their interfaces
were not user-friendly. Considering these factors, Apple offered a
unique product that resulted in the creation of a differential
advantage in this market.
However, in the consumer electronics and smartphone market
segments, technologies are changing rapidly, meaning the
effectiveness of Apple’s investments in R&D can be questioned (Liu
and Atuahene-Gima, 2018, p.7). More and more companies offer
smartphones similar to the iPhone regarding computing power,
features, and capabilities at considerably lower prices (Seifert, 2018,
p.1). Besides, the emergence of the open innovation concept has
made Apple's investments in R&D even less rational from the
economic standpoint (Haller et al., 2017, p.40). Therefore, the
company could change its approach to positioning and resource
allocation strategy to cope with the pressures and threats that come
from its rivals and remain competitive in the long term. Nonetheless,
Apple’s ability to deliver high-quality products and services still
allows it to successfully exploit the differentiation strategy and make
its smartphones more attractive to consumers than those of its rivals
(Lazonick et al., 2013, p.249). For example, in the first quarter of
2018, Apple’s iPhone X was the world’s best-selling smartphone
regardless of its price tag (Su, 2018, p.1). Thus, Apple effectively
communicates the benefits of owning an iPhone to consumers. It is
another crucial factor that explains the company's success since the
launch of the first iPhone from the perspective of the positional view
of strategy.
INTERMEDIARIES
While the RBV and the positional view of strategy are usually contrasted to each other, it is
beneficial to implement both approaches in the strategy of large companies such as Apple
(Chen et al., 2019, p.6). The former view is focused on the use of internal organisational
capabilities and competencies as a source of competitive advantage. However, it is also
essential to take into consideration external factors in order to make sure that the use of these
resources and capabilities would generate a highly demanded product or service. Apple’s
success is a unique phenomenon in many respects. On the one hand, the company wisely
used its tangible and intangible resources to produce a highly innovative product. On the
other hand, Apple created a new market segment and secured its position in this market by
exploring the external environment and deciding what factors had to be reduced or raised
well above the industry's standard as well as eliminated or created from scratch . It is
recommended that Apple should change its resource allocation strategy and approach to
positioning by reaping the benefits of open innovation.

Q.)Use the VRIO framework and the value chain to assess the company’s competitive
advantage, and how it can be sustained?
Apple Inc. succeeds in the computer technology and consumer electronics market,
despite bouts of challenges in the changing global business environment. The company
uses its core competencies, which are identified in this VRIO analysis. The VRIO
analysis model evaluates the value, rarity, imitability, and organization of the business.
This internal analysis determines the core competencies and competitive advantages of
the company, based on the VRIO variables.

In this case, Apple Inc. exploits its core competencies to achieve long-term competitive
advantages against aggressive competitors. The firm’s strategic plans and objectives
focus on business development in areas where competitors are weak. Using a VRIO
analysis of Apple, managers can arrive at the best courses of action to strengthen the
business based on its core competencies or long-term competitive advantages, which
satisfy all of the four VRIO variables. Related information may be obtained through a
Four Corners Analysis of Apple Inc. (based on Michael Porter’s framework). In
addition, a McKinsey 7S analysis of Apple Inc. can pinpoint factors that the business
can use to harness its core competencies shown in this VRIO analysis.

A VRIO Analysis of Apple Inc.

The following table presents the resources and capabilities of Apple Inc. Each of the
factors is evaluated based on the VRIO variables. The company’s long-term competitive
advantages or core competencies are the resources and capabilities that have
checkmarks for all of the four variables:
Apple’s Organizational Resources & Capabilities(VRIO ANALYSIS)
NON-CORE COMPETENCIES:
Business process automation
Competitive employee compensation packages
Human resource capabilities for innovation
Product mix diversity

CORE COMPENCIES
CORE COMPETENCIES OR SUSTAINED (LONG-TERM) COMPETITIVE
ADVANTAGES:
Globally popular premium brand
Systems set up for rapid innovation
Ecosystem of complementary products

Access to user information

Artificial intelligence capabilities
Global distribution and sales network

 Apple’s Core Competencies (Long-term Competitive Advantages). The VRIO table above
identifies six resources or capabilities that are categorized as Apple’s core competencies or
long-term/sustainable competitive advantages. For instance, the company’s globally popular
brand is a core competency because it is valuable, rare, and difficult (if not impossible) to
imitate, and the business is organized around the use of this brand as a major competitive
strength.
 Apple also has its systems set up for rapid innovation, which is a critical success factor of the
business. This resource/capability enables the corporation to maintain a high rate of
innovation that is especially notable in hardware products like the iPhone.
 The VRIO table also identifies the ecosystem of complementary products as another one of
Apple’s core competencies. This competency involves products that mutually promote each
other. For example, because of cross-device compatibility and accessibility, customers are
more likely to purchase an iPhone when they already have a MacBook, and are more likely
to purchase apps and digital products via iTunes when they already have a MacBook or an
iPhone. This ecosystem of complementary products makes it difficult for competitors to
acquire customers who already own Apple products.
 Apple Inc. also has the sustained/long-term competitive advantage of access to user
information, which includes device type and model, geographic location, app usage, and so
on, depending on individual users’ privacy settings. Despite privacy regulations, the
company’s large global user base helps in gaining valuable information to support innovation
and new product development, as well as marketing strategies and business management
and strategic planning.
  Furthermore, Apple’s artificial intelligence capabilities provide competitive advantage in
terms of convenient and efficient services. For example, the company develops artificial
intelligence for services like Siri and related functions.
 Among the VRIO factors, the company’s international distribution network is also identified
as a core competency. Apple Inc. maintains long-term competitive advantage partially
through its global network of strategically located authorized distributors and sellers. This
network streamlines the company’s strategic plans and efforts in reaching target customers
worldwide.
 Other Competencies of Apple Inc. In the VRIO internal analysis model, each resource and
capability that does not satisfy all of the VRIO questions is considered a non-core
competency or non-core competitive advantage. For example, in the table above, Apple’s
non-core competencies include business process automation, which is valuable but common
throughout the industry and even in other industries and markets.
 Also, competitive employee compensation packages are a capability that helps the company
maintain a highly skilled workforce that supports rapid innovation. However, this capability
is a non-core competency in Apple’s case because other technology companies, such as
Amazon, Google, Microsoft, and Intel also offer competitive employee compensation
packages. In relation, Apple’s human resource capabilities to support innovation are
common in other firms in the computing technology, consumer electronics, and
digital/online services industries.
 The increasing diversity of the company’s product mix is a sign of strategic efforts to reduce
the per-market risk exposure of the business. These resources and capabilities are important
but not the top priorities determined in this VRIO analysis of Apple Inc.

HOW WILL IT BE SUSTAINED

The core competencies shown in the VRIO table provide a picture of how Apple’s business
maintains its competitiveness despite challenges in the industry and internal issues in the
organization. These sustainable competencies offer long-term competitive advantages that the
company uses to ensure a profitable future while addressing current problems. For example,
Apple uses its brand and capacity for rapid innovation to maintain competitiveness despite
the aggressiveness of Samsung, Huawei, and LG, among other consumer electronics
manufacturers. This VRIO analysis of Apple Inc. also shifts attention to business
diversification, as well as possible strategic changes for long-term competitiveness based on
technological innovation.

Apple Inc.’s operations are currently focused on consumer electronics and online/digital
products, which are the main revenue sources. However, the company’s strategic plans
already include major opportunities to develop the business in other industries or markets.
For example, the artificial intelligence and robotics markets are gaining ground, along with
the autonomous and self-driving automobile markets. These opportunities require that Apple
use its core competitive advantages identified in this VRIO analysis to strategically position
the business to offer technologically advanced products that make the corporation a major
player early on as these other industries and markets develop.

What is your prediction about the future of this firm if it continues on its current path?

• Apple and Its Suppliers: Corporate Social Responsibility” Apple’s labor rights
violations took place in mainland China the first incident with Foxconn and the
 second with Pegatron. First and foremost, since this repeated labor rights violations
happened in China, Apple

• should not attempt to oversimplify their options such as “move manufacturing out of
China.

• Take a hands-off approach to worker welfare”.

• In order for Apple to prevent future labor rights violations it should “Aggressively
chip away at the problems associated with contract manufacturing with a program of
iterative improvement, higher standards, constant audits and growing transparency.
Initiate an aggressive program of paying component suppliers and contract
manufacturers more in exchange for transparency, worker welfare and environmental
safeguards”.

• They should maximise their (long-term) profits.

• Those profits will then be paid out as dividends to the shareholders. The shareholders
can then decide if the want to use any of those profits for good themselves. They
don’t need Apple to decide it for them.

• It may be, however, that doing good will help them to maximise their profits. For
example, investing in communities can help them to have better employees and more
customers. In that case, they should not sacrifice profits to do good, but they should
do good in order to maximize profits.

• Additionally, they have a duty not to do bad in order to make profits. So, they might
campaign against inequality, or invest in more environmentally friendly technologies
in order to reduce bad. But these things will almost surely increase long-term profits.