MBA-FPX5006 Singh Jas Assessment 1-1 PDF

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APPLE INC. BUSINESS STRATEGY November 24, 2020

TABLE OF CONTENTS

EXECUTIVE SUMMARY.........................................................................................................................3 ANALYSIS..................................................................................................................................................4 VRIO.......................................................................................................................................................4 AFI FRAMEWORK...............................................................................................................................5 Internal Analysis................................................................................................................................6 External Analysis - PESTLE................................................................................................................6 External Analysis - Porters Five Forces Framework........................................................................8 LEADERSHIP............................................................................................................................................9 CONCLUSION........................................................................................................................................10 REFERENCES........................................................................................................................................12 APPENDICES.........................................................................................................................................14 Appendix A - VRIO..............................................................................................................................14 Appendix B – PESTLE Analysis........................................................................................................15 Appendix C – Porters Five Forces Analysis....................................................................................16

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EXECUTIVE SUMMARY Apple Computer, Inc., currently known as Apple Inc., is an “American manufacturer of personal computers, computer peripherals and computer software and they were the first successful personal computer company” per Levy (2020). The company was founded in 1976 by Steve Jobs and Steve Wozniak and it started in Jobs garage per Levy (2020), currently it’s located in Cupertino, CA. Every company has major events that lead to a success of the company. The same has happened to Apple. According to Porter (2018), the “five big things that have made Apple are: Steve Jobs – a brand unto himself, the iPhone – revolution, Apple services – and brand loyalty, China – and growth and the Apple brand today. Like any other companies, Apple has also utilized VRIO, AFI framework, PESTLE analysis and Porters Five Forces Framework to strategically operate their organization. Through these frameworks and analysis, Apple has identified their strength and weakness, capabilities, rivalry and other elements. Apple has great leadership and through training and development they can empower their staff while maintaining ethical responsibilities to their stake holders and clients.

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ANALYSIS VRIO Value, rarity, imitability and organization which is also known by its acronym VRIO. As stated per Smith (2020) “The VRIO framework is a strategic analysis tool designed to help organizations uncover and protect the resources and capabilities that give them a long-term competitive advantage”. The same analysis is utilized to identify the core competencies and competitive advantage for Apple. Apple misuses its core competencies to attain long-term competitive points of interest against its forceful competitors but the company’s main goals and planning are centered on commerce improvement in regions where the competitors are powerless, per Newton (2019). According to Newton (2019) “in responding to Apple’s VRIO analysis, managers can arrive at the best courses of action to strengthen the business based on the core competencies or long-term competitive advantages, which satisfy all of the four VRIO variables”. As reflected in the appendix A, figure 1, the value is strong for Apple, rarity is not as strong because it falls short on the business process automation. The diverse product line is imitable, however the organization is considered a non-core competencies due to the other companies offer similar or competitive resources. Other factors that are not checked in the table are also considered non-core competencies. Apple keeps on improving its product line and each product comes in a different value package to target the diverse consumer market. Apple’s long term competitive advantages are globally popular premium brand, systems set up for rapid innovation, ecosystem of complementary products, access to user information, artificial intelligence capabilities and global distribution and sales network. All these long term competitive Page 4 of 16

advantages are the core competencies and the VRIO analysis reflects the strength for Apple. As stated by Newton (2019) “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”. AFI FRAMEWORK The analysis component in this framework consists of mission, vision, values, internal and external analysis. Apple’s current mission statement “is committed to bringing the best user experience to its customers through its innovative hardware, software and services” per Mission Statement Academy (n.d.). The company wants to provide the best quality and user friendly products for the diverse cliental while not compromising on their mission statement. Apple’s vision states “we believe that we are on the face of the earth to make great products and that’s not changing” per Mission Statement Academy (n.d.). From that statement one can see that the company believes in themselves and they keep on proving it by producing enhanced products every year which is supported by their core values. Those values are “accessibility, education, environment, inclusion and diversity, privacy and supplier responsibility” per Mission Statement Academy (n.d.). An example of the core values is when they release an iPhone every year, through inclusion and diversity Apple makes it accessible to everyone with different models, they have customer services who are ready to answer questions and provide education, they make it environment friendly with their replacement and trade in programs while maintaining client’s information confidential. At the same time, they make their suppliers accountable for making high quality parts / products. Page 5 of 16

Internal Analysis Apples internal factors can be examined through strengths and weakness. One of the major strengths for Apple is their brand image. Apple offers a diverse range of products which is offered globally. They have been in the industry for a long time and consumers rely on the trust worthy company and brand which leads to people buying more of that brand. According to the Forbes (2020), Apple is the world’s number 1 brand in the technology industry with a $241.2 billion in the brand value, with an increased 1 year value of 17% and $260.2 billion in the brand revenue. Being an owner of wide range of Apple products, I would say that there weakness is their price point. Not everyone is able to afford their product and the price has gone up since the last time I purchased an Apple product. If the prices keep on increasing, the demand would decrease as not everyone is able to afford it. Apple’s price factors should depend on the current economy. Apples external factors would need to be examined through the PESTLE analysis.

External Analysis - PESTLE PESTLE analysis consists of factors such as political, economic, social, technological, legal and environment. Apple’s revenue is causing a political factor because it is generating calls for higher corporate tax assessment within the United States and the pay imbalance has gotten to be a major political issue per Khan, Alam & Alam (2015). Due to this practice by Apple and other companies, higher corporate tax assessment was a measure on the 2020 election ballot. There are a few components to the economic factor, which are tax rates, inflation rate, interest rates, exchange rate and cost of labor. When the economy was recovering from the recession, the labor cost Page 6 of 16

increased which also impacted Apple and many other companies on their cost and profit margin per Khan, Alam & Alam (2015). As stated by per Khan, Alam & Alam (2015) for the social factor “sales of apple products increased by a good percentage in India in 2013, which forced the firm to open franchises and make investments in India, which is clear evidence of Apple showing a rational as their growth strategy”. At the same time, since the Apple products are manufactured in China, this could offend other regions or countries. Compared to other competitors, Apple is much innovated when it comes to technology. As it ranks number 1, they are aggressively innovating to deliver the best to the consumer. As stated by the PESTLE Analysis (2020) the potential legal factors on Apple could be “by offering financial services, Apple could face increased levels of litigation”. If Apple enters another industry, than the probability of the litigation would be increase. To consider the environment, Apple has a trade in program. They take in the used or non-working equipment while they figure out a way of disposing it. “The expense of disposing of devices, particularly those containing lithium batteries, could be high and Apple could be forced to assume that expense because of concerns about such devices in landfills”, which can lead to stricter regulations, cost or even legal actions if protocols are not followed per PESTLE Analysis (2020). Apple also has its opportunities which comes from the technological pressures and Apple can overturn that through the strategic advantage and their loyal consumers. Appendix B, figure 1 reflects all the elements and what each elements consists of.

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External Analysis - Porters Five Forces Framework Porters Five Forces analysis which is a tool for strategic management that consists of industry rivalry, supplier power and buyers’ power, thread of substitution and threat of new entry. Rivalry is a high risk and Apple has strong rivals such as Dell, Samsung, Sony and others who are also forceful in fast advancement, impersonation and forceful in promoting forces for the solid drive in the market and many people switch from iOS to Android per Adamkasi (2019). The supplier power has a lower risk because Apple has various suppliers at various locations. Apple is strongly impacted by this component since it decides that acquiring control and choices of buyers and their related recognitions and inclinations which influences the business per Adamkasi (2019). The threats from the substitute product is also weak due to “technology, online services and consumer electronics Apple provides” per Adamkasi (2019). The threats of the new competitors is low to Apple because a new company would need to compete against the other small companies before competing against Apple as it is currently ranked number 1. This is best explained in appendix C, figure 1 cycle. The second step in the AFI framework is the formulation of strategy which includes corporate, business and functional. Apples corporate strategy is simple and well known, they keep on enhancing and expanding their diverse product line but not compromising on the quality and they have their own store which is not offered by most of their competitors per Google (n.d). According to Dudovskiy (2019) there are 3 elements in the business strategy which are “focus on design and functionality of the products, strengthening Apple ecosystem and decreasing dependence of the business Page 8 of 16

on the sales of iPhones”. Apples functional strategy is through marketing via patents wars per Khan, Alam & Alam (2015), without spending too much. The third and the final step in the AFI framework is the implementation strategy, which Apple has done “through a flatter and less hierarchical management structure and executes its renowned creative and innovative approach through a collaborative and generally trusting culture” per Packham (n.d.). LEADERSHIP The role of leadership in strategic planning process or with any big decision is important. The leadership is the one who needs to acknowledge that the changes are needed, why it’s needed and how it will benefit the organization and the clients. The leaderships needs to be involved in the decision making process so the group can mutually design the next. There are four elements the leaders use during the planning process, which are communicating plans, giving out assignment, monitoring execution and encouraging staff per Mooney (2018). An example of this would be a current project that I’m working on with my colleagues. During our strategic planning process we all decided collectively that we needed a new system for license management. After the vendor was secured, my manager shared with the team what his plans are for this new system, he divided the task within the team. Since he has other responsibilities, he has the trust in his team to have the meetings with the vendor. He monitors the execution through a debrief process with his team. He is very encouraging towards everyone working on this project. The leadership also has the ethical responsibilities. They need to ensure that the organizations mission, vision, code of conduct, customer relations strategy, employee

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relations strategy and social responsibility strategies are adhere to. As stated by Hill (2020) “ethics shape the decisions and actions of each individual” in the organizations from the executive leaders to the staff. Additionally “observing high ethical standards is sound business strategy-resulting in customer loyalty, higher employee retention and positive image in the industry and within the community” per Hill (2020). A course of action for leadership would be to have a development plan. An organization should a training and organizational development coordinator who can research and arrangement for trainings to occur within the organization. They trainings should help build skills for leadership and for the future leaders, it can help them gain an understanding of their strengths while maximizing performance in others to drive the results. The leaders can attend the training and share the information with their staff or recommend the training to them. The organization is investing in their staff at all levels, for them to invest it back into the company. Their strength, enhanced talent, innovative ideas, understanding of the company and it would be highly effective for the longevity of the staff, leadership and the organization as it would improve the resources and capabilities. CONCLUSION Apple is a strong company that is recognized globally, is ranked at # 1 and is worth over billions of dollars. They have reached this level of success through their innovative designs and products. They have implemented the value, rarity, imitability and organization (VRIO) to achieve the long term competitive advantage through the core competencies. Apples strength and weakness was analyzed through the AFI framework to ensure that the company was adhering to their own standards. Apple

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continuously delivers the best user experience through their products, services, accessibility, education and diversity and inclusion while considering the environment. Privacy and security is also their top priority. Apple has the diverse product line, which is one of their strength but the weakness is the price point. Through the PESTLE analysis, the external factors were examined. Considering the current economy due to the pandemic Apple did drop their price on the release of the new iPhone. Apple continues to show their rational through their growth strategy while continuously improving on other factors such as political, social, technological, legal and environment. Through Porters Five Forces framework, Apple is aware of their rivalry, supplier and buyers powers and monitors thread of new entry. Being a leader in the innovative technology, Apple uses the corporate, business and functional strategy for their organization but they use less hierarchical management structure. Strategic planning and involvement of leadership is important in every organization. Leadership recognizes that the changes are need and why, they can also involve other members of the organization to implement those changes. Prior to implementing changes, leaders need to consider that they are not compromising the organization’s mission, vision, code of conduct and various strategies. A course of action the leaders can take is create a training and development plan for their staff and leaders. This will enhance their understanding and capabilities, which will empower the staff and benefit the organization. They are the future of the company.

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REFERENCES

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Levy, S. (2020). Apple Inc. Retrieved from https://www.britannica.com/topic/Apple-Inc

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Porter, S. (2018). Five big things that have made Apple. Retrieved from https://www.bbc.com/news/business-45044963

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Smith, R. (2020). Explaining the VRIO Framework (with a real-life example). Retrieved from https://www.clearpointstrategy.com/vrio-framework/#:~:text=The%20VRIO %20framework%20is%20a,before%20the%20strategic%20planning%20process

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Newton, V. (2019). Apple Inc. VRIO Analysis – Core Competencies & Competitive Advantages. Retrieved from https://www.rancord.org/apple-inc-vrio-analysis-core-competencies-competitiveadvantages

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Mission Statement Academy (n.d.) Apple mission and vision statement analysis. Retrieved from https://mission-statement.com/apple/

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Forbes (2020). The world’s most valuable brands. Retrieved from https://www.forbes.com/the-worlds-most-valuable-brands/#31fa0a74119c

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Khan, U., Alam, M., Alam, S., (2015). A critical analysis of internal and external environment of Apple Inc. Retrieved from https://www.researchgate.net/publication/282274921_A_CRITICAL_ANALYSIS_OF_ INTERNAL_AND_EXTERNAL_ENVIRONMENT_OF_APPLE_INC

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PESTLE Analysis (2020). Apple Inc. PESTLE Analysis. Retrieved from https://pestleanalysis.com/apple-pestle-analysis/

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Adamkasi (2019). Porter’s five forces analysis of Apple. Retrieved from https://www.porteranalysis.com/porter-five-force-analysis-of-apple/

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Dudovskiy, J. (2019). Apple business strategy: a brief overview. Retrieved from https://research-methodology.net/apple-business-strategy/

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Google (n.d.) Computer Industry: Apple vs. Dell – Corporate strategy. Retrieved from https://sites.google.com/site/applevsdelladmn703/corporate-strategy

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Packham, C. (n.d.). Work: business strategy and strategic management implementation and Apple computing. Retrieved from Page 12 of 16

https://sites.google.com/site/foodsafetypolicy/business-strategy-strategicmanagement-implementation-apple?overridemobile=true 

Mooney, L. (2018). What Is the Role of Leadership in Strategic Implementation? Retrieved from https://yourbusiness.azcentral.com/role-leadership-strategic-implementation25197.html

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Hill, B. (2020). How are ethical considerations incorporated into planning & policy making in an organization? Retrieved from https://smallbusiness.chron.com/ethical-considerations-incorporated-planning-policymaking-organization-62079.html

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Sandeeprajs (2016). Market research iPhone. Retrieved from https://mark...