A strategy is described as an articulated plan of action that is specifically designed to achieve a certain overall aim or goal in the long-term. In a business environment, strategies can be split into two coherent categories; business and corporate level strategy. A business-level strategy inherently details the actions to be taken in order to provide value to its customers thereby gaining a competitive edge over its competitors through exploiting the intrinsic competencies in particular service markets or individual products. On the other hand, a corporate level strategy concerns itself with strategic decisions made by the business that affect the whole organization. As such, some of the concepts involved in a corporate level strategy include mergers, human resource management, financial performance, acquisitions, as well as the allocation of company resources.
For this paper, the chosen publicly traded corporation is Apple Inc. (AAPL) which is in the tech industry incorporating markets such as mobile and personal computers, smartphones, entertainment media applications, and mobile payments. Prior to delving into discussions about the company or corporation, it is prudent to define and describe a public corporation or company in order to gain an in-depth comprehension of the fundamental tenets to be discussed in the paper. As such, a publicly traded corporation such as Apple Inc. is a firm whose proprietorship is distributed among the general public in numerous stock shares which are freely traded in over the counter markets or on a stock exchange. In this accord, the paper is duly aimed at providing a meticulous discourse on the selected company in regards to its business level, corporate level strategies, its competitive environment, and how all of these factors affect the performance of the company or organization.
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Business-level Strategies
Apple’s business-level strategy can be categorized as product differentiation in functionality and design. Apple Inc. is coherently committed to bringing a top-notch user experience to consumers of its products and services via its innovative software, hardware, and services. Through its business strategies, the business leverages its idiosyncratic ability to not only design but also create its own operating systems, software applications, hardware, and services to inherently provide its clients with solutions and products that embody fundamental characteristics such as seamless integration, superior simplicity and ease of use, as well as innovative design. As part of its business approach, the firm continues to expand its delivery and discovery platforms such as Apple Watch, Apple TV, Mac computers, iTunes, and other iOS applications that can discover and download digital content (United States Securities and Exchange Commission, 2017).
Other than the discovery and delivery platforms, the firm’s business approach also includes both expanding and building its retail and online stores as well as its third-party distribution networks to reach and satisfy more clients effectively. This wide reach is aimed at providing the customers with high quality and competent sales and post-sales support experience. A vital addition to its business strategy is its intensive international market expansion mission which by far leaves is way ahead of its competitors. In a bid to gain a competitive advantage, part of its business strategy involves adapting and advancing capabilities and features of its services and products. Some of these advanced products include the iPad, iPod, and the Macintosh computer. Advanced services include but not limited to Apple Pay, iTunes services, and iCloud services.
The success of the company has mainly been attributed to the vertical integration as part of its business-level strategy. This is in such a way that the company uses expertise to specializes in multiple products such as hardware, software, and services at the same time. Ultimately, its business strategy is geared towards the advancement of research and development, advertising, and marketing which are pivotal in the sale and development of innovative products, technologies, and services, (United States Security and Exchange Commission, 2017). Apple’s business-level strategy of vertical integration is by far the most fundamental strategy. This is because this approach has for a long time been its success factor and reason behind its enormous competitive edge epitomizing it as the pinnacle of the tech industry. The company’s devices, applications, and software have syncing capabilities enabling them to only communicate among themselves thereby creating an enclosed ecosystem.
Corporate-level Strategies
In the company’s history, there have been two primary corporate-level strategies referred to as corporative linkages. These include the AIM alliance (Apple-IBM-Motorola alliance) in 1992 as well as the alliance in 2006. The 1992 AIM alliance was duly formed in response and reaction to the partnership between Windows and Intel referred to as Wintel. Specifically, the AIM alliance was aimed at giving a strategic competitive response to the personal computers running Microsoft Windows operating systems equipped with x86 processors developed by Wintel. This corporate reaction strategy was purposefully conceived and implemented to protect Apple’s market position in lieu of its competitors’ actions. The second alliance was with Intel Corporation in 2006 that was geared towards developing and manufacturing Macintosh computers that were embedded with IntelR microprocessors. The alliance was strategic in the sense that it allowed Apple to compete with its rival HP and at the same time increase the customer base for Intel.
Nevertheless, in recent times, corporate level strategies of the company have involved outsourcing, diversification, vertical and horizontal integration. Contrary to business-level strategy, vertical integration, in this case, refers to the company’s direct connection to forward vertical integration that enables it to gain control over its channels of distribution. Economies of scale are yet another influencing factor in corporate level strategy whereby the company employs cost leadership in a bid to gain a competitive advantage regarding lowered real costs. Through customer satisfaction, competent innovation, and high-end quality, the company applies yet another corporate strategy referred to as differentiation strategy. This approach can further be adjusted and manipulated to fit both socioeconomic and age groups in order to maximize sales.
Diversification as a corporate strategy has been a fundamental aspect of the company in the sense that the company offers a wide array of products including mobile phones, home computers, personal computers, music players, and applications. Diversification in this case crucially involves low, middle, and high-level variation which enables the company to compete in different industries putting it at the top. Based on its history since its inception, the company has undertaken several mergers and acquisitions of small software firms that have been pivotal in its growth. Nevertheless, the most important corporate strategy is the diversification strategy. This is particularly significant and a good choice because it has enabled the company to innovatively compete and dominate several markets thereby attaining a considerable advantage over its competitors such as HP and Samsung. It is due to its diversification that the company has become popular and gained a huge consumer base thereby raising its revenues well above its competitors,
The Competitive Environment of Apple Inc.
One of the significant aspects of a business environment is the competitive environment and competitors at large. To this end, Apple is faced with stiff and unrelenting competition from all fronts of the tech industry. This is in the form of introduction of new and advanced products such as mobile phones, audacious pricing, and extremely low-cost structures. According to Dedkova & Blazkova (2014), the competition environment involves both macroeconomics and microeconomics whereby precepts such as competitive advantage are characterized under microeconomics but impacts the competitiveness (macroeconomics) of the entire organization as well as the environment. In effect, to fend off and thwart the competition, Apple uses certain competitive principles such as relative pricing, product features, product quality, marketing, and distribution, as well as strong third party software. As a giant in the industry, the company offers its top-notch products such as personal computers, mobile smartphones, media devices, as well as mobile communication services.
However, Apple faces serious competition from rivals through imitation and collaboration as means of offering more competitive services and products (United States Security and Exchange Commission, 2017). To this end, Apple’s most significant and fierce competitor is Samsung especially in the mobile and personal computer markets.
Comparison of Strategies
In regards to business strategies, Samsung is similar to Apple in the sense that both of their business strategies are geared towards Research and Development in producing quality and innovative products. However, unlike Apple, Samsung’s business strategy focusses on high-margin products that are both market and consumer-oriented. The creation of a value chain that duly integrates all forms of competencies from all areas is yet another business strategy applied and implemented by Samsung departing from Apple. Ultimately, Samsung’s business strategy incorporates a digital vision that involves fundamental tenets such as bolstering creativity as well as meeting and tackling challenges (Thai, 2016).
In regards to corporate-level strategies, Samsung is similar to Apple in utilizing full vertical integration strategy enabling it to leverage every aspect of the manufacturing process. As such, similar to Apple, vertical integration is the single most fundamental strength of the company. Samsung also makes use of diversification as a corporate strategy thereby making it flexible to compete globally as one of the largest suppliers of electronic components and at the same time compete in different markets. This approach has proven to be a dominant competitive tool thereby threatening Apple forcing it to broaden its product lines to prevent a decline in the market share.
Judging from both of their business and corporate level strategies, both companies are set to be successful in the long run. However, owing to its dynamic diversification nature including unrivaled services such as Apple Pay and services offered by platforms such as iTunes, Apple is set to outlast Samsung in the long run in terms of success. Apple’s vertical integration is coupled and fortified by the synchronicity of its products and services, unlike Samsung, making this a unique concept and a marketing point leading to the success of the company.
Slow-Cycle and Fast-Cycle Markets
Due to its long innovation cycle and simplified production line, Apple Inc. would be successful in a slow-cycle market, (Thai, 2016). Apple is highly innovative and differentiates its products while Samsung imitates. As such, in a slow-cycle market where imitation is prevented or prohibited for a predefined period, Apple gains the advantage thereby becoming successful over Samsung. However, in a fast-cycle market, the choice would change in favor of Samsung. This is because Samsung has a short innovation cycle averaging three months with a broader production line compared to Apple. Also, Samsung values the bargaining power of consumers thereby able to lower their prices aggressively to increase sales over a short period, unlike Apple.
Conclusion
As a publicly traded company, Apple is a giant in the tech industry significantly owing to its diversification and vertical integration strategies. Through these strategies fortified by differentiation, the company is able to gain a competitive edge over its rivals such as Samsung. However, despite its participation in the fast-cycle market through products such as iPads, Apple is more successful in slow-cycle markets owing to its lengthy innovation cycle. Despite both companies implementing vertical integration in their corporate strategies, Apple gains the upper hand in terms of long-term success based on its synchronicity. However, owing to its simple production line, it is advisable for Apple to broaden its product line further to continue commanding the market shares in the industry and avoid being dominated by Samsung; the largest producer of electronic components globally. Nevertheless, tapping on its strengths such as vertical integration, innovation, and differentiation, Apple is able to grab market opportunities and remain ahead of the competition for years to come.
References
Dedkova, J., & Blazkova, K. (2014). The competitive environment among companies in the Czech part of Euroregion Neisse-Nisa-Nysa. E+ M Ekonomie a management, (3), 86. DOI: 10.15240/tul/001/2014-3-008
Thai, P.H. (2016). Samsung Final: Samsung Strategies Analysis Report. Docuri. Retrieved from https://docuri.com/download/samsung-final_59bf39ecf581716e46c44ee6_pdf
United States Securities and Exchange Commission. (2017). Apple Inc. 2017 Form 10-K. retrieved from https://www.sec.gov/Archives/edgar/data/320193/000032019317000070/a10-k20179302017.htm#sD0F7ECFEC8965FDE8B546D17642E8FED
