Strategy formulation is a critical step following environmental scans. It refers to the process of determining a company’s long-term goals and objectives and business management functions. The importance of effective strategic management process includes assessment of an organization’s current market positions and gearing it towards greater future success. Apple is one of the most successful companies in the telecommunications industry operating within a highly competitive industry. With Samsung closing in on Apple’s success, the corporation's strategic formulation process is critical for maintaining its prestigious position in the market. Therefore, this paper will focus on Apple’s strategy formulation process covering all the important components of this stage.
Long-term Goals and Objectives
Markets
The first stage is the definition of Apple’s future market development. Apple Inc. is an international brand selling cellphones in over 450 retail stores across the world and employs over 50,000 workers. The Asian market holds a great potential for Apple’s growth due to the growing number of customers and demand for high quality and premium phones. India, in particular, holds the largest appeal for the organization that eventually made Apple make an attempt to enter the country in 2016 but has largely been unsuccessful. By 2017, Apple’s cellphone market share was 2.5%, thus the need for a good strategy to successfully penetrate this huge market to tap into the high-profit growth rates. India’s cellphone industry growth is expected to expand at 3% annually in the next few years driven by fast economic growth, favorable telecommunications laws, and growing population (Joishi et al., 2012). In terms of demographic segmentation, Apple will target rural and urban consumers in India.
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Value Proposition
Apple’s value propositions will significantly impact its success in India. The company’s value proposition will be offering high quality and differentiated smartphones for India’s middle-income segment of the population. Apple is primarily known for its premium pricing strategy targeting high-end markets in the Western world. However, India presents a new dynamic with its closest competitor, Samsung, holding a significant share of the premium market. It is critical to note that Apple is visually appealing for many people in India, thus there is little doubt focusing on middle-income earners is a viable market.
Resources and Capabilities
The company requires a number of resource and capabilities to successfully take over the Indian market. One is human resources that comprises of a highly skilled workforce with adequate knowledge and experience to handle the unique needs of an Indian consumer (Malo Milara, 2014) . Secondly, there are technological resources including software, operating systems, and phone hardware. Thirdly, Apple requires its intellectual property comprising of patents and copyrights that are a distinguishing feature of the brand. Also, Apple requires innovation and capability to design Indian appealing smartphones and engineering capabilities for the production process.
Value and Sustainability Capability
Additionally, it is essential for Apple to establish the right value and sustainability capability for its target market. Apple should incorporate its differentiation strategy in India to provide consumers with authentic phones varying from the other offerings in the market. The firm has a good brand for its differentiation, and this will act as a good strategy in the Indian market.
Business Management Strategy
Vertical Integration
Vertical integration is a significant component of a business management strategy. It refers to a company’s ability to control the supply chain from the beginning to the end. Apple is renowned for its vertical integration strategy that rivals all other companies around the globe, and replicating it in India will increase the firm’s profitability. The process will include using in-house employees to design smartphones, production within Apple’s factories in India, and opening distribution stores in strategic places in the country (Auster & Hillenbrand, 2016) . Moreover, Apple will carefully select vendors for supply of quality raw materials.
Strategic Alliances
Forging the right strategic alliances in the Indian market will have a profound impact on Apple’s Indian operations. Strategic allowances should be carefully formulated and incorporated into the firm’s supply chain activities to ensure the success of critical business functions. Foremost, Apple needs to enter into a partnership with vendors supplying various hardware and software smartphone components like batteries and glass screens. Secondly, there is the need for forming an alliance with one of India’s distribution companies to help the company effectively distribute its products to all retail stores and designated distributors around the country. Strategic partners are also required in the manufacturing process, where the firm will establish an agreement with select factories, marketing firms, and distributors. Consequently, Apple will have control over smartphone manufacturing and distribution in India to increase its overall presence in the market and improve sales and profits.
Competitive Advantage
A competitive advantage is what puts a company over the edge of close competitors operating in the same industry. According to Michael Porter, there are three types of competitive advantages including product differentiation, customer focus, and cost leadership. Product differentiation is the creation of unique products through the introduction of small variations to meet or exceed the expectations of consumers (Giachetti, 2018) . On the other hand, customer focus refers to the process of providing goods or service for a specific market niche. Cost leadership is using optimum production processes to lower the total production costs. Apple will use the product differentiation process by incorporating the best features of its mobile phones in India’s smartphones. For example, producing an iPhone in India for the middle-income consumers will give them the power to enjoy a good phone design, fast processing abilities, vast storage, and access to numerous applications from the store.
Other sources of Apple’s competitive advantage include a strong brand reputation that transcends over its transactions in the market. An innovative culture will see the firm add new capabilities to the smartphones over time. Lastly, there is the firm’s strongly skilled workforce that is essential in overseeing all the company’s activities and the organizational culture that fosters the innovativeness and creativity in the firm.
Organizational Chart
Finally, it is important to describe Apple’s organizational chart to show the distribution of authority in the organization that will be established in India. Apple will establish hierarchical organizational structure headed by the CEO who is in charge of the company’s global operations including the Indian segment. The next authority figure after the CEO is the regional manager that will oversee Indian operations, followed by vice presidents heading different functions, department heads or middle managers, and employees. The primary reason for creating this form of structure is the Indian culture, where top managers hold absolute control over an organization. Therefore, there is no need to create many hierarchies of authority since control over the firm will rest on the identified figureheads. Employees will enjoy the unity of command and authority that is a prominent feature of all successful companies in India and the rest of the world.
Organizational Structure
Employees
Employees
Employees
Employees
HOD-Finance and Accounting
HOD-Industrial Design
HOD-Sales and Marketing
HOD-Operations
VP Finance and Accounting
VP Industrial Design
VP Sales and Marketing
VP Operations
Regional Manager
Chief Executive Manager
References
Auster, E. R., & Hillenbrand, L. (2016). STRAGILITY: THE ULTIMATE COMPETITIVE ADVANTAGE. Leader to Leader , 2016 (82), 40-46.
Giachetti, C. (2018). Explaining Apple’s iPhone Success in the Mobile Phone Industry: The Creation of a New Market Space. In Smartphone Start-ups (pp. 9-48). Palgrave Macmillan, Cham.
Joshi, B. H., Mehta, A. B., Patel, B. A., & Patel, K. (2012). Usages of Mobile Phone by rural consumers: with special reference to collegian students of Palanpur Taluka. International Journal of in Multidiscliplinary and Academic Research, 1(2), 1-16.
Malo Milara, I. (2014). Comparison of resources and capabilities in two companies.
