4.0Current ‘Problem’ Diagnosis
5.0Generation of Strategic Options
6.0Evaluation of Strategic Options
7.0Description of Selected Strategy
8.0Action Plan for Implementation
Apple Computer Inc was founded by Steve Jobs and Steve Wozniak in 1976. Apple’s current strategic position as of 2008 is that its market share had declined and has a successful business from its products ranging from PCs to non PCs. Apple’s recent industry entry is to the mobile phone industry with its recent product of the iPhone. Apple has already has its personal computer industry and personal media player industry which consist the MP3 player industry. Apple’s strategic purpose is to leverage its ability through the design and development of its own products and provide its customers products which are ease-of-use. In 2008, the gross margins were not increasing despite the falling component prices. The market is not doing well and the huge concern is whether Apple could continue its impressive performance, leadership in its innovation and reclaim its original market leader position into the future. The following are the analysis and strategies which can help Apple to continue its business successfully into the future.
The PESTEL framework in figure 1 analyses the many different external factors surrounding Apple’s macro environment and they are interlinked (Turner, 2006).
Political: Apple’s products are given to the US government for certification and regulation and the process is very long and time consuming. Economical: Due to global economic crisis, figure 4 shows that the sales of apple product get affected and the gross margin of 2008 (Apple Case, 2008, pp. C149) did not do well as expected and there is change in the US exchange rate. Social: Consumers now prefer single device which consist of various functions due to lifestyle changes. Apple has to keep innovating to keep up with its consumer needs such as the iPhone which consist a phone, iPod, and internet (Apple Case, 2008). Technological: Due to the rapid change of factors like product quality, reliability, service, innovation and support, Apple has the pressure to continue to innovate further in order to adapt with the standards of the technology and market changes. Environmental: There is intense competition as competitors are improving themselves in the mobile industry, PC and non PC industry. Legal: Apple relies heavily on third-party suppliers and if found to break the law, the Apple’s products will be affected. Critical Success Factors are the key determinants of Apple’s success and also have a predominant impact on the achievement or failure to achieve Apple’s objectives (Lynch, 2006). Apple critical success factors are its resources, skills and attributes.
Resources: Apple’s very own operating system, customised suppliers who are being outsourced out of US in which Apple has long term contract and customised PC and non PC products. Skills: Apple has highly skilled and senior management team and they have the ability to think alike and innovate like no one could. Attributes: The Apple brand, the reputation of being the top leader in its PC and non PC industry, user friendly products, simplicity in design, high performance and innovative products are the key factors for Apple. Apple products are costly and difficult to imitate too.
Figure 3 shows the Porter’s 5 forces analysis which is a tool being used by Apple to systematically analyse the attractiveness, competitive pressure and determine whether the profits in Apple will be high or low and to also investigate how Apple needs to form its strategy in order to develop opportunities in its environment and protect itself against its competitors and other threats (Grundy, 2002).