Apple Business Strategy: a brief overview

Apple Business StrategyApple business strategy can be classified as product differentiation. Specifically, the multinational technology company differentiates its products and services on the basis of simple, yet attractive design and advanced functionality.

Apple business strategy consists of the following three elements:

 

1. Focus on design and functionality of products. According to its business strategy, Apple has adapted advanced features and capabilities of its products and services as bases of its competitive advantage. The list of innovations introduced by Apple include, but not limited to the introduction of iPad, the first device of its kind that stored thousands of songs with a simple shuffle capabilities through songs, development Macintosh, the first computer to use a graphical user interface and the launch of iMac that “ripped up the computer design rule book, doing away with dull beige boxes and instead replacing them with fun, translucent machines in shades such as “Bondi Blue” that hinted at the aesthetic Apple would become so well-known for.”[1]

First mover advantage is another element of Apple competitive advantage. It has to be stated that Apple competitive advantage may be challenging to be sustained for long-term perspective. Specifically, the management may fail in terms of ensuring the addition of innovative features and capabilities in new versions of its products, thus compromising its competitive advantage.

 

2. Strengthening Apple ecosystem. Apple business strategy can be characterised as vertical integration in a way that the company has advanced expertise in software, hardware, and services at the same time. Apple’s vertical integration is one of the major factors that set it apart from the competition. The company has been benefiting from its vertical integration immensely. Specifically, an important source of Apple competitive advantage relates to its ecosystem, which is enabled by such integration.

Apple devices and software sync easily and work well with each other. Applications work on multiple Apple devices at the same time and there is no much difference in user interfaces; however the same items do not pair with products of other companies, thus creating the likes of a closed ecosystem. Apple’s ecosystem creates switching costs for its customers to the competition. The ecosystem also provides the opportunities to leverage relationships with existing customers to offer other products and services.

 

3. Decreasing dependence of the business on the sales of iPhones. Apple business strategy is transitioning from relying on iPhone sales to prioritizing its services business and other divisions. John Giannandrea has been promoted to a machine learning and AI role, retail chief Angela Ahrendts recently left the company and Bill Stasior has been removed as a head of Siri.[2] These high-profile changes that took place within the timeframe of less than three months are clear indication of company’s focus on services and other business divisions in order decrease dependence of the business on the sales of iPhones.

It is important to note that these and other efforts are showing positive results. Specifically, Apple’s services business division generated record revenues of USD 10,9 billion in the first fiscal quarter of 2019, which is 19% increase year-on-year.[3]

 

Apple Inc Report contains a full analysis of Apple business strategy. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on Apple. Moreover, the report contains analyses of Apple leadership, organizational structure and organizational culture. The report also comprises discussions of Apple marketing strategy, ecosystem and addresses issues of corporate social responsibility.

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[1] Apple’s Greatest Innovations (2016) The Telegraph, Available at: http://www.telegraph.co.uk/technology/picture-galleries/6099399/Top-10-Apple-innovations.html

[2] Broussard, M. (2019) Apple’s Recent Leadership Changes Suggest Transition From iPhone Reliance to Focus on Services, Mac Rumors, Available at: https://www.macrumors.com/2019/02/18/apples-leadership-changes-services/

[3] Clover, J. (2019) “Apple’s Services Revenue Up 19% Year-Over-Year in Q1 2019, Hits New All-Time High” Mac Rumors, Available at: https://www.macrumors.com/2019/01/29/apple-services-revenue-q1-2019/

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