Subject name: Business Strategy
Student name: Eupraxia Laksita Raras
Table of Contents
1.0 INTRODUCTION 2
2.0 BACKGROUND 4
3.0 BUSINESS-LEVEL STRATEGIES 5
3.1 COST ADVANTAGE 5
3.1.1 ECONOMIES OF LEARNING 5
3.1.2 PROCESS TECHNOLOGY AND PROCESS DESIGN 5
3.2 DIFFERENTIATION 6
3.3 FOCUS STRATEGY 6
4.0 CORPORATE-LEVEL STRATEGIES 6
4.1 DIVERSIFICATION 6
4.2 INTEGRATION 7
5.0 NETWORK, PARTNERSHIPS, AND ALLIANCES 7
5.1 EQUITY ALLIANCE 7
6.0 GLOBAL STRATEGIES AND MULTINATIONAL CORPORATION 7
6.2 GLOBAL BUSINESS STRUCTURES 7
7.0 CONCLUSIONS 7
8.0 RECOMMENDATIONS 8
3.0 BUSINESS-LEVEL STRATEGIES
Apple Inc is not an island but part of an ecosystem in the technological sector. As is result the company has come up with business strategies that seek to promote its growth. For able to survive in the technological sector, there has to be viable business strategy. Integral to the management of apple Inc are the following business level strategies;
3.1 COST ADVANTAGE
The cost advantage is a business strategy that encompasses saving money by reducing the cost of production a process that is driven by economies of learning, economies of scale and process technology (Painter, 2017). Notably, Apple’s technological devices, for instance, the iPhone has a lower cost of production compared to the products offered by the high-end competitors. Since Apple is already producing a lot of products already, the company cannot utilize economies of scale, but rather it should emphasize on the economies of learning and process technology as the two fundamental aspects of acquiring a cost advantage (Levy, 2017).
Currently the U.S economy is witnessing a significant rise especially in the technological industry. Similarly, other countries were apple has most of its branches are also experiencing an increase in economic growth. As such almost all the market segments of apple have the potential to grow. This means that apple will have a competitive edge in terms of access to resources as well as waste reduction. At the same time the Virtual Reality industry is set to witness growth inters of consumer market, from the current $1 billion market value to approximately $ 5.2 billion to $15.9 billion by 2020. The customer demand offers viable economic opportunities and in virtual reality ecosystem and as such apple’s VR headset project is projected to be successful based on the above cost advantage parameters. The US market for instance will benefit the company since it is headquartered in the U.S and therefore it will have its first major market in the U.S.
3.1.1 ECONOMIES OF LEARNING
Economies of learning depict to the costs savings that emanate from the reduction of costs and expenses due to fewer mistakes. Economies of learning are therefore as a result of improvement in the problem solving activities and due to repetition of the operations. As such, when employees acquire experience in undertaking particular tasks they ultimately reduce the mistakes that would lead to wastage thereby making it possible for the company to save costs of operation.
The coordination of the employees has enabled Apple Inc to exhibit intrapreneurship thereby reducing the production costs. Notably, when all the employees are fully qualified and have the necessary expertise the level of production is of high quality, and as such, the cost of production is also reduced. Low cost of production depicts a high chance of accruing more profits (Liarokapis, 2006).
Apparently, apple has employees that have a high expertise and experience in technology. Therefore using the existing workforce apple will be in a position to boost the quality of products (Business Insider, 2016, August 22). Moreover, the qualified employees will also help lower the costs of production since the company will not need to outsource other employees. Apple will, therefore, need to only take the existing workforce into the business unit without having to hire a new team. There is, therefore, no need to recruit new employees since this will increase the cost of production as the employees will need to be paid (Maggio, 2017).
Economies of learning is therefore a competitive strategy that encompasses the employment and outsourcing experienced employees to undertake a task. Within the context of Apple’s VR headset project, Apple is anticipated to incur fewer costs in terms of operational costs since the project team consists of highly qualified technology gurus.
3.1.2 PROCESS TECHNOLOGY AND PROCESS DESIGN
Technology offers manufacturers with a variety of options especially when it comes to addressing the needs of the consumer. According to Robb (2008), the contemporary epoch has seen a growing importance and concern for consumers to have user experience in terms of functionality and design. In a way the advances in technologies has placed the bar too high for technology companies since the people’s expectations of digital devices is high. Process technology and design is a critical success factor for any new technology. VR has the potential to become one of the top breakthrough technologies for apple and therefore the design of the VR headset should be able to suit the needs of the consumers. Though the development of VR technology is in still its infancy, it is important that apple utilizes the most viable technology to ensure that the headset is outstanding and meets the expectations of the consumers. Based on the project team working on the VR headset it is anticipated that headset will of high quality in terms of both technological systems and design.
3.3 FOCUS STRATEGY
5.0 NETWORK, PARTNERSHIPS, AND ALLIANCES
Over the past few years Apple has immensely strengthened its foothold in the business expansion through a number of partnerships, networks and alliances. Most importantly apple has formed partnerships with both large scale and small scale business premises. These collaborations have helped apple Inc gain a notable business momentum (Aylett & Louchart, 2003).
5.1 EQUITY ALLIANCE
Equity Alliance encompasses an endeavor whereby companies sign a treaty or contract to undertake a similar task. The parties that enter into an equity alliance must be willing and motivate to engage in the contract and share the core competencies and obligations required to accomplish the task at hand. It should also be understood that in equity alliance, one company assumes a greater ownership or benefits from the other regarding shares, interests or even profitability (Liarokapis, 2006).
Equity is best elucidated by Samsung’s cooperation with Oculus. It is worth noting that both Samsung and Oculus are committed to be the first to market their virtual reality technological devices. However, Samsung has not been ready to invest the amount of money and time that Oculus is willing to invest in the same project. Based on these variables, Samsung and Oculus have signed a contract that is enforceable under the terms and conditions of equity alliance (Maiberg, 2014).
Notably, Samsung manufactures the OLED screens that are crucial in Oculus’ final product. On the other hand, Oculus manufactures the specific software that is needed by Samsung to make its virtual headset (Levy, 2017). If Oculus provides low-quality software of the VR headset, the consumers will lose confidence in Samsung products since they will not understand why Samsung contracted oculus. On the other hand, since Samsung has a huge customer base If it makes a high-quality screen for Oculus, Oculus will gain a high competitive advantage and boots its sales courtesy of Samsung quality screen.
In the past particularly, Apple Inc has engaged companies such as IBM, Cisco, Box, and Microsoft. Through these alliances, Apple has been able to boost its sales and even penetrate new market segment (Magee, 2011).
Apparently, Apple has entered into an equity alliance with Clearwell whereby Clearwell is set to develop the Apple VR headset. The alliances that Apple has signed have been successful, and therefore the equity alliance with Clearwell is also anticipated to be successful. It is worth noting that Clearwell will develop part of the software due to the fact that the company is a renowned manufacturer of VR products (Aylett & Louchart, 2003). The alliance will see Clearwell gain a significant customer base since Apple is a leading manufacturer and has penetrated major market segments. This is, therefore, one business strategy that will see Clearwell acquire recognition across the world.
It should also be noted that Apple is determined towards ensuring that the VR headset is of high quality and meets the demands of the customers. Since this is a new project looking at the various business and technological strategies that Apple has taken into place, the VR project is set to be successful. The VR will be useful to Apple products since it will provide a new customer experience by making its products easy and simple to use. With the current team of employees, it has been argued that virtual reality will be an exceptional venture for Apple. One of the most successful hires that Apple has made in its bid to ensure quality of the virtual reality headset is Professor Bowman who worked as a Virginia tech center for human-computer interaction. His prowess in computer technology is indisputable, and as such, he stands in a better position to boost Apple’s realization of the virtual reality headset dream. Apple has also employed employees that were part of Hololens team at Microsoft. The team from the Holelens has experience on VR headset since Microsoft had initiated a similar project in the past.
It is worth noting that Apple’s current VR team has been developed through acquisitions. At the same time, Apple has in the currently acquired VR companies is intending to purchase more companies that developed VR related products in the past. The Primesence Company which is based in Israel was the first to be acquired by Apple. The company is able to offer services such as interactive gaming, indoor aping among other services. Other companies that Apple is intending to acquire include Metaio, Faceshift, and Emotient (Maiberg, 2014, February 23). All these companies have used virtual reality related technologies, and as a result, Apple is using them as the available resources to ensure that the VR project is a success.
6.0 GLOBAL STRATEGIES AND MULTINATIONAL CORPORATION
6.2 GLOBAL BUSINESS STRUCTURES
7.0 STRATEGIC EVALUATION
In conclusion, it is undisputable that Apple Inc is the leading manufacturer in the tech industry. The company over the years managed to break market barriers and penetrate into new market segments. The product differentiation strategy is working for the company since its product clearly stands out from the products of apple competitors. As such the future of Apple Inc is certain and highly promising based on the fact that the company is always in the process of identifying new market niches to boost its customer base. The kind of leadership offered by Steve jobs is exceptional and the organizational culture has been maintained since the inception of the company.
Based on Apple’s key issues, therefore, it is recommended:
1. That Apple should be flexible in terms of implementing its business strategies and competitive advantage. The vertical integration aspect of acquiring a competitive advantage may only be sustainable over a short period of time. The addition of new applications in all the versions of its products may be a difficult task that would compromise Apple’s competitive advantage.
2. That Apple Inc should embrace a flat lattice organizational culture in all its branches. This would give all the employees an opportunity to grow their career but also increase creativity and innovative skills.
3. That Apple enhances product differentiation to service in the VR industry. Notably many of apple’s competitors are working on VR projects. Some of the competing firms has already launched similar projects or are planning to launch their products in near future. Oculus rift for instance is one of the virtual reality Headsets that have been produced in the contemporary epoch. For Apple‘s VR headset project to be successful, the company has to put into consideration the available options and come up with new designs that would make the headset more suitable to the customers. This would in turn result to more sales since headset will stand out among the other competing products.
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