Introduction
Apple’s success has been pegged on their missions, vision and corporate strategy of innovation and development of new technologies. Due to this, Apple is well known as the pacesetter in the smart phone industry where they have established themselves as the undisputed market leaders (O’Grady, 2008). The major success achieved by the company under its former chief executive officer, Steve Jobs, was based on the fact that while other industrial players sought to improve existing technologies, Apple was busy trying to develop new technologies. This gave them an edge over their competitors. However, to sustain its market amidst challenges posed by competition, there is a need to review its strategies.
Strategic choice for Apple Company
Market Penetration Strategy
Apple Company has the option of increasing market share of the IPhone in the market they serve. This option involves less risk since the company is conversant with trends in the market. The current major markets for Apple’s IPhone are Europe, America and Asian countries. To penetrate further into these markets, Apple should target potential customers who are currently not using the IPhone. They should seek to activate this market through a number of ways. First, Apple should increase its advertising campaign in these countries with the aim of encouraging more people to try the experience offered by Apple’s IPhone (Afuah, 2009)
The company can also try to win the loyalty of the existing customers with the aim of locking them in (Afuah, 2009). This will help the company to retain its market share for its IPhone products already in the market and also I Phone products that will be launched in the future. To implement this strategy, the Apple Company can also engage in promotional activities that may include offering special prices during promotional campaign or offering free shipment for IPhones purchased online.
The other way the company can implement this strategy is by increasing its sales activities through its sales force. Should they choose this option, Apple Company should increase its distribution channels in America, Europe and Asia (Afuah, A. 2009). This is possible through e-commerce and establishment of more stores close to the target customers in order to offer convenience and easy accessibility to the IPhone. Apple Company can also take advantage of the announcement made recently on the future of the corporate association between Sony and Ericson companies in relation to mobile phone production. In this situation, the Apple Company should move in and try to convince the market that the Apple IPhone offers the best bargain in the market.
Product Development Strategy
Another strategy available for Apple in its bid to fight off competition and increase sales of its IPhone is the product development strategy (Hill and Jones, 2008). In this strategy the company can try to extend the IPhone market by coming up with different variety of the phone which will allow users to use it in different ways. For example, Apple could develop Iphones specific for a given application environment only. This can include development of the IPhone to be used by students and teachers for academic purposes only. In this case, the IPhone should have built-in capabilities that allow students and teachers to have virtual interaction while in or out of schools. It should also have educational resources such as eBooks and easy access to online libraries.
The IPhone should also have applications that allow online discussion groups and communities. It can also develop IPhones targeting different segments of the market (Hill and Jones, 2008). For instance, IPhones targeting business people should include those features that can help in information gathering, decision making and management. The Iphones targeting doctors for instance, should have capabilities that can allow them to store their patients’ medical history and conditions, while those targeting young generation should be developed in a way that allow them to socialize easily and get various forms of entertainments conveniently. By using this strategy, the Apple Company will be able to lock in existing customers and also attract new customers by adding value to the IPhone brand.
Market Development Strategy
In market development, Apple Company could seek to expand its market for the existing IPhone versions. One option for Apple Company is to target African countries particularly South Africa, Kenya, Egypt and Botswana. The African’s smart phones market is emerging and remains highly unexploited. Economic performance indicators in most African countries, for instance the countries mentioned above shows a promising economic growth trend. The size of upper and middle class income earners is on the rise in most of these countries. There is also a change of lifestyles in these countries with preference to trendy and stylish gadgets such as phones. The business community is also on the rise in these countries and therefore the need for products that serve their specific needs. With the IPhone version, Apple should seek to exploit this market through establishment of sale centers in Africa.
Africa has also increased its internet usage as a result of low cost and wide accessibility of the internet through optic fiber. There is also increased acceptance of e-commerce in Africa. Apple should establish an online e-commerce portal aiming the African market. This portal should be developed in a way that allows language translation to main African languages. This site should be able to win Africans confidence due to their cautious nature when it comes to online purchase.
Diversification Strategy
This is another option available for the Apple Company. The option is highly risky for it tries to promote the sales of new products in totally new markets. The risk arises from lack of proper knowledge and experience in the operations of the target market and the product the company wishes to promote (Hill and Jones, 2008). The Apple Company could embark either in a related diversification or unrelated diversification. Under related diversification, they can either choose backward, horizontal or forward integration. If they decide on the backward integration, the company could decide to develop smart phones software and application and then to sell them to other smart phone producers such as Samsung and Huawei companies. In forward integration, Apple incorporation should involve itself in direct sale of its IPhones instead of relying on agents to do so. It can also take on a horizontal integration in which case it will seek to sell related products such as low cost I phones targeting low income earners. Alternatively, it can sell other products related to I Phone such as the I-pad brands.
Ansoff Matrix for the Company
Existing Products New Products
Market Penetration
• Increase sale of Iphones in America, Europe and Asia, to existing customers. Product Development
• Develop special purpose Iphones
Market Development
• Market Iphones in emerging markets such as Africa Diversification
• Develop smart phone technologies for other smart phones makers
Existing Markets
New Markets
Implications of these options
Making a strategic choice requires consideration of the available resources within management disposal, required competencies and the availability of the necessary capabilities (Hill and Jones, 2008). Therefore, before Apple chooses an appropriate strategy, it must identify its strengths and weaknesses and compare this with its competitors. By doing this, Apple will be in a position to identify its core competencies which can be exploited to earn a competitive advantage, or its weakness and the way they can be minimized for the benefit of the company. Extra resources may also be required to implement a given strategic option.
To develop the required resources and necessary capabilities for the implementation of a given strategic choice requires a long time period. This period may be longer than the period set to enter a given market. Therefore, Apple should first build skills and develop necessary experience before they decide to enter the African market or to develop specialized Iphones. Successful implementation of strategic choices may require Apple Company to think about its capability first before they consider a strategy to employ in the market. They must develop competencies that can be demonstrated in the market or the product they choose.
If they choose to enter the Africa’s market, Apple Company will have to establish distribution channels and customer support centers in these markets. If they decide on product development strategy, they will be required to develop new resources. Development of competencies will also be required as well. The risks involved with implementation of each of these strategies vary with the strategy chosen. Operating in the existing market will be less risky compared to operating in a new market (O’Grady, 2008). This is the same case with the products. Therefore, the risk posed by selling its version of Iphones in America and Europe are minimal as compared to the risk involved if they were to choose diversification strategy by launching totally new products in new markets where they have no experience.
Strategic Options Tests and the Strategic Choice
Apple should consider strategic option which conforms to the overall strategy of the firm. The strategy should be feasible in terms of resources and skills required to implement it. It should also be acceptable to the management and the staff who should implement it.
Given the objectives of the Apple Company and the overall business strategy, the best strategic option will be product development. Apple has pioneered different smart phone technologies (O’Grady, 2008). This has therefore equipped them with the experience and competencies needed to develop products that will meet the needs of the existing market. Another reason why it should consider this strategy is its heavy investment in research and development which gives them resources needed to develop a new product. Apple’s management has always supported innovation of new products. It also has staffs motivated by new innovations. Therefore, this means the strategy will be acceptable.
Strategy Implementation
The implementation of the product development strategy should be a cooperative effort that should include all the stakeholders inside and outside the company. There should be a thorough research into the particular aspects of the organizations structure and culture so as to ensure that the process of strategic change is as smooth as possible. The fact that the company has superior communication structures should serve to increase the efficiency of its product development strategy implementation process with the identification of the particular mandates that the different departments as well as other stakeholders have to play in the organization being communicated (Afuah, 2009).
Communication is the key in ensuring that different people who are involved in the strategy implementation process cooperate with each other for the successful adoption of product development strategy to a point where the real intentions of the strategy are achieved (O’Grady, 2008). The fact that the company has for the last few years adopted an inclusive approach to strategy formulation means that most of the stakeholders already have an idea of what is expected from them in the implementation process and this should ease the process by reducing conflict. The availing of the required resources in time should serve to increase the efficiency of the strategy implementation process as well as salvage the company from the particular inefficiencies that it is exposed to in the market.
Recommendations
As the company engages in the product development strategy implementation, it must take certain factors into account. First, competitors are always keen on the moves taken by Apple Company in the smart phones development. Second, the market is as dynamic as the needs of the customers. Therefore, the company should embark or intensive and extensive research and development in order to come up with advanced technologies, which will take time before imitation by competitors, take place. Apple should also make sure it renders its previous versions obsolete. By doing this, competitors will always be behind them in technology. Research should also be done to determine the needs of the market. By comparing this with previous needs, the company should project future needs of the market with the aim of meeting them.
Reference list
Afuah, A. 2009. Strategic Innovation: New Game Strategies for Competitive Advantage. New York: Taylor & Francis.
Hill, C, and Jones, G. 2008. Essentials of Strategic Management. Upper Saddle River: Cengage Learning.
O’Grady, J., D. 2008. Apple Inc. New York: ABC-CLIO.