Research Paper on "Strategic Research Project: Apple"

Research Paper 5 pages (1684 words) Sources: 4

[EXCERPT] . . . .

Strategic Research Project: Apple

Strategic Research of Apple Computer

Apple (NASDAQ: AAPL) is today one of the world's most valuable companies with a market capitalization rate of $625B as of August, 2012, fueled by an over

100% increase in iPad (173% yr.-over-yr.) and 152% yr.-over-yr. growth of iPhone sales (Apple, Investor Relations, 2012). Apple continues to set revenue and profit records on a consistent basis due to the company's ability to coordinate its supply chain, production, marketing, stores, services and enterprise business. The company's value chain is one of the most efficient in high technology today, due to the close coordination with suppliers and focus on rapid innovation. Using the Porter five forces model to analyze Apple provides insights into why they have been so successful in the past and how they are well-positioned for the future (Apple, Investor Relations, 2012). The Five Forces Model as defined by Dr. Michael Porter provides valuable insights into hwo the dynamics of an industry directly affect overall profitability and performance (Porter, 2008). It is used as the foundation of research for this strategic research project. The intent of this analysis of Apple is to first evaluate their vision and mission statement, and provide evidence of how closely Apple aligns to these values. Next, an assessment of the external environment Apple faces is provided using Porter Fives Forces Model. Next, the market penetration, market development, and product development are discussed in addition to a SWOT analysis of the company. This analysis concludes with a recommendation of corporate strategy for Apple for the next five years.

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Analysis of Apple's Vision and Mission Statement

Steve Jobs is credited with writing the most compelling vision statement Apple has had in its history by stating early in the company's history by writing "Man is the creator of change in this world. As such he should be above systems and structures, and not subordinate to them" (Apple Investor Relations, 2012). Apple's vision statement is the galvanizing force in its ability to create highly innovative products and pushing suppliers to a level of performance that they have never seen before (Cole, Matsumiya, 2007). Steve Job's influence on the culture of Apple continues to do this day as his passion for excellence and product design defined many of the core processes of the company (Apple Investor Relations, 2012). As the process-based excellence of the company shows, this vision is very much a galvanizing force in making the company successful.

The mission statement as stated in their annual report is as follows: "Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings" (Apple Investor Relations, 2012). It is understandable this mission statement begins with students, as Apple's history began with the building of PCs for the educational market. The initial successes with software vendors was also in the educational market, an area of software evangelism that Guy Kawasaki has detailed extensively in his book on this period of Apple's history (Kawasaki, 1990). Apple has also gone through intensive periods of creating entire systems and applications that enable a much greater level of individual creativity than the prevailing platforms from IBM and its many compatible systems provided (Holt, 2003). In conclusion, Apple continues to live by its vision and mission statements, creating exceptionally high value products for its core base of customers. This consistency and fidelity to its vision and mission statements have also led to the company having the most loyal customer base in high technology today, with the lifetime customer value at well over $2,000 per capita, an astounding figure in an industry where the norm is $545 and sales per square foot in their retail stores is second only to high-end retailer Tiffany's Jewelry Stores (Apple Investor Relations, 2012).

Appling the Porter Five Forces Model to Apple

Dr. Michael Porter's Five Forces Model adeptly captures the key factors that are critical for staying competitive over the long-term in any industry. By taking into account the five areas of Substitute Products, Bargaining Power of Suppliers, Bargaining Power of Buyers, New Market Entrants and Competitive Rivalry, the Five Forces Model successfully captures the competitive dynamics of markets and industries (Porter, 2008). Figure 1, Apple Five Forces Analysis graphically illustrates hwo these five forces are being influenced by and also influencing the performance of Apple today. Apple's greatest strengths are its supply chain management expertise, ability to coordinate suppliers with their new product development and introduction (NPDI) process, and speed of innovation (Holt, 2003). In addition to these strengths, Apple has successfully been able to also create the most profitable retail channel of any high tech manufacturer globally (Apple Investor Relations, 2012). Unifying all of these factors is the focus on the customer experience, which is consistent across all devices and touch points throughout the company, from the website to iPad and iPhone-based applications (Cole, Matsumiya, 2007). Apple has been able to mitigate competitive risks by also concentrating on making the bargaining power of suppliers, providing market forecasts that deliver advance notice of new components and assemblies needed well before the actual product launch (Apple Investor Relations, 2012). Apple keeps these suppliers closely managed in secrecy to protect their next-generation product designs as well.

Figure 1: Apple Five Forces Analysis

Assessing Apple's Organizational Intensive Strategy

Apple excels at quickly translating an innovative product design into a commercially successful product. The company is able to accomplish this by working closely with suppliers, production centers, outsourcing production partners including FoxConn, while also have an exceptional grasp of retailing globally. The three areas of market penetration, market development and product development are discussed in this part of the analysis.

From a market penetration standpoint, Apple has a commanding market share in the tablet market, with the iPad having defined the category initially. Apple claims in their latest annual report to have 82% of the global market for tablet PCs and over 62% of the global smartphone market due to its iPhone platform (Apple Investor Relations, 2012). These market share figures are significantly higher in the U.S., with Apple reporting nearly 89% of enterprises in the U.S. standardizing on the Apple iPad and iPhone platforms for corporate communications (Apple Investor Relations, 2012).

From a market development standpoint, Apple has historically excelled in the education, small business and enterprise markets, with strong growth in colleges and universities (Apple Investor Relations, 2012). This is in keeping with its focus on education within the mission statement of the company. Apple has also found this market is excellent for finding new innovation that can solve customer problems in more broadly-defined markets as well (Apple Investor Relations, 2012). Market development has also accelerated with the success of the Apple iTunes ecosystem which generates 30% of all revenues globally for the company on a consistent basis (Apple Investor Relations, 2012). Apple credits the lessons learned in this ecosystem with the ability to fund increasingly aggressive timelines for iPhones, the next-generation iPad and future devices (Apple Investor Relations, 2012).

Product development concentrates on creating innovation based on the stability and continued market acceptance of the Apple iOS operating system, continued adoption of the iPad in the enterprise, and potential for growth of a mid-tier iPad product line. Apple has also continued to invest heavily in the development of new operating systems, with Mountain Lion surpassing Microsoft Windows 8 in performance benchmarks as of August, 2012 (Apple Investor Relations, 2012). Apple continues to rely on its expertise in user experience design in conjunction with state-of-the-art technologies to fuel greater growth.

Apple SWOT Analysis

The following is an assessment of the strengths, weaknesses, opportunities and threats facing Apple today. Apple's strengths include one of the most valuable brands globally today, an exceptional new product development process and ability… READ MORE

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