Question

Can someone please provide an example of Apple's strategic management plan(in your own words)?

Answer 1

Apple's Strategic Management Plan would include the following:

1. Organization's Goal.

2. Vision & Mission.

3. Industry Analysis of the industries Apple is in - Electronics (PCs, Laptops, Smartphones, Smart Tablets) and analysing the threat to each of the Porter's 5 Forces.

4. SWOT Analysis of Apply which will involve Strengths, Weaknesses, Opportunities & Threats.

5. Tetra Threat Analysis - Threat of Imitation, Threat of Substitutes, Threat od Holdup, and Threat of Slack.

6. Competitive Advantage that Apple wants to create/enjoys.

7. STP's (Segmentation, Targetting and Positioning) of Marketing.

8. The 4Ps - Product, Place, Promotion, Price.

A few of the analysis carried out below:

SWOT Analysis

Strengths

• Apple is considered to be the epitome of innovation and design not just in its products but also in its promotion and branding strategy. It adopted a variety of techniques to make the iPhone such a success. Following are the factors for Apples success in the past:
• It had iconic apple stores acted as an excellent sales location as well as advertisement. The stores allowed apple to tightly control the image of the brand & it also provided excellent customer service.
• Apple also was the leader of innovation & design. The difference between the price & cost was the value created, the difference was so huge that the customers were ready to pay a premium for the value created. [Price – Cost = Value]
• Merging Strategy was adopted by Apple to combine both iPod & phone and coming up with the iPhone, which was the state of the art at that time.
• Apple also realized that there was a huge market apart from the premium customers in countries apart from the US. Rather than diluting the brand by coming out with cheaper iPhones it started selling older versions at a cheaper rate. China became the biggest market outside of US.
• It started selling the iPhones in a unique way by combining the data card providers and making the iPhone more subsidized and affordable at the same time not diluting the brand. This was the revenue sharing model adopted by apple.
• Bargaining power of Apple had come through having a stronghold in the mobile device market. Apple had become the leader and started arm twisting its stakeholders.

Weakness:

• Incompatibility of iOS with any other OS or software makes it difficult for people in terms of interoperability.
• High Price
• Recent fiascos like that of the battery explosion and secrets about battery management can tarnish complete image of the company

Opportunity:

• Increasing purchasing power of people in different parts of the world like India which increases its market size
• Recent advancements in technology gives it an edge of its competitors in terms of learning curve and ability to exploit technology to launch newer products
• P2P cloud services is on the rise and it can encash that opportunity from its customers

Threats:

• New age competitors like OnePlus are a threat to Apple
• Growing user base of Android users poses one big threat to Apple since Android is Open Source
• Localised competitors like Saavn, Jio Music, etc can pose a big threat to iTunes Music Store business where such localised platforms exist in different countries.

Tetra Threat Analysis

Analysis of Apple’s position in the PC industry using Tetra Threat Framework:

There are four threats as per Tetra Threat Framework:

1. Threat of Imitation:
   1. White-box desktops/machines assembled by local entreprenuers in China
   2. Threat of small companies which started making Mac Clones.
   3. Threat of maintaining secrecy and confidentiality
2. Threat of Substitutes:
   1. Android Smartphones
   2. Tablets
   3. Chromebooks
   4. Windows PCs
   5. Advanced game devices like Sony PlayStation 3
3. Threat of Holdup:
   1. Market saturation with lot of competitive products
4. Threat of Slack:
   1. Closed Ecosystem – customers found it hard to switch to other OS systems like Windows due to non-compatibility of Mac applications.
   2. Lower margins on PCs (3%), while Apple had to maintain lot of inventory with low R&D spending.

Response to Threat of Imitation:

1. Apple started licensing a handful of companies to make Mac clones in 1993.

Response to Threat of Substitutes:

1. IBM launched PC which used DOS. Apple responded by introducing Macintosh in 1984, by including value-added features like ease of use, industrial design & technical elegance.
2. For tackling low-cost PCs market, Apple introduced Mac Classic, which was $999 computer, designed in response to IBM low-priced clones.
3. Formed an alliance with IBM to create a new PC OS aimed at multimedia apps.
4. Launched iPhone by launching

Response to Threat of Holdup:

1. Formed an alliance with Intel to rework Mac OS to run Intel chips.
2. Collaboration with Microsoft to develop core products, such as Microsoft Office for Mac.

Response to Threat of Slack:

1. Opening up the iPod by renovating iTunes to provide access to Windows users also.
2. Apple reduced its inventory significantly and increased its spending on R&D to tackle the changing environment and competition.