Question

APPLE INC.: MANAGING A GLOBAL SUPPLY CHAIN1 case Study

What are Apple's key resources and key capabilities?

Answer 1

Ans:

Apple’s most important resources and capabilities are the integrated systems of hardware and software that the firm has developed and successfully marketed to derive value. While Apple’s designers, programmers, and engineers each represent key resources the ability of the firm to exploit their abilities to create their entire software/hardware ecosystem is the firm’s key capability. Taken each individually, the resources only represent competitive parity and temporary advantages. The combination is their key capability that has established a sustainable and ongoing competitive advantage and above average performance within the industry.

Following are the key resources and capabilities of Apple:

Apple Stores–Retail Locations

The introduction of Apple stores has provided the company with an important physical presence to act as both a sales location and an advertisement. The stores allow Apple to tightly control the image of the brand and provide excellent customer service. Apple tops many retailers in in-store sales, generating $4,032 per retail square foot per year, beating other retailers like Tiffany & Co. at $2,666 and Best Buy at only $930. This resource is of incredible value to Apple and a success that is a relative rarity in the industry. Matching success and impact like the Apple store model is difficult for other firms to achieve. Past experiments likeGateway stores have failed, while Sony Style stores founder in mediocrity.

Relationship with OEMs

Apple has outsourced all of its manufacturing processes to OEM partners in China, like Foxconn and Hon Hai Precision Industry while focusing on design internally. The relationship between Apple and their OEM partners are very close to providing Apple with excellent service and high-quality products. Mutually beneficial business relationships are time-consuming and difficult to develop and maintain is of considerable value to Apple and puts them ahead of other manufacturers who may decide to outsource some production.

Industrial Design Capability

Apple’s incredible industrial design capability is a function of their innovative design teams, led by Jonathan Ive, senior vice president of industrial design, and the firm’s prioritization of design and outsourced production. Ive and the Apple design team hold many awards, with products being shown in permanent collections at various museums. This combination is valuable to Apple, rare among competitors, and difficult to imitate.

Talented Software Development Teams

Apple’s software developers are carefully selected and talented programmers. They’ve produced industry award-winning software and the highly regarded iterations of Macintosh OSX operating system. They’ve provided Apple with important products, but developers of their caliber are not rare within the industry, nor are they difficult to imitate. Other firms can develop staff as talented or hire them away from Apple.

Tailored Hardware/Software Systems

One of Apple’s most important capabilities is their ability to develop and build highly integrative systems with software designed specifically for the hardware it runs on. The ‘closedsystem’ style of Apple is unique in the industry which typically relies on third-party software(i.e. Microsoft Windows running on a Dell computer). This capability comes from a combination of the design teams, software development teams, and hardware engineers employed byApple. No other firm in the industry has a system like Apple’s and it would cost millions or billions of dollars to imitate, not regarding success. While other systems work for PC manufacturers they cannot achieve the same results as Apple’s integrated system.