Question

APPLE INC.: MANAGING A GLOBAL SUPPLY CHAIN1 case Study

Appraise how important Apple's key resources and capabilities are in establishing and sustaining competitive advantage? (See strategy capsule 5.7)

Answer 1

Competitive advantage within strategic management refers to leverage that an organisation has over its competitors in all relevant areas. It is essential to identify all advantages over the competition companies to be able to exploit, further develop and nurture sustained competitive advantage. Competitive advantage maybe segregated on the basis of cost and differentiation as outlined by Michael Porter. With cost advantage being identified as cost leadership or cost focus and differentiation or differentiation focus.

There are four functional level strategies within any organisation for Optimisation of processes to render the competition irrelevant by creating a unique and hitherto unidentified market space for itself globally. These are, the level at which all individual divisions in departments within the entire organisation and every unit operate, the linking of all strategic issues to each other and to every business process on the entire value chain, utilisation of all such Strategies and processes for absolute involvement in the development and coordination of all available company resources based on which business unit level strategies can be effectively and efficiently executed. The strategies implemented within each process provide the inputs to incorporate action plans for each department facilitating the accomplishment of the goal. Entire system of strategy is highly dynamic and adaptable with the feedback from implemented strategies becoming action plan and information for decisions on future strategy. This results in a process of constant monitoring and control with continuous modifications and changes being implemented as and where required. This involves implementation and the ground level to optimise functionality by monitoring efficiency of every employee the quality of output by each department and the innovation and strategy of the company as a whole with sensitivity and responsiveness towards the customer and community through meeting every requirement and satisfying every need. These are the core functional level strategies which are closely connected to each other, making it mandatory that all be optimised in entirety to ensure success for a business entity. Absolute quality of responsiveness to customers requires the company to achieve quality, efficiency and innovation without which customer satisfaction cannot be achieved.

Apple is the uncrowned king of the technology world which seems unbeatable to competitors due to its ability to rebuild and reorganize itself to emerge stronger and victorious from every debacle it faces. It seems untouched by recession and seems to not only sail smoothly but rise exponentially, while competitors struggle. Apple seems to have mastered the art of strategy, with extension focus on differentiation and utilising it to gain competitive advantage. Apple leaves no opportunity unexploited with regards to customer needs from the very basic to the extremely over the top, they are like the probable Genie with the Magic Lamp weather customer rubs the lamp makes a wish and Apple implements it in the product. They have strategy not only to gain competitive advantage but also to defend their position strongly and aggressively.

Apple has the advantage of being into hardware and software both. This provides an exceptional advantage as Apple provides unique software which they feel requires hardware which needs to be as exceptional and unique to be able to successfully operate the software. This provides exceptional advantage as the hardware component does not restrict the software and Vice Versa as both are absolutely under the control of the company. Their greatness results from an ability to make specific hardware design which will maximize the value of the software by increasing the perceived value within the overall product for the consumer. The major obstacle for software companies is to design software which is unique and exceptional by following all restrictions and restraints created by the hard way which will be used to operates the software. Apple concentrates on creating exceptional and unique software and manufacturing the hard way which will perfectly match the software. This is an exceptional competitive advantage which is very difficult to imitate or substitute.

Another major advantage which results out of differentiation within software, is from the exceptionally unique software which Apple has created in the form of iTunes and digital Asset Management. Apple has once again displayed it superlative strategy in understanding that data and content is a major factor in winning the technology battle and the winner is the one who holds the keys to the content and not the owner of the content. The one who holds the key is mostly the one who provides the platform for accessing the content, or displaying the content. Apple's announcement of having over hundred million consumers providing credit card information is a declaration of having arrived on the digital Asset Management scene in a big way by selling digital goods which may change in the future. Apple has built an incomparable company and brand image with customer trust and loyalty which is unparalleled.

Another key factor which records Apple competitive advantage was another strategic move of introducing their own retail stores in spite of various precedents of companies having failed miserably. Apple once again proved that it can succeed where others fail through exceptional management and strategy. Apple apparently did its homework by thoroughly analysing the location and the priority accorded to the store and making the stores as exclusive and unique as the product itself. The store was small inside but made available the entire range of products and accessories produced by apple and also served in a multidimensional capacity, as the support center for service and repair. To ensure that the brand image did not suffer any detrimental impact promise management of these outlets the control over the entire retail experience was maintained within the head office, with heavy investment to retain focus and ensure quality. Strategy is Apple's forte, which is visible in every behaviour displayed, stance adopted and decision made by the company. The decision to locate the stores within malls was another winner, as most visitors are already in shopping mode. Due to direct contact with the end user through the stores Apple is able to collect valuable inputs and feedback from the customers which is used further enhancing inherent value perceived by customers through implementation of needs and suggestions wherever possible, for improvement of the product.

Apple therefore, has an extensive competitive advantage over Rivals provided by its unique strategy of differentiation even when it is not entirely differentiated, by exploiting the content management through adoption of gatekeeper strategy within iTunes and retail strategy rendered successful by exceptional management. Competitive wanting to talk with apple need to understand that it may not be impossible but they need to be as innovative in the strategies to win the strategic battle, which is the greatest strength Apple has, a la David and Goliath.