Apple Inc Strategic Audit: Recent Situation

Computing technology has rapidly evolved over the years, presenting golden opportunities to innovative players, desirous to satisfy and attract customers. It is for this trend that Apple Inc, utilizes entrepreneurial innovation in the pursuit of offering added-value of their customized products, alongside the customer-focused services. Since 1976 when Steve Jobs, Ronald Wayne and Steve Wozniak co-founded the American multinational corporation, it has grown to offer closely-related manufacturing and designing solutions in a portfolio stretching across computer hardware, digital distribution, consumer electronics and computer software industry. The fierce competition witnessed across the computing technology and electronic consumer segments warrants Apple Inc to implement a hybrid strategy.

Business model

The current collaborative structure allows Apple Inc to operate multi-business solutions in three industrial categories including hardware manufacturing, retail and software engineering. Typically, the structure conglomerates the organization into the software manufacturing core, thus its hardware and retail units. Its success traces from its innovative models, used in creating, delivering and capturing value. Firstly, the systemic innovation allows the organization to operate across the customary industrial boundaries by generating an innovation-friendly ecosystem. This allows Apple Inc to retain a mastery of operating in hardware, software and entertainment industries. Secondly, its value proposition model prioritize each product as an experience. It allows Apple Inc to pioneer new enterprise space and define a workable environment for is related-products(Cotton & Dowling, 2012). In addition, its great-in-store service facilitates the adoption of its products in business utilization.

Furthermore, Apple Inc blends product innovation with business model innovation to locate its products at the center of the computing market. In particular, the subsequent release of the iPod series captured the attention of customers transpiring them to its computers. Illuminating the Zott and Amit (2009) design themes of evaluating business models, Apple Inc reveals a novelty-centered design. This is evident from the generation of its iPod and iTunes platforms as expansion units of its innovation locus of business models.

Its multi-platform model facilitates an easier exercise of unpatrolled control and integration of its content and hardware to yield its growth. The organization dictates the terms for its customers and suppliers. Particularly, the model locks the former through high switching costs, imposed by generating Apple Inc content that only functions within its hardware. The integrated platform with the suppliers allows apple inscribe more profitability in the end-to-end physical supply chain. Here, the integration accomplishes a standard outsourcing platform upon which Apple Inc sustains its interoperability, thus a stricter control over the use and transfer of its content. Contrastingly, consumers own the content in non-Apple mobile devices, unlike the lock-in structure where Apple solely controls its target digital marketplace(Montgomeriea & Roscoe, 2013). This arises through devices and software designs that connects within its existing ecosystem and extending to the consumer.

Multi-business lines

Apple Inc operates in multiple business lines mainly extending its special design across its lock-in ecosystem. Primarily, the organization maintains an end-to-end control from the designing, manufacturing and marketing of its broad portfolio of communication and media devices, portable digital-music players, and personal computers. Besides, it sells related-software content, third-party digital content, networking solutions and peripherals. The California-headed multinational sells its products in the global market through a controlled chain of retail stores, direct sales force, third-party network carriers, online stores alongside value-added retailers(Jinjin, 2013).

Initially, Apple Inc retains the world leadership through quality and functionality of its software engineering. This transpires into setting the technological pace and end-user experience through its operating system X targeting its niche markets. Secondly, Apple Inc utilizes unique designs and creativity to attract a loyal clientele for its hardware manufacturing line. Given the technological prowess and friendly innovative environment, the company accomplishes lower ownership costs and greater built-in functionality sustained through tiger interoperability from its operating system(Feitler, Van Beelen, Kielstra, & Taylor, 2012). This allows the hardware business line to extend to mp3players, servers and diverse tech appliances. Finally, though releasing superior products it fails to capture the leadership in its store-within-a-store business line.

Business Organization

Apple Inc utilizes a geographic basis to structure its international business approach, thus constituting the reportable operating segments. Here, nature and location of the customers are applied in determining the businesses focus, including the Americas, Asia-Pacific, Europe, Japan, and Retail. It is worthy to note that the Americas segment comprise the North and South America region, Europe segment for Middle East and Africa and Eurozone block and Australia and Asian countries in the Asia-Pacific segment. The Retail unit comprises retail stores operating in thirteen countries where similar hardware, software and related-services are provided. By 2012, the company domestic and international operations generated 39% and 61% net sales(SEC, 2013). The final assembly of its products takes place at the Ireland manufacturing facility despite that its substantial outsourcing partners are in Asia.

Products and Customers

The primary products contributing the bulk of its annual revenue include the iPad, iPod, iTunes, iCloud, iPhone and Mac App Store. iPhone is a single-handheld product combining features of iPod, mobile phone and internet communication devices. The features of the latest iPhone 5 allow web browsing, guide, maps, and searching automatic syncing with the Apple-ecosystem. Secondly, iPad serves multi-purposes, including web browsing, sending emails, photo viewing, watching and listening, along with reading e-books playing games. Since their innovation, Apple Inc offers third, fourth and iPadmini generations. Besides Mac computing products and iPod digital and media players, it offers iTunes applications including App Store and iBookstore to support purchasing, downloading and digital contents. Moreover, it provides software products including OS x and iOS operating systems amidst application software for consumer-oriented digital experience(Mallin & Finkle, 2011).

Although the above-mentioned products do not exhaust the lengthy, they constitute the Apple Inc brand targeting independent consumers, education and government customers. As revealed in the table below, their revenue contributes an essential portion that generates value of the Apple brand.

Company Business Strategy

Apple experiences a broad market where it sells its products to consumers comprising education clientele, small and mid-sized businesses, enterprise customers and governments. It commits its business strategy to yield the best user experiences to its existing customers by offering innovative software, peripheral solutions and hardware. For this reason, it leverages unique ability in designing and developing within its ecosystem comprising operating system, application software and integrated services. This transpires to yield comparative advantage in providing consumers with superior products, ease-of-use, and seamless integration to the Apple Inc brand(SEC, 2013).

Additionally, the belief to continue investing in research and development franks allows it to attain an end-to-end control in the delivery of innovative products and technological solutions to the market. The expansion of the discovery and delivery platforms for third-party digital contents through iTunes Store and iBookstore further entangle customers to other offerings within the Apple brand. Similar support to the community developing third-party hardware and software offerings that complement its solutions expands the Apple Inc distribution network(Gupta & Prinzinger, 2013). Consequently, it transpires to effectiveness in reaching more customers and providing high-quality post-sales support experiences.

Markets and Distribution

Apple Inc utilizes a blend of direct and indirect channels that operate across the five geographic blocks. Besides the customary wholesalers and retailer network, it strives to reach its primary consumers through direct sales force, cellular network carriers through third-parties, alongside the value-added resellers. The company targets sales maximization by engaging salespersons, knowledgeable to convey the value in an integrated hardware and software products while demonstrating the unique solutions in them. Equally, it believes in establishing and sustaining direct contacts with the targeted consumers facilitate a comparative demonstration of the core advantages of Apple Inc products over rivals(SEC, 2013).

It complements the direct contact approach by offering post-sales support experience. This accomplishes an excellent buying experience that attracts new customers to the brand. The emergence of competitive organizations riding in the technological advancements has influenced Apple Inc in expanding and improving its distribution platform through fully-owned retail stores. The present investment in enhancing reseller sales program allows it to place Apple Inc fixtures and merchandising resources within reputable third-party reseller units. This strengthens its Premium Reseller Program amongst the selected third-party locations who focus on establishing high levels of integrating support services and Apple product expertise(Lashinsky, Lev-Ram, & Kimes, 2008).

Supply Chain Analysis

Although Apple Inc has multiple sources for components essentially sustaining its businesses, it currently faces limited sources for several of its components. This leaves the entire organization of facing disrupted deliveries alongside pricing risks. Equally, though benefitting from multiple sourcing its production schedules encounter delays during the industry-wide shortages besides the resulting price fluctuations. Furthermore, there exists little guarantee that the Apple would acquire extensions in the existing agreements with suppliers(Montgomeriea & Roscoe, 2013). It implies that denied renewal would subject Apple to supply shortages that would trigger price increases capable of adversely hampering its financial performance and operating results.

The company faces heightened competition from other participants for the similar components. It illustrates that the increasing demand for these components would trigger increased prices as suppliers desire to maximize their revenues. In this light, the rivalry in demand would leave operators incurring high acquisition costs. Apple Inc also uses customs components supplied from one source. For instance, the iPhone components comprise rate earth metals source from China in Inner Mongolia region, explaining why it resorts to assembling its devices in China to accomplish faster production cycles (Dilger, 2013).

Apple Inc embraces a distinct supply chain platform to yield maximum visibility and control while designing and manufacturing over all its components. Although the company seeks to increase its control by investing in self-manufacturing units, it remains dependent on placing huge advance orders to its key suppliers. The recent development in its supply chain includes the talent spending spree targeting the Asian region where it seeks to recruit supply chain managers and engineers to speed up its productions. While this would serve to yield visibility to its existing business models, recent shifts in the supply chains of most mobile device manufacturers enable their rival products to reach the market earlier (Williams, 2014). This exposes Apple’s supply chain under mounting pressure as it loses its sufficient control in its supply base.

The Substantial hardware products of the company are manufactured by outsourcing partners in Asia. The concentration of its supply base in a single location enables it to acquire at acceptable prices. If the company fails to obtain sufficient supplies from these sources, then most of its projects would stall. It is likely that the increasing demand from other rival operators may lead the concentrated suppliers to produce common components rather than offer customized releases that target its unique requirements. The organization may suffer delayed production if the outsourcing partners are unable to deliver along their commitments, thus disrupting Apples manufacturing schedules. In this regard, Apple Inc has shifted to broaden its supply base amongst the Chinese companies including GoerTek Desay Battery and Sunwoda Electronic, alongside Taiwan’s Pegatron. This will reduce dependencies on Taiwan’s Foxconn, lower manufacturing costs, and yield faster production turnaround cycles (Salerni, 2013). The growth in manufacturing partners will reduce manufacturing delays, thus ensuring the products reach consumers faster than the releases by competitors.

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