STRATEGIC MANAGEMENT

STRATEGIES OF APPLE
Company Profile
Apple was one of several highly successful companies founded in the 1970s that bucked the
traditional notions of what a corporate culture should look like in organizational hierarchy (flat
versus tall, casual versus formal attire, etc.).
Originally, the company stood in opposition to staid competitors like IBM by default, thanks to
the influence of its founders; Steve Jobs often walked around the office barefoot even after
Apple was a Fortune 500 company. By the time of the"1984" TV ad, this trait had become a key
way the company attempts to differentiate itself from its competitors.
Steve Jobs
Steven Paul "Steve" Jobs (born February 24, 1955) is an American business
magnate and inventor. He is the co-founder and chief executive officer of Apple Inc.Jobs also
previously served as chief executive of Pixar Animation Studios; he became a member of the
board of directors of The Walt Disney Company in 2006, following the acquisition of Pixar by
Disney. He was credited in the 1995 movie Toy Story as an executive producer.
Vision

To be the most admired company in the world and the most loveable brand people ever
use
Every person around the global should taste at least 1 apple product

Business Philosophy

We believe that we're on the face of the Earth to make great products.
We believe in the simple, not the complex.
We believe in saying NO to thousands of projects so that we can really focus on the few
that are truly important and meaningful to us.
We don't settle for anything less than excellence

Mission

Apple is committed to bring the best personal computing experience to students,

educators, creative professionals, and consumers around the world through its innovative
hardware, software, and Internet offerings.
Apple Computer is committed to protecting the environment, health and safety of our
employees, customers and the global communities 'where we operate. Apple strives for
continuous improvement in our environmental, health and safety management systems
and in the environmental quality of our products, processes and services
Apply recycling programs:
Once an Apple product reaches the end of its useful life (assumes a seven-year product

lifetime), we will help you recycle it responsibly

Strategy
Corporate Strategy
Growth is the main corporate strategy with the following integration models

Horizontal Integration: Via New Products and new areas of creativity. Also via hitting
new regions and countries.
Vertical Integration: Via direct contacting with the end customer either online through
the online Apple Store (iTunes) or through the 300+ Retail Apple store which introduce a
very luxuries customer care & support.

Apple Is Competitive to the Edge.

Apple Competes with Microsoft in Operating systems and software.

Apple Competes with IBM, DELL and HP in Personal Computers and Laptops
Apple Competes with Adobe in Multimedia Software Applications.
Apple Competes with HTC, Nokia, Samsung, Sony and Google in Smart Phones and
Small Personal Computers (I PAD).
Apple Competes with Retails Stores as well as Online Multimedia contents resellers.
Apple is Maintaining the Specialty in the highest level of it while its products is in a high
cost average.

If we want to describe Apple as a company,

its the strongest competitor ever in Information Technology.

Company Life Cycle

Apple has 2 main stream life cycles as Follow

Apple Computers Inc. (1976 2007) .the Company was producing personal computers as
well as software totally compatible with it.
Apple Inc. (2007 Now) the company started a new business line focusing on the
consumer electronic devices such as iPod, iPhone, Apple TV, iBook, iPad...etc.

Apple Computers Inc. Life Cycle

For these 30 years, the company started as an idea for a 5 years of a question mark.
Then started to go away into the sky as a star, they made up their base customer base, their
revenue getting into a stability then started lately to decline a bit. They are a nice Cash Cow now.

As we all know, Apple has dominated the portable media industry since the introduction of the
iPod. Since then, Apple has introduced many new products such as the iPhone, macbook, and

the iPad; all which are sold throughout the globe. Apple international strategy is a Global
strategy of a standardized products. The only modification Apple alters in their products is the
power source because of the different power voltage in different countries. Other than this,
Apple products are precisely standardized throughout international markets. Apples
engineering, design, and manufacturing is controlled by one source, which is why it
differentiates from other computer makers.
If Apple followed a multi-domestic strategy, they would have excess overhead and management
would loose control of the company, more importantly the image of cutting edge and advanced
technology, products, and marketing can be damaged. Apples engineering and design
developers come up with ideas for the products in the U.S, but the complete manufacturing of
Apples products is done by two large IT solution brands manufacturers named Foxconn and
Inventec, which are located in China. The reason why Apple manufacturers its products in
China, rather than the U.S is because labor costs in China are much cheaper, most of the products
needed for manufacturing are made in China, Apple also has access to a big market with China
having the biggest population on the globe, and lastly, China as a very strong and stable
economy.

Mergers & Acquisition Strategies

Throughout its existence, Apple has acquired 21 companies and has purchased stake in two
companies. Most of Apples mergers and acquisitions were software companies. Since Steve
Jobs returned to Apple, the company has only bought 11 small companies. Generally, Apple
does not have a reputation of acquiring firms. Google on the other hand has bought 11
companies in just the past 18 months.
Steve Jobs has always preferred developing technology in-house to avoid the risks that come
with integrating other companies into Apples unique unique and well nurtured culture.
Last year Apple was interested in acquiring mobile advertising firm AdMob, but Google
swooped and quickly and bought the company for $750 million. Following the event, late last
year, Apple entered the bidding for the online music site Lala.com after Google and several other

prospects acquirers had gotten involved, Apple closed the del quickly. The company closed the
deal in a few weeks, rather than the more typical two to three months.
It was very evident that Apple did not want to to lose out on this bid, and especially not to
Google. Apple has been moving quicker on closing M&A deals which is very critical for them
with Googles competitive presence hovering over all of Apples strategic moves.
Some of the reasons why Apple should become more acquisitive include the fact that they are
moving from traditional personal computers to smart phones and mobile computing.

Strategic Alliances
Apple has had very significant strategic alliances since the years of their existence. Some of the
main reasons for Apples desire to join strategic alliances are to exploit economies of scales,
learn from competitors, manage risk and share costs, all sources of economic value in any
industry. One of the most notable and valuable alliances is Apples alliance with AT&T in
production and launching of the iPhone. Apple needed to trust AT&T that it would not share
Apples key technologies with other mobile manufacturers. On the other hand, AT&T had to
trust Apple that once the iPhone was created, it wouldnt disband the alliance, and launch the
iPhone with another mobile company.
Another valuable alliance Apple has is with Microsoft. Under this alliance, Microsoft agreed to
develop Microsoft Office software for the Mac and in return, Apple agreed to bundle Internet
Explorer in all of Apples computers. Apple has had an alliance with Intel for the processors
used in their products. This alliance was very crucial for Apple because it was the major
contribution that promoted those consumers who had stayed away because the computers could
not run Windows to convert to Apple computers.
Another example of Apples strategic Alliance:
In 2004 HP and Apple announced a strategic alliance to deliver an HP-branded digital music
player based on Apples iPod and Apples iTunes music player and store to HPs
customers. The outcome of this alliance was to have Apples iTunes software preinstalled on all
HP consumer PCs and notebooks. The goal for Apple was to have an easy-reference desktop
icon to point customers directly to the iTunes music software, while offering a user-friendly
music experience. In addition, Apple also wanted to get iPod and iTunes into the hands of every
music lover around the world, and by partnering with an innovative company, it helped them
achieve that. The value for HP from this alliance is that it helped HP customers to enjoy more
from their personal digital entertainment content. More important, partnering with Apple added
value by integrating the worlds best digital music offering into HPs larger digital entertainment
system.

Implementing Corporate Diversification

To manage its operations, Apple follows an M-form functional structure. Under CEO Steve Jobs
there are 10 Senior Vice Presidents: CFO, COO, Operations, Hardware Engineering, Software
Engineering, iOS software, Worldwide Product Marketing, Industrial Design, Retail and General
Counsel. The management duties are separated out, but they ultimately report to the few at the
top.
Apples board of directors oversees the Chief Executive officer and other senior management in
the competent and ethical operations of Apple on a day-to-day basis to assure that the long-term
interests of shareholders are being served. Directors are expected to be proactive and to have a
focused approach to their positions. More importantly they are expected to set standards to
ensure that Apple is committed to being successful. Apples governance structure was designed
to encourage moral actions, effective decision-making and monitoring of compliance and
performance.
Apple executives meet daily to talk about all of the business. They discuss current goals and
projects and market changes and where the companys direction is going. Apple is an incredibly
collaborative company; they are great at figuring out how to divide tasks up into great working
teams promoting communication amongst teams.

Diversification Strategies
Apple has used close-related diversification strategies as their corporate strategy. In 2001, Apple
which was historically known for its software and computer technology diversified into the
digital music market with the launch of the revolutionary portable mp3 player - the iPod and later
the iTunes Music store. Apple has had clear economies of scope due to the high degree of
integration between personal computing products and personal entertainment The economic of
scope gained from such strategy has reduced Apples operating costs, which in turns contributes
to both higher margins and more affordable prices to customers. More importantly,
diversification has restored the troubled companys image and market share.
Apples diversification has helped the company learn more about what consumers are looking

for in todays evolving technological era. Apples diversification has proved that Apple is
capable of creating innovative high quality and well design devices that impress consumers and
facilitates everyday and work life. Apples iTunes, iPods, and iPad diversification success has
boosted sales of the Mac computers because of the close integration between the
products. Ultimately, this integration creates a bundle of products that are easily managed
because they are all virtually running the same operating system.

Apples recent diversification into the mobile communication industry has

been remarkable because they have essentially created a new era of smart phones. Before the
iPhone, if you asked someone what kind of phone they had, they usually would say sprintor
motorolaphone. Now people say iPhone and they are proud to say it, regardless of the service
provider they use.

Vertical Integration Strategies

Apple, throughout its history has essentially followed a vertical integration approach in how they
run operations in their business. Apple continuously seeks control of every aspect of the value
chain. Increased control can be a competitive advantage as Apple has taken ownership of chip
manufacturers, control over manufacturing, extremely strict software standards, and a nearly
closed ecosystem and proprietary retail stores.

More specific, Apple follows a vertical integration strategy in the production of the
iPad. Apple is using a vertical integration strategy because it has now taken over the stage of
chip design and production. To power the iPad, Apple has designed its own processor, called the
A4. Prior to this, Apple used chips made by other companies such as Intel to power the iMac
and Macbook Pro and Samsung for the iPhone. In addition to the processor, Apple also makes
its own operating system software for the iPad, which has allowed Apple to exploit its creativity
and offer an extraordinary user experience on all of its products.
Apple has decided to vertically integrate so that the company has more control of the value chain
and more importantly, component costs. Steve Jobs is known to be a control freakand hates
relying on others. By designing its own processor and operating system software, Apple creates
optimization between both components to increase speed and preserve battery life. In addition,
vertical integration creates more competition amongst chip suppliers.

Differentiation
Apples differentiation strategy consists of manufacturing computers from the same company,
which is responsible for both operating and hardware in which it runs. Windows computers on
the other hand are made from dozens of different manufacturers. Because Apple licenses their
operating system exclusively for mac computers, Apple controls all of the components which are
included in their computers. Since the hardware and software is intended to be used on the
Apple (Macintosh) operating system, the effect of end-user technical issues is
minimized. Apple differentiates itself from the competition by focusing on design
quality. Apple has a strong reputation because of its high quality design in personal computer
history. Apple offers sufficient hardware and software features to ensure high quality user
experience. Apple competes in the high-end market because their hardware is made to provide
high value for the money. Apple is the only computer manufacturer company that has
established physical stores around the globe. Apples presentation of their products are very
stylish and ergonomically delivered. When consumers walk into an Apple store, they experience
a level of service much superior than any other computer store. Apple stores has a genius bar for
technical support, daily workshops, one-on-one support, and the most important their products
out for people to play with before making a purchase. Instead of focusing on offering low cost
computers, Apple differentiation strategy focuses on manufacturing products that are innovative,
high quality and design, and user-friendly.

Cost Leadership
Cost leadership strategies is essentially what gives all businesses the competitive edge and more
importantly is the tool behind generating profit; all the way from acquiring inputs to the delivery
of the product or service to the customer. Wal-Mart is the best-known cost leadership company
in the world due to its success in developing closer relationships with suppliers and by
developing its own distribution network. In Apples case, their cost leadership strategy is
achieved by the direct low cost inputs to produce the cheapest high quality product
possible. Apple has a very powerful management and company culture, which promotes
innovation in everything they do, from their products, marketing, and delivery, which is key in
differentiating their brand from the competition. Apple also achieves cost leadership by
developing long-standing business agreements with companies so that they can focus on creating
innovative products and solutions to problems.
A good example of cost leadership is Apples iTunes service. This service allows companies to
distribute music digitally without the expenses of the physical production of a Compact
Disk. This cost leadership strategy, which follows the VROI framework by Apple has
revolutionized the way people get their media by creating a hub where practically anything can
be found from music, videos, and games at a very low price. Direct selling through Apples
website has also been a major influence of this strategy.
Apple targets the market with products such as the iPhone and iPod, which follow a
differentiation strategy based on the design, branding, and user experience, which is what allows
Apple to charge a price premium due to the lack of imitability of their specialized production
process.