1.

0 Introduction
The purpose of this report is to evaluate the performance of a company, Apple Inc. in
countering and adapting to the challenges in the consumer electronic industry
despite the rapid transforming of the business nature. A massive research on the
profile of Apple Inc. is conducted include the business description and also products
and services launched. An analysis of products and services are introduced prior to
the launch of Apple latest product and so the latest product is carried out. The
possible circumstances leading to the launch of the new product have also been
identified.

Three analytical tools include Financial Performance Measures (ROI and RI), Balanced
Scorecard and SWOT analysis are used to examine the overall performance of the
company for the previous two years before announcing the new product. Besides,
the capability of the company to strengthen its competitive advantage is also
explained.

Furthermore, a Five-Forces Analysis is prepared for Apple Inc. to find out the external
considerations influencing the company. The generic strategy adopted by the
company is also considered and supported by thorough research. Lastly, strategic
recommendations are provided on how the company could enhance its competitive
advantage to better adapt to the revolutionising environment.

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Company Research
2.0 Company Profile
2.1 Company Profile – Apple Inc.
Apple Inc. is an American multifunctional technology company which mainly involves
in the fields of designing, manufacturing, and marketing of mobile communication,
personal computers, and portable digital music players (Reuters 2017). The company
was established by Steve Jobs, Ronald Wayne, and Steve Wozniak on 1 April 1976.
The parent company is located in Cupertino, California with 92,600 employed
personnel as of 27 September 2014 (Alacra Store 2016). The company’s segments are
the Americas, Europe, Greater China, Japan and Rest of Asia Pacific (CNN Money
2017).

In 1976, Steve Wozniak created Apple I (Apple co-founder tells his side of the story
2006). In 1977, Ronald Wayne quitted by selling off his shares to Steve Jobs and
Steve Wozniak. Meanwhile, they released Apple II which was known as epoch of
desktop computers. Despite Apple’s success for the next few years, they experienced
many failures such as weak performance of products and devaluation of profits and
market share. In 1997, Steve Jobs took over and became the CEO of Apple.
Reformation carried out by Steve Jobs had ensured the company profits and brought
success to the company (Nair & Quay 2012, p. 21). In 2011, Steve Jobs resigned and
Tim Cook took over as the CEO.

2.2 Analysis of Products/Services prior to launch

Apple Inc. has developed many products and services including iPhone, iPad, Mac,
iPod, Apple TV, Apple Watch and professional software applications, iPhone OS (iOS),
OS X, iCloud, Apple Pay and a variety of accessory (Reuters 2017).

iPhone is operated through iOS which includes Siri, a voice activated intelligent aide,
Apple Pay and touch ID on matching devices. iPhone users are able to purchase and
download digital content applications via iTunes Store, App Store, iBook Store, Mac
App Store, Apple Music and television APP Store (Reuters 2017).

On 9 September 2015, iPhone 6s was introduced by Apple Inc. (Apple Inc. 2015).
iPhone 6s has 3D Touch which can detect forces to access features and applications
(McGarry 2015). Additionally, iPhone 6s has Retina HD display which is manufactured
from the most durable glass and 7000 series aluminium, an alloy normally utilised in
the aerospace industry (Apple Inc. 2015). Furthermore, iPhone 6s adopts a new
feature on photography which is Live Photos. The transformative feature brings the

2
pictures to life by catching an instant in motion (Mcgarry 2015). The iPhone 6s is also
supported by Apple A9 chip which enhances overall performance.

2.3 Launch of New Product – iPhone 7 and 7 Plus

Apple announced iPhone 7 and 7 Plus on 7 September 2016 (Apple Inc. 2016).
iPhone 7 and 7 Plus come with iOS 10, the most innovative mobile operating system
and are able to perform better with Apple’s newly designed A10 chip. Both phones
are able to shoot at 12 megapixels and come with optical image stabilization. Also,
the battery life is extended for both devices.

Moreover, the users of iPhone 7 and 7 Plus can experience amazing audio quality
through the new and integrated stereo speaker system (Apple Inc. 2016). iPhone 7
and 7 Plus come with two new black finishes which are jet and matte black as well as
silver, gold and rose gold finishes. Furthermore, the new iPhone is water and dust
resistant (Apple Inc. 2016).

2.4 Possible Circumstances Leading to the Launch of New Product

Most of the users are unsatisfied with the home button of the predecessors as it
stops functioning easily and the sensor may not be sensitive sometimes. The newly
launched iPhone 7 has resolved the problem of the home button. Apple has
displaced the old home button with a virtual home button which can make users to
feel a slight click when it is pressed (Apple Inc. 2017).

Furthermore, the new iPhone is now water and dust resistant which enables it to
continue working after being fully soaked in water for 30 minutes due to high
demand and requests from customers (Chowdhry 2016). Besides, iPhone 7 and 7 Plus
also have their headphone jack removed and this change allows the users to listen to
music while charging their phones with the new wireless AirPods (Apple Inc. 2017).

Moreover, the major competitor of Apple, Samsung is well known for its camera
performance and image quality. In order to compete with Samsung and fulfil the
requirement of customers, Apple has improved the camera system of iPhone 7 and 7
Plus with a wider colour capture and dual lens for the iPhone 7 plus (Apple Inc. 2017).

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3.0 Company Performance
3.1 Financial Performance Measures
3.1.1 Return on Investment (ROI)

Return on Investment (ROI) is a financial performance measure of the return on the

capital employed in the company based on the net income of the business
(Entrepreneur 2017).

Year ended 27 September 2014

Year ended 26 September 2015

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Before iPhone 7 is launched by Apple, the ROI for the company at the year ended
2014 and 2015 is 23.46% and 25.70% respectively, which means, for every capital
employed or resources invested in each product, 23.46% and 25.70% of the profit
earned after deducting the tax is the return for the investment of capital in year
ended 2014 and 2015 respectively.

3.1.2 Residual Income (RI)

Residual Income (RI) is another financial performance measure tool, which can show
the insight into the rate of return on invested assets by a company, or a department
of a company (Chegg Study 2017).

Year ended 27 September 2014

Year ended 26 September 2015

RI generated in the year ended 2014 and 2015 is $22,586,704,500 and

$33,484,837,500 respectively. Since the RI generated in both year are positive figure,
it means that Apple has earned enough to cover the capital in 2014 and 2015, and
there was an extra income made to be put into the shareholders’ pocket.

Apple Inc. Annual Data

5
 Sep07 Sep08 Sep09 Sep10 Sep11 Sep12 Sep13 Sep14 Sep15 Sep16

WAC
21.14 25.74 14.46 12.93 8.39 8.11 6.94 10.05 9.75 12.09
C
Table 1: Apple Inc. Annual Data (Guru Focus 2017)

3.2 Balanced Scorecard

Balance Scorecards (BSC) can help a company to elevate itself to a better
performance by making decisions according to the company’s objectives. As Apple is
a remarkable brand, BSC is required to measure its performance. In this context, four
BSC objectives are included:

3.2.1 Financial Perspective

In order to generate an astounding financial return to the shareholders, financial

perspective is used to measure Apple performance. For instance, Residual Income
(RI), Return On Investment (ROI), Economic Value Added (EVA) and profit margin are
calculated to measure the financial status as the shareholders are concerning with
their financial returns from time to time.

The ROI calculated for the company at the year ended 2014 and 2015 is 23.46% and
25.70% respectively before iPhone 7 is launched. Also, the RI generated in the year
ended 2014 and 2015 is $22,586,704,500 and $33,484,837,500 respectively. This
illustrates that Apple is able to deliver outstanding income since the RI generated in
both year are positive.

It is proven that the launching of iPhone 5 and 5s have the same profit margin with
the launching of iPhone 6 and 6 Plus, which made the company to earn a profit
margin of 69% which exclude the costs of marketing, distribution and advertising.

It can be concluded that Apple has incredible financial performance to bring superior
return to its shareholders.

3.2.2 Customer Perspective

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From the customer perspective, Apple has measured the number of new customers,
market share and customer complaints in order to enhance customer satisfaction
and products performance. This is to enlarge the customer base and the company
profits. For instance, Apple has a well-designed supply chain which enables it to
deliver its products on time which increases customer satisfaction.

Based on a survey regarding customer satisfaction, Apple iPhone is ranked in the top
20, while Samsung phone is in top 10. This indicates that although Apple introduces
new model of iPhone regularly, complains were made that it does not have much
significant changes or upgrades compared to the previous model leading to
unsatisfied customers switching to other smartphone brands.

In general, although Apple has a loyal customer base due to its reputable brand,
there are still some customers who are not attracted to use its products because of
the cheaper substitutes and higher customer expectation.

3.2.3 Internal Business Process (IBP)

Internal Business Process (IBP) is a significant process in delivering products to the

customers. For instance, the design of Apple iPhone is crucial as it affects the growth
of sales of Apple greatly. Hence, Apple has strengthened the features of the latest
iPhone and also introduced a bigger size iPhone Plus which fulfils the customer‘s
demand.

Moreover, the production process is important as it will affect the quality of products.
Apple has assured that the products such as iPhone are able to be produced and
delivered efficiently to customers on time. Clear information and instructions are
given to the development team which comprise the number of workers needed, their
responsibility on every stage, who will be responsible to process the final products
and the due date upon the completion of products. Additionally, Apple also has
weekly review sessions to examine the products on every stage of the production
process.

Overall, Apple is able to deliver its products to customers with innovative design and
fabulous quality meritoriously.

3.2.4 Learning and Growth (L&G)

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Learning & Growth is also a significant measure of the company performance. Apple
always focuses on the employee skills in producing the products. Apple has spent
approximately $1,200 annually on the training cost of a new employee with an
average of 32 hours. Besides, the recruiting of new employees will also incur both
direct and indirect in turnover costs, which consumed the company around $3500
per annum.

With the capability of Apple in achieving superior internal processes to deliver short-
term and long-term growth, it is essential for the employees to have proper and
effective training from time to time (Kahney 2015).

3.3 SWOT Analysis

SWOT Analysis can aid Apple to maintain a competitive niche in the market through
comprehending the strengths and weaknesses, discovering opportunities, and also
eliminating the threats. This is crucial for Apple to develop effective strategies to
differentiate itself from the competitors.

3.3.1 Strengths

Brand equity has made Apple one of the leading companies worldwide. As the sales
have grown incredibly and the cash flow is managed wisely, Apple possesses a total
capital of $416.62 billion which resulted as No.1 brand at Forbes. This strongly proves
that Apple is sanctioned with an esteemed brand recognition due to the creativity
and innovation of the co-founder, Steve Jobs (Schmeiser 2008).

Besides, customer loyalty is one of the strength of Apple due to its reputable brand
and awe-inspiring customer service along with the superb design and function of
Apple products (Goodson 2011). Apple has strengthened customer loyalty by
establishing a clear strategy to maintain and improve their brand personality and
product design proficiently (Pinson & Brosdahl 2015).

Moreover, another strength is the extensive distribution channel of Apple. As Apple

is renowned in engaging multiple distribution channels such as direct sales, online
and retail stores, it is able to deliver its products to consumers all around the globe.
Apart from direct distribution channels, Apple also uses extensive indirect
distribution channels through third-party for instance accountable retailers to sell in
Amazon Market Place, Walmart and Best Buy, wholesalers and value-added resellers.

3.3.2 Weaknesses

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From the weakness aspect, the price of Apple products such iPhone is comparatively
higher than other competitors. Due to Apple’s strong brand recognition and better
operating system which is iOS, Apple can set a higher price compared to other rivals
such as Samsung and Oppo. However, it is found that Apple has encountered
difficulties entering new markets due to its premium price as it is not affordable by
most people. In order to maintain and increase the sales growth, Apple has launched
iPhone 5C at a lower price in 2013 which is more affordable to people (Blodget
2015).

Furthermore, the strong integrated ecosystem of all of its products can also be the
weakness of Apple. Apple devices and software are designed to perform perfectly
with each other and sync without difficulty due to its similar user interfaces across
devices (Nielson 2014). For instance, the Bluetooth in iPhone has restricted usage
between iPhone and the memory card built in is not expandable. Therefore, the
consumers may find that it is problematic to transfer photos or music to another
brand of smartphones such as Samsung.

3.3.3 Opportunities

The sustained technological advancements and investments in Research and

Development (R&D) enable Apple to achieve viable competitive advantage compare
to its competitors (Wakabayashi & Ramsey 2015). For example, Apple R&D
department has increased their funds from $500 million to $1.3 billion in 2015 so as
to produce and manufacture more technologically advanced products such as
iPhone 7.

Moreover, in this transformation epoch, people are more dependent and addicted to
smartphones, internet and different applications in electronic devices such as
Facebook and Instagram. This contributes to the sales growth of Apple as it is an
opportunity for Apple to raise up its product sales volume as a result of the growing
demand.

3.3.4 Threats

Apple is facing the threat of strong United State (US) dollar. The currency exchange
rate of US affects most of the companies and consumers around the world. A survey
shown that Apple has earned more than 65% of its revenue outside US. At the same
time, it is forecasted that US dollar exchange rate will be rising further against other
currencies from time to time. In this context, Apple’s profits which are generated in

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other countries apart from US will be declining when the foreign currency revenue is
converted to US dollars.

Besides, Apple markets share profits are also influenced by market penetration of
other well-established competitors in the market. For instance, nowadays, the market
share of Android smartphones is growing constantly which currently occupies 47.5%,
meanwhile Apple iPhone has only owned 42% share in the market. This
demonstrates that iPhone with advanced technology and premium price tag is
reasonably hard to combat with its competitors such as Samsung and Lenovo as the
Android smartphones are cheaper (Bhasin 2016).

3.4 Apple’s Ability to Strengthen its Competitive Advantages after

the Launch of iPhone 7 and 7 Plus

Since the launch of iPhone 7 and iPhone 7 Plus for just two weeks, the share of the
sales of US iPhone 7 and 7 Plus is represented by a 43% of Apple’s sales (Seitz 2016).
Before the launch of iPhone 7 and 7 Plus, Apple’s sales has already been increasing
steadily every year. 78.3 million iPhones were sold in the first quarter of year ended
2017, which exceeded its expected figure, 76 million (Solomon 2017), even its
revenue earned at $78.4 billion and earnings per share at $3.36 wrote new all-time
records of its company. What is interesting is that 9% of the buyers of iPhone 7 and 7
Plus are used to be Android users, whom have switched to Apple.

However, according to Seitz (2016), while Apple’s market share in US has increased,
Apple’s market share in China has decreased due to China’s lower-cost or middle-
ranged local brands such as Huawei and OPPO. Compared to previous models,
iPhone 6S sales in China were stronger than iPhone 7 and 7 Plus because in their
point of view, the innovation of iPhone 7 and 7 Plus is not significant.

To conclude whether Apple has succeeded in strengthening its competitive

advantages after the launching of iPhone 7 and 7 Plus, the answer is yes for US and
the rest of the world and the answer is no for China as different people have different
perspectives and needs.

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Industry & Strategy Research
4.0 Industry and Generic Strategy
4.1 Five-Forces Analysis
Apple is eminent as one of the most valuable companies over the globe. The Five
Forces analysis developed by Michael Porter provides elucidations about the external
considerations affecting the company. Based on this analysis, Apple remains to tackle
with intense competition and the bargaining power of buyers, which are the most
substantial external considerations influencing the company (Ferguson 2017).
Nevertheless, the threats of substitute products and new entrants as well as
bargaining power of suppliers are all weaker factors among the main industry forces
(Maverick 2015).

Table 2: Porter Five Forces

4.1.1 Threat of New Entrants (Moderate)

Apple is under great pressure in the consumer electronic industry as there are rising
companies especially from China such as Huawei, Xiaomi and Lenovo with
momentous costs advantages. At the moment, Xiaomi has overwhelmed Samsung by
capturing its market shares via low cost strategy in China astonishingly, indeed it can
claim that this threat can be very high (Dou 2015). These Chinese companies, which
enjoy government financial backing oppose Apple's status within the industry in the
future (Maverick 2015).

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Nonetheless, it is really costly to establish a business that is able to battle against
Apple by developing a strong brand (Ferguson 2017). Also, a bulky amount of capital
is necessary for any new entrant to the electronic marketplace to undertake extensive
R&D and manufacturing. This is crucial for the new entrants to develop their own
product range before introducing its products to market hence makes them weaker
as they need to endure with the robust competition among large and well-
recognised firms within the industry (Maverick 2015).
The threat of new entrants is moderate for Apple. Therefore, it is vital for Apple to
bolster its competitive position incessantly through new product expansion and
developing brand loyalty so that any potential new entrants to the industry
encounter a greater competitive difficulty (Maverick 2015).

4.1.2 Intensity of Rivalry (Strong)

Indubitably, Apple is recognised as a foremost company in the consumer electronic
industry. It is competitive as there are a number of influential competitors for
instance Samsung, Google and Microsoft (BusinessEssays.net 2016). The vigorous
rivalry in terms of simulation, efficient promotion and robust innovation, has put high
force on performance of Apple (Ferguson 2017). These existing competitors have
consumed significant capital on R&D and marketing to maintain their competitive
position just like Apple (Maverick 2015). Predominantly, Apple competitors has
implemented cost leadership strategy so as to battle against Apple (Dudovskiy 2017).
Furthermore, it is easy for customers to change from Apple to other brands as the
switching cost is low, thus causing rivalry among the reputable technological brands
(Ferguson 2017). A customer does not necessitate an extensive investment to dump
Apple’s iPhone for a Samsung Galaxy or Apple’s iPad for an Amazon Kindle (Maverick
2015).

In general, the competitive force from the prevailing competitors is very high. Apple
has coped with it through persistently exploiting new and inimitable products to
remain competitive in the market (Maverick 2015).

4.1.3 Threat of Substitute (Moderate)

Substitute products are not products that are absolutely comparable with a
company's products but can be conceivably akin alternatives for them. There are
many alternatives to Apple products which are readily obtainable in the market such
as digital cameras to snap photos and landline telephones to make calls rather than
using iPhone (Ferguson 2017).

In the smartphone market, this risk has kept mounting for Apple as there are a
number of brands presenting low to middle-priced models particularly China brands
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for instance Oppo and Xiaomi (Pratap 2017). These brands would slowly erode
market shares of Apple through their constructive low cost tactic and marketing
proficiency (Beating Apple, Xiaomi and the gang in China 2017).
However, since Apple has achieved large economies of scale, it can produce at a
lower cost with its well-established brand equity. Apple products are more reliable
due to its outstanding software and premium quality which can deliver superior
benefits and economic value to customers.

It can be concluded that the threat of substitute for Apple is moderate hence Apple
needs to strengthen its product features and customer loyalty with fruitful leadership
practice, intellectual properties and stupendous capability in innovation.

4.1.4 Bargaining Power of Suppliers (Weak)

Apple does not develop all of the devices by its own, though acquires the
components from a vast number of suppliers that constrains their bargaining power
(Seth 2015). Apple has handled an intricate supplier chain that are dispersed all over
the globe including China, Japan, United State, Vietnam and other numerous
countries (Apple 2017). The final assembly of various components of Apple products
are carried out by accountable service-vendors (Seth 2015).

Additionally, the suppliers of Apple’s device components experience a robust

competition among themselves. Apple has many options to freely choose from a
large number of potential suppliers for its product components due to the low
supplier switching costs (Maverick 2015). Consequently, Apple still possesses brilliant
control and negotiating power over its suppliers as the suppliers would not want to
lose their business with Apple, a well-established huge company (Pratap 2017).

Overall, the supplier bargaining power is not a main consideration for either Apple or
its key rivals (Maverick 2015).

4.1.5 Bargaining Power of Buyers (Strong)

Buyer bargaining power is invigorated by the abundance of substitution for

electronic devices, which implies that in fact they have comparatively high bargaining
power against the sellers, for example Apple (Nair & Quay 2012, p. 21). The buyers
can choose from a wide range of brands which offer cheaper products than Apple.

Moreover, Apple has to consider the absence of buyer switching costs to switch to
other brands. Although the individual bargaining power is a vulnerable pressure, as
the loss of any buyer does not have material impact on revenue, the compound

13
losing of customers in the marketplace yet places a strong force on Apple (Maverick
2015).

Nonetheless, it is claimed that the buyers who are loyal to Apple may be reluctant to
switch to the products introduced by competitors In reality, most of the consumers
are reasonably sensitive of costs, thus they would probably favour the competitors
that introduce high-quality products close to Apple at relatively lower prices within
the developing countries (He & Chen 2005).

Apple responds to this strong bargaining power of buyers by making on-going

massive capital disbursements in R&D to continue expanding new and distinctive
products such as Apple Watch (Maverick 2015).

4.2 Generic Strategy – Product Differentiation

Apple are capable of being conspicuous from the troop through product
differentiation and innovation where its rivals are tumbled behind in an endeavour to
come up to this emerging hulk ever since the 1980s (Hanks 2017).

In the consumer electronics industry, the absence of switching cost makes product
differentiation an essential strategy to eradicate the threat of buyers bargaining
power. This differentiation develops customer loyalty thus the customers will be less
sensitive to price changes of product since Jobs epoch (Alami n.d.). Known for its
notable leaderships from innovative design to remarkable advertising, Apple has
established a loyal customer base. Through hard effort in establishing brand loyalty,
Apple is able to differentiate itself from Samsung, Microsoft and other competitors in
the industry (Hanks 2017). Apple has worked hard to improve and enlarge its own
retail and online stores as well as its third-party distribution network so that it can
approach more customers efficiently and deliver a noteworthy sales and post-sales
support experience to their customers (Nielson 2014).

Moreover, Apple has triumphed in developing demand for its products, providing
the company power over prices via product differentiation, notwithstanding robust
rivalry. Apple has constructed an artificial entry hurdle to competitors through
concentrating on customers who are willing to pay more and keeping a best price at
the cost of unit volume (Nielson 2014). Steve Jobs pursued to make a superior
product with a price equivalent to quality whereas upholding high profit margins.
Apple products constantly fall in the mid-range prices, but loyal customers are willing
to pay that price for the superb user experience. This pricing strategy differentiate
Apple from those manufacturers which develop low-end products and count on
narrow profit margins (Hanks 2017).

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Irrefutably, Apple enjoys a fabulous reputation in the industry due to its innovation. It
has established product design a footprint of its differentiation strategy since the
company starts off. There are no identical products introduced in the market with so
many features in one package at the time when Apple launched the iPod, iPhone,
and iPad (Hanks 2017). Besides, Apple has an inimitable capability to design and
create its own operating systems, application software and hardware to offer the
latest products with that are simple-to-use, unified integration, and novel design
(Nielson 2014). For instance, Steve Jobs, who brought iPhone to the market, was
holding ‘minimalism’ principle, to make a more exclusively simplistic yet elegant and
impressively functional design for iPhone which is tailored to the customer demand
(Riera 2016). Yet, iPhone operating system, iOS is more valuable, as most of its major
competitors are using the same system, Android, thus this differentiates iPhone from
the other smartphones (Riera 2016).

Furthermore, Apple controls a proficient and well-designed supply chain which

differentiates it from competitors. It is capable to offer its products to the nation at
the appropriate time with no suffering unnecessary inventory expense and placed
them at a gain position among its rivals (Alami n.d.).

5.0 Strategic Recommendation

5.1 New Product Line

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At present, Apple has clearly established a target demographic which is consumers
from upper middle class to the high class spectrum of society. It is a norm that Apple
products are viewed as luxury in the customer electronic market. Absolutely, Apple is
a trustworthy brand that everyone may desire, nonetheless not everyone can afford.
Nowadays, people view the brands they use as part of their self-image because the
brands express who they are (Haskins 2015). However, a product with reputable
brand which delivers a high value is not necessary unaffordable.

To capture this golden prospect, Apple can split the product line into two major
categories, which are premium product and affordable product. Apple should not
only focus on high income earners but also do not neglect the middle income
earners and teenagers base. This economical strategy brings a good new to many
loyal and potential customers because they believe Apple will still maintain the
superior quality of its relatively cheaper products.

It is a fact that the cost sensitive consumers would likely support the competitors that
launch high-quality electronic products at lower prices within the developing
countries (He & Chen 2005). The emerging sprouts include Huawei, Xiaomi and
Lenovo with significant cost advantages have high potential to take over Apple
market shares in future. Hence, a new product line is crucial for Apple to maintain
and capture a larger market share around the globe as its products are now more
affordable for the middle class consumers and teenagers. Furthermore, Apple can
penetrate the markets, particularly in developing countries for instance India and
Vietnam where the Apple market spread is still restrained with the affordable product
line.

In 2013, Apple has released the low-priced iPhone 5c which contributed the largest
growth in mid-range iPhone market during that time (Hughes 2014). It is proven that
iPhone 5c has essentially attracted Android users to switch to Apple thus Apple
gained a competitive position to battle with its greatest competitor, Samsung. Some
people may argue that, if making price of Apple products cheaper, this would affect
the standing of Apple in the industry. Though, exploitation of a cheaper product line
does not mean that Apple abandons the original product line. This new product line
might bring the company to a brighter future.

5.2 Safety Concern

In September 2016, Samsung was forced to scrap its Galaxy Note 7 smartphones
because the customers reported that the batteries have exploded and caught fire

16
while using. It is proven that the explosion is caused by the volatile chemistry of
lithium- ion batteries. This incident blows the whistle to customers about the safety
issue of electronic devices. Presently, some airlines prohibits guests to bring
Samsung Galaxy Note 7 on board due to safety fears (Heathman 2017). This incident
gives Apple an evident that it should raise full awareness about the safety issue of its
product so that the Samsung case would not happen in Apple.

Apple should conduct regular inspections and impose strict safety requirements for
every single production process. Also, more technical and engineering experts are
highly required to study the product constraints to guarantee the quality and safety
of the products as a safe product will win the heart of the consumers. To build up
consumer confidence, Apple can organize a giveaway event to do testing on new
products prior launching. For example, before Apple introduces a new iPhone, a limit
number of new iPhones is given away to a group of people for 2 months testing and
after that collect feedbacks from them. Hence, Apple can be more vigilant to the
problems addressed from the feedback and is highly recommended as it can protect
reputation of the company.

Furthermore, the crisis of Samsung Galaxy Note 7 benefits Apple to hit its highest
share price in the market. Consequently, the amount of Android users has dropped
dramatically and have shifted their platform to iOS (Spence 2016). Apple should put
effort to persuade these consumers to believe that whatever Apple has done is the
best. Therefore, Apple should assure that its products will diversify continually and so
the technological horizon to retain these ‘newbie’ by highlighting safety concern.

5.3 Management Position & Employee Loyalty

Apple has a well-established system in place and has a notable management
position which both Google and Samsung do not hold. Apple has employed the
former CEO of the fashion giant Burberry, Angela Ahrendts and also a British
industrial designer, Jonathan Ive (Riera 2016). These influential people can share their
expertise and experience to enhance company improvements and conflict
resolutions. For instance, Apple can pay extra and provide better benefits for these
experts to educate more potential juniors or fresh graduates. Thus, Apple can use
this competitive advantage in order to copiously utilize the human resources and
also discover more potential employees for the future development of Apple.

Recruiting the potential employees is just a kick off to create a strong workforce. A
good working relationship is definitely beneficial for both employers and employees
to increase the employee loyalty. Apple can create open communication between
employees and management by holding regular meetings which allow employees to

17
offer ideas and ask questions liberally and frankly without any fear of repercussion.
This open-door policy can circumvent misunderstanding and create a peace working
environment.

Additionally, employee’s confidence always comes from the trust of employers.

Apple should provide the employees more opportunities to convalesce their
professional skills so that they can play a stronger role in contributing to the work
task. Attending courses, training and conferences is constructive to enlarge their
knowledge and competence. In this manner, employee confidence and loyalty can be
fostered for the long-term success of Apple.

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6.0 Conclusion
It is concluded that Apple Inc. is capable to stand out from the crowd due to its
effective generic strategy of comprehensive differentiation. Differentiation in design
and functionality sustains the company aspiration of becoming a foremost brand
worldwide. This differentiation strategy increases the value of the Apple and keeps
the competitors behind. Today, Apple is the most valuable brand in the world with its
stock price with $728.35 billion. Steve Jobs is not merely an engineer, but he is also
an expert in marketing. In this case, Apple sticks to their premium pricing as Apple is
able to do better than other competitors by focusing on touting their unique value
proposition.

However, these are some recommendations proposed to aid Apple to maintain its
standing in the industry as it has lost market share in China due to the cheaper
products launched by the rising competitors for instance such as Huawei and Xiao
MI. Apple is encouraged to split the product line into two which includes premium
and affordable product lines so as to attract more middle income earners. Apple
should build up the confidence of their consumers by following strict safety
standards in every stage of the production process. Lastly, an open-door policy is
required to ensure better communication among managers and employees. All of
these are essential to move Apple towards a brighter future and strengthen its
unshakeable standing in the industry.

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