Apples Business strategy with the iPhone

Apple's strategy have been organized through some business decisions which have enabled it to emerge as one of the major players not only in the telecommunications sector, but computer and music sectors as well. Apple's business strategy reductions across all the three Strategic Business Units i. e. Computer unit, Telecommunications device and Music & Video recording unit.

The company's total annual survey of 2009 claims corporate and business strategies that Apple seeks to adopt. (AMERICA Securities and Exchange Commission, 2009)

Apple is focused on getting the best personal computing, mobile communication and portable digital music and video tutorial experience to consumers, students, educators, businesses, and administration companies through its ground breaking hardware, software, peripherals, services, and Internet offerings. (The United States Securities and Exchange Commission, 2009)

Continued investment in research and development. The company believes that is crucial to the development and enhancement of progressive products and solutions. (The United States Securities and Exchange Percentage, 2009)

Capitalise on the convergence of the personal computer, mobile marketing communications and digital gadgets by creating and refining enhancements, such as iPhone, ipod touch and the iTunes Store. (The United States Securities and Exchange Commission payment, 2009)

Expanding the syndication network to effectively reach more of its targeted customers and offer them with high-quality sales and post sales support experience. (The United States Securities and Exchange Fee, 2009)

It is important to note that even though the above strategies apply across the primary strategic sections, each device has altered/adapted these strategies to suit their specialization.

Telecommunication SBU business strategy

After scrutiny of Apple's commercial strategies we deduced that the telecommunication's business strategies are

Continued investment in research and development for telecommunications department in order to stay prior to the competition.

Commitment to delivering the best mobile communication experience to consumers by increasing its circulation network to reach more customers.

Build through to the union of mobile communications and digital consumer electronics by making and refining inventions;

Value Chain Research of Apple Inc

Wheelen and Being hungry (2008) illustrate a value chain as a associated set of value creating activity that start with basic raw materials via suppliers move on to a series of value added activities involved in producing and marketing a product/ service and end with marketers getting the final goods into the hands of the ultimate consumer.

The Value Chain (Reklies, 2001)

Inbound logistics deals with the suppliers of components necessary to manufacture products. The telecommunications SBU handles one main company, Intel who provides them with processors for all their products. These processors are one of the key components of the iPhone. Every other component necessary for the phone is created in-house.

Operations deal with all the current activities required to convert inputs into productivity. These processes include machining, assembly, packaging, preserving and testing. This is where the innovation, research and development business strategy comes into play.

Outbound logistics deals with the activities required to accumulate, store and distribute the output. The main branches here will be the Sales and Marketing departments of the organisation. Within this section of the value chain analysis, the second business strategy which deals with extension of the syndication network in order to bring the best customer experience is apply.

Service includes all the actions required to keep the product/service working effectively for the buyer after it is sold and delivered. (Rowe et al, 1994)

The most significant primary value string activities which associate with the telecommunication SBU strategies are;

Innovation, Research & Development (operations)

Sales & Marketing (outbound logistics)

Innovation, Research & Development (R&D)

Innovation falls under the inbound logistics and procedures section of the value chain. Corresponding to W (2010) Apple Inc. is an organisation that is well known for its innovative ability. Its telecommunications SBU by using technical engineers from other divisions could actually revolutionise the cellular phone industry with the unveiling of the now famous iPhone - the world's first completely touch screen smart phone.

The innovative capacity has led to further development of the iPhone into 4 differentiated products specifically;

Year

Products

2007

iPhone (is currently discontinued)

2008 4thquarter

iPhone 3G

2009

iPhone 3GS

Mid 2010

iPhone 4

Innovation improvement of telecommunication SBU of Apple Inc (Apple, 2010)

When presenting the apple iphone 4 4, Apple's CEO Mr. Steve Jobs had this to say about their latest creation;

"When making iPhone 4 4, Apple designers and technicians didn't focus on a clean sheet of paper. They began with three years of experience making and building the mobile phones that redefined just what a mobile can do. apple iphone 4 4 is the consequence of everything they've learned so far. And it's all contained in a lovely enclosure a mere 9. 3 millimetres slender, making iPhone 4 4 the world's thinnest smart phone. " (Careers, 2010)

This affirmation best identifies Apple's innovation ability.

The R&D department is from the operations section of the value string analysis. It really is safe to state that the study and development arm of Apple Inc. is one of the main aspects of the industry and because of this a huge amount of capital is injected into this division. America Exchange & Payment (2009) shows that Apple Inc capitalised $75 million of costs with interacting with iPhone software development. The physique below shows operating expenditures for 2009 and the money used by the R&D department.

Apple twelve-monthly operating bills (The United States Securities and Exchange Payment, 2009)

From these table, we see that there is evidence of continued investment in research and development for telecommunications division so as to stay ahead of the competition as well as accumulating on the union of mobile marketing communications and digital gadgets by generating and refining improvements.

Sales and Marketing

Apple Inc. has an extremely successful sales and marketing department. Since the intro of the iPhone, there has been a steady upsurge in the sale of this product, with more than 9 million systems being sold this year 2010 only.

iPhone Sales Graph (Apple inc, 2010)

This figure is more impressive when compared to the other SBU's in Apple Inc. which cements the success of the telecommunications SBU which is proof the strategy of commitment to bringing the best mobile communication experience to consumers by increasing its circulation network to attain more customers.

The report below also shows the iPods dominance in terms of dividends to the company.

Apple annual sales record (The United States Securities and Exchange Commission, 2009)

The Human Source of information Management facet of the secondary activities of the worthiness chain analysis is mainly accountable for the success of the sales and marketing department. In light of this, Apple Inc. has spent greatly in training of its sales personnel in order to enable these to surpass Apple's quest to "reinvent retail" and establishing a high bar for other companies in the retail world.

According to Frankel (2007), the training process of Apple sales personnel has been carefully designed. The company has a three-step sales process i. e. Position, Permission, Probe. A sales worker points out to customers that they have some questions to understand their needs, get authorization to flames away, and then keep digging to see which products would be best for the client.

Business Strategy Development

There are two main procedures of strategy development regarding to Johnson et al (2008). These are

Intended strategy development

Emergent strategy development

Intended Strategy Development

Intended strategy development mainly handles the execution of a technique as if was prepared by senior supervisor. This type of strategy may be firmly influenced by proper leader who may have formulated the strategies analytically by use of reasoning and evaluation.

Also, the market leaders may attended up with a perspective/strategic intention which act as a motivation for the personnel and ends up with increased cohesion and efficiency in amalgamation of strategies produced by others. In more uncommon circumstances, strategy authority is by having a command composition whereby all the strategies are dictated by an individual.

Furthermore, planned strategy development considers strategy planning system which may take the form of systemised, step-by-step, chronological techniques to build up or coordinate an organisation's strategy as mentioned by Johnson et al (2008). In cases like this, initial guidelines formulated with assumptions about the exterior environment are set up. Business divisions then produce strategic plans based on the assumption. Commercial level ideas are then develop from the aggregation of the business enterprise plan through coordination and consultation between corporate and business level and divisional level units. Finally, financial and tactical target are installation to do something as a basis of performance evaluation.

According to Rowe et al (1994), the final process of meant strategy development is through externally enforced strategy whereby powerful external stakeholders for example, the government may dictate a specific strategic route/approach.

Emergent strategy development

Emergent strategy mainly grows from each day activities and operations in organisations and may not be directly from the development of strategy. Johnson et al (2008) declare that emergent strategy typically change because they build on and amending earlier strategies which generally tend to have an impact on future guidelines.

According to Wheelen and Craving for food (2008), logical incrementalism is one of the major constituents of emergent strategy development process. Logical incrementalism is the deliberate development of strategy by experimentation and learning from incomplete commitments. Among its major benefits is that continual trials and gradual implementation of strategy provides better quality of information for decision making. It depends on social procedures within company to sense the development and try out new ideas.

Another constituent process of emergent strategy development source allocation process points out strategies as a result of resource allocation among divisions in an effort to dwelling address issues/problems as they emerge. It emphasises much more on the operations within the business enterprise divisions that drive an emergent strategy. In addition, emergent strategy development can be afflicted by the political view which asserts that strategies develop as the results of techniques of bargaining and negotiations among stakeholders. Johnson et al (2008) declare that this political activity has a negative effect on strategy development since it gets in the way of analysis and logical thinking.

Apple's strategy development process - Planned strategy development

The telecommunication section utilises the designed strategy development process. Evidence of this is found in Apple's history. First of all, CEO, Mr. Steve Jobs had laid out a tactical plan which included diversification of the business into the telecommunications department, the computer division and the music & video tutorial division. Articles sourced from the business's website states that through the Macworld Expo on January 9, 2007 Jobs announced that in the future Apple Computers Inc. would be known as Apple Inc. This was because of the fact that the company was diversifying and moving to mobile gadgets rather than focusing on personal computers. It was at this event that he layed out ideas for the advantages of the iPhone which is the SBU's main product.

Intended strategy development process leans heavily on the ability of the organisation's head and regarding to Burrows (2007), Jobs himself is a crucial part of the SBU's activities. He's popular for his hands-on participation in the design and production procedure for the iPhone. This shows the effect of strategic vision and command as a design that he has and exactly how he (Jobs) uses this as a motivator and helps make a shared belief within which people in the SBU can work together more effectively and successfully as well. In addition to this he is a co-founder of Apple Inc. and that gives him leverage when establishing strategic plans/decisions scheduled to his central position in the business and tactical business product.

Moreover, the merchandise release stages and changes on the iPhone show elements of proper planning systems in place in the telecommunication SBU. Developed strategies which include building up on the union of mobile communications and digital consumer electronics by making and refining enhancements as well as extended investment in research and development for telecommunications section so as to stay ahead of the competition can be linked to the strategic planning pattern of expected strategy development.

Recommendation

The telecommunication section of Apple Inc. should include the other tactical processes to be able to reduce the dependency on meant strategy development and company CEO Steve Careers who crucial part of SBU and the business all together as he is the one who came out with the strategy after he was reappointed as the CEO in 1996. We believe that Steve Job departure may negatively affect the organisation due to his involvement in every aspect of product development.

Adopting the emergent strategy development in addition to current planned strategy development process will reduce the SBU reliant on single person to develop the organisation's strategy goals.

Strategy evaluation - suitability

According to Johnson (2008), suitability is principally concerned with the entire rationale of a strategy. It also assesses how the strategic options leverage the organisation's primary competences and if the said strategies have dealt with the objectives of the shareholders.

The telecommunications section of Apple Inc. has had the opportunity to develop strategies which leverage on the organisations opportunities while at exactly the same time try to minimise the dangers encountered from the external environment. The SBU's strategy of extended investment in R&D is particularly important as it touches on dangers, opportunities and core competences of the SBU.

When looking at opportunities, R&D permits the telecommunication SBU to find new designs technology or even building materials which supply the organisation an edge over the conclusion. This strategy also leverages on the strategic business unit's center competencies of research and development (R&D) as well as invention. Furthermore, the strategy enables the SBU to come up with products that have been successful in the market and consequently the organisation's show price exhibited market gains. Regarding to Team (2010), the new apple iphone 4 4 will improve a few key features to the apple iphone that could assist drive further apple telecommunication section sales, slow-moving declines in iPhone costing and lead to a long-term boost in Apple's currency markets.

Innovation and R&D are also central to the second SBU strategy which is accumulating on the union of mobile communication and digital consumer digital by creating and refining development. These two key competences are important to the SBU because they are the models' "defence" against dangers from the exterior environment through competition, change in laws and regulations, consumers taste and technology. Any change as a result of the hazards are diagnosed and noticed by the research and development group and the development section designs products effectively counter the effects of the exterior threats.

The final SBU strategy takes on a support role to the two main strategies as it is principally focused towards customer good care/ satisfaction. This plan is targeted at allowing the SBU to reach a wide marketplace as you can through the expansion of its distribution network, retail and maintenance retailers.

Recommendation

The strategies that apple's telecommunication section is rolling out and used are ideal. However, the main recommendation we have for the telecommunication division is that it will further diversify its products and bring in mobile phones geared towards the lower end of the market.

This strategy will show extremely beneficial when consolidating market show in emerging and developing markets especially Africa which regarding to Schwartz (2010) is expected to reach 50% this year 2010. Majority of the population don't have the means to acquire premium priced phones like the iPhone and a phone designed designed for this market will have guaranteed returns.

Furthermore, the SBU should eliminate the threat of distributor (5 Causes Model) by sourcing for another supplier for its core microprocessor for the iPhone rather than counting on Intel Corporation for its micro chips.

Conclusion

The success of any organisation would depend on the development and implementation of appropriate business strategies which consider and leverage the organisation's hazards, opportunities and center competences.

The telecommunication SBU is rolling out three strategies which sufficiently cover the afore talked about criteria. Among the main strategies of the SBU is continued investment in research and development. This plan has been central to the success of the unit as well as the company. With an efficient R&D division, the SBU has been able to combat off threats which have emerged from competitors and changing regulations while accumulating on opportunities like building dominance in the touchscreen smartphone market.

Building up on the union of mobile communication and digital consumer electronics by generating and defining development is a technique which operates as a support to the key R&D strategy. That is mainly because technology and R&D go hand in hand. The ultimate strategy is focused on customer care and increased syndication network has proven beneficial not only to the SBU however the whole Apple organisation. It has empowered the company reach a wider target market and in the process the telecommunication SBU has increased to be the third largest mobile phone manufacturer in conditions of amount sales mainly due to the success of the iphone.

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