Business-Level and Corporate-Level Strategies – Apple Company

Business-Level and Corporate-Level Strategies – Apple Company

Today’s business environment is dominated by many companies specializing in various products and services. In most instances, the market for specific products and services is dominated by large brands that have already acquired a significant market share. The main types of strategies used in the modern business environment to gain competitive advantage are business level and corporate level strategies. This paper will analyze the business level and corporate level strategies used by Apple company, the most important strategies to its long-term success, and whether it is a good choice. The paper also analyzes the company’ competitive environment and compares the strategies of Samsung company, one of the main competitors, at every level to conclude on the company that is most likely to be successful in the long term. The paper’s final section determines whether the choice of the most successful company would differ in slow-cycle and fast-cycle markets.

Business-Level Strategies

Business-level strategies are the activities businesses or companies undertake to stay ahead of competitors. The strategies involve exploiting major competencies that add value to clients either through unique products or higher quality products compared to what is offered by competitors (Ireland et al., 2012). The main business-level strategies are focused differentiation and focused cost leadership. Apple has been among the leading companies in the telecommunication industry. The company has strived to maintain a competitive advantage by regularly updating its products based on technological advancement and ensuring that its products are of the highest quality. One of the business-level strategies that the company uses to gain a competitive advantage is differentiation. The company uses product differentiation by differentiating its products to include mobile phones, computers, online music stores and music players. According to Hill & Jones (2012), the company engages one company to provide hardware and operating system for its products. This enables the company to concentrate on the quality of its design. The company has also embraced differentiation in the distribution of its products through various retail stores globally. The second business-level strategy that Apple company has been using to increase competitive advantage is the cost leadership strategy. The company uses cost leadership by providing high-quality, valuable products acceptable to customers at a relatively competitive and low price. The third strategy is forming business alliances with other successful companies for market intelligence and continuous innovation. Although the cost leadership, strategic alliance and differentiation strategies have played a significant role in creating competitive advantage, the product differentiation strategy is the most important to the long-term success of the company and is the good choice for the company because it enables the company to serve a wide range of customers based on different product categories hence increasing market share.

Corporate-Level Strategies

Apple’s corporate-level strategies incorporate the diversification of its products at high and moderate levels, including personal computers, home computers, music stores, mobile phones and software. The company also has a blend of entertainment and personal computing with a high level of integration, enabling it to be more efficient in delivering and producing products at relatively competitive prices while also remaining competitive. Diversification allows Apple customers to get their preferred product of a design standard and high quality because all products run on the same operating system and are highly integrated. The company has also internationalized production by establishing its production in China to take advantage of access to raw materials, low cost of labor, favorable economic environment because of China’s economic stability and high potential market. Therefore, the company can produce standardized products in the international market as manufacturing and engineering design are closely centralized and controlled. The company also uses the cooperative linkage strategy that includes partnering with other companies to create economies of scale and benefit from their technology. For instance, the company formed an alliance with Intel in 2006, enabling it to use Intel chips on Apple computers to compete against Dell and HP and the alliance with Microsoft to use their software on Mac computers.

The most important corporate-level strategy adopted by Apple is diversification because it helps the company focus on what it does best. The diversification strategy is a good choice because it allows the company to protect its customers by maintaining customer loyalty. The strategy also enables the company to prevent a decline in profitability and sales of a single product because the customers are distributed across different product categories. It also allows the company to maintain a competitive advantage by focusing on the mass production of less dominated products in the market. Product diversification is also used to customize products to meet specific customer needs hence promoting customer loyalty and attracting more customers looking for unique products.

Competitive Environment

The competition in the telecommunications industry is stiff, especially for companies producing smartphones and computers (Buckingham et al., 2018). The main competitors that Apple company competes with are Dell, Samsung, Toshiba, Nokia, Lenovo and Samsung. The company identifies Samsung as the main competitor due to its domination in producing high-quality products with specifications close to those of Apple company’s products. Over the past three years, Samsung has gained recognition in the market due to the launch of high-quality products such as the Samsung Galaxy S III, which was the biggest selling phone in 2012. Samsung company’s tablets have also gained dominance in the market, thus enabling the company to set competitive prices for its products, thus posing stiff competition for the iPad product lines produced by Apple. Samsung uses differentiation and cost leadership strategies to gain a competitive advantage. The differentiation strategy is, however, different from the one used by Apple company. For instance, Apple company focuses on the quality of its products while Samsung differentiates its products based on product value which implies that the company focuses on achieving a balance between price and quality to expand market share. The strategy has played a significant role in Samsung’s market expansion by declining the technology gap between the company’s products and Apple’s products. Samsung has also been using the cost leadership strategy to gain a competitive advantage and achieve lower costs by focusing on economies of scale. The company focuses on achieving high quality through economies of scale, while Apple focuses on achieving profitability through high-profit margins. Samsung’s cost leadership strategy has enabled it to target markets with large sales potential, such as India, which are not appealing to Apple due to low-profit margins. Samsung uses diversification as its corporate-level strategy. However, unlike Apple’s diversification strategy, which focuses on related diversification, Samsung uses unrelated diversification by producing a wide range of products. The unrelated diversification strategy has enabled the company to target customers in many customer segments compared to Apple and spread risk. The strategy also allows the company to have better preparedness to take advantage of growth opportunities in emerging markets where average income levels are low.

Based on the analysis of the two companies’ strategies, I would conclude that Apple is more likely to succeed in the long term because it mainly focuses on its competencies. Samsung’s strategies may only lead to short term success because they focus on economies of scale and investing in markets with limited competition, such as emerging economies. The rise of new competitors in these markets could reduce the company’s long-term profitability, hence limiting long-term success.

Market Cycles

The success of every company is dictated by its competitive advantage. The primary source of competitive advantage is having a large customer base enabling the company to increase sales, thus increasing profit margins (Hitt et al., 2020). Companies in slow-mart and fast-cycle markets perform differently due to the differences in the business environment in the two markets. Samsung’s strategy may be more suitable for slow-cycle markets because the company can expand the scale of its operations from medium or short term to long-term to significantly reduce costs and earn higher profits through economies of scale. Slow-cycle markets imply that companies have a long window to earn profits and recover costs and can therefore afford to set competitive prices for their products. Apple’s strategy is, on the other hand, suited for fast-cycle markets because the company only has a short window to exploit the commercial potential of their products hence differentiating based on quality to achieve high-profit margins. In fast-cycle markets, a company’s competitive advantage is not protected from imitation. This implies that Apple company’s products can be imitated by competitors such as Samsung, which is why the company needs to continuously improve its quality and introduce new products that may take time for computers to imitate. This has been the trend in the telecommunications industry, particularly in the production of phones, whereby most phones have similar features, and only a single unique feature is used to differentiate the smartphones from other similar smartphones offered by competitors. For instance, most smartphone producers focus on increasing phone storage because most companies use identical camera specifications to attract customers based on the quality of photos a phone can take. Fast-cycle markets are also unsteady, thus requiring a company to adapt flexibility to maintain competitive advantage. Samsung company would therefore be more successful because slow-cycle markets would allow it to gain a monopoly, introduce a unique set of products and capitalize on innovation to introduce unique designs. The company would therefore gain a dominant position enabling it to increase market share and profit margins.

Moreover, in slow markets, companies are able to increase their returns from competitive action by exploiting new opportunities hence increasing the chances of being successful. Apple would have to invest more in product innovation to maintain a competitive advantage in fast-cycle markets, therefore, using a lot of resources. This would, in turn, force the company to increase the prices of its products to increase profitability due to high operation costs, thus limiting success, particularly if customers can access similar products at a lower price from competitors such as Samsung. Apple also has to invest in product customization and increasing the quality of its products to create value to maintain customer loyalty due to intense competition from competitors such as Samsung company whose aim is to increase profitability based on creating value to attract more customers.

Sources

Buckingham, A., Bustani, C., Satola, D., & Whittfield, C. (2018). Telecommunications reform in emerging markets. Telecommunications Law and Regulation. https://doi.org/10.1093/oso/9780198807414.003.0023

Hill, C., & Jones, G. (2012). Strategic Management Theory: An Integrated Approach. Belmont, CA: Cengage Learning.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2020). Strategic management: Concepts and cases: Competitiveness and globalization. Cengage Learning.

Ireland, R. D., Hoskisson, R. E., & Hitt, M. A. (2012). Understanding business strategy concepts plus. Cengage Learning.

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Business-Level and Corporate-Level Strategies – Apple Company

In this assignment, you are to use the same corporation you selected and focused on for the assignments Strategic Management and Strategic Competitiveness and External and Internal Environments.

Research the company on its own website, public filings on the Securities and Exchange Commission’s Filing & Forms page, Strayer University’s online databases, the Lexis Advance database, and any other sources you can find. The annual report will often provide insights that can help address some of these questions.

Use the Business-Level and Corporate-Level Strategies Template [DOCX] to ensure that your assignment meets the requirements.

Requirements
Write a 6-8 page paper in which you do the following:

Analyze the business-level strategies for the corporation you chose to determine the business-level strategy you think is most important to the long-term success of the firm and whether you judge this to be a good choice. Justify your opinion.
Analyze the corporate-level strategies for the corporation you chose to determine the corporate-level strategy you think is most important to the long-term success of the firm and whether you judge this to be a good choice. Justify your opinion.
Analyze the competitive environment to determine the corporation’s most significant competitor. Compare their strategies at each level and evaluate which company you think is most likely to be successful in the long term. Justify your choice.
Determine whether your choice from Question 3 would differ in slow-cycle and fast-cycle markets.
Use at least three quality references. Note: Wikipedia and other websites do not qualify as academic resources