Apple Inc. Strategy Recommendations and Justification
Apple Inc. is a company in the US that specializes in designing and developing hardware and software products. These include laptops, I-phones, tablets ipads, ipod and desktop computers. It also deals in software and services such as OS X operating system and I-tunes (Apple, n.d). The company has in the recent past developed revolutionary products – iphones and ipad – that have seen it achieve extra-ordinary results compared to its rivals. Some of its competitors include Research In Motion, Google, Samsung and Motorola. The company is currently the market leader in the smart phone and tablets market and according to analysts’ predictions, the company can continue to lead if it can implement and maintain appropriate strategies (New York Times, 2011).
Justification and Recommendation
Production capacity in US
Apple Inc. needs to expand its production capacity in the US to be able to meet the huge demand for its products that is witnessed during and after the launch of its products. During the launch of ipad, the demand surpassed expectation, which led to a delay in international release. For instance, in the US there was a demand for over 300,000 units on the first day yet the company was only able to deliver 500,000 units on the first week. This shows lack of adequate capacity to meet the available demand. This is a risk considering that some people can buy the products and supply them in the gray market at a higher price. Therefore, the company needs to build a larger production plant, which will enable it to expand its production capacity (BBC News, 2010).
The marketing department seems be doing well as shown by the large demand that accompanies Apple’s product launch. During the launch of ipad, large crowds were seen around Apple’s retail stores waiting to purchase the product. The same happened during the launch of ipad2, which shows the ability of the marketing in building demand before a product is introduced to the market. For example, some customers withstood the torrential downpour for three days after the launch of ipad2 to purchase the gadget. Apple’s imminent product launch is usually characterized by rumors about the product way before its launch date. This strategy is used by the marketing team to create and maintain demand for the expected product before its launch. This strategy has enabled the company to attract crowds and attain record sales than any of its competitors. For instance, the company sold over 15 million units of ipad within the first six months after its launch (Lowenshon, 2011).
Purchase Order and Delivery strategy
The company, however, needs to improve on its delivery strategy. It is evident that the company was poor in anticipating demand for its products. The unmet demand during the launch of ipad1 could not be understood because the company was venturing in to a niche market. However, during the launch of ipad 2 the company experienced almost the same problems as before. For instance, the ordering system was jammed as customers rushed to be the first to make a purchase of the device. Some customers reported that they were supplied with different products from the ones they had ordered. This confusion shows lack of clear planning on the delivery method of the company. In fact the decision to put on hold on-line purchases until the ipad2 went on sale was not a wise one (Doole & Lowe, 2008).
During its future launch, the company should provide an opportunity for on-line purchases before launch date however; the delivery can be done after the product has been done. This will reduce the number of customers on-line trying to purchase because the ones who purchased earlier will be assured of delivery after the launch. Secondly, the company should invest more in market research just before its product launch. This will help the company to predict with more certainty the anticipated demand, which will help in determining the quantity to be produced. In the long-term, the company needs to build production plants in other countries such as in Europe and Asia. Therefore, the plants in the US will be used to meet the huge demand in the country while those in Europe and Asia will supply their respective markets. This will ensure that there are no delays in international release, which the competitors can capitalize on (Levin & Kalal, 2003).
Apple Inc. should continue with its strategy of pioneering in innovation which has seen it lead in developing innovative products. The company’s CEO Steve Jobs confirmed this during the launch of ipad2. He said that as other companies were striving to copy its first generation of ipad, the company was launching ipad2 which has more attractive features than the first one (Apple Press Information, n.d). This has forced its rivals to adopt a market follower strategy, whereby they only copy what the leader is doing. For instance, after Apple introduced ipad, Motorola followed with its Xoom, RIM launched blackberry playbook while Samsung introduced its Samsung Galaxy Tab. However, all these could not match up to Apple’ competition because customers had already associated the company with innovation. For instance, on the first week of April 2011, 100,000 units of Xoom tablets were sold as compared to over 500,000 units of ipad2. Therefore, the company should invest more in research and development to continue with its market leadership in producing innovative products (Crothers, 2011).
Supply chain management
The company needs to develop a strong relationship with the members of its supply chain. As competition grows stronger, company’s that are able to win the loyalty of the retail storeowners will have an upper hand. For example, Brooke Crothers of the CNET News reported that most retailers were giving Apple products the front shelf where the customers can spot them from far. The retailers said that the products attracted customers into their stores (Crothers, 2011). This partly explains the high sales that the company is registering. However, this can change if the company will not seize the opportunity and cement stronger relationship with its supply chain members, which involves addressing their needs. This will ensure that the company’s products get preference treatments in retailers’ stores (Levin & Kalal, 2003).
Employee Development strategy
The company should refrain from building its success around individuals. For instance, the current success is mainly attributed to the current CEO Steve Jobs. Therefore during the periods of his absence- such as when he was on a sick leave- the company has been realizing negative results. The company’s Chief Operating Officer also has been credited for most of the success achieved in sales worldwide (New York Times, 2011). In the event that these individuals who are highly relied on are not there, then the company will suffer greatly. Therefore, the human resource department should develop a strategy whereby the company’s performance is built around institutions. This will ensure that the company continues with its upward trend even when the key persons are not there (Doole & Lowe, 2008).
The company needs to have production plants in Europe and Asia as this will expand its production capacity in these markets. As a result, the company will be able to meet the huge demand which is seen when the company is launching its products. It will also counter the threat from suppliers of gray markets who are waiting to satisfy unmet demand, which results from inadequate production capacity. In addition, the company will increase its sales because those customers who were purchasing competitors’ products because they could not get Apple’s products due to high demand will have the products as and when they need them. Opening new production plants will enable the marketers in those regions to devise marketing strategies that fit the needs of the customers in those regions (Doole & Lowe, 2008).
By improving the delivery strategy, the company will avoid the congestion in its on-line purchase systems. Some customers will be able to order products in advance before the launch. This will reduce the number of customers in the system and help those purchasing after the launch to do so with much ease. As a result, more customers will be able to purchase because each purchase will take a shorter period and the system will not be overwhelmed by orders. The advance customer orders could also be used to estimate the anticipated demand. Therefore, it will be able to produce enough products to meet that demand (Levin & Kalal, 2003).
Carrying out market research before launching a product will also help in estimating the expected demand. With the expanded production capacity, the company will be able to produce goods according to the findings of the market research. Therefore, the company will meet the huge demand witnessed during the launch of its products. As a result, the company will be able to counter the threats posed by competitors who work hard to satisfy the unmet demand. In addition, those waiting to buy the company’s products and sell them in gray markets will not get a chance. This will increase customer loyalty because customer orders will be met as soon as they are made (Levin & Kalal, 2003).
Maintaining technology leadership strategy, whereby the company continues to lead in developing innovative products, will have many benefits to the company. First, the company will have the opportunity to enjoy the first sales of any innovation before the rivals can come up with a similar product or better ones. Secondly, leading in innovation is an asset to the company because customers will increasingly associate its products with quality and effectiveness. Therefore, the market will always be looking forward for the next innovation from the company and this guarantees a consistent demand for the company’s products (Doole & Lowe, 2008).
Apple has achieved significant success in the recent past due to introduction of innovative products in to the market, which its rivals have not been able to match up. However, its rivals have also been able to develop products at a relatively equal pace, which has seen its products face stiff competition in the retail stores. There are various strategies that the company needs to adopt, some that it should drop and others that it should maintain to continue enjoying market leadership. Some of the strategies that it should maintain include its marketing strategies and technology leadership strategies. However, it should drop its current employee strategies that focus on individuals and build its institutions to ensure continuity. It should also adopt supply chain management strategies that ensure its products are effectively delivered to the customers. By making the changes the company will attain unrivalled competitive advantage.
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