Which of Porter’s Four Competitive Strategies Does Apple Engage in? Explain.
The relative positioning of firms within the industry verify whether a company’s profitability is above or below the industrial average. The fundamental principle of the above-average long-term profitability of a business is a sustainable competitive advantage. Porter asserts that firms can employ four generic strategies to gain a competitive advantage. Porter’s important model is subdivided into two parts, lower cost, and differentiation. Broad categorization is included in the model to accommodate four parameters. The four parameters in the generic strategies include cost leadership, differentiation, cost focus, and differentiation focus (Kroenke & Evans, 2015).
Apple engages in both cost focus and differentiation focus. The success of the Apple Company in the computer industry began as early as 1985. Apple focused on developing well-engineered machines to suit the needs of both home-based consumers and workplace or student customers. Thus, Apple introduced to the market Apple II personal computers for home-based users and Macintosh computers for students or knowledge-affiliated customers. Apple managed to sustain its competitive advantage by dominating more than 20 percent of the computer industry. During the Apple Company recession period, it had failed to maintain its competitive edge in the market as a result of stiff competition from other computer-affiliated companies. However, reinstatement of Steve Jobs as the C.E.O rejuvenated the Apple Company’s competitive advantage. The company focused on cost reduction and differentiation strategies. Through a focus differentiation strategy, the company infiltrated the market with the iPhone, iPad, and iPod products. The products received extensive loyalty from the consumers, who were mesmerized by their unique engineering and originality. Also, the Apple Company focused on cost reduction by reducing its original prices on products in the software channel by 60%. The two of Porter’s strategies implemented have sufficed Apple Company’s competitive advantage over other enterprises in the industry (Kroenke & Evans, 2015).
What Do You Think Are the Three Most Important Factors in Apple’s Past Success? Justify Your Answer.
In my view, Apple’s success in the past was facilitated by three factors, namely:
1. Steve Jobs’ leadership
First, the Apple Company benefited a lot under Steve Jobs’ leadership. Besides being the company’s chief innovator, Steve Jobs had admirable skills in leadership. He advocated for teamwork and coordination of activities using both passion and skills. Additionally, Steve Jobs’ genius expertise in computer technology, coupled with his innate love of computers, enabled him to spearhead the Apple Company towards successful marketing strategies.
Secondly, the innovation of the Apple Company’s workforce steered the company towards early success. The Apple Company was endowed with a team of knowledgeable system developers that offered significant contributions to the enterprise. The innovativeness of the Apple Company workforce resulted in the development of customer-oriented computers. This innovativeness has led to the third factor – diversification. The Apple Company diversified its computer products to meet the needs of consumers in the industry. The company introduced Apple II personal computers for home-based customers and Macintosh computers for students and knowledge workers. Diversification of the computers amplified the Apple Company’s past success in the industry (Kroenke & Evans, 2015).
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The future of the Apple Company in the Absence of Steve Jobs
In my opinion, the future of the Apple Company is still bright even after the demise of its core stronghold, Steve Jobs in 2011. Contrary to the popular belief that Steve Jobs was synonymous with the Apple Company, I think that the company can still be successful without him. However, it is important not to understate the influence Steve Jobs had on the growth and success of the company. It is correct that Steve Jobs was among the founders of the Apple Company. Also, under his leadership, Apple’s performance was at its climax compared to other companies in the industry. Evidence of Steve Jobs’ tremendous impact on the company was also manifested by the revival from its economic recession in the late ‘80s. The fact that three other C.E.Os had failed to sustain the Apple Company’s competitive advantage in relation to other companies demonstrates how good Steve Jobs was at leadership and innovation (Kroenke & Evans, 2015).
Nonetheless, the Apple Company can realize success on its own. It can respond to Steve Jobs’ death by building on the foundation he had laid down throughout his leadership course. It should continue to use Porter’s competitive strategies to redefine its progress. Also, the company should expand through innovativeness to develop and diversify its products. Teamwork should be embraced as the company endeavors to break through the industrial market towards success. As a shrewd investor, I would be willing to invest in the Apple Company without the leadership of Steve Jobs. The Apple Company is determined to prove to the world that it can survive and thrive even without their stronghold (Kroenke & Evans, 2015).
Why Microsoft Company Has not Realized the Same Success as the Apple Company
Despite being the leaders in developing devices like iPads and the operating systems coupled with applications for 20 years, the success of the Microsoft Company is not close to Apple’s historical success. Five reasons can be provided to explain this unfortunate failure. First, Microsoft Company loses track of the consumer. The Microsoft Company fails to focus more on the satisfaction and needs of its users while the Apple Company sets more focus on its customers. It implies that Apple is customer-oriented while Microsoft is product-oriented. The inability of Microsoft to concentrate on the end-user denies it a chance to dominate the market as the Apple Company has historically done. Secondly, Microsoft has manifested an extreme focus on enterprise buyers than individual consumers. Such a focus has often caused the Microsoft Company to overlook consumer marketing efforts by underfunding consumer projects (Kroenke & Evans, 2015).
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However, despite the keen attention given to the big enterprises, other companies such as Cisco and British Petroleum end up dumping Microsoft for Apple. The companies assert that Apple focuses solely on their customers, and it is impressive. Thirdly, the Microsoft Company fails to embrace and improve strategies for successful firms. Instead of identifying and developing its competitors’ strategies, the Microsoft Company applied the strategies that did not work any better. Fourthly, Microsoft lacks the diversification of products. The success of Microsoft Company has mostly been based on software products. However, the Apple Company has been very efficient in diversifying its products. The Apple Company has achieved greater heights of success by dealing with both hardware and software components of computers. Lastly, Microsoft faces tough competition in software development from other companies such as Google. Microsoft lacks diversification, thus relying on the profits from its software series and apps. Therefore, it is difficult for Microsoft to realize Apple’s past success based solely on software products.
If I had a spare of $ 5000 in my portfolio, I would buy an equity stock from the Apple Company. The Apple Company has an excellent history of success. It has realized greater heights than most companies would ever manage to and anticipates future success, as well. It would be a smart choice to be in the winner’s circle. After all, everyone likes to be associated with winners.