Apple’s strategy management

Apple’s strategy management

  • Introduction

Smart phone products are getting more and more attention from people. The more popular brands on the market are Apple, Huawei, Samsung and a series of branded electronics companies. Apple is a high-tech company that originated in the United States. It was founded by Steve Jobs and Steve Wozniak in 1976 when they named Apple Apple Computer, USA, changed its name to Apple on January 9, 2007. As of June 2014, Apple has become the world’s largest company by market capitalization for three consecutive years and ranked 9th in the 2016 Fortune 500 list. This is a very outstanding result. On September 30, 2013, in the “Best Global Brand” report of Hongmeng Group, Apple surpassed Coca-Cola to become the world’s most valuable brand. In 2014, the Apple brand surpassed Google to become the world’s most valuable brand. How did Apple gain consumers’ love at a rapid rate? What kind of strategy does the company use to manage the company? In the process of managing the company, what problems did it encounter and what challenges did it face? This article will dialectically discuss Apple’s strategic management, and then provide valuable discoveries and help for entrepreneurs and society.

 

Figure1:The retention rate of the smartphone industry

Source:BankMyCell

  • Apple’s strategic management

Apple and its subsidiaries are mainly involved in the design, production and sale of personal products, computers, mobile communication products and portable digital music devices. The company also sells other businesses, such as software packages, related services, network solutions and applications. Its product and service series include iPhone, iPad, Mac, iPod, Apple TV, iCloud and a series of products and professional software applications. It also has an online store to sell its products and services, such as the iTunes Store, App Store, iBookstore and Mac App Store, through which customers can make their own purchases.Apple has entered the 500 largest company list within 5 years, and has maintained a double-digit growth rate since 2004. As a major innovator and pioneer in the technology industry, it has created its own independent system, the ios system built into the iphone. This system is a mobile smart operating system specially designed by Apple for iphone. Compared with Samsung and Huawei’s other smart phone Android systems, the ios system has more powerful advantages. The first point: the ios system and the iphone mobile phone have a high degree of matching, and the customer’s use is very smooth, and there is little lag. The second point: strong security. iPhone customers can only download and install apps through the iPhone store, and log in and install through their own accounts. This can reduce account sharing and prevent the installation of some virus software. The third point: The interface is simple and the icons can be DIY. The user-friendly design makes the operation interesting and unique, allowing users to feel clean and simple during use. These three characteristics bring together the uniqueness of the ios system [Morrissey, S. and Campbell, T. (2011)]. In addition to the unique system, Apple’s business strategy is also ingenious. Building a brand image culture is the first step in the management of the company. In January 2000, Jobs released a new operating system at the Macworld conference to show the upgrade of all Apple products. The sale of a series of new products, from technology to design to offline customer experience. Jobs successfully built the brand image of Apple. Apple hired the world’s best designers and engineers with high salaries to obtain the latest technological development and product updates.[Abimbola, T.(2010)]In addition to brand marketing, Apple attaches great importance to user experience and after-sales service. In the offline experience store, Apple displays all its products, and has a dedicated service area, amusement area and after-sales points. The user can touch and use the electronic product at will, and the customer service staff can give you guidance and give you a targeted purchase plan. This improves the customer’s favorability of the product and the brand, which is a manifestation of personalization. Apple has also created an open application platform on which Apple users can upload their own programs, and other users can download and use them once they have been verified by Apple[Laugesen, J. and Yuan, Y.(2010)]. This improves the loyalty of the product.

Apple’s transformation strategy is a very critical step, because for products,Apple’s products can be replaced, and Apple just entered the music market. It can not only obtain revenue through original products, but also obtain other products through music. An income. In just three years, the iPod iTunes portfolio generated nearly $10 billion in revenue for Apple, accounting for almost half of the company’s total revenue. It has become a hot spot for global industry and consumers.

 

 

Figure2: The upper figure is Apple’s sales and net income from 1980 to 2004; The nether figure is 2001-2012, the relative importance of different Apple products in total sales

Source:Standard & Poor’s Compustat database

 

According to the second chart, we can know that from 2001 to 2006, Apple’s sales increased from 5.3 billion US dollars to 19.3 billion US dollars. In 2006, iPod sales accounted for 40% of total sales, and music sales accounted for 10%. Music drove consumers to buy iPods.[Lazonick, W., Mazzucato, M. and Tulum, Ö.,( 2013)].This is a very good driving model.At the beginning of 2007, Apple’s promotion and marketing activities were mainly placed in the local market, mainly to occupy market opportunities. Apple’s ads and tens of millions of dollars of free publicity, new video models and the derivative of 3d advertising attracted a large number of consumers, who lined up the night before the release on June 29. Apple sold 270,000 iPhones within the first 30 hours of listing. For operators, the key indicator of iPhone success is to win new customers. Apple entered the mobile phone market with the iPhone as a product line. Not only has it successfully won loyal customers, it has also changed the concept of mobile Internet. Steve Jobs predicted that three weeks before the release of the first iPhone, “people want the real Internet on their phones”[Block, R. (2007).], and he finally realized this idea successfully.

 

  • Apple store services and Problems in Apple’s services

Apple provides its customers with a variety of services to meet the needs of different types of customers, including: digital content stores. Apple operates a digital content repository that enables customers to discover and download service-based applications and digital content, including music, videos, books, games, and podcasts. Apple’s services, such as Apple Music and Apple TV+. This type of service provides Apple with a lot of revenue. AppleCare service. AppleCare is a fee-based service that provides phone hardware repairs, accidental damage and even theft. other service. These services include iCloud, Apple Card, Apple Pay and Apple News+. A large part of the reason why Apple has become one of the industry leaders is the Apple App Store. In 2008, when Apple opened the App store, there was a wave in the industry. In 2010, more than 5 billion application downloads were made. This is a very impressive data. In the same year, due to the success of Apple, a large number of client download data were summarized. There are approximately 80 potential application stores worldwide, and similar application stores have been created. For example: “Nokia, Microsoft, Samsung, Sony Ericsson and other smart phone and mobile OS vendors, etc.”. Why is application development so popular? There are many factors in the big environment to support application equipment. The main factors are the following reasons. [Tracy, K.W., (2012)]The first point: popular high-speed network. In metropolitan areas, the popularization of networks has become more and more widespread, and the current 5G network coverage is also increasing. High-speed networks supporting interesting data applications have become relatively common. The second point: The processing and storage capacity of high-performance equipment, small equipment has been improved a lot, and the price of the equipment can be widely adopted by the public. The third point: the needs of different devices are different. App store only supports users who use Apple electronic devices to download. Therefore, for users of Android clients, Android Market needs to develop and support Android application software, so as to make different clients more convenient and usable. Fourth point: Support the development of third-party mobile applications. In addition to the research and development of official agency personnel, other people can also create and publish applications (and make money on them), the more likely developers are to create and publish the application, adding more innovations with different ideas.[Kimbler, K., (2010)],The iPhone plus App Store and iPod plus iTunes have exactly the same business model. The only difference is that the third party of the App Store is a broader software development group. Users can easily access the app store through iPhone and PC/Mac client applications. service. It provides users with browsing, discovery and installation functions, as well as simple payment methods through credit card and carrier billing. Apple App Store now has more than 200.000 applications, and covers a wide range of fields, including: games, education, learning, etc. Users purchase mobile phones with key applications and services, and then personalize them by downloading their free and advanced applications from the application store, which contains both charged and free application software.Even so, Apple is also facing some equipment service issues. Apple has only one year’s current warranty for all Apple products, including hardware failures and manufacturing defects, and up to 90 days of free technical support. If the Apple product used by the customer has problems such as accidental damage after one year, the user can only pay the fee. And the Apple devices set in different countries are also different. For example, Apple products in the US and Japan cannot provide AppleCare+ with anti-theft and loss protection functions. According to UBS estimates, such as Apple Music, iCloud and AppleCare, etc. Services (which consumers choose to pay) each generate approximately US$4 billion to US$5 billion in annual revenue. They are not small businesses, but relative to Apple’s scale, they are small. Apple’s service revenue (including only the fees consumers choose to pay) is much smaller than reported. This is a daunting task because the iPhone generates huge revenue. It is a daunting task to offset the small decline in iPhone sales with new services.

 

Reference

BankMyCell (2019). Smartphone Brand Loyalty Statistics (2019). Available at: https://www.bankmycell.com/blog/smartphone-brand-loyalty-during-trade-in-2019/ Accessed January 7, 2020

 

Morrissey, S. and Campbell, T., 2011. iOS Forensic Analysis: for iPhone, iPad, and iPod touch. Apress.

 

Abimbola, T., 2010. Brand strategy as a paradigm for marketing competitiveness

 

Laugesen, J. and Yuan, Y., 2010, June. What factors contributed to the success of Apple’s iPhone?. In 2010 Ninth International Conference on Mobile Business and 2010 Ninth Global Mobility Roundtable (ICMB-GMR) (pp. 91-99). IEEE.

 

Lazonick, W., Mazzucato, M. and Tulum, Ö., 2013, December. Apple’s changing business model: What should the world’s richest company do with all those profits?. In Accounting Forum (Vol. 37, No. 4, pp. 249-267). No longer published by Elsevier.

 

 

Block, R. (2007). Steve Jobs live from D 2007. Engadget, May 30. Retrieved from 〈http://www.engadget.com/2007/05/30/steve-jobs-live-from-d-2007〉.

 

West, J. and Mace, M., 2010. Browsing as the killer app: Explaining the rapid success of Apple’s iPhone. Telecommunications Policy34(5-6), pp.270-286.

 

 

Tracy, K.W., 2012. Mobile Application Development Experiences on Apple¿ s iOS and Android OS. Ieee Potentials31(4), pp.30-34

 

Kimbler, K., 2010, October. App store strategies for service providers. In 2010 14th International Conference on Intelligence in Next Generation Networks (pp. 1-5). IEEE.

 

 

 

 

 

 


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