Apple Inc's competitive advantages and market leadership strategy

Apple Inc. that was previously known as Apple Computer, Inc. is an American multi-national corporation that deals in consumer electronics, personal computers and computer software and was founded in 1976. Steve Jobs was the co-founder of Apple. During his stay as CEO, company launched series of revolutionary technologies. He died on October 5, 2011. Currently, Tim Cook is the CEO of Apple. Before being on this position, Cook was Apple's Chief Operating Officer. He was responsible for managing the company's sales and operations including supply chain, support services, and sales activities all over the world.

As according to the September 2011 stats, Apple operates more than 300 retail stores in 11 countries. In addition to the retail stores, there is an online store that deals with individuals and corporate customers in hardware and software products.

The company had computer in its name but removed it on January 9, 2007 when it achieved a big name in other electronic devices as well apart from computers. Till 2000, company faced hard time but it made a successful turn afterwards when it started operating in other devices.

Currently, Apple is the biggest publicly traded company in all over the world in terms of market capitalization and considered as the largest technology company in terms of revenue and profit. Apple focuses more on designing and manages distinctive advertising campaigns. The company leads in its innovative capabilities and always do its best to bring all new products for its customers.

Apple's innovations and designs has built loyal family of customers and made a unique reputation. As according to Fortune Magazine, Apple was named as the most admired company all over the world in 2008, 2009, 2010 and 2011.

Apple leads the market majorly due to its low cost, sleek designing, differentiation of products, integrated products and high quality offerings. The company has number of competitive advantages over other companies so it has a bright future. (Khan, 2011)

Apple's Mission

Apple's investors' website states its mission as:

"Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices."

Apple's commercial mission statement is as follows:

"Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and internet offerings."

Apple's Vision

"To make contribution to the world by making tools for the mind that advance humankind."

Apple fulfils its vision via the technologies it develops for organizations and individuals. It tries to make its customers the master of machinery they have purchased. It simplifies the operations for customers so that they may benefit from the technology as much as it is possible. Apple not only claims but implements it practically, forwards the vision towards its employees, clarifies objectives and provides them with all facilities to achieve the targets.

Apple's Goals and Objectives

Apple strives to:

Create and sell computers and other electronic devices that are easier to operate.

Expand business in an international market by opening more number of stores to increase profits.

Continuous innovations in all aspects of business

Apple highly focuses on improving innovative capabilities. The company believes in continual investments at different sectors like research and development, advertising and marketing so that to always bring fresh experience for the customers.

Apple's Competitive Advantage

The hardest thing for any company is to create a competitive advantage and even more than that is to sustain Competitive Advantage. For this purpose, it is important for a company to master in at least one thing what others cannot imitate. This may include the products' cost structure, distribution network, product offerings or customer support. (Robbins, 2003)

Apple is one such company that has been able to create and maintain its competitive advantage. Its superb product designing, low cost manufacturing, direct sales channels and other aspects build a competitive advantage for the company.

In past years, Apple had only an image that its products are easy to use and elegant but has limited market share. The market price was much higher and therefore unable to attract application developers. However, the image has been changed now. In addition to its sleek designing and ease of use, the company has been able to offer lowest customer prices.

Now due to innovation capabilities, development and company's trendsetting techniques in electronics, Apple has left other competitors far behind. The popularity of Apple can be well assessed with the number of likes it gets on Google, Amazon, Real Networks and other pages.

Since, the company has now large supply chain so it enjoys some procurement benefits as well. Being a large company it makes huge orders that outclass rest of the companies. Recently Samsung lost market value of $10 billion when Apple made huge order of flash memory with Elpida. It secured more than half of the company's supply.

Apple Stores

Apple is capable of delivering its products to millions of customers all around the world with in short time. The company manufactures millions of units of products in prior that are about to be launched in the world market. Moreover, the orders are monitored in retail stores with a gap of hours and necessary changes are made accordingly. As according to the 2011 report, Apple stated that it shipped about 37 million iPhones and 15.4 million iPads per day. Due to timely delivery and never been out of stock, Apple is considered to have the world's best supply chain management.

Currently, Apple is focusing on maximizing the number of retail stores but the company has also well-established website interface to deal with the customers. There are different offers made all over the world. Free shipping is offered on all orders above $50 and product is delivered right at your door or customers can also purchase online and pick their product from the nearer store. There are different stores maintained by the company in order to facilitate all customers. There is a separate education store, business store, international store and government and military store. Students, Businesses and institutes can purchase the best products of their use at an affordable price. There is also a customer support and expert advices available for the clients. Experienced business experts offer mobile, apps and hardware solutions. Company maintains website for 41 countries and so you can choose yours from the list. Moreover, Apple also offers its special services for the military and Government clients/employees. (Apple, 2012)

As of July 2011, Apple opened more than 330 stores worldwide. These stores deal in Macintosh Personal Computers, iPods, iPads, iPhones, software, third party accessories and various electronic devices like Apple TV. Many of these stores also offer a feature of theatre for training with Apple Products, free workshops and presentations. Most importantly, all stores provides technical support and repair services.

Apple's Smartphone Contribution

Apple's smartphones have integrated iTunes and many other applications therefore you can have an access to various applications just by means of iPhone. It is the major reason of company's sustainable competitive advantage. The company has launched 4 versions of iPhone so far which have made record breaking profits. Currently, the company is making 70% of its revenue through iPhone and iPad.

Apple's Logistics Challenges

Apple like other big electronic companies has a high risk supply chain profile. Most of the key components of the products are manufactured in Northern Taiwan. It places order for its customized components to other massive factories in Shenzhen, China for final compilation. Any sort of natural disaster or man-made problems at any of these areas can potentially destroy Apple's supply chain. Therefore, the company must consider for the alternatives or reduce the risks for the company.

Since now Apple has its name in the leading companies of the world and so it has to maintain its positioning by always providing the best services to its clients. The company has a wide range of products mainly including iPod, iPad, iPhone and MACs so the company also have to manufacture larger number of units and supply all over the world.

Since 70% of the company's revenue is generated by the iPhone and iPad so the company needs to focus on to meet the challenges because of its fast growth. How company can meet the demands of iPhone and iPad. Is it able to produce enough units to fulfil the demands. How it can maintain the similar high quality, warehouse management, transport and delivery of spare parts? That's the currently the biggest challenge for Apple.

In 2011, Apple produced 175 million gadgets that were about 50 million higher than the previous year making 40% growth. In 2012, it is expected to produce 200 million gadgets so the growth is continuously increasing and therefore the company has to improve its logistics operations. It is expected that by the end of the decade the company would have to ship 500 million gadgets in a year so Tim Cook the current CEO of the company must make strategic decisions otherwise it may create opportunities for the competitors to take Apple's place. (Frommer, 2011)

Recently Cook visited Foxconn, the Chinese manufacturer of Apple products and the next day Fair Labour Association (FLA) criticized on long working hours and violation of basic wage standards at Foxconn industries. Being the member of FLA, Apple is responsible to ensure implementation of basic labour rights and it is also important for the reputation of the company.

Apple Efforts to Meet Logistic Challenges

As according to the SupplyChain Digest (2012) report, Apple is committed to diving the highest standards for social responsibility throughout their supply base and conducting audit so that suppliers provide safeworking processes wherever the Apple products are manufactured.

The company is organizing training workshops and expanding the supply chain so that to meet the demands of customers. The audits and improvements in logistic functions have brought positive results. More than 60,000 employees have taken professional development courses is logistics and SCM.

The company has built a closed ecosystem where it closely control every step of supply chain, designing up to distribution. Previously, the company was following the just in time approach to meet the demands of the customers. There were limited number of warehouses since the units were manufactured according to orders. However, when company is about to make new launch, it manufactures large number of units just in case. But since now the growth of company is increasing rapidly therefore, the company must increase the number of suppliers as well as warehouses so that to deliver units whenever demanded.

Apple's Approach to Logistics is Best Practice

Since, the products offered by Apple have many similarities and so the components used in all products are quite same. The difference lies only at the size of the overall product that is iPod is small, iPad is bit of bigger size and laptop is larger than both. However, touchscreen, functions and features are almost same in all. This aspect gives an edge to the company. It can place order in bulk for common components thus it reduces the prices of the products. Just like the price, company offered for iPad and iPhone. None other companies can compete the price offerings made by Apple. This gives a big competitive advantage to the company.

Other companies are either dealing in computers or phones but Apple has a wide range of products. So, there is a long way for other companies to compete with Apple in low price. This approach of logistics is best for the Apple itself since there are options for the company to utilize the bulk ordered components anywhere and it is for this reason, the company is the considered to have the best supply chain management.

Whether Apple Can Bring Improvements to its Supply Chain Management?

Apple's new CEO Cook is already on the route to improve company's supply chain management and mainly focusing on the same issue. Cook has expertise in supply chain and operations and so there are high expectations that this man will lead the company towards new levels of success.

Recently, Cook played an important part in an issue of Chinese company Foxconn that shows how much the company is concerned regarding the improvements of supply chain management. The company also organized 2 day training program at the Foxconn so that to increase performance and operations. (Banker, 2012)

Since, the new CEO has its expertise in supply chain management and making significant steps towards SCM so the company should use its competencies to improve the provision of logistic support in-house itself rather than outsourcing logistic operations to third party.

In-House or Third Party Logistics

If the company follows the same pattern of in house logistics then it must bring improvements and expand the area. Currently, the company outsources manufacturing tasks to cheap foreign suppliers and manage every step of supply chain itself. Moreover, it closely examines the process so that to offer error-free and timely delivery to customers and organizations.

Since, company follows the just in time approach so it continually checks for the demands at retail stores and bring changes in orders as according to the market need. However if the company outsource its logistics area to third party then it may rise the cost. Since the company would have to separately conduct demand forecasts and survey to place an accordingly.

This demand forecast helps the company a lot at the time of new launch since the order is placed accordingly but if less number is ordered then the company loyal customers may have to wait in long queues for their favourite brand's new products. This will definitely make a negative image on loyal and enthusiastic set of Apple's customers. However, in case of in-house logistics, company doesn't need to compromise on demand.

However, in order to decide that which pattern of operations the company should follow for logistics, it needs to make cost and benefit analysis. It would have to make comparison if the in house logistics or third party logistics contract makes higher cost. What level of profits a company can earn in both cases and will the third party be able to maintain the quality and standard of products.

Military Logistics

Apple offers a separate website store for the Government and Military employees and institutes. There are special reasonable price offers or employee purchase programs for these customers. There are number of military apps also available at the store to facilitate the combat troops.

United States Army is making plans since 2010 to deploy smartphones to war troops since it can be used effectively in combat situations and also has much lower price. Moreover, it is small in size that would benefit in combat situations. They will be able to access battle plans, stay in contact with data provided communications and real time visual features. (Sultan)

Apple is strengthening its relations with the Government and Military institutes since if an Army or Government decides to deploy Apple iPhone then it would multiply the company's revenues. Apple has also developed Macintosh Personal computers, desktops, Operating Systems and applications especially for the use at Government and military institutes.

Conclusion

Apple is the leading electronic company that has been able to launch high quality innovatory products with sleek designing at best prices. Moreover, it is successfully sustaining the competitive advantages over its rivals. Though the company is doing well in the electronic market but since last year, it has come across number of challenges because of the death of master mind Steve Jobs. The biggest challenge that the company has tackle with is management of supply chain. Since, the company's growth is increasing rapidly so it has to fulfil the increasing customer demands as well while maintaining the competitive advantage. However, there are optimistic hopes since the new CEO, Cooks is making intelligent moves towards supply chain management.