Enhancing the Competitive Strategy Task

4 Pages   |   800 Words
Select the best competitive strategy. Provide a rationale for why this is the best strategy
The five competitive strategies are based on the two dimensions of ‘market coverage’ and the ‘type of competitive advantage’ that any company is looking for. The model of the five generic competitive strategies defines competitive strategy on two main fronts: low-cost features and differentiation features (SoÅ‚oducho-Pelc, 2014). According to the model, any business organization, including Apple Inc., may primarily compete on low costs or differentiation. Both low costs and differentiation can be broad or focused strategies.
 

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In the case of Apple Inc., a company dealing in breakthrough products the world over, a “focused differentiation strategy” appears to be the best. This is so because Apple projects and holds a unique image amongst its customer base. Apple products and services are not for the common man. In fact, the users of Apple’s Macintosh systems are known as Macolytes, a unique identify for the users of Macintosh (Yinb, Haslam and Andersson, 2013).
Apple’s presence in a limited number of market segments, primarily the youth, educated, urban professionals, is consistent with an image of those who look for perfection in whatever they do in life. For Apple to keep an elite image of its powerful brand and continue producing breakthrough products, the most suitable competitive strategy is to create value through differentiating features.

Develop supplemental strategies. Provide a rationale for why these are good supplemental strategies.
The supplemental strategies for Apple may also be derived from the five generic competitive strategies. The supplemental strategies would be an extension of the company’s mission, vision, core values, and also be in line with the best-chosen strategy. For this reason, it will not be convenient for Apple Inc. to be a low-cost provider, given the company’s heavy investments in research and development. In addition, Apple also pays considerable attention to customer insight that is critical for any tech-based product range (Mazzucato and Lazonick, 2013).

On such rationale, it is suggested that a ‘broad differentiation strategy’ may be applied. This is so because the company would still be producing differentiated products, such as the thinnest laptop or the clearest smart phone display. However, it may now reach a larger range of market segments with a differentiated strategy. This means that the differentiating features of Apple Inc. are not only for the elites, but several other segments based on geography, ethnicity, and education levels may be applied. As income levels increase in various segments of the population, Apple products would be in their reach. With such supplemental strategy, Apple Inc. may increase its revenues tremendously while retaining an image of superior electronics product range (Mace and West, 2010).

Develop a strategy for foreign markets. Provide a rationale for why this is a good strategy for foreign markets.
Firstly, this depends on which foreign markets Apple plans to target. As various developing countries now have a rising educated middle class and working professionals, such foreign markets are vital targets for multinational corporations (MNCs). On the whole, however, the competitive strategy of ‘focused low cost’ may be followed in several foreign markets. For this purpose, Apple Inc. will have to contain its costs of production significantly. The foreign markets do present low-cost avenues, with cheap technology and available of factors of production (Teece, 2010).
For example, if Apple Inc. starts assembling its products in China which has a large and cheap labour force, the costs of production will vary tremendously as compared to the company’s costs in the United States. It is also important for this strategy to understand what the consumers are looking for. If the global image of Apple is that of state-of-the-art products and technologies, such an image cannot be compromised for saving costs of production. Otherwise, the company will continue to play in a ‘focused differentiation strategy’ or a ‘broad differentiation strategy’ even in its foreign markets. With a low-cost strategy, however, Apple Inc. will still be competing in a limited number of market segments.
 

References

Mace, M. and West, J. (2010) 'Browsing As The Killer App: Explaining The Rapid Success Of Apple's iPhone', Telecommunications Policy, vol. 34, no. 5-6, June-July, pp. 270-286.
Mazzucato, M. and Lazonick, W. (2013) 'Apple's Changing Business Model: What Should The World's Richest Company Do With All Those Profits?', Accounting Forum, vol. 37, no. 4, pp. 249-267.
Sołoducho-Pelc, L. (2014) 'Competitive Advantage: The Courage In Formulating Objectives And Expansiveness Of A Strategy', Procedia - Social And Behavioral Sciences, vol. 150, September, pp. 271-280.
Teece, D.J. (2010) 'Business Models, Business Strategy And Innovation', Long Range Planning, vol. 43, no. 2-3, April-June, pp. 172-194.
Yinb, Y.P., Haslam, C. and Andersson, T. (2013) 'Apple's Financial Success: The Precariousness Of Power Exercised In Global Value Chains', Accounting Forum, vol. 37, no. 4, December, pp. 268-279.

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