Expert answer:​Analysis Apple Company

Solved by verified expert:Analysis Apple Company from the following parts.1. External Environment of the large Firm partner selected. (two pages)a.Conduct Porter’s 5 forces analysis with detailed explanation （Should be like the example I have attached)i. What are the opportunities and threats?2. Internal Environment of the large Firm partner selected.(Two pages)a. identify the Mission and vission. Explain in your own words.b. Describe the Core Competence of the firm, then, make an VRIN Analysis. (Look the Powerpoint and the picture)
core_competence.png

vrin.png

example__22five_forces_analysis_22.docx

core_competence.pptx

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Overview: Apple Inc.’s Five Forces Analysis
Apple’s strategies are partly based on the need to address forces in the external
business environment. These forces can limit or reduce the firm’s market share and
revenues. Apple’s Five Forces analysis, based on Porter’s model, shows the following
strengths or intensities of external factors in the industry environment:
1. Competitive rivalry or competition (strong force)
2. Bargaining power of buyers or customers (strong force)
3. Bargaining power of suppliers (weak force)
4. Threat of substitutes or substitution (weak force)
5. Threat of new entrants or new entry (moderate force)
Considering these five forces, Apple must focus its attention on competitive rivalry and
the bargaining power of buyers. The analysis supports Apple’s current position of
continuous innovation. The firm effectively addresses the five forces in its external
environment, although much of its effort is to strengthen its position against competitors
and to keep attracting customers to Apple products.
Competitive Rivalry or Competition with Apple (Strong
Force)
Apple faces the strong force of competitive rivalry or competition. This component of
Porter’s Five Forces analysis model determines the intensity of influence competitors
have on each other. In Apple’s case, this influence is based on the following external
factors:
1. High aggressiveness of firms (strong force)
2. Low switching cost (strong force)
Companies like BlackBerry, Samsung, LG, and others aggressively compete with
Apple. Such aggressiveness is observable in rapid innovation, aggressive advertising,
and imitation. On the other hand, switching cost is low, which means that it is easy for
customers to switch from Apple to other brands, thereby making competition even
tougher. Thus, this part of the Five Forces analysis shows that competitive rivalry is
among the most significant considerations in Apple’s strategic formulation.
Bargaining Power of Apple’s Customers/Buyers
(Strong Force)
The bargaining power of buyers is strong in affecting Apple’s business. This component
of Porter’s Five Forces analysis model determines how buyers impact businesses. In
Apple’s case, buyers’ strong power is based on the following external factors:
1. Low switching cost (strong force)
2. Small size of individual buyers (weak force)
It is easy for customers to change brands, thereby making them powerful in compelling
companies like Apple to ensure customer satisfaction. On the other hand, each buyer’s
purchase is small compared to Apple’s total revenues. This condition makes customers
weak at the individual level. However, because it is easy to shift from Apple to other
brands, buyers still exert a strong force. Thus, this part of the Five Forces analysis
shows that Apple must include the bargaining power of buyers or customers as one of
the most significant variables in developing strategies.
Bargaining Power of Apple’s Suppliers (Weak Force)
Apple experiences the weak force of the bargaining power of suppliers. This component
of Porter’s Five Forces analysis model indicates the influence of suppliers in imposing
their demands. In Apple’s case, suppliers have a weak bargaining power based on the
following external factors:
1. High number of suppliers (weak force)
2. High overall supply (weak force)
Even though Apple has less than 200 suppliers of components for its products, the
company has more options because there are many suppliers around the world. This
condition makes individual suppliers weak in imposing their demands on firms like
Apple. In relation, there is a high level of supply for most components of Apple products.
Thus, this part of the Five Forces analysis shows that Apple does not need to prioritize
the bargaining power of suppliers in developing strategies for innovation and industry
leadership.
Threat of Substitutes or Substitution (Weak Force)
The threat of substitution is weak in affecting Apple’s business. This component of
Porter’s Five Forces analysis model determines the strength of substitute products in
attracting customers. In Apple’s case, substitutes exert a weak force based on the
following external factors:
1. High availability of substitutes (moderate force)
2. Low performance of substitutes (weak force)
Substitutes to Apple products are readily available in the market. For example, people
can easily use digital cameras instead of the iPhone to take pictures. They can also use
landline telephones to make calls. However, these substitutes have low performance
because they have limited features. Many customers would rather use Apple products
because of their advanced features. Thus, substitution has a weak force in impacting
Apple’s business. This part of the Five Forces analysis shows that Apple does not need
to prioritize the threat of substitution in business processes like marketing and product
design and development.
Threat of New Entrants or New Entry (Moderate Force)
Apple experiences the moderate force of the threat of new entrants. This component of
Porter’s Five Forces analysis model indicates the effect and possibility of new
competitors entering the market. In Apple’s case, new entrants exert a moderate force
based on the following external factors:
1. High capital requirements (weak force)
2. High cost of brand development (weak force)
3. Capacity of potential new entrants (strong force)
Establishing a business to compete against firms like Apple requires high capitalization.
Also, it is considerable costly to develop a strong brand to compete against large firms
like Apple. These factors make new entrants weak. However, there are large firms with
the financial capacity to enter the market and impact Apple. Google has already done
so through products like Nexus smartphones. Samsung also used to be a new entrant.
These examples show that there are large companies that have potential to directly
compete against Apple. Thus, the threat of new entry is moderate. This part of the Five
Forces analysis shows that Apple must maintain its competitive advantage through
innovation and marketing to remain strong against new entrants.
https://www.slideshare.net/jontymohta444/porters-5-forces-model-case-apple-inc
Core Competence &
Diversification
Knowing your Core
Competencies
• What is a Core Competency?
Core Competences are NOT Products
• Core Competence
Product C
Product B
Product D
Product A
Business Unit 1
Business Unit 2
Core Product/Tech 1
Core Product/ Tech 2
Core Competences
(Prahalad & Hamel)
• What a firm does better than
competitors
• Firm should not be viewed in
terms of products, business
units or divisions (portfolio of
businesses) but by the core
competencies it possesses
• Do you measure the strength
of a tree by it’s leaves or the
roots and trunk? Should you
measure the strength of a firm
by its products or by its
competences?
3M
Product : Thousands of products in the areas of –
Display & Graphics, Electronics and Electrical Communications,
Healthcare, Safety & Security, Transportation, Manufacturing,
Office, Home & Leisure
Business Units:
Consumer, Electronics/Energy, Healthcare,
Industrial, Safety/Graphics
Core Tech:
substrates, coatings, adhesives
Core Competences:
Innovative Culture
3M Innovative Culture
• Top down commitment to innovation
• Official company policy allows employees to use 15% of
their time to pursue independent projects
• The company explicitly encourages risk and tolerates
failure/mistakes
• Allow employees to do job their own way
• Access and integration across 42 technology platforms
• Tech forums run by employees
• Poster sessions
• Reward and recognition is peer driven; good science and
commercial application is key
• Customer Innovation Center – customers interact with
scientists and engineers to solve problems
Discovering Core Competencies

Four Criteria of
Sustainable
Competitive Advantage
(VRIN) (Barney, 1990)
Valuable (to customer)
 Rare
 Costly to imitate
(Inimitable)
 Nonsubstituable

VRIN Model
• Valuable Capabilities
• Capabilities that improve the value proposition for customers
• An appealing and compelling customer value proposition is crucial for
competitiveness
• Rare Capabilities
• Are not possessed by existing or potential competitors
• Inimitable or Costly-to-Imitate Capabilities
• Historical: Evolved over time (eg organizational culture or brand name)
• Ambiguous causality: The causes or source a competence are unclear (Walmart
logistics)
• Social complexity: Interpersonal relationships, trust, and friendship among
managers, suppliers, and customers
• Nonsubstitutable Capabilities
• Cannot be “trumped” with another capability
VRIN Outcomes
What is corporate level strategy?
– Strategy to select and manage several different business units
competing in different industries, geographic area, or product markets.
– Concerned with # and relatedness of units and creating value for firm
as a whole
Corporate
Level
Strategy
Business
Unit
Business
Unit
Business
Unit
Business
Unit
Key Questions of Corporate Strategy
1. What businesses should the corporation
be in?
2. How should the corporate office manage
the array of business units? (Level and
type of Diversification, number of units)
Corporate Strategy is what makes the corporate whole
add up to more than the sum of its business unit parts
(Includes M&A, alliances)
Sony Corporation 2017
When should firms diversify?
• Industry is attractive.
• How can you determine this?
• Cost of entry does not exceed profitability
• Better off test
• Synergy with existing businesses
5 Levels and Types of Diversification
Low Levels of Diversification
Single business
Dominant business
> 95% of revenues from a single
A
business unit (Southwest, small
businesses)
Between 70% and 95% of revenues
from a single business unit (UPS)
A
B
Moderate to High Levels of Diversification
Related constrained
Related linked
Very High Levels
Unrelated-Diversified
A
< 70% of revenues from dominant business; sharing of resources and competences (Walmart) B A < 70% of revenues from dominant business, and only limited links exist C Transfer of resources and competences B (Honda) A of Diversification Business units not closely related (Tata) B C C Related Constrained Diversification Sharing Capabilities & Competences Key Characteristics: Sharing Activities and Resources Sharing Activities can lower costs if it: Achieves economies of scale Boosts efficiency Helps move more rapidly down Learning Curve Example: Procter & Gamble’s uses a common paper production plant for disposable diapers and paper towel divisions Related Linked Diversification Transferring Knowledge & Competencies Key Characteristics: Transfer of competencies Involves intangible resources - Sticky Since intangibles are difficult to imitate, provides immediate advantage to other business unit Example: Honda has transferred expertise in engines to various types of vehicles such as motorcycles and lawnmowers Unrelated Diversification Strategies Efficient Internal Capital Market Allocation Key Characteristics: Firms pursuing this strategy frequently diversify by acquisition: Acquire sound, attractive companies that need capital Acquired units are autonomous Portfolio managers transfer capital resources from units that generate cash to those with high growth potential and substantial cash needs Add professional management Sony Corporation 2017 What kind of Diversification? Core Competence Video • https://hbr.org/video/5146717725001/the-explainer-corecompetence
…
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