11 May Discussion And Response
Please keep each part separated
Part 1 Discussion
“Apple, Inc: Keeping the “I” in Innovation” Please respond to the following:
- From the second e-Activity and the case study, determine how market commonality and resource similarity impact Apple’s competitive standing in terms of its main rivals. Provide specific examples to support your response.
- Determine what additional steps Apple’s competitors are likely to take and how Apple will most likely respond. Explain your rationale.
Part 2 Repsond
Hi Classmates –
The case study for Apple “Keeping the ‘I’ in Innovation” was fascinating, based on the discussion that we had last week about staying power. Based on the study, it was clear that Apple was the leader in technology, in advancing innovative new tools, and using a differentiation business strategy to sell itself as better from the rest. Just a few years later, though its revenue is still astonishing, Apple has certainly lost its position as the differentiator in the industry. With the loss of Steve Jobs came the loss of the inventor’s genius that kept Apple ahead of the pack. From a market commonality perspective, the other major cell phone manufacturers have not only caught up, but Samsung has moved into the position as the advancer of technologies, often a year or two ahead of Apple products from a features perspective. In fact, because Apple does not have the ability to produce the LED screens on their devices, Samsung has become a major player in the Apple supply chain, with a rumored $110 per iPhoneX device going to Samsung, equating to $14B in revenue for their competitor’s new flagship device. Furthermore. based on the most recently quarterly updates, iOS has continued to lose market share to Android in the US, Europe, and Japan, though it has increased market presence in China. Finally, it must be stated that Apple has received significant criticism on major human rights violations within their supply chain, including dangerous work environments, human trafficking, and partnering with war lords in conflict mineral areas. This has required changes to their processes, which has eaten into their speed to market, as well as revenue. Since the similarity of the product Apple is selling vs competitors has reached parity, some customers have started to move towards cheaper or more technologically advanced devices provided by competitors.
Since devices have become incredibly expensive, with the iPhone X being priced at $1,149, while cellular companies are no longer trading devices for contracts, the optimum competitive market strategy is to provide a more affordable device for consumers. Both Samsung and Huawei have had success with this internationally, with Huawei’s Mate 10 flagship device containing similar features to the iPhoneX, and retailing at $825. Apple’s response to this has been more subtle. Huawei has been blocked from entering the US market, with Congress pushing against the company because of concerns about espionage from the Chinese manufacturer. Given that Apple devices are also manufactured in China, and that Huawei has successfully captured market share in Europe, it seems possible that the $5.4M that Apple spent on lobbying congress in 2017 may have helped to create a barrier to entry for this competitor. If Huawei is able to enter the US market, they will certainly do it at a lower price point, which could negatively impact Apple’s US sales. Going forward, if Apple continues to lose market share, they will either need to create new innovation to differentiate themselves, or potentially reduce the sales price on their phone, with the hopes of earning less per device, but gaining back share.
Looking forward to your thoughts.
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