Page |1

Sunderland Business School

PGBM16
Global Corporate Strategy

Submitted
By

SHASHANK D.NIKALJE

119073775

December 2011

EThames Graduate School

 Page |2

Executive summary:

This assignment is about a case study of Apple Inc. world’s fastest growing mobile
and electronic devices manufacturing company discusses about the strategic
leadership applied in the company. I have represented the critical evaluation of core
competency and dynamic capabilities of Apple Inc.
Second part evaluated the concept of ‘strategic alliances and ‘merger and
acquisitions’, and how these strategies helped company to maximize the volume of
shareholders.
Last part focused on the understanding of ‘Strategic leadership’ and ‘innovation in
context of global corporate strategy. I have tried to critically evaluate Apple’s
changeover after return of Steve jobs in 1997 and how it has changed according to
the Diffusion of innovation across Apple’s value chain and innovation in consumer
electronics and entertainment business of company.
.
 Page |3

Question 1:

1) Core Competency:-
It can be defined as a "key ability or strength that an organization has acquired that
differentiates it from others, gives it competitive advantage, and contributes to its
long-term success (Drejer A., 2002).
Core competence has important characteristics through the company can meets
following conditions.
1. Consumer benefits can be provided
2. Difficult to imitate the product line to any competitor
3. Can be influenced widely to many products and markets.

In global and competitive business atmosphere every business organisation need to

identify the future opportunities in market. Therefore to sustain and grab the future
business opportunities the determinants like ‘core competency’ and ‘dynamic
capabilities ‘plays an important role to define their customers and products to
increase their market share and growth.

2) Dynamic capabilities:
(Teece et al., Aug 1997) define dynamic capabilities as ‘the ability to integrate, build,
and reconfigure internal and external competencies to address rapidly-changing
environments’.
According to many market researchers it is found that dynamic capabilities have
direct effect on the company performance, so financial performance can also be
improved if the company has core dynamic capabilities.

1.1 Apple

The core competency and dynamic capabilities lead Apple to bring innovative and
dynamic products for customers. Apple's success has rarely come from a first-to-
market advantage; Apple always keen to give a range of products to customers
without their responses to particular product category.
 Page |4

Evaluation of products can be evaluated and based on the following important

factors.

Foundation of Apple’s core competency is based on ‘how you do and what you
do’, it also depend upon the potential of Apple in the design segment of computing
devices with an extraordinarily elegant ease of use. (De wit & Meyer, 2010)
Apple has differentiated itself through fashionable design, ease of use, smart
marketing and effective distribution team. The introduction of new electronic devices
like iPod click wheel and the iPhone touch screen, also distinguishes the products
from other hand-held electronic devices in the same category.
Apple employed following core competencies and dynamic capabilities in
current global technological context. Talking about strategies which Apple is
following and the factors which influences in success of business explained below.
a) Differentiation
b) Value creation
c) Innovation in technology

a) Differentiation strategy is employed in Apple having a unique features and

characteristics, superior quality, commands premium pricing and rapid innovation in
new products,

Apple has vertical integration strategy to develop business process is classified in to

three categories;
1) Customer Centric approach: - Apple goes against the outsourcing trend and
contrary to other industrial vertical integration which company uses it to control the
global valuable customers.
2) Business design:-Apple adopts holistic approach to its business with reference to
products and its integration with financial marketing.
3) Focus: - Company consistently focuses on lean product line which the customers
can prefer by design and features both.

b) Value creation: - Value creation involves the innovation has been carried out in
the developed of the product or developing product Apple outsources the basic
 Page |5

equipments from third party manufactures to reduce the cost of production through
economies of scale. Company always invest their technology to build industrial
design products and UI (user interface) to give more compatible and high end quality
designed product to customers. Because of Apples easy to use and simple designed
devices create a value in products which commands better value of product. Apple
carried out this value creation process from MAC to iPhone, involved segmenting
and targeting of MAC products and their customized products like IMac, IBook and
Power Mac etc.

c) Innovative design and technology: - Apple has always differentiated itself on its
innovative and design in every product and the devices like iTunes and iPhone
combination are unique examples of this strategy. In case of Apple, innovation plays
dominant role in the competitive dynamics in fast cycle electronic market. however,
the Apple is differs in product features, product mix methods with other competitive
companies products with brand reputation in easy to use products in multiple
designed electronic devices. Innovative design and technology are core
competencies imply in Apple since the invention of company and it had maintain it by
effectively integrating the entire solution, this innovation including software (iTunes),
hardware (iPod) and distribution of the third party digital content (iTunes – Music
stores).
With reference to the breakthrough innovation and technology it can say that not only
the technical expertise is a strong base of the growth of the company but operations
and system management also does well performance in delivering good service to
customers and design the product in such a way that they will not easily imitate.
Other base of success is the Strategic leadership style of Steve jobs implied in
company influences in such a way the output goes always high. (Hopf, welter, 2010)
Apple has capability to innovate new designed product and technologies which
shown through the innovation through iMac, and the advanced series developed by
Apple. (De wit, and Meyer, 2010)

Strategic alliances with strong based companies helped Apple to increase the
customer volume and new market entry. Example for entertainment business,
Apples alliance with Disney, SONY which are the best alliance partner for business.
 Page |6

Thus the mentioned core competencies and dynamic capabilities are evaluated
on the basis of products designed evaluated which are based on examined factors.

1.2 IBM

Over the years, IBM has a world pioneer company for PC manufacturing who
developed numerous noncore technologies with the licensing provide company as
well. Since early stages of the IBM it had major business operations in the computer
technology, research and service consulting to other companies. Professional
service solution and business operations worldwide make IBM to transform the
advanced technologies in to customer’s value
.
 Core competencies of IBM:
Acquisition of more than 50 companies during the period 2002-2007 has
became an important competency made by IBM to build networked portfolio
with embedded technologies like modular system for businesses of all sizes.
But it is certainly one of the most important strategies of the knowledge
economy. Transformation of business sector of IBM as from provider of
computer hardware to a broad-based supplier of information technology
services and solutions due to find out future business opportunities in global
technological sector also made IBM to be more competitive in global
computer industry .IBM has not followed any specific strategy in business
because the technological changes in the industry. (Glassman and Enkel,
2005) in his research article said IBM has not only invested in research and
development but also in innovation process to focus strategically to meet
customer demands. Thus IBM has following only research strategy to
compete in market and these strategies are built upon past experience.

 Dynamic capabilities of IBM:

During the past decades, IBM has transformed the business from its
computer hardware service provider to information technology service
provider. With the acquisition of PwC, IBM becomes the largest consulting
company in their Global Technical Services and Business Services units. This
 Page |7

acquisition used to find out the need of providing the design in technology,
engineering, which help to give solutions to companies. IBM‘s open source
business model is used for providing applications to other business
organisations. At the same time rival companies like Xerox, Philips and
Polaroid unable to reach the high as IBM gained the status because of their
innovation in products and best solution provider in market. Due to this
dynamic capabilities IBM still stand top among the other companies.

 Dell
Core competencies of Dell: - Company achieved its success because of
employing core competencies in business. Dell applies “Customer Intimacy”
as an important competency factor while doing business because company
has a legacy in making affordable products for customers. Supply chain
efficiency and direct sell of products gave the company a competitive
advantage in market. Due to increased competition in desktop selling Dell
experienced tough competition with other companies, so it had change the
distinguish business model of direct sales and company turned to
manufacturing process of PC’s. Strategy like offering product by customer
choice called as a ‘Customization’ and sell them online through website
according to the changes or modification customer wants .Dell received good
response with new market entry in online business.

 Dynamic capabilities of Dell:

Notebook and desktop manufacturers gave tough competition to IBM to
sustain in market, IBM employed strategic change program to face the
competition in market which involved design and distribution of user friendly
products categorized in different groups among the customers kept IBM
competitive.
 Page |8

Question 2:

In the context of global corporate strategy, the meaning of the terms ‘strategic
alliances’ and ‘mergers and acquisitions’ can be evaluated as below.

2.1 Strategic alliance is a mutual agreement between the organizations to

cooperate in certain business activity to get benefits from the partner organisation
with competitive advantage defined by (Rangan and Shrinivasa, 1998). Chances of
uncertainty and complexity increases in the globalization and Industrialization,
therefore businesses need stability and risk free business environment. Strategic
alliance is a nowadays become a suitable business method to avoid the risk in
business, because when any organisation become a strategic alliance with other
business group it involve the sharing of knowledge and expertise between partners
as well as the reduction of risk and production cost, and use of partner companies
technology to improve the business opportunity.
Strategic alliance creates an environment for a company to achieve synergy and a
competitive advantage in market and get the way of international expansion or any
other favorable business issues. It become a easy process of being more
competitive in market and also it pushed the company to become competition more
effective which bring synergy into the process that would be difficult to achieve if
attempting to enter a new industry alone.
Any business organisation operates internationally get benefits of strategic alliances
like direct entry in to the market, or overseas market with use of technology,
transportation and strategic alliances. It may overcome the existing obstacles of
previous business.

2.2 Merger and Acquisition (M&A): - Today, globalization, worldwide financial

reforms and international business integration created an atmosphere of
international merger and acquisitions to significant level. This is also known as global
merger and acquisition (Coyle, Brian, 2000). M&A in business takes place at
corporate industries for the purpose to acquire strategic benefits in the industry of
host country. Multinational companies can enjoy benefits in businesses like
economies of scale and market supremacy.
 Page |9

As said above the M&A causes for companies benefits which enriched them for
future business at international level.
These activities became integral part of global business because it helps in gaining
and accessing new technologies with high technical upgrading standards. The
importance of these terms in business context is it helps in increases the profit levels
and minimizes the future risk of the business. Increase in the efficiency in operations
or in certain production because of existing business knowledge in certain field.
As a part of a discussion process of vertical integration and applying different
methods of strategic alliances, merger and acquisition became a business’s part of
corporate strategies.
So, the above examined factors which are important while considering the evaluation
of strategic alliances and M&A in the context of global corporate strategy. (Ehud,
Menipaz, 2011)

Following discussion will focus on how these strategies can help Apple to
maximize the values of shareholders:
As Apple is an organisation which competes globally in competitive markets, which
includes personal computer industry, consumer electronics market, entertainment
and in variety of products such as I pod, digital music, I phone, I tune store, etc. One
of the most significant factor that led the company to achieve this position in
technology industry due to company’s strategic alliances and the M&A activities that
Apple did with other companies. These strategies enabled company to led globally
and it helped to gain new market entry and share with big volume of customers
across the globe.

2.3 Apple and Strategic Alliances:

Apple has a history of strategic alliances. Since the invention of the company Apple
have made strategic alliances with many companies to improve the services and
quality factor. Apple’s new strategic alliances with peripheral component
manufactures and media transmission giants gave opportunity to extend new
products to existing loyal customers.
 P a g e | 10

These two alliances helped Apple in maximization of companies shareholder value

can be based on;

 To get international market:- Apple’s strategic alliances with Novell and Intel
during scullery’s period to regain the market share and keep international
growth IBM alliance with Apple to provide operating system and multimedia
applications and cost cutting purpose.
 To enter in consumer and entertainment business:- Apple developed a series
of strategic alliances in the course of its to become the centre of the digital
hub, where digital content would be created and transformed to any apple
device. Development of iPod, iTunes and iPhones has necessitated these
alliances. But Apple knew it won’t be possible to achieve market especially for
entertainment business, so Apple alliance with SONY BMG and Warner
brothers. To provide best music function in iPhone Apple alliance with Google
for developing mapping and video applications.
 To increase in distribution capabilities: - Apple has a strategy to make
international alliance with other companies to provide and Apple’s service and
products and increase market share. Apple successfully done the strategic
alliance for selling the products like iPod, iPhone etc. in international
market.(Marketing week ,2011)

Thus Apple has alliances with companies gained a huge market share and good
responses from customers, helped company to bring innovative product in market,
so the strategic alliance is a very good option in near future to build strong position in
any businesses for company to sustain market growth.
Apple employed strategic alliance and merger and acquisition strategy in company
soured profit ratio of stakeholders in the period which the M&A took place. The
annual results of Apple accomplish the increase in company’s net sales and
turnover.
 P a g e | 11

Question 3:

Steve Jobs can said to be a transformational leader, who has pioneered in the
complete makeover of the Apple Company after a long interval; Company has
undergone transformational changes under the Steve jobs leadership. After
comeback Apple was able to rebrand itself as one of the most innovative company
dealing with technology. But after long break company under jobs leadership style
come up with popular devices such as iPad, iphone and the Mac series of
computers. Mr. Steve Jobs’ management and leadership style has enabled him to
lead and take a strategic decision that has transformed the company as the leading
innovative company in recent years.

3. A) Diffusion of innovation across Apple’s Value Chain

(Rogers, 2003) defined ‘diffusion of innovation’ as it is a process by which an
innovation is communicated through certain channel over the period through
members of social networks and services in the IT and computer industry. This
diffusion process of innovation creates value chain in any organisation to bring final
product of company.
Definition of Value Chain: - Michael Porter defined value chain as “It is the
sequential set of primary and support activities that an enterprise performs to turn
inputs into value-added outputs for its external customers”.
As we know Apple is USA based multinational company gave new direction to
technology and consumer based electronic segment industry. Apple transformed its
basic business from computer industry to consumer industry by entering in to the
entertainment business, movies, and videos. Thus company established a new
business model in technological industry in which other companies could not easily
imitate the product line.
The progress and achievement of Apple is not only due to the technology and
strategy applied in business model but the Steve jobs ‘strategic leadership’ made
the company successful. If we see the success graph of Apple before and after
Steve jobs worked as a CEO, it has been proved that in the period of Steve’s the
company’s growth was consistent and profit making.
 P a g e | 12

After the returning in to the Apple Steve jobs started working like crazy from the
second half of 1997 to put company back on track. He brought his own brand of
strategic thinking in Apple.

To evaluate the performance of Apple after the return of Steve jobs we will
discuss factors of values chain with reference to the Diffusion and innovation.

Value Chain Analysis:

After the return of Steve in Apple the existing value chain took place by new policies
and modifications of business operations. Apple has developed strategic
competencies like product innovation, and differentiation with distinctive capabilities,
which helped to develop its own market dynamically. While doing business Apple
utilizes many resources to get innovativeness in product, Porter’s generic value
chain model represents a systematic framework about the idea of utilization of
resources.

1) Technology and Product Design

Upon the comeback of Steve in Apple, the decision making process get faster as
before. Steve focused on designing high quality and easy to use products to bring
the market. Company launched innovative products like advanced version of
Macintosh, Apple first official store, iPod kind of portable music player, iPhone etc.
Jobs brought product line in four design which is categorized in to Desktop and
portable on, for professional and consumer. Since the continuing the product line
Apple under Steve jobs expanded version of iTunes for Mac users and windows
users. Due to innovativeness and creativity Apple created value creation and it
helped him financially strong and also became rich in customer value.

2) Production
As Apple had stopped fledging agreements and providing license operating systems
in external market entities welcomed by the bundled package of both hardware and
software which became milestone business idea in production development.
But Apple faced failures in many stages of production, like Lisa and Newton were not
so much liked through the consumers. Then iMac’s performance of 64 bit
 P a g e | 13

architecture with styling of multicolored translucent cases counted a special place

among consumers. Component production in design process always treated as a
natural extension in production. Apple improved the production in the terms of
quality, speed, dependability, and production.

3) Sales and Marketing

Jobs personally reveals all new product introductions, reviews, marketing
campaigns, and approves guide lines for new products since his returns in
1997.Jobs’s decision of patent cross licensing and technological agreements gave
new direction to increase the sales of products. Gradually of dynamic marketing
policies Apples share in market grows and also the number of consumers increased
compare to Steve was not a part of a company. Apple evaluated strategy in such a
way that it includes expanding its distribution to effectively reach more customers
and provide them with high-quality sales and post sales support experience.

4) Customer Service: As a continuous growth of Apple also makes profit and

turnover of the company then created substantial cash converted in to making new
designed products. Eventually company established a strong relationship with the
customers by delivering a variety of products with the development in related
software and hardware development. Apple’s integrity of customer’s service is very
transparent so that customers can easily understand the start to end process work.
Steve jobs knew the technology industry is customer based and end user product
industry therefore he employs primary activities like human resources and supply
procurement to gain good customer feedback.

3. B) Breakthrough innovation in consumer electronics and entertainment

Apples core competency helped company to be a market leader in consumer
electronics market. (Apple, 2008) The breakthrough innovation can be evaluated by
the company because of innovation in technology and differentiation strategy of
company. Apple has been very selective to find alliance partner. Company has not
interested in making number of alliance but it focuses on engaging with best of the
best companies. Jobs always had a strategic vision to develop a dynamic products
relate to entertainment, because he identified the entrainment would have a great
 P a g e | 14

scope and demanding sector in future. But on the other side he knew that entry in
the entertainment industry would not have been possible without the strong alliance
in market. So according to strategy when Jobs realized the company needs to enter
in to this entertainment industry. Pixar movie company collaboration with Disney
received tremendous success of blockbuster movies. The alliance between these
companies found remarkable potential for company growth and economies scope.
Gradually Apple started doing alliances with pioneer companies in movie
entertainment to get massive share in industry.
Later on foundation of entertainment gadgets like iPod, iTunes and iPhone were the
example of breakthrough innovation which brought under the leadership of Steve
jobs after he returns. To achieve big records and responses from customers Apple
alliance with EMI, SONY BMG, Universal and Warner Brothers, and this proved the
mega popular of sales of iTunes in short period. Similarly company obtained
partnership with YouTube for the promotion of iPhone and with Google for video
applications and developing mapping.
As from the graph represented below, the Apples profit have steadily grown since
1997 to 2011due to policies, Apples strategic alliances and merger and acquisition
which made company to undergone tremendous change in market share, sale in
consumer electronics segment and entertainment business and rise in share rises
etc.

Sources: - Apple Inc.

 P a g e | 15

Apple financial situation grew in the leadership of Steve jobs proved his returned
gave high profit with high revenue and market share in consumer electronics as well
as computer markets.

(Apples financial empire, 2011)

Remarkable growth has seen during period 1997-2011 when Steve job held the CEO
position, we can say this increase in the profit, sales and market share is a part of
breakthrough innovation in Apple. Tremendous growth in terms of finance, customer
volume, expectancy level proved the Steve jobs returned in Apple brought the
company on the success path of technology industry. Thus it has seen that the
above discussed factors have crucial and important factors where the evaluation of
return of Steve in Apple performs the ‘Breakthrough innovation in consumer
electronics and entertainment ‘done significantly. This portray the leadership style of
Steve Jobs was really effective which brought changes in Apple in terms of
innovation.
 P a g e | 16

Conclusion:-
From the above case study the knowledge from global corporate strategy module
gained, it can be concluded that the Apple is an organisation who built an empire in
technology as well as entertainment and consumer electronics field with rapid
innovations in every products with customer’s satisfaction.
It can be also concluded that the growth of company is not only base of technological
innovation but also his vision and strategic leadership style under the Apple achieved
sustainable growth.

References
APPLE. 2008. Annual Business Report. USA.

COYLE, Brian. 2000. Merger and Acquisition. USA: Kogan Publisher.

DE WIT, and Meyer. 2010. Strategy Process,Content,and Context International Perspective. Thomson
Learning.

DREJER, A. 2002. Strategic management and core competencies. USA: Library of congress catloging.

EHUD, Menipaz. 2011. International Business:Theory and Practice. London: SAGE Publishers Ltd.

HOPF, welter. 2010. Rethink, Reinvent,Reposition. New York,USA: Adams Business.

J, Barney. 1991. Firms resources and sustained competitive advantage. Journal of management.
17(1), pp.99-120.

OLIVER GLASSMANN, Ellen Enkel. 2005. Towards a Theory of Open Innovation : Three Core Process
Archetypes. Institute of technology management ,University of st.Gallen., pp.11-14.

RANGAN, Michael Yashino & Shrinivasa. 1998. Strategic Alliances:An Enterprenerural Approach to
Globalization. USA: Harward Business School Press.

TEECE, Gary PISANO, Amy SHUEN, and David J. Aug 1997. Dynamic Capabilities and Strategic
Management. Strategic Management Journal. 18(7), pp.509-533.
 P a g e | 17

Web sources

http://www.innovationmain.com/Apple-eBook.html accessed on 1-12-2011

http://www.industryweek.com/articles/ibms_winning_strategy_18437.aspx accessed
on 3-12-2011

http://files.shareholder.com/downloads/AAPL/1352035942x0xS1193125-10-
238044/320193/filing.pdf accessed on 6-12-2011

http://www.allbusiness.com/company-activities-management/product-
management/12024296-1.html accessed on 7-12-2011

http://en.community.dell.com/dell-
blogs/direct2dell/b/direct2dell/archive/2011/06/13/my-take-on-dells-solutions-
strategy.aspx accessed on 9-12-2011

http://money.cnn.com/galleries/2011/technology/1109/gallery.apple_financial_empire
/index.html accessed on 10-12-2011