Internal Analysis of Apple inc
In the modern world, organisations must strive to gain competitive advantage over their rivals in the industry to ensure that they are profitable and productive. Most managers of organisations are often concerned with management strategies that will ensure that their organisation remains competitive in the global market. An organisation’s distinctive competencies, resources and capability are the key determinants of its competitive advantage over their business rival in the industry. Organisations should, therefore, conduct constant internal analysis of its activities and resources to ensure that they are performing according to their expectations. Some of the techniques that can be used by an organisation to conduct internal analyses of its activities include Capability Gap Analysis, Value Chain Analysis, Core Competencies Analysis, and Resource Base View analysis. This paper, therefore, explains the role that a company’s distinctive competencies, capabilities and resources play towards achieving and sustaining competitive advantage over other firms in the industry. In particular, the essay deals with how distinctive competencies, capability and resources can be used to by firms to make them competitive in the market. The analysis of a firm’s competitive advantage involves four main internal analysis approaches that include Capability Gap Analysis, Value Chain Analysis, Core Competencies Analysis, and Resource Base View analysis.
Capability Gap Analysis
Capability Gap Analysis is an internal analysis tool that is used by organisations in the determination of the gap beaten the desired and the ideal capabilities. It helps organisations in the comparison between their actual and potential performance (Ansoff & McDonnell 1990). Through capability gap analysis, companies are able to identify the gap between the actual performance and the desired performance hence determines areas that need improvement so as to perform according to its potential. In order for organisations to be able to identify the gap between their actual performance and the desired future performance, it is essential for the management to conduct capability gap analysis. The analysis considers four major areas that include human resources, business direction, business processes and information technology. The desired and ideal capabilities of an organisation can be assessed using various management models and tools, such as McKinsey 7 – s and Senege’s 5 learning disciplines. McKinsey 7 – s is a management model that is used to assess the gap that exists between the actual company’s performance and the desired ideal performance of the company (Fleisher & Bensoussan 2003). The model is based on seven elements that are considered important to the performance of the company. The main elements that are used in the assessment of companies are organisation’s structure, strategy, skills, system, style, and staff and shared values. It is, therefore, useful in determining what needs to be adjusted so as to improve the performance of the company. Organisations can determine their capabilities through the use of a capability matrix. A capability matrix shows various measurements of the organisational capacity, desired capacity and the gap between organisations and desired capacity.
Distinctive competencies of an organisation refer to the unique capability and skill of an organisation that enables it to have competitive advantage over other firms in the industry. A distinctive competence is therefore organisations competitive and valuable activity or product that performs better than those of the rival companies in the industry (Prahalad & Hamel 2006). Distinctive competence is important for organisations in that it helps organisations to have competitive advantage over other firms. It also forms a significant component of an organisation strategy and provokes a valuable competitive capability to the organisation. Various firms have different distinctive competencies that enable them to be competitive with other firms in the industry. For example, Apple Inc. has a distinct competency in the manufacturing of quality tablet computers in the world market. Hence, their distinctive competency relies on their iPad. The company, therefore, uses the iPad product to gain competitive advantage in the market and acquire a significant market share. Apple’s tablet computers are manufactured using an advanced level of technology that is difficult to copy by other firms. The operation system of the iPad is unique and contains features that support different applications.
Resource Base View
Resource base view is involved with the analysis of organisations’ strategic resources, which enable them to perform their operations and activities in a better and cheaper way than their competitors in the industry (Barney 1991). They include such resources as an organisation’s physical assets, intangible assets and capabilities. Strategic resources of organisations should have some characteristics that make them unique and valuable hence creates competitive advantage among other rival firms. There are five characteristics of an organisation’s strategic resources that include the following.
- The strategic resources are difficult to copy.
- The strategic resources have a slow depreciation rate.
- The value of the strategic resources is controlled by the company, but not the employees, customers and suppliers.
- It is very difficult to substitute strategic resources.
- The strategic resources of an organisation are superior to the similar resources that other organisations own.
The resources that are difficult to copy by rival firms will make it impossible for rival companies to acquire the resources used by the company. This will make it impossible for rival firms to come up with resources that are similar to the organisation strategic resources hence make the organisation have competitive advantage over other rival firms in terms of resources. The strategic resources also have a low depreciation rate. The low depreciation rate of the strategic resources makes them be used for a long period of time. This helps to improve the productivity of a company hence makes it competitive in the market in terms of productivity. The value of the strategic resources is controlled by organisations as opposed to the employees, customers or suppliers. This characteristic is important since it ensures that no employee, supplier or customer can change or interfere with the company’s resources. This makes the strategic resources secure from manipulation by individuals who might be acting in response to competitors’ request. This protects the company’s resources from being exposed to rival firms who might collude with customers, suppliers or employees. The strategic resources also have the ability that makes them easily substituted. They are also superior to the similar resources that organisations competitors possess. This strategic characteristic of resources allows them to have a competitive advantage over the resources of the rival companies in the market.
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Having distinctive strategic resources will make it impossible for rival companies to obtain or copy organisations’ resources so as to produce similar products. The characteristic of the strategic resources also makes it impossible for rival firms to obtain similar resources that are superior or of the same quality as organisations’ strategic resources. This makes them unable to offer products that are competitive to the company products. The strategic resources will also offer barrier of entry to rival firm’s main activity in an industry. Many firms will find it difficult to acquire appropriate resources that match an organisation’s resources hence will be less competitive to the organisation.
Apple Inc. has had strategic resources that are difficult to copy by other rival firms. The company strategic resources have enabled it to be appealing to the luxury market due to its high quality, stylish products and an appropriate strategic pricing policy. The company has seen growth in the business and market development. The human resources of the company have strategic technological skills that enable them to be more efficient than rival firms. It produces the iPad, iPod, iTunes and iPhone that can download and upload songs on the Internet. It is difficult for other rival firms to copy the company’s products hence making it have competitive advantage over other firms in the market.
Value chain can be defined as a chain of an organisation’s activities that it performs in its production process. It is involved with the process of an organisation that enables it to deliver various products to customers (Porter 2008). Value chain can be grouped into two main activities of an organisation, which include primary activities and support activities. Both of the primary and support activities of a firm are associated with costs. The primary activities and cost of value chains includes supply chain management, operations, distribution, sales and marketing, service and profit margin. The support activities and cost of organizations include product research and development, technology, system development, human resource managements and general administration.
The aim of organisations is to ensure that all the activities within its value chain are efficient and cost-effective. This ensures that an organization’s processes are productive and profitable. Three main value chain representatives of companies include supplier related value chain, an organisations own value chain and forward channel value chain. Supplier related value costs are concerned with activities, margins and costs that are attributed to suppliers of organisations; organisational own value chain can be defined as the internal activities, cost and margins of the organizations; and finally, the forward value chain consists of activities, margins and costs that are associated with forward channels and strategic stakeholders (Hausman et al. 1994). Companies can be able to realise high profits and reduced cost if they efficiently and effectively manage their supply chain. The main factors that are vital in the determination of the cost in the value chain activities include the following:
- the materials purchased by organisations
- the payment of suppliers by an organisation
- inventory management in an organisation
- introduction of new products into the market
- the quality control performance
- transportation of customers’ orders
- recruitment and training of employees
- processing of an organisation’s payrolls
Any organisation can be able to translate its performance of the value chain activities to become its key competitive advantage over the rival firms. This can be made possible by the use of two main options that include ensuring that rival companies’ performance of value chain activities are inferior to an organisation’s performance of value chain activities and also by beating rival companies’ performance of value chain activities in more cost-effective manner.
Capability Gap Analysis, Value Chain Analysis, Core Competencies Analysis, and Resource Base View analysis are important assessment tools that are used by the majority of organisations to ensure that they remain competitive in the global market. Each of the analyses contributes to a given competitive advantage. An organisation should be able to use the combination of the tools to ensure that it is able to have a sustainable competitive advantage and become productive and profitable in the market. Capability Gap Analysis is important in ensuring that a company identifies the gap that exists between the actual performance and the desired performance. The identification of the gap between the desired and actual performance of the company helps the company to develop appropriate strategies that can help it to meet its objectives. Value Chain Analysis is concerned with a chain of an organisation’s activities that it performs in its production process. The identification of the important activities that are involved in the production of an organisation’s products is useful in designing efficient and cost-effective production activities (Dekker 2003). This will help the organisation to reduce its production cost and increase its profitability. Another important tool is core competencies, which refer to a unique capability and skill of an organisation that enables it to have a competitive advantage over other firms in the industry. It is a characteristic that makes an organisation stand out above other organisations hence become competitive in the market. The unique characteristic of an organisation can be in the form of a product, its production processes, its activities, skills, technology or human resources. The last factor that is considered by a firm in an effort to gain competitive advantage is the resource base view analysis which is involved with the analysis of an organisation’s strategic resources, which enables them to perform their operations and activities in a better and cheaper way than its competitors in the industry. This makes it difficult for other rival firms to cope up with its production capability hence making the company to thrive in the market.
For a firm to remain profitable and productive in the market, it is necessary that it adopts strategies that will ensure that it has a competitive advantage over other rival firms. The ability of an organisation to gain a competitive advantage over rival firms depends on a number of factors, which include its ability to produce good quality and unique products. This will enable a company’s products to be superior to the products of other rival firms. Firms should also ensure that they are competitive in the market through offering their products at prices that are affordable to consumers. This can be achieved if a firm uses a production technique that is cost-effective hence ensure its profitability is increased. In conclusion, becoming competitive in the market enables organisations to increase their productivity, reduce their cost and increase their profitability.