Part 1: Analogical Measurements
Question: Do you agree with the following statements?
- A strategic capability to become a competitive advantage, it has to be Unique.
I agree with that statement. Normally, gaining competitive advantage relates to offering something that competitors lack. This uniqueness establishes a strategic competitive advantage.
- The threat of new entrants is high when product differentiation is low.
I agree with this statement because when products cannot be differentiated within the market many companies can simply emulate what other companies are offering. This opens up doors for more entry into the market.
- Is it important to differentiate between objectives and strategy?
Organizations should strive to differentiate between objectives and strategy because they are different yet interdependent aspects of the business. Objectives refer to the things that the business intends to achieve while strategies refer to the means of achieving the objectives (Giachetti, 2013).
- The most important corporative objective is to maximize profit.
I do not agree with this statement. While businesses exist to make a profit, maximizing profit should not be the main objective. Strategies that sustain the business over a long period of time often require a business to compromise their profit margin to some extent to remain comparative. On the contrary, remaining profitable should be the ultimate corporative objectives (Hill, Jones, and Schilling, 2014).
- “Positioning” is how a firm fights competition.
I agree with this statement. Positioning refers to strategies that a firm adopts as a way of maintaining its locus in serving the customers. Therefore, positioning can be considered as a way of fighting competition.
- A five-star hotel
We offer a home away from home.
- A travel agent
We take your travel burden and make you travel with ease.
- A restaurant
We don’t offer food, we offer health
- A hypermarket
We create comfort and convenience in your shopping experience
- A house builder
We house your next generation
- Competitive Analysis of Nokia and Apple
Both Apple and Nokia have been players in the competitive mobile industry. Whereas Nokia has mainly focused on the mobile industry, Apple has largely diversified its products base to cover other electronic products. However, the two companies have had strong competition against each other in the mobile phone industry. Each of the companies has employed a different and unique strategy to outdo the other company and hence establish itself as the market leader (Cecerea, Corrocher, & Battaglia, 2015). This analysis compares the strategy employed by the two companies and seeks to determine which of the two companies has a stronger strategy and hence more competitive than the other company.
Value added refers to the concept of enhancing a product’s value and usefulness. A manufacturer may add a specific feature to its product to increase the usefulness of a product. Most manufacturers that produce homogenous products endeavor to differentiate their products from of their competitors through adding features that enhance the usefulness of such products. Such value-added not only enhances the usefulness of the product to the consumer but also differentiates the manufacture’s products from the products offered by competitors. Both Nokia, as well as Apple, have endeavored to add values in their different and unique ways to their respective products. The value-added gives the products a competitive edge of varying degrees (McCray, Gonzalez, and Darling, 2011).
Apple has endeavored to add value to its products in different ways. First, it was the first to introduce the technology of touchscreen on its iPhone products. This was a major breakthrough not only in differentiating its products but also in adding value for consumers in the mobile phone industry. These screens created convenience for the users and consequently added value to the product. The iTunes was another feature that the company added to its iPhone and iPod products. This feature enabled iPhone users to download music from websites and music produces that Apple had collaborated with (Heracleous, 2013). Notably, while other mobile phone companies latter adopted this new feature into their products, Apple was the initial innovator of this value added. These strategic value added to the iPhone was a significant strategy for marketing the iPhones. Moreover, the timely introduction of such innovative value added to its iPhone products was equally important in enhancing the product leadership of this product (West and Mace, 2010).
In contrast, Nokia equally made frantic efforts to add value to its mobile phone products in the wake of increasing competition from Apple as well as other players in the global mobile phone industry. Like Apple, Nokia equally made agreements with other music recording companies to add the aspects of music downloads within its mobile products. Nokia also incorporated the touchscreen technology in response to a similar technology adopted at Apple. Nokia further sought to incorporate internet in its mobile phone products.
Comparing the value-added strategy in both Nokia and Apple products, both companies adopted almost similar value-added features in their products. However, the latter was more proactive in innovation and coming up with more suitable added features in their mobile phone products (Arruda-Filho and Lennon, 2011). On the contrary, Nokia was very reactive in its approach to adopting value-added features in its mobile phone products. The value-added approach was largely driven competition and observation from competitors. As such, the company adopted most of its value addition in response to what Apple did. In such a case, Apple had a stronger and upper hand with respect to adding value to its products (Pontiskoski and Asakawa, 2009).
Sustainability is a measure of how the strategies employed by a company can be sustained over a long period of time. In normal business circumstances, the dynamic of the market changes due to changing customer needs. Moreover, the coming in of other players in an industry leads to the change in the competitive environment of the industry in question. The advancement in technology is equally a significant factor in introducing change in a given industry or market. Therefore, sustainable business strategies are those strategies that can survive diverse and changing market condition and still remain relevant and useful to the business over a long period of time. The sustainability of the strategies employed by both Nokia and Apple companies were largely different McCray, Gonzalez, and Darling, 2011).
Apple largely relied on research and Innovation. The major strategy employed by this company was the creation of high end and high-quality products with the view of equally pricing them highly. The research and innovation at the company led to the creation of many value-added features. The concept is a sustainable strategy on its own (Jenster, & Søilen, 2009). Given the dynamic nature of the mobile industry, a player should invest in research as a way of outdoing the competitors. Apple managed to leverage on this advantage of research and remained ahead of competitors like Nokia in the creation of the more value-added application. However, the creation of new technology in itself as employed by Apple was a less sustainable strategy. In essence, other competing companies such as Nokia managed to catch up with such technology and incorporate it into their own products (Hill, Jones, and Schilling, 2014). Therefore, this eliminated the competitive advantage that its products enjoyed due to receptive technologies.
However, Nokia used strategies that were largely similar to Apple strategies. First, they used music downloads as well as the development of touch screen technology to woe customers. This strategy was similarly not sustainable over time as many other companies such as Motorola and Samsung added such features to their products. Secondly, it used the pricing strategy. The company managed to offer similar features as iPhones on its mobile phone products but at a much-reduced price. However, this strategy cannot be sustainable in the wake of the increased cost of production coupled with the need to remain profitable (Giachetti, 2013). Therefore, Nokia’s strategy was not sustainable to a great extent.
Processes to Deliver Strategy
The strength and effectiveness of any strategy largely depend on the processes that led to the development of such strategies. For instance, a well-informed process of delivering a strategy that is factual will be more effective in developing appropriate and effective strategies compared to a process that is missing informed. The process of creating a strategy in both Nokia and Apple are largely different and hence yield different results for the company (Hill, Jones, and Schilling, 2014).
The process of delivering strategy in Apple business is largely research-based. The company invested heavily in market research as well as technological research. As such, the company has developed strategies that are not only considered risky but also whose effect in the mobile phone is unpredictable. Given the processes through which such strategies were developed, they proved to be effective regardless of the uncertainty surrounding them (Giachetti, 2013). Therefore, the process of delivering a strategy for Apple is effective and strong. On the contrary, the process of delivering strategy in Nokia was largely informed by the direction taken by competing companies. For instance, when Apple introduced music downloads and touch screen technology, Nokia emulated this strategy. This reactive approach in the process of delivering a strategy for Nokia will likely lead it to lag behind other players in the mobile phone industry.
Different companies take different approached in creating a competitive advantage for their products in the market. Such aspects of competitive advantage may range from the pricing of the products to the actual quality and added value of the product. Whichever approach a company takes to gain a competitive advantage over competitors the company must ensure that their approach to creating competitive advantage is unique to them. Both companies took different approaches to creating a competitive advantage for their products.
Nokia largely relied on pricing to obtain a competitive advantage over competitors. The company offered mobile phone products that had similar features as those of the iPhone but at a cheaper price. As such, it maintains control over a significant section of the market (Johnson, Scholes, & Whittington, 2009). Conversely, Apple largely relied on the quality and unique value-added features in gaining a competitive advantage over competitors. While Apple products were highly priced, they were favored by the high-end segment of the market due to their enhanced features and quality. Therefore, research and innovation were at the center of creating a competitive advantage for Nokia over its competitors.
- Challenges of Predicting Market Changes and Trends in Competition in Future
The mobile phone industry and particularly the market for this industry are highly dynamic. Customer’ needs are always dynamic. Moreover, the competition within this industry equally keeps changing both in intensity and complexity. To survive in such a dynamic industry, firms are required to closely monitor the trends in the markets and the competition to lay strategy that will be sustainable over a long period of time (Johnson, Scholes, & Whittington, 2009). However, predicting the changes in competition as well as the dynamics of the industry over the next few years has proven to be a challenge for most players in the mobile phone industry. The case study of Apple and Nokia demonstrate this difficulty in predicting the future of the market and the trends in competition.
Several factors make such aspects of market and competition unpredictable over the next few years. First, the mobile phone technology, as well as the overall technological environment, is greatly evolving. As such, it is hard to predict the trends in technology that will happen in the next few years and consequently affect the mobile phone market. Before Apple ventured into the industry, Nokia was the undisputed giant. However, the company could not predict the possible changes in technology over the subsequent few years that would greatly change the industry and consequently reduce their market share. For instance, they did not foresee the introduction of the music download platforms in the mobile phones as well as the touchscreen technology. The adoption of such technology by the competitor company Apple came as a great surprise to Nokia and equally had a negative impact on their market share. This demonstrates how technology in the mobile phone industry quickly changes over a short and cannot be predicted over the next few years. Such changes in technology come with changes in customer requirements and consequently the market structure and the ability of a firm to meet the needs of the consumers.
Secondly, the trends in competition in the mobile phone industry cannot be predicted due to the unpredictability of new entrances into this market. Given the expanding mobile phone market, many electronic companies are increasingly getting interested in this potentially lucrative market. As such, it is impossible to predict the companies that will enter this market in the near future (Hill, Jones, and Schilling, 2014). For instance, Apple had mainly dwelled in the computer industry without showing interest in the mobile phone industry. While the company had made great progress in the computer industry and obtained great success within this industry, it plunged into the mobile phone industry in 2007 through its introduction of the iPhone product. Companies such as Samsung that had majored in home electronics equally plunged into the mobile phone market. This entry into the mobile phone market over a very short period of time was a surprise to Nokia that was initially the giant and leading company in the mobile phone industry (Johnson, Scholes, & Whittington, 2009).. Such events in the past show how it is difficult to predict the possible new entrances into the mobile phone market and consequently the trends in competition.
Changing consumer needs is another factor that makes it impossible to predict market changes as well as competition within the mobile phone industry. The needs of the consumers have been greatly dynamic. In the advent of globalization, interaction is increasingly becoming important to the mobile phone users. More than just phone calls mobile phone users are constantly seeking ways of interaction over long distances that are convenient and secure. This has led to the development of many social media platforms over which people can interact regardless of their locations. This need to use social media over mobile phone platforms has led to the collaboration between mobile phone manufacturers and social media companies. Moreover, the increasing need for internet among consumers has led to the development of mobile phones that can support internet (Cecerea, Corrocher, & Battaglia, 2015). This could explain why Nokia endeavored to equally become and be identified as the internet companies. These examples demonstrate that the needs of consumers are greatly evolving and companies that can anticipate such changes and keep up with them are the ones that can ultimately survive the competitive environment of the mobile phone industry. Therefore, the changing customer requirements make it difficult to predict market changes as well as the trends in competition.
Lastly, the unpredictability of collaborations within the mobile phone industry and between companies in this industry with other technological companies equality contribute to the unpredictability of market changes as well as the trends in competition (Johnson, Scholes, & Whittington, 2009). Over the past years, the industry has witnessed unprecedented collaborations between mobile phone manufacturers and other technology companies. Many of these collaborations had not been anticipated in the recent past. Both Nokia and Apple have collaborated with music producing companies to add iTunes and music downloads to their respective products. Given the evolving needs of mobile phone consumers and the need to add more value to mobile phones, more companies will likely collaborate with other technology company with the view of borrowing features that can be incorporated into the mobile phones (Hill, Jones, and Schilling, 2014). However, it is unpredictable to determine the direction that this collaboration will take in the next few years. Since such collaborations are largely driven by customer needs, they are as unpredictable as the needs of the customers. Therefore, this unpredictability on potential collaborations within the mobile phone industry makes it hard for companies to set long-term goals and strategies.
3. Lessons that Other Companies can learn from Apple Strategies
Apple strategies outlined in the case study provided significant lessons that other companies can lean both within as well as outside the mobile phone industry. To begin with, other companies can learn the effectiveness of collaboration in business as a strategy of overcoming competition. During the initial years, Apple lost its competitiveness to Microsoft due to its unwillingness to collaborate with other computer manufacturing companies. While Microsoft largely collaborated with other computer manufacturing companies by allowing them to use the Microsoft software in their computers after paying a license fee, Apple largely restricted its software from use by other computer manufacturing company. As a result, Microsoft could sell more of its software through other companies compared to what Apple managed to sell. This shows the importance of collaboration in business. From this strategic failure, other companies can learn to develop strategies that are collaborative in nature (Johnson, Scholes, & Whittington, 2009).
Apple later learned from these initial mistakes in the subsequent years. In the years that followed. In the years that followed, the company could build more collaborative strategies. For instance, the development of iTunes was based on the collaboration between Apple and music producing companies to enable iPhone users to download music from their iPhones. The strategy proved to be a great success for the iPhone product and Apple. Other companies can equally learn from this collaborative strategy. In developing their own organizational strategies businesses should endeavor to incorporate aspects of collaboration among players in the same industry and other players who could potentially help in the realization of the business objectives (Hill, Jones, and Schilling, 2014).
Lastly, businesses should learn that continuous research, innovation, and product improvement are inevitable if they have to remain competitive. Apple’s success relied largely on its ability to continuously reinvent its products and develop more advanced technologies. The company realized that stopping continuous inventions would lead other competing companies to catch up with regarding technology over the years. Therefore, continuous research h and innovation was at the core of Apple’s strategy (Mudambi, 2008). Similarly, businesses should learn to continuously research and reinvent their products if they are to remain competitive in their respective markets.
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