Product differentiation helps in coming up with differentiated goods and services that meet the demand and needs of different people in a region. The strategy of product differentiation improves the survivability of an organization in the industry and competition by having in place a broad range of goods. Product differentiation attracts large niche in the market. According to Barney and Hesterly (2005), most companies utilize differentiation and alliance strategies to create a unique image in comparison to other players in the industry by coming up with a different range of products.
How Apple has Positioned Itself
Apple Company has been successful in the telecommunication and electronic industry in all the regions that it has been operating. In China and United States, Apple Company has been among the top players in the industry, therefore, has a significant market share in the industry. Apple has been taking various steps in the introduction of different differentiated products that has enabled it to become among the top companies in the industry that are competitive. In 1999, the Apple released an operating system that was stable in comparison to other players in the industry.
According to Black (2012), other companies have been trying to imitate the differentiation strategy of Apple Company because of the success that it has shown in the market place. The company has been conducting differentiation frequently, therefore, able to meet the demands and needs of the customers. The company was the first one to come up with the idea of iTunes that gave the firm an opportunity of Mac that helped in moving to the digital style of operation. The digital lifestyle introduced by the company improved its market share in both China and United States by making the firm more competitive compared to other enterprises in the same industry.
Carpenter and Sanders (2006) claim that an organization must come up with new products based on the generation to develop new products and come up with additional services. The company has been showing progress in the development of new technologies that other companies have been trying to imitate to impress the customers. Apple Company was the first to come up with LCDs for desktops in both countries. The introduction of iTunes stores in 2003 improved the competitiveness of the company in the two nations. The company was the pioneer of the iTunes stores that made the organization has the largest niche in the market in both countries.
Research by Black (2012) shows the viability of product differentiation particularly if the firm takes into consideration the distinction for differentiating its products. Apple Company has conceptual distinctions for its products that have made it successful in most of the areas that it operates including China and United States. The conceptual differences that have enabled Apple Company to be successful in the market by having a large market niche include product mix, link with other organizations, product features, and reputation of the company and its products. According to Aaker (2001), the company has high reputation that has enabled it to be competitive in the industry based on the quality of the products that it offers to its customers. The company has been producing technologies or products that are easy to use therefore making more people attracted to the products that the firm sells and as a result improving the market share and significant market niche.
The differentiated products of the company appear attractive as compared to the substitutes. Apple Company has been highly competitive in China and United States as well as in other operating areas. In product differentiation, there are various dilemmas that firms find themselves in and they pose a threat to their operations. Coming up with appropriate techniques helps to bypass the challenges turning them into opportunities in the market or the industry. Apple Company has been utilizing high-qualified management team in resolving the problems. Coming up with the best differentiation strategy or way of solving problems has been the key to success of the company (Barney & Hesterly, 2005). The high cost involved in differentiating the products has been encouraging the company to succeed in its operation by having a firm position in the differentiation of its products. The high cost has been putting other companies from differentiating its products.
Risk Associated with Strategic Alliance
Strategic alliance helps in achieving the objectives and goals of the company by bringing together resources and expertise. Failure to enter into an agreement can have shortcoming effects or challenges including the inability to meet the set goals of the company effectively. Joining an alliance, however, can turn out to be risky to a firm. Entering an agreement can lead to overtaking of the less powerful company by the one that is powerful either regarding resources or expertise of the enterprise (Barney & Hesterly, 2005). The Alliance can encourage rivalry between the companies. For example, from the article, Sculley refused to sign a contract of entering into an agreement with Apollo Company because of the feeling that the firm would overtake Apollo Computer Company of which it happened.
A strategic alliance can lead to diverse views or disagreements between the merging companies, therefore, deviating from their intended goal of the operation. Michael Spindler and Sculler collaborated with Apple Company with a hope that IBM Company would buy or acquire Apple Company that never came to being making it difficult for them to undertake the intended business effectively. A strategic alliance can lead to loss of positions of individuals or employees of the companies. Coming together of the groups may result in stepping down of the management team of either one company or a mix of the companies to facilitate smooth operation. The businesses that license the firms coming into a partnership can lose because of the strategic alliance. Failure to enter into an alliance can lead to high operating cost that could have been shared if the company had entered into a partnership with other firms in the same industry.
Strategic alliance helps in the calculating price of business. Failure of Apple Company to form an alliance with other groups led to high prices involved in calculating the cost of its operating system. Inability to enter into an agreement would also result in utilization of less efficient technologies as compared to the time when an alliance is involved. Entering into an agreement would help in making sense or evaluating how to conduct a business (Aaker, 2001). Not entering has a risk of not seeing the effectiveness in leading companies. Failure to be in a strategic alliance ruins the ambition of an organization to be competitive in the industry and difficult to imitate. However, the strategic alliance can increase the risk of competition among companies entering into a partnership.
Aaker, D. A. (2001). Developing business strategies. New York, NY [u.a.: Wiley.
Barney, J. B., & Hesterly, W. S. (2005). Strategic management and competitive advantage: Concepts. Englewood Cliffs, NJ: Pearson.
Black, E. (2012). IBM and the holocaust: The strategic alliance between Nazi Germany and America’s most powerful corporation. Washington, DC: Dialog Press.
Carpenter, M. A., & Sanders, W. G. (2006). Strategic management: a dynamic perspective, concepts and cases