Incredible Growth Story

Some companies like Apple, Google, Netflix, Airbnb etc., have disrupted the market and have grown and growing year on year and in this blog exploring the strategy of one of the companies – Apple which have touched $1 trillion market capitalization, covering some of the below aspects

About Apple’s business:

• Apple has grown from less than $1 billion to $365 B in 20 years, (365 times grown by revenue) but categories of products are only 5. Apple business is classified into 5 segments – iPhone, iPad, iMac, Wearables and Accessories.
• Revenue distribution: iPhone makes about 46% of revenue and second largest revenue stream for them is from services – 21.9% and the rest are in the range of 10%. Broadly speaking 80% of revenue is from products and 21.9% from services.
• There are about 600 million subscribers! It is about 1/10^thof world population!

What are the “growth strategies in strategic management” which is driving incredible growth for Apple and companies like Apple? A closer look at the strategies of the companies throws some light on the strategy behind their success.

Strategy behind Apple’s growth:

• Most of us are aware about the product’s premium quality, marketing intelligence of Apple, Global supply chain capability, selling products at a premium price, users falling in love with the products and feel proud about having Apple product, etc., In fact about 80% of revenue comes from these products.
• The big question?What is driving Hardware sales growth or what is driving 80% of revenue? Does the product quality and marketing are the key factors of success for Apple to achieve this incredible growth and revenue?  It may seem obvious when we look at the quality of the products which is often quite spoken about.
• We have to go back in the history and understand about the break through innovation of launching iPod, when the competition was focusing on how to make better products which can hold 15 to 30 songs either in a cassette or CD etc., Apple launched a product which can hold 1000 songs in a pocket and that iPod evolved into iPhone.
• How Apple users were able to download 1000 songs into iPod? here is the strategy, Apple developed a market place (a platform called Apple music store), through this music store consumers can download their desired music, and people pay for the music and Apple takes a % and pay rest to the music companies.  The point here is the back bone of the Apple’s strategy is creating a platformand creating a subscription-based revenue stream. In the hands of consumers, Apple delivers a fantastic quality product with incredible performance, but what is powering in the back is powerful platform, which is often less spoken.
• In due course of time, Apple has expanded this platform when it launched iPhone, allowing mobile phone App developers to develop Apps for the mobile applications, which completely disrupted the entire market and there was no competition and it was a blue ocean strategy for Apple when it launched the iPhone.  Smartly it connected with the telecom operators, App developers, Content providers, accessory makers and intelligently created a subscription model behind this.  Now this has expanded to movies, News, pod casts, etc.,
• Apple design its own hardware and only the manufacturing gets outsourced globally.  Over a period, Apple has embedded AI into the products, services and create a great experience to the user.

In essence what are the “Growth strategies in Strategic management” of Apple, is the powerful underlying platform and the ecosystem it has created, which is very difficult for the competition to penetrate. The following key elements of Apples’ strategy gives us some of the insights

• Digital Platform – connecting the products, service providers, distribution channel is the heart of Apple’s strategy
• Disruption – Ability to launch products in blue ocean again and again. recently ECG can be taken using Apple’s iWatch
• Pervasive – Into home, consumer, health care, automobile
• Scaling of business – Every business being launched is at scale.

Every organization has its own unique strength, but deep diving into these aspects gives us a strategic insight and how some of the elements can be relevant which can be adopted by tailoring some of the aspects…and lastly the intent of Apple to launch & disrupt when some one cannot see the market is the unique strength they have developed and able to maintain this secret recipe over decades, and every successful organization has a strong strategy.

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