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Apple's Sustainable_competitive_advantage


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The focus of this project was to capture success of one of the most worldwide know company - Apple and track down its way to overcome its competitors. With the use of RBV Theory, Dynamic Capabilities Framework and Business Model Canvas.

Published in: Business
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Apple's Sustainable_competitive_advantage

  1. 1. What is Apple´s sustainable competitive advantage? Kristine Bezbaile, Korinna Ringendahl, Mara Munk Jensen, Magdalena Zając
  2. 2. Overview • Business Model Canvas Analysis for Apple • Resource Based View Analysis for Apple • Resource Based View and Business Model Canvas => Sustainable Competitive Advantage 2
  3. 3. Source: Business Model Canvas 1 3
  4. 4. Value Proposition “Steve Jobs famously said that market research is useless because customers did not know what they wanted until he showed it to them. “ (Hixon, 2012)1 • How to satisfy customer needs? • What bundles of products and services does Apple offer to its customers? Source: 1Hixon,(2012) 4
  5. 5. Value Proposition Unique User Experience2 Minimalist Design1 Value Proposition Service at Apple Stores4 Product Performance3 Sources: 1Burrows & Satariano , (2012); 2Osterwalder & Pigneuer (2009); 3Apple Inc, (2014); 4Apple Inc, (2014); 5
  6. 6. Key Resources Definition 1 Resources are all assets (tangible and intangible), firm attributes (reputation and innovation), information, know-how controlled by a firm that enables to implement strategies that improve its effectiveness and efficiency. • Which Assets does Apple require to create Value Proposition for its customers? Source: 1Barney, (1991) 6
  7. 7. Key Resources Tangible Physical Resources:  Foxconn manufacturing plant in Huaian, China (employees 35800)1 Apple Stores: - sales locations - advertisement strategy => 2013: Worldwide Sales approx. 171$ mil.2  Intangible Human Resources: • Software development teams:3 - Highly skilled workers with experience, knowledge and creative problem solution skills - Including creativity capability to develop easy use products with great design of software Intellectual Resources:    Brand (Product quality) Value 98.3 $ billion4 Patents (touch sensing architecture)5 Partnerships (strategic partnership with the Microsoft) => It produces Microsoft Office for the Macintosh)6 Sources: 1Cheng, (2012); 2Annual Report, (2013); 3Denning, (2012); 4Mourdoukoutas, (2013); 5Purcher, (2014); 6Businessinsider Inc, 2013 7
  8. 8. Key Activities Definition1 • Most important actions a company must take to operate successfully • To create and offer a Value Proposition, reach markets, maintain Customer Relationships and earn revenues • What Key Activities does Apple require to create Value Proposition for its customers? Source: 1Osterwalder & Pigneuer, (2009) 8
  9. 9. Key Activities • Apple store (Tim Cook: “They are the face of Apple…”)1 • Retail sales concept, characterized by exclusive design • Enabling customers the interaction/ testing of products2 • ca. 395 million visitors in 2012 Graph 4: The iPhone Stores – Asymco, (2013) Source: 1 Elmer-DeWitt, (2013); 2 Moritz, (2011) => Creation of unique user experience => Key components of Apples marketing strategy 9
  10. 10. Key Partners Definition1 • Describing the network of suppliers and partners that make the business model work • Companies create alliances to optimize their business models, reduce risk or acquire resources • Which Key resources does Apple acquire from partners? • Which Key Activities do partners perform? Source: 1Osterwalder & Pigneuer, (2009) 10
  11. 11. Key Partners • Strategic alliance: • Enabling extension of own capabilities • Obtaining knowledge or even access to customers1 • AT&T - wireless provider: • Carrier of the iPhone in the USA • Q´4 - 2011 => over 7.6 million activations => AT&T´s performed Key Activity: Distribution of the iPhone´s Graph 5: Souppouris, (2013) => Apple´s acquired Key resource: Voice and data network access2 Source: 1Osterwalder & Pigneuer, (2009); 2Cohan, (2013) 11
  12. 12. Resource Based View Definition1 • The resource based view is a relevant model in analysing the sources of a company’s competitive advantage. If the firm can exploit opportunities or neutralize threats through the resources If the resources are costly to copy Competitive advantage2 Figure 6: Resource Based View. (Own development, 2014) Source: 1Beard & Sumner (2004); 2Barney, (1991) 12
  13. 13. VRIO Framework • Is it rare? • Is it valuable? • Is it imitable? • Is it exploited in the organisation? 13
  14. 14. Is it imitable? • Causal Ambiguity • Path dependency • Social Complexity 14
  15. 15. Causal Ambiguity Resources Performance Management Sustainable Competitive Advantage1 Figure 7: Sustainable Competitive Adv. (Own development, 2014) Source: 1 Enders, (2004); Barney, (1991); King & Zeithami, (2001); Reed & Defillipini, (1990) 15
  16. 16. Path Dependency Competitive advantage – historical path2 Developing resources – historical path1 Patenting the iPhone in 20073 Apple 1st mover advantage -> BLUE OCEAN Figure 8: Path Dependency. (Own development, 2014) Sources: 1Pot, (2000) 2Hamalainen, (2003) 3Iyiola, (2013)
  17. 17. Figure 9: CNN Money (2011) 17
  18. 18. Exploited by the organization Competitive Implications Economic Performance Resource Valuable Rare Costly to Imitate Innovation Yes Yes No - Temporary competitive advantage Above normal First mover advantage Yes Yes Yes Yes Sustained competitive advantage Above normal iTunes Yes Yes No - Temporary competitive advantage Above normal Brand reputation Yes Yes Yes Yes Sustained competitive advantage Above normal User-friendly design Yes Yes No Temporary competitive advantage Above normal Top executives Yes Yes No - Temporary competitive advantage Above normal International product distribution Yes No - - Competitive parity Normal Simplicity Yes No - - Hardware Yes No - - Software Yes No - - Customer loyalty Yes Yes Yes Yes Location Yes No - - Competitive parity Normal Competitive parity Normal Competitive parity Normal Sustained competitive advantage Competitive parity Above normal (Decker, 2013) Normal Table 10: Decker, (2013) 18
  19. 19. Resource Based View & Business Model Canvas Sustainable Competitive Advantage Resource Based View • First mover advantage • Brand reputation • Customer Loyalty Business Model Canvas • Combining software and hardware design into one device • Mixture of intellectual resources in a socially complex way • But still simple to use • Unique user experience • Specific resources/activities trough partnerships if necessary 19
  20. 20. References • • • • • • • • • • • • • • APPLE INC. (2013) FORM 10-K Annual Report [Online] Available from[Accessed: 15th December 2014] ASYMCO. (2013) The iPhone Stores. [Online] Available from: [Accessed: 23rd of January 2014] BARNEY, J. (1991) Competitive advantage, Resource Based Theory of a Firm. [Online]. p.170-173 Moodle. Economics and the organization of economic activity. Session 5: Resource Based Theory of the Firm. BARNEY, J.B. (1991) Firm resources and sustained competitive advantage. Journal of Management. Vol.17. BEARD, W. J. & SUMNER, M. (2004) Seeking strategic advantage in the post-net era: viewing ERP systems from the resource-based perspective. Journal of strategic information system. [Online]. (April). p. 130-132. Available from: [Accessed: 8.12.2013]. BURROWS,P & SATARIANO,A. (2012). Apple's minimalist Ive assumes Jobs's role for design.[Online]. Available from: [Accessed: 10 of January, 2014]. Businessinsider Inc, (2013) Microsoft And Apple Actually Don't Loathe Each Other, And Here Are Examples Of Them Working Together [Online]. Available from: [Accessed: 20 January 2014] Cheng, R. (2012) Foxconn Spending $210M on New Apple Production Line. [Online] 21st of May 2012. Available from:$210m-in-new-plant/. COHAN, P. (2013) Project Vogue: Inside Apple´s iPhone Deal with ATT. [Online] Available from: [Accessed: 22nd of January 2014] DAFT, R. (1983). Organization theory and design. New York: West. DECKER, A. (2013) Resource Based View, [Lecture Notes] Lecture Notes on Resource Based View. Economics and the Organization of Economic Activity. Aalborg University, International Business Centre, Fibigerstraede 2, room 21, September 2013. DENNING, S. (2012). Is Apple truly Agile? [Online]. Available from: [Accessed:10 January 2014] ELMER-DeWitt, P. (2013) Tim Cook´s Prozac: The Apple Store in three charts. [Online] Available from: [Accessed: 22nd of January 2014] ENDERS, A. (2004) Management Competence: Resource-Based Management and Plant Performance (Contributions to Management Science). Germany: Physica-Verlag Heidelberg. 20
  21. 21. References • • • • • • • • • • • • HAMALAINEN, T. (2003) National competitiveness and economic growth. [Online] Massachusetts: Edward Elgar Publishing, Inc. Available from: JATXlFQ&hl=en&sa=X&ei=9DjhUvWDJ6Px4QSUvYGABQ&ved=0CEQQ6AEwBA#v=onepage&q=imperfect%20imitability%20path%20dependence&f=false. [Accessed: 21 January 2014] HIXON, T. (2012). The all important value prop.[Online]Available from [Accessed:22nd January 2014]. IYIOLA, O (2013) Sustainability of competitive advantage: a must for every firm. College of Business and Social Studies (Marketing). [Online]. p. 1-6. Available from: [Accessed:20 January 2014] KING, A.W. and ZEITHAMl, C.P. (2001) Competencies and firm performance: examining the causal ambiguity paradox. Strategic Management Journal. MORITZ, M. (2011) Apple – Die Geburt eines Kults. Kulmbach: Börsenmedien AG MOURDOUKOUTAS,P. (2013).Apple's most important branding lessons for marketers.[Online]Available from: [Accessed:17 of January, 2014]. NAIDU-GHELANI, R. & BAGCHEE, D. (2011) 10 Significant Apple Business Partners. CNBC [Online]. Available from: [Accessed: 17th December 2014] OSTERWALDER, A. & PIGNEUR, Y. (2009) Business Model Generation. [Online] John Wiley and Sons Inc. 1st edition. Available from: [Accessed: 3rd of January 2014] POT, F. (2000) Employment relations and national culture.[Online] Massachusetts: Edward Elgar Publishing, Inc. Available from:,+F.+(2000)+Employment+relations+and+national+culture.+Massachusetts:+Edward+Elgar+Publishing,+Inc.&ots=VF9cMtv1nU&sig=ERGi4 UZLJOjeGS_bo6QCFKWAzuc&redir_esc=y#v=onepage&q&f=false. [Accessed: 20 January 2014] PURCHER, J. (2014). Apple Granted 36 Patents Today Covering a Touch Sensing Architecture, Multitouch Magic Mouse, Intelligent Pairing & More. [Online]. Available from: covering-a-touch-sensing-architecture-multitouch-magic-mouse-intelligent-pairingmore.html. [Accessed: 14th January 2014] REED, R. & DEFILLIPINI, R.J. (1990) Causal Ambiguity, barieers to imitation, and sustainable competitive advantage. Academy of Management Review. SOUPPOURIS, A. (2013) Verizon posts $4.23 billion Q4 loss despite record subscriber growth and smpartphone penetration. [Online] Available from: [Accessed: 23rd of January 2014] 21
  22. 22. Thank you for your attention! 22