Demand and Competition in the Smartphone Market
While worldwide shipments of mobile phones declined from 1.19 billion in 2008 to 1.27 billion in 2009 because of poor economic conditions in the United States and many other 25 major country markets, worldwide sales of mobile phones rebounded to 1.36 billion units in 2010. The growth in shipments of smartphones outpaced the growth in basic-feature phone shipments by a considerable margin. The shipments of smartphones increased by 74 percent between the second quarter of 2010 to the second quarter of 2011, while shipments of all mobile phones increased by 16.5 percent between the second quarter of 2010 and the second quarter of 2011. Smartphones accounted for 25 percent of all mobile phone shipments in August 2011.
Developing countries such as China offered the greatest growth opportunities but also presented challenges to smartphone producers. For example, there were 700 million mobile phone users in China, but popular-selling models were quickly counterfeited, it was difficult to develop keyboards that included the thousands of commonly used characters in the Chinese language, and most consumers preferred inexpensive feature phones over smartphones. Nevertheless, many analysts expected China to account for 10 percent of worldwide smartphone shipments within the near term. Apple began selling the iPhone 4 in China in 2010 through its partnership with China Telecom, the country’s second largest wireless provider and its network of 25 flagship stores located in the country’s largest cities. The iPhone was available in 100 countries in 2011.
With the market for smartphones growing rapidly and supporting high average selling prices, competition was becoming more heated. Google’s entry into the market with its Android operating system had allowed vendors such as HTC, Motorola, Acer, and Samsung to offer models that matched many of the features of the iPhone. In addition, Microsoft’s Windows Phone 7 features compared favourably to the capabilities of the iPhone operating system with live tiles of rotating pictures, e-mail messages, and social-networking feeds.
While iPhones and Android phones primarily targeted consumers enthralled with clever and helpful Web apps, RIM had built its position in the smartphone market by appealing to businesspeople who needed the ability to check email; maintain appointment calendars; receive fax transmissions; and open, edit, and save Microsoft Office and Adobe PDF files. In August 2011, Android was the leading smartphone platform followed by the iPhone, RIM’s BlackBerry, and Windows Phone 7. The success of Android and the iPhone in the market for smartphones came largely at the expense of Nokia and BlackBerry, which had seen substantial market share erosion since 2009. Android’s quick rise to the top spot among smartphone platforms led to the August 2011 announcement by Google that the company would enter the handset segment of the smartphone industry and the tablet computer business through the $12.5 billion acquisition of Motorola Mobility. Exhibit 7 presents shipments and market shares for the leading smartphone producers between 2009 and the second quarter of 2011.
By 2005, consumers’ satisfaction with the iPod had helped renew interest in Apple computers, with its market share in personal computers growing from a negligible share to 4 percent. The company also exploited consumer loyalty and satisfaction with the iPod to enter the market for smartphones with the 2007 launch of the iPhone. The brand loyalty developed through the first iPod, and then the iPhone, made the company’s 2010 launch of the iPad a roaring success with 3.3 million units sold during its first three months on the market. Much of Apple’s turnaround could be credited to Steve Jobs, who had idea after idea for how to improve the company and turn its performance around. He not only consistently pushed for innovative new ideas and products but also enforced several structural changes, including ridding the company of unprofitable segments and divisions.
Thesustained demand for high end products, the ever changing customer performance expectations and the fierce competition in the Smartphone Markethas created a situation where companiesoperating in the industry have to carefully evaluate their strategic Thinking &positioning practices. In that regard, the Operations manager (that’s you) have been instructed to carry out the following exercises and to present a detailed business report for the board to evaluate:
1. Briefly discuss the concepts of strategic positioning and the main issues in the Smartphone market at present (four years post Steve jobs).
2. Present an analysis of Apple’s internal and external environment and explain how Steve Jobs’strategic thinking approaches engendered success and whether, so how relevant in Apple’s current context.
3. Using appropriate strategic management theories, critically evaluate theadopted strategy which has helped Apple maintain a sustained growth post Steve Jobs.
Assessment Criteria Marks Awarded Marks Available
1 Present a brief introduction of the concepts of strategic positioning in general and how it affects the Smartphone Market in particular. Discussion should be focused, drawing on relevant academic theories to underpin a well-structured critical evaluation. Also, you should endeavour to highlight, identify key issues and challenges associated with the Smartphone industry.
2 Present a comprehensive analysis of the company’s (Apple’s) external and internal environment issues identified in the case study and anything else your research uncovers in relation to the company’s current environment.
Explore this information to determine Apple’s specific point of departure from, or continuance with Steve Jobs’ approach in order to maintain the company’s competitive advantage. 25
3 Strategic Management theories utilized must be presented in a manner consistent with academic best practices of demonstrable application of models, critical thinking, knowledge gained and understanding of the subject matter. It is not sufficient merely to reproduce a model. Narrative should be supported by theoretical sources throughout and demonstrate where the model has been applied to the assignment context.
4 Harvard referencing principles are applied throughout the submission in the correct manner. Authentic and academic sources have been utilised to support each section of the work
Omitting to reference correctly reduces work to a descriptive level only and is not satisfactory for post-graduate work.
5 The work is presented to a professional and business-like standard and incorporates an introduction and summary. Each section is clearly identified with a sub-heading. International business English that is correctly structured is expected.
Additional Comments from Second marker or External Examiner (if required) :
Masters Level Marking Criteria – Level 7
Marks in the range of 70-100% The work will clearly demonstrate the ability to analyse accurately, reliably and fully, all relevant information; to use evidence; to conceptualise, evaluate and judge; to propose and operationalise effective solutions, and to show substantial originality and creativity in a variety of familiar situations or in the face of ambiguity, uncertainty or change. It will demonstrate valuable knowledge transfer and propose feasible solutions for a wide range of situations. Evidence of the ability to innovate will be present.
Marks in the range of
60% – 69% The work will contain complete explanations using most available information. There will be substantial analysis; the ability to recognise evidence, use ideas, conceptualise, evaluate and judge in familiar situations will be clearly demonstrated. Proposals or solutions will be contextually relevant and useful, with substantial evidence of the skill necessary to operationalize them in a variety of situations, including those in which uncertainty, ambiguity or change are present. The work will provide evidence of originality and of useful knowledge transfer to novel situations. It will be coherent and convincing.
Marks in the range of
50% – 59% The work contains all the necessary contextual information. There will be adequate analysis, explanation and conceptualisation, with appropriate illustration and example, and sound attempts to evaluate and judge. The work will be substantially coherent and will contain relevant and feasible proposals or solutions related to familiar situations, some responses to uncertainty or ambiguity and some acknowledgements of the implications of change.
Marks in the range of
40% – 49% The work contains sufficient descriptive information. There is some analysis and explanation with appropriate illustration and example, and some attempt to evaluate. The work will generally be coherent and relevant, it will contain some useful proposals or solutions related to familiar solutions and there will be some attempt at originality. It will be communicated clearly.
Marks in the range
30% – 39% The work shows some knowledge and required skills are present to a degree. There may be appreciable error or omission of facts, poor structure, misdirection to the task, or poor conceptualisation or illustration of the work. Evidence of analysis and evaluation is weak. There will be indications in the work that the candidate is capable of improving it by further application to the task
Marks below 30% No work has been submitted in the time allowed, or the work submitted demonstrates little or no understanding of the task or the subject matter. This may be evident where the work is substantially incoherent, irrelevant or lacking in factual content, or where these shortcomings are present in combination such that the work as a whole is unsound. Major errors of fact, or evidence of substantially poor cognitive or other relevant skills will also lead to a fail.
Johnson, G., Scholes. K, and Whittington, R. (2008) Exploring Corporate Strategy: Text and Cases Multimedia 8th edition, Prentice Hall FT: Harlow
Balogun, J. and Hope-Hailey, V. (2008). Exploring Strategic Change, (3rd ed.). Prentice Hall