The document assesses Apple's competitive position in the global smartphone market using the VRIO framework. It finds that Apple's strong brand name and marketing strategy give it a sustained competitive advantage. Another advantage is Apple's integrated product portfolio across devices like the iPhone, iPad and Macs, which creates switching costs for customers. However, while Apple pioneered integrated services across devices, competitors like Google are now offering similar services. The document also finds that Apple's research and development capabilities are on par with competitors like Samsung and HTC. Overall, Apple still has advantages, but faces pressure to innovate further to maintain its leading position against improving competitors.

1. IBCON – Global Strategic Management
Georgi, Alexander (ID: 332765)
Case: Apple Inc. 2010 – One pager case questions
November 2011
Question: Please assess the (sustainable?) competitive position / competitive advantage of Apple in the global
smartphone market.
The global smartphone market is very volatile and highly competitive. In third-quarter 2011 Samsung overtook
Apple in smartphone shipments as well as market share for the first time in its history1. Due to the announcement
of the next generation of Apple’s iPhone, many customers waited for its release, which resulted in fewer shipments
during the third-quarter. However, another possible reason could be Apple’s loss of competitive advantage vis-à-vis
its competitors. Based on the VRIO framework, Apple’s competitive advantage will be assessed in this paper.
One of Apple’s most valuable resources and capabilities is indisputably its strong brand name and marketing
strategy. Their good reputation combined with high quality products leads to a high brand loyalty on the customer
side. Furthermore, Apple products are being a status symbol among young adults, so that their products appear to
be worth the extra money. Rather than advertising the iPhone as a powerful device full of latest technology, Apple
claims that the product can make the consumer’s life easier and better. This ability is definitely valuable, rare and
nearly impossible to imitate by other firms. Apple also applies this notion to its entire organization. Hence, the
brand and their commercialization strategy can be viewed as sustained competitive advantage.
Another outstanding resource is the product portfolio that integrates as one. Apple successfully covers multiple
areas of consumer electronics, such as music players, smartphones, tablets as well as computers. Due to its success
with the iPad, Apple attracted many first-time buyers. Once the customer has bought one product, he will most
likely buy other Apple products afterwards since the company has focused on a highly integrated operating system
and services. Moreover, Apple gains advantage through economies of scope by using similar hardware and
software on their different devices. This phenomenon is unique in this industry and inimitable. Altogether, this
leads to another competitive advantage as the product portfolio is in line with Apple’s overall strategy and
organization.
Product and service integration is another core competency of Apple. On the one hand, Apple is doing very well in
bringing together multiple functions in one device, such as music library, email, apps or video functionality. On the
other hand, the company also integrates hardware, software and services of different products using iTunes or
iCloud as a seamlessly integrated hub. Even though it is valuable and currently rare, it is not impossible to imitate.
Google with its Android OS is already offering similar integrated services such as GMail, Picasa, Google Docs or the
Android Market. Based on cloud technology, these are also available on laptops, smartphones and tablets without
any constraints. Google is working hard on an even better integration of these services. Nevertheless, in this regard
Apple has a temporary competitive advantage.
From the resource-based view, research and development (R&D) is another crucial factor of success. Apple’s
strategic foresight capability in combination with their ability to bring innovations from concept to market – in
order to meet customer’s wants and needs through applying user centered design – is definitely one of their key
success factors. Besides, they obtain a huge portfolio of patents. However, other firms like Samsung or HTC also
have many patents as well as innovative power. Furthermore, Apple struggles with technological issues, e.g.
regarding the antenna (iPhone 4) or battery life2 (iPhone 4S). Therefore, Apple’s R&D capability will be rated as
competitive parity.
Overall, Apple still possesses competitive advantages, of which some can even be considered as being sustainable.
However, with increased efforts of its competitors, Apple is under pressure of preserving these advantages. To
remain a leading position, Apple must focus on their core competencies and carry on introducing cutting-edge
products.
1
“Samsung outshines Apple in smartphone shipments, market share”, news.cnet.com, Nov. 4, 2011, http://news.cnet.com/
8301-13579_3-57318644-37/samsung-outshines-apple-in-smartphone-shipments-market-share/, accessed Nov. 2011
2
“Apple Confirms iPhone 4S Battery Issue, Offers Fix”, www.forbes.com, Nov. 4, 2011,
http://www.forbes.com/sites/mobiledia/2011/11/04/apple-confirms-iphone-4s-battery-issue-offers-fix/, accessed Nov. 2011