Assess the current strategy:
1. Does the current strategy strengthen the feedback processes driving growth?
Yes, the current strategy strengthens some of the feedback processes driving industry demand and market share. Please refer to the stocks and flow models for the following reinforcing strategies.
- Abundance of add on free accessories and software - strengthens the reinforcing feedback in product differentiation category
- Advanced features (best touch screen and best user interface) - strengthens the reinforcing feedback in product differentiation category
- Regular advancements in technology and launch of new generation products - strengthens the reinforcing feedback in new product development category
2. Are those gains appropriable?
Yes, the gains are appropriable. Because once Apple established itself as the leading brand, it got its major loyal customer base (network effect, refer figure 1) who will stick to the brand in spite of competitors. This network effect will help in further growth. The value from this growth will be passed on the suppliers and customers, in addition to the organization.
3. Future Vulnerability
- Introduction of competing models - Introduction of good quality competing models will drive down the price and thereby the profits.
- Technological obsolesce - Invention of new technologies may render current Apple products obsolete, hence Apple might lose its share of the market.
- Customer bargaining power - Customers might not want to always pay the premium price of Apple products, and gradually shift to cheaper options.
4. Limit the growth of market and industry as a whole
The most important factor that can limit growth of the market in which Apple Inc.
operates is introduction of better substitute technologies. A very comparable example of it is almost disappearance of Cathode Ray Tube Television with the advent of LCD and LED display technology.