ST4S38 Strategic Analysis: Tools & Techniques – Coursework 2 (50%)
Report
Consider the following questions:
Diversify or Focus on core business?
What matters most for long-term sustainability of the business?
In order to answer the question, follow the steps below.
• Select a company that can support your core argument (i.e. for sustainable growth, should a company focus on its core business only or should it try to diversify?)
• In the Introduction, you should state your core idea and a business example you are going to use.
• Identify the company’s offerings and conduct the Portfolio Analysis
• Based on the Portfolio Analysis you conducted, evaluate key future directions for strategic growth (you may want to use the Ansoff’s product/market matrix)
• Suggest what methods the SBU can adapt in order to grow (i.e. External growth or Internal development)
• Conclude the argument with the answer to the question and if necessary, with final suggestion of what the company should do in order to achieve long-term sustainability of the business
The aim of this assignment is to construct your argument in order to answer the question, not just to describe what the company does. You do not have to follow the structure strictly suggested as above, but it should be constructed logically with consistency. Introduction should clearly state the main theme and overall structure of the report. Conclusion should draw the analysis to a close and present your answer to the question. Remember you do not introduce new findings into the conclusion – this should have been all introduced and fully discussed in the main body.
The following topics may be useful for your analysis:
• Portfolio analysis
• Strategic change and directions
• Strategic options for growth (diversification, internal growth)
The coursework is an individual piece of work. It will be 3,000 words, NOT inclusive of appendices (+/- 10%). Please note that text in diagrams or tables will NOT count towards the word count.
It is important that attention be focused on a strategic appraisal of the company as opposed to providing lots of interesting facts over what interests you or what you find on the internet. Assessment will focus on students’ abilities in applying strategic models and frameworks in a coherent manner that enables them to develop a clear strategic view of the strategic position being studied.
Please remember that an assignment is not meant to describe what you have found. Analysis means commenting on your findings and explaining what the evidence suggests about the company.
Write in an appropriate academic style. Make sure your final work is all spell-checked and proof-read.
Marking Criteria (available separately on module Blackboard)
Introduction
The purpose of this report is to answer the question of whether a company should focus on its core business or diversify for sustainable growth. To do so, this report will analyse a well-known company and its portfolio. The selected company for this analysis is Apple Inc. This report will evaluate the company’s portfolio using portfolio analysis, discuss key future directions for strategic growth using Ansoff’s product/market matrix, and suggest the methods the company can adapt in order to grow, such as external growth or internal development. Finally, the report will conclude with an answer to the question, along with a final suggestion of what Apple should do to achieve long-term sustainability.
Portfolio Analysis
Apple Inc. is a multinational technology company that designs, develops, and sells consumer electronics, computer software, and online services. The company’s product portfolio includes smartphones, tablets, computers, watches, and accessories. Apple Inc.’s portfolio can be analysed using the BCG matrix, which classifies products into four categories based on market growth rate and market share. Apple’s iPhone product line is a cash cow with high market share in a mature market, generating steady cash flow for the company. The iPad and Mac product lines are classified as question marks as they have lower market share and growth rate. Finally, Apple’s wearables and services are stars, having high growth rate and market share.
Future Directions for Strategic Growth
To achieve sustainable growth, Apple should focus on both market penetration and market development strategies. Market penetration is a strategy that involves selling more of the existing products to existing customers. Apple can achieve this by increasing the availability of its products in new regions, offering discounts to loyal customers, and improving customer service. Market development is a strategy that involves selling existing products to new customers in new markets. Apple can achieve this by expanding its retail presence in developing markets such as India and Brazil, offering products at different price points, and localising its products and services for these markets.
Another direction for strategic growth is product development. This involves introducing new products to existing markets. Apple can achieve this by introducing new product lines such as virtual reality devices, smart home appliances, and autonomous vehicles. The company can also innovate its existing product lines, such as introducing foldable iPhones, improving battery life, and enhancing camera capabilities.
The final direction for strategic growth is diversification. This involves introducing new products to new markets. Apple can achieve this by leveraging its existing capabilities to enter new industries such as healthcare, financial services, and entertainment. The company has already started diversifying its services by launching Apple Music, Apple TV+, and Apple Arcade.
Methods for Growth
To achieve sustainable growth, Apple can use both internal development and external growth methods. Internal development involves investing in research and development to create new products, services, and capabilities. Apple has been investing heavily in research and development, with an expenditure of $16 billion in 2021. This investment can be used to develop new products and services, enhance existing ones, and improve manufacturing and supply chain capabilities.
External growth involves mergers and acquisitions to acquire new capabilities, products, or markets. Apple has used this method to acquire companies such as Beats Electronics, Shazam, and Dark Sky. The company can continue to use this method to acquire companies with capabilities that can complement its existing ones, such as companies that specialise in healthcare, finance, or autonomous driving.
Apple should focus on both diversification and core business to achieve sustainable growth. The company should continue to innovate and improve its existing product lines, while also exploring new product lines such as virtual reality devices and autonomous vehicles. Apple should also focus on market development and product development strategies to expand its customer base and product portfolio. Finally, the company should use both internal development and external growth methods to achieve its strategic goals
