Apple Value Chain Analysis (Primary and Support Activities)

Every company needs to perform various activities to convert its ideas and concepts into physical products. Value chain shows all internal activities that a company performs to change inputs as outputs.

Apple value chain analysis is the framework that helps identify business activities and ultimately creates a competitive advantage for the business. The value chain contains the entire range of activities from the initial state to the end involved in launching the product to the market and to the end-users.

A value chain provides an analysis of all these steps and how they have added value to the product. Analysis of the value chain aids in better results achievement. By optimizing the value chain, the companies can boost their operational efficiency.

Almost every one of us knows about Apple as it is the most successful business today. Starting from Apple 1 now, the company has an entire product line with millions of loyal and satisfied customers.

In this article, we will perform a value chain analysis for Apple. We will also briefly describe the history of Apple. Let’s dig into the detail without any delay.

Founding of Apple

On April 1, 1976, two college students: Steve Wozniak and Steve Jobs, founded Apple Inc. They brought to the novel company a vision of modifying the way people viewed computers.

Wozniak and Jobs wanted the computer to be small enough so that people could have houses and offices. In other words, they want to make computers as user-friendly much as possible. They first developed Apple I in the garage and sold it without a keyboard, monitor, or casing.

The Apple II revolutionized the computer industry by introducing the first-ever color graphics. Sales jumped from 7.8$ to 117$, and Apple became a point of focus for the public.

Apple’s market share has suffered in some previous years after its peak in 1990. The iPhone, the touch screen cellular phone, was introduced in 2007. This product is considered the company’s most successful product and contains many successors.

Along with it, other popular products are the Apple Watch and iPad tablet. The company has also stretched its services to Apple card, Apple Arcade for games, Apple news for news, and Apple TV+ for streaming original content developed by Apple.

Steve Jobs died on October 5; however, the company continued to shine with Tim Cook as the CEO. The fame of the iPhone has made Apple the first company worth one trillion dollars in 2018, and it doubled the figure two years later.

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Primary activities:

Inbound logistics:

This primary activity refers to receiving and keeping the raw material for use in production. Apple has hundreds of suppliers worldwide and always maintains a highly experienced and professional supply chain management.

Inbound logistics also ensures the quality of the product. They need to perform fast production within a short period. Apple gets raw materials from America, China, Europe, and various Asian countries. After that, products are assembled in China.

Apple has set quality standards for every supplier to maintain the high-quality standard for the services and products. Along with this, Apple maintained smarter methods to reduce the storage requirements and boost the procurement process.

Furthermore, the company exercises severe bargaining power with suppliers, which ultimately provides the cost-benefit in the purchase of resources. 

Apple Operations:  

Apple prefers to outsource the manufacturing of its hardware as it does not own any production facilities. Its focal and major supplier is China. Most of the items are assembled in China; that’s why they bear the tag of made in China.

Apple has also engaged with the Indian government, and soon manufacturing also starts there. However, a small part of the manufacturing takes place in other parts of the nation too.

Labor costs are lower in the Asian countries that are ultimately reducing the manufacturing cost for Apple. Along with it, Apple has also tried to reduce the use of toxic substances in production and assembly.

This world’s largest company tries to make things run smoothly; however, it does not apply six sigma, unlike its competitor. One hundred forty-seven thousand full-time employees around the globe fulfill Apple’s operations.

Only a few products are manufactured in the USA and Ireland; remaining production occurs in units based in Asia and locations that offer lower costs. Given below is a reportable operating segment of Apple.

Americans: This segment includes south and north America. It is considered as the largest giant regarding sales. In 2020, sales were increased by 7% in this segment as compared to the previous year.

Europe: European countries are included in this segment, like the Middle East, India, and Africa. In 2019, sales were declined by 3% in this division. However, they made an impressive increase of 14% in the year 2020.

Greater China: Hong Kong, Taiwan, and China are included in this segment. Sales in China have decreased in previous years due to local competition. 16% decline was noticed in 2019 and 8% in 2020 comparatively.

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Japan: Sales in Japan segment for 2020 are the same as the previous years.

Rest of Asian Pacific: Sales in this division are increased by 10% in 2020 and 2% in 2019. One hundred forty-seven thousand full-time employees around the globe fulfill Apple’s operations.

Only a few products are manufactured in the USA and Ireland; remaining production occurs in units based in Asia and locations that offer lower costs. 

Apple outbound logistics:

Apple has maintained a very large distribution channel containing both indirect and direct channels. Outbound logistics include warehousing and distributing products like iPhones, Mac, iPads, and other products to the end-users.

Apple has managed a very large channel to distribute the products to customers. With the passage of time, Apple has tried to improve the quality of services and increase the number of brand stores. Apple’s technological products have a short life span of almost 12 years, so the inventory cost is higher.

Apple has reduced the shipment cost in the Asian regions and China by efficient market penetration. This thing has ultimately improved the brand image and brand attraction for customers.

Apple marketing and sales:

Apple products are famous for design, uniqueness, quality, and technological innovation. Any new product from Apple is highlighted massively not just on social media but also by some big and successful websites.

However, it does not mean that Apple does not spend on marketing its brand. Along with heavy publicity on social media, Apple also makes unique and engaging ads for its customers. By using its creativity and imagination, Apple has acquired giant brand loyalty.

Along with television and online commercials, the company also promotes and advertises the brand through print ads.

The company sales come from 7 sectors: Apple retail stores, value-added resellers, Apple online stores, Retailers, Wholesalers, Third cellular network carriers, and Direct sales force. Apple earns almost 34% by direct distribution while 66% by indirect distribution.

Services:

Apple provides quality services to its customers during the pre-purchase, during purchase, and post-purchase phase. Most of the Apple products come with 90 days of complimentary support and a one-year limited warranty. Online store help is also available for Apple customers. Every customer can check their order status and chat with the Apple experts for help. Customers can get their products repaired at the Apple-authorized service provider.

Moreover, there is a return policy in which you can return the item within 14 days. However, the condition that applies here is that you should purchase the item from the Apple store, either in-store or online.  

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Support activities

Technology/research development:

Apple spends massively on research and development. This brand is well-renowned for its quality, technological innovation, and unique designs of its products.

To maintain the competitive advantage company has invested much in research and development. In 2016, Apple spent almost 10 billion dollars on research and development and 11.6 billion USD in 2017.

Since 2014, the company has raised its research and development spent higher than 5 billion. Three key factors behind the great push are increased focus on in-house technology development, expanding Apple services, and growing product range.

Firm infrastructure:

The infrastructure of any organization plays a crucial role in its success. Either it is about financial, management, culture, structure, or any other resources, all these things together make the firm’s infrastructure.

The better infrastructure of the firm ultimately leads to creating high profits. Apple has undergone a major change in its cultural change recently.

The infrastructure of every company contains several changes throughout the lifetime of a company. We must say that a well-developed infrastructure is the key pushing force for a company’s success.

Human resource management:

Human resource management is related to management, controlling, and choosing the employees of the company. As employees run the company, so we must know how much important human resources are.

Apple focuses on hiring the best and then paying them well. It was the norm of Apple since the time of Steve Jobs in Apple. Apple has always hired the best people.

However, the style of human resource management has changed at the time of Tim Cook. The new CEO has bought some major changes to change the image of Apple in terms of human resources.

Procurement:

Another key focus area at Apple at Procurement. Apple has managed excellent relationships with its suppliers.

The suppliers must provide a safe working environment and deliver up-to-the-mark services and products. All these factors affect the relationship with the suppliers. However, Apple is also a major buyer for most of its suppliers, so we can say it is a mutually beneficial relationship. 

Conclusion:

We all are well aware of the fame and publicity of the Apple company. However, Apple has acquired this position because of its amazing services, content, unique designs, and values.

Apple’s value chain analysis is described in this article in detail. By reading, this article you will have in-depth detail about how the company’s primary and support activities operate.

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