Implication Of Digital Economy on The Activities and Working Practices of Apple CompanyImplication Of Digital Economy on The Activities and Working Practices of Apple Company
Implication Of Digital Economy on The Activities and Working Practices of Apple Company
Introduction
Today, there is a high rise in the spread of technology throughout many sectors. With the adoption of the digital economic landscape, consumer electronics is one of the industries that have been hugely impacted. With digital technologies such as social media offering new market opportunities, there is an increasing challenge for organizations in this sector in achieving their goals in customer-focused marketing and upholding a vibrant business environment. This rise in internet popularity has revolutionized interaction, engagement, and transactions between the general public and businesses. Especially in the software and online services industry, consumers and businesses are turning to the internet as the leading platform for product research, decision making, and purchasing. In this essay, Apple, an American-based company, is the leading company in exploiting market opportunities presented by the digital economy in the consumer electronics, software, and online services industry. Through innovative application of innovative digital technology, Apple Company has managed to effectively provide flexible merchandising and diversify its iPhone products while at the same time advancing its products through promotional approaches. Established in 1976, Apple Company has stood out as the leading brand globally by adopting effective marketing technologies, which have helped it execute its operation within the digital economy. This has enabled the company to successfully research, design, manufacture, and sell various consumer electronics products and provide software services that suit other consumers’ preferences. Consequently, the corporation has established unrivaled market dominance by addressing segments in online shopping trends, price changes, and adopting effective consumer technologies.
Developments In the Digital Economy and Their Implications in The Operations in The Consumer Electronics Industry
Development in the digital economy has resulted in changes in market demand, the energy use of different domestic appliances, and consumer purchase choices. Consumer electronics include the most used electronic products for entertainment, such as mobile phones, iPods, video game consoles, tablets, and automotive technology. Comparatively, technology for consumer electronics has undergone a considerable transformation in the past three decades.
Firstly, the consumer electronic industry is rapidly changing and has become a dynamic industry with high competition and greatly influenced by technological developments. Consequently, manufacturers are continuously under enormous pressure to bring compatibility, uniqueness, and differentiation of products to match the market’s requirements (Ayres & Williams, 2004). Within this competitive market environment, any successful outcome is likely to attract copycat products of different qualities and ranges from competitors, resulting in rapid rebranding, re-evaluation, commoditization, and falling prices (Langley & Leyshon, 2017).
Additionally, the digital economy has resulted in the emergence of two prevailing trends that have revolutionized the industry by converging and combining the functionality of many products into one. Technological convergences have enabled companies in the electronics industry to disparate new functionalities and addition of new portfolios to the existing essential products. By utilization of this technology, companies can effectively integrate tasks that were previously performed using different devices into one device. For instance, separately integrated technologies such as voice consisting of telephony features, data comprising basic office tasks, and video can now share resources in one device and interact synergistically (Dustin, Bharat,& Jitendra, 2014 ). This has been a big step towards the vision of integrating media, telecommunication, and online industries into one single device, such as smartphones and tablets.
Secondly, the consumer electronics industry has experienced rapid adoption of tablets, resulting in disruption and severe cannibalization of demand for notebooks. This has been necessitated by the convergence of many tablet features that were previously performed only on computers. However, the decline in demand for laptops appears to have slowed as tablets still cannot effectively perform all computer functions. The third and most significant implication has been experienced from the distribution perspective, specifically online retailing (Malecki &Moriset, 2007). The consumers themselves have adequate access to information. They are getting more educated on significant consumer electronics trends, and information exchange has become much more prevalent within the industry.
Again, with the growth of the internet, consumers tend to change their electronic gadgets according to the trends and the different desires they intend to satisfy. This has resulted in the development of e-commerce by many companies operating in the consumer electronics industry. With these changes, digitalization has increased and significantly changed peoples’ ways of socializing, communicating, and working, with most of the tech items being purchased online. If there is one constant feature of the rapid pace of change across technology, it must be consistently outstripping and surpassing all expectations and expert projections. By 2017, the rapid technological changes coupled with consistent outstripping are estimated to result in a global social network audience of between 1.95 to 2.55 billion. Moreover, rapid technological change in the industry has increased production efficiency, reduced retail prices for consumer electronics products, and made them more compatible, attractive, and affordable.
The main negative implication of the growth of the digital economy and the rising demand for consumer electronics and mobile devices is the consequent increase in electronic waste (e-waste). According to a report by the UN, the world has experienced a continuous rise in domestic waste, with more than 50 million metric tonnes of electronic waste being produced annually. This has resulted from increased demand and purchasing of electronic products as the digital world expands, with less than 20% of this waste being recycled globally. These electronic wastes contain numerous toxic substances that include; lead, mercury, and bromine, all of which pose as significant contamination to our water bodies. In addition to the physiological impacts of the wastes, there are several devastating environmental and social impacts resulting from their exposure.
Evaluation Of Apple’s Vertical Integration Business Model in The Digital Economy
In the consumer electronics industry, the competitiveness capacity of a company is greatly determined by the scope given by the influence in the business value chain. A company with a well-spread impact across the industry’s value chain stands a high chance of succeeding by achieving a competitive advantage. The vertical integration model is the most suitable strategy that effectively broadens and spreads a company’s influence in the production chain. Through this model, Apple Company has achieved a downstream expansion by using well-adjusted internal operational infrastructures, which has effectively stretched the company’s span of production control.
Competition is one of the challenges brought about by the digital economy in the consumer electronics industry. Due to the stiffness of the competition and the technological developments, organizations are forced to indulge in competition wars to gain more customers and expand their market share. According to Hitt I & Hoskisson, 2013, one of the main reasons why competition in the electronics industry has rapidly increased is the increase in innovation which has made it possible for companies to develop mobile phone devices with advanced features. Apple Company has noted the developments undertaken by its rival competitors. With the adoption of the vertical integration model, it has managed to respond effectively.
Apple’s Innovation and Target Markets
Since its inception in 1976, Apple Inc. has dramatically expanded, becoming a key reformer and leader in the consumer electronics market innovation in phones and personal computers. Through its integrated business model based on the creation and consumer-centered production, Apple has entered into an innovative partnership that has leveraged its diverse culture. Additionally, the company can actualize numerous innovation processes through collaboration, seizing many new market opportunities (Adner, 2006). Moreover, innovative partnerships have been essential to the company’s exponential growth. Another advantage accruing from this model is the venture acquisitions. Apple has primarily adopted a less aggressive venture investment and acquisition strategy with more emphasis and capital pumped into its supply chain. In the last 20 years, the company has made fewer acquisitions than the other companies operating in the consumer electronics industry. Over-investment in the supply chain has helped Apple to rival its competitors by effectively retailing its products globally via its outlets, online stores, third-party wholesalers, retail stores, and direct sales.
Despite stiff competition from competitors such as Microsoft, Sony, HP, Nokia, and Google, Apple has consistently enjoyed a substantial market share through its rigorous digital marketing. Through advanced websites, the company has managed to exploit its principal competitiveness as the leading company in the electronics industry (). Also, Apple Company has developed and designed its hardware and operating system (OS), which gives them a competitive advantage over its competitors, such as Nokia, which uses Google’s OS (Shapiro, 2019). Additionally, with the rise in technological convergence, Apple has stepped up its innovation competency by developing innovative products that can have the ability to share the same operating system (OS) in a device, same software, and applications. Furthermore, the company has scaled the performance levels in the smartphone industry by developing a graphical user interface and pioneering the iPod music player, which increased its product sales significantly. By applying of vertical integration business model, the company can minimize the risk associated with product development, time scale, and the general costs of development. Also, Apple’s innovative strategy has enabled the firm to introduce a stream of electronic products, maintaining its competitiveness, strengthening consumer loyalty, and consequently building a barrier to competition (Prescot,2014).
Use of Digital Technologies for Marketing (e-Marketing)
The technological advancements in the business world have led to a proliferation of internet marketing of goods and services (Strauss, Frost &Sinha, 2014). In addition, in the prevailing competition, companies in the consumer electronics industry have adopted some facets to becoming essential for spawning competitiveness. Among these facets is the need to create a highly reputable brand that can only be achieved through effective digital marketing (Bergvall-Kåreborn & Howcroft, 2011)). Through the vertical integration model, Apple Company has managed to improvise digital technologies, which comprise a multifaceted solution to the enterprise’s numerous challenges, such as marketing and branding requirements. Subsequently, Apple organization has employed social media as one of the tools and platforms for efficient digital marketing, inciting discussions, and connecting with their customers (Teece,2018). The company has also enhanced its brand by consistently injecting more funds into the e-marketing departments to boost their existing corporate marketing methods. This has effectively promoted brand awareness, attracted more customers, and successfully introduced new products such as MacBook, iPhone 12, and iPod.
In the past, the company relied heavily on traditional marketing strategies, which went a long way in informing and creating pull in the market. By utilizing of vertical integration model, which allowed the incorporation of different strategies, the Apple Company positioned itself as one of the leading firms in the consumer electronics and mobile devices industry (Dolata, 2017). According to the company’s annual report in 2020, the online advertising business it adopted through e-marketing strategies had more than tripled the company’s market share. The in-house advertisement, Search Ads, has been critical in the company’s effectiveness in using online advertisements to introduce and endorse new products and services. Also, through mobile marketing, Apple can announce promotions and compete favorably with other companies in the online marketing business. Furthermore, Apple has managed to develop an online Apple store which has been, for several years, enabling customers their purchase goods and services without unnecessary hassle or the burden of visiting the nearest Apple store to purchase a product (Huws, 2018). With the help of this digital App, customers can access various products, make purchases, and have their products delivered to their doorsteps in a matter of days.
Pricing Wars Under Vertical Integration Model
One of the main competition areas in the digital economy is the price wars between rival companies. In the consumer electronics and mobile devices industry, the top competitors are Apple and Samsung, with each company trying to be cost-effective to sell at relatively lower prices and consequently attract more customers (Heil &Helsen, 2001). This was the main reason behind the adoption of the vertical integration model by Apple. One of the advantages of this business model is that the company can source most of its crucial inputs outside the United States. Therefore, Apple Company has overcome Samsung’s dominance in the consumer electronics market by acquiring inputs at the lowest prices possible.
Additionally, the business model generally aims to decrease expenditure to achievable margins while simultaneously maintaining the quality of the products. To the company’s benefit, Apple Inc. has successfully minimized the cost of production by primarily outsourcing the manufacture of most used hardware (Padilla, Perkins, & Piccolo, 2022). Also, Apple can spend relatively higher on promotional events and advertisements to attract more customers.
Apple’s Management of Electronic Waste
Apple is the most valuable company in the technology industry, inevitably producing the most significant portion of electronic waste. Like other companies, it is at the forefront in vying for environmental sustainability. One of the management efforts by Apple Company in addressing the waste challenge is its environmental agenda of producing carbon-neutral products by 2030. In addition, the company has incorporated a holistic recycling program aimed at recycling tin, cobalt, and the utilization of carbon-free aluminum. Secondly, the company has hugely invested in research and development (R &D) to increase the percentage of recycled wastes. For instance, Apple Company developed a robot in 2018 that went into operation, disassembling old smartphones, tablets, and personal computers and extracting their materials (Vonk, 2018). Moreover, unlike its competitors who use Android Operating System, Apple Company consistently ensures timely software support and updates for older devices that have been operational for many years. This also serves as a competitive advantage because as long as the hardware is functional, the user can expect their Apple device to receive software support and updates for an extended period (Johnson et al.,2011).
Conclusion
The emergence and advancement of technology have resulted in significant growth in the digital economy. Consequently, there have been numerous implications in the business world with every company trying to take advantage of globalization, creating brand awareness, and using the internet as a platform for products and service promotion. Apple company have been in light in the 21st century as the leading company in exploiting market opportunities presented by the digital economy in the consumer electronics, mobile devices, and online services industry. These technological developments are not void of positive and negative implications. Some of the impacts brought about by the digital economy in the technology industry are; an increase in market demand, rise in competition, increase in innovations as research and development are boosted, disruption of the market, changes in consumer patterns, and increase in electronic waste. Through the adoption of the vertical integration business model and the achievements attained by its utilization, Apple Company has managed to stand tall in the aggressive business environment. Additionally, by effectively using the internet and venturing into e-marketing to capture target markets, the company has promoted its products and gained a competitive advantage over its rivals.
