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126 Corporate Strategy Essay Topic Ideas & Examples

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Corporate strategy is an essential aspect of business management that helps organizations define their goals, make decisions, and allocate resources to achieve sustainable competitive advantage. Writing an essay on corporate strategy allows students and professionals to explore various topics related to business strategy, industry analysis, competitive advantage, and organizational growth. To help you get started, here are 126 corporate strategy essay topic ideas and examples:

• An analysis of successful corporate strategies in the technology industry.
• The role of corporate culture in shaping organizational strategy.
• Examining the impact of globalization on corporate strategy.
• How diversification strategies can help organizations adapt to changing environments.
• The importance of strategic alliances in corporate strategy.
• Analyzing the relationship between corporate strategy and corporate governance.
• The role of strategic planning in achieving organizational objectives.
• How corporate strategies can address environmental sustainability.
• Exploring the impact of digital transformation on corporate strategy.
• The challenges of implementing a global corporate strategy.
• Analyzing the competitive advantage of low-cost strategies in the airline industry.
• The role of disruptive innovation in shaping corporate strategies.
• Examining the impact of mergers and acquisitions on corporate strategy.
• The influence of leadership styles on corporate strategy.
• The role of marketing strategies in corporate success.
• Analyzing the impact of technological advancements on corporate strategy.
• The challenges of crafting a corporate strategy in the healthcare industry.
• The importance of ethical considerations in corporate strategy.
• Examining the role of strategic human resource management in corporate success.
• The impact of political factors on corporate strategy.
• Analyzing the relationship between corporate strategy and organizational structure.
• The role of strategic alliances in driving innovation in the pharmaceutical industry.
• The challenges of implementing a differentiation strategy in a saturated market.
• Examining the impact of industry dynamics on corporate strategy.
• How corporate strategies can mitigate risks in uncertain environments.
• The role of corporate social responsibility in shaping corporate strategy.
• Analyzing the impact of disruptive technologies on traditional business models.
• The challenges of international expansion in corporate strategy.
• Exploring the influence of customer-centric strategies on corporate success.
• The role of strategic leadership in driving corporate innovation.
• Analyzing the impact of e-commerce on traditional retail corporate strategies.
• The challenges of managing a multi-brand strategy in the consumer goods industry.
• Examining the role of strategic pricing in corporate profitability.
• The impact of market segmentation on corporate strategy.
• The role of strategic alliances in entering new markets.
• Analyzing the relationship between corporate strategy and financial performance.
• How corporate strategies can address the impact of climate change.
• The challenges of managing cultural diversity in global corporate strategies.
• Examining the role of strategic innovation in corporate success.
• The influence of customer experience strategies on corporate brand image.
• Analyzing the impact of disruptive startups on established corporate strategies.
• The role of strategic partnerships in driving technological advancements.
• The challenges of implementing a cost leadership strategy in a premium market.
• Examining the impact of regulatory changes on corporate strategy.
• How corporate strategies can address income inequality.
• The role of strategic decision-making in corporate risk management.
• Analyzing the impact of social media on corporate communication strategies.
• The challenges of managing a franchise strategy in the hospitality industry.
• Examining the role of strategic marketing in corporate growth.
• The impact of industry consolidation on corporate strategy.
• The role of strategic alliances in entering emerging markets.
• Analyzing the relationship between corporate strategy and organizational culture.
• How corporate strategies can address the ethical implications of artificial intelligence.
• The challenges of managing a global supply chain in corporate strategies.
• Examining the impact of disruptive business models on traditional industries.
• The influence of customer loyalty strategies on corporate profitability.
• Analyzing the impact of political instability on corporate strategies.
• The role of strategic partnerships in driving sustainability initiatives.
• The challenges of implementing a blue ocean strategy in a mature market.
• Examining the impact of digital marketing on corporate branding strategies.
• How corporate strategies can address the impact of automation on employment.
• The role of strategic decision-making in corporate crisis management.
• Analyzing the impact of data analytics on corporate strategy.
• The challenges of managing a multi-channel marketing strategy in the retail industry.
• Examining the role of strategic innovation in corporate turnaround strategies.
• The influence of consumer behavior on corporate pricing strategies.
• Analyzing the impact of geopolitical factors on corporate strategies.
• The role of strategic partnerships in driving sustainable supply chains.
• The challenges of implementing a differentiation strategy in the luxury goods industry.
• Examining the impact of technological disruption on corporate strategies.
• How corporate strategies can address the impact of cybersecurity threats.
• The role of strategic decision-making in corporate social responsibility initiatives.
• Analyzing the impact of influencer marketing on corporate branding strategies.
• The challenges of managing a global distribution strategy in the logistics industry.
• Examining the role of strategic innovation in corporate product development.
• The influence of pricing strategies on corporate market share.
• Analyzing the impact of trade policies on corporate strategies.
• The role of strategic partnerships in driving innovation in the renewable energy industry.
• The challenges of implementing a customer-centric strategy in the service sector.
• Examining the impact of digital disruption on corporate business models.
• How corporate strategies can address the impact of income inequality on consumer behavior.
• The role of strategic decision-making in corporate sustainability initiatives.
• Analyzing the impact of social media influencers on corporate marketing strategies.
• The challenges of managing a global manufacturing strategy in the automotive industry.
• Examining the role of strategic innovation in corporate talent management.
• The influence of pricing strategies on corporate profitability.
• Analyzing the impact of political instability on corporate investment strategies.
• The role of strategic partnerships in driving innovation in the healthcare industry.
• The challenges of implementing a sustainability strategy in the fashion industry.
• Examining the impact of digital disruption on corporate supply chain strategies.
• How corporate strategies can address the impact of automation on job displacement.
• The role of strategic decision-making in corporate reputation management.
• Analyzing the impact of data privacy regulations on corporate strategies.
• The challenges of managing a multi-brand strategy in the hospitality industry.
• Examining the role of strategic innovation in corporate customer experience.
• The influence of pricing strategies on corporate competitive advantage.
• Analyzing the impact of economic factors on corporate strategies.
• The role of strategic partnerships in driving innovation in the technology industry.
• The challenges of implementing a customer retention strategy in the telecommunications sector.
• Examining the impact of digital disruption on corporate business processes.
• How corporate strategies can address the impact of income inequality on brand perception.
• The role of strategic decision-making in corporate diversity and inclusion initiatives.
• Analyzing the impact of influencer marketing on corporate sales strategies.
• The challenges of managing a global logistics strategy in the e-commerce industry.
• Examining the role of strategic innovation in corporate brand management.
• The influence of pricing strategies on corporate customer loyalty.
• Analyzing the impact of trade wars on corporate strategies.
• The role of strategic partnerships in driving innovation in the financial services industry.
• The challenges of implementing a sustainability strategy in the food and beverage industry.
• Examining the impact of digital disruption on corporate marketing strategies.
• How corporate strategies can address the impact of artificial intelligence on job displacement.
• The role of strategic decision-making in corporate crisis communication.
• Analyzing the impact of data-driven decision-making on corporate strategies.
• The challenges of managing a multi-channel distribution strategy in the consumer goods industry.
• Examining the role of strategic innovation in corporate sustainability initiatives.
• The influence of pricing strategies on corporate brand positioning.
• Analyzing the impact of regulatory compliance on corporate strategies.
• The role of strategic partnerships in driving innovation in the automotive industry.
• The challenges of implementing a customer-centric strategy in the financial sector.
• Examining the impact of digital disruption on corporate customer service.
• How corporate strategies can address the impact of income inequality on marketing effectiveness.
• The role of strategic decision-making in corporate talent acquisition.
• Analyzing the impact of influencer marketing on corporate brand equity.
• The challenges of managing a global retail strategy in the fashion industry.
• Examining the role of strategic innovation in corporate supply chain management.
• The influence of pricing strategies on corporate market penetration.

These topics provide a wide range of areas to explore within the field of corporate strategy. Whether you are a student or a professional, selecting a topic that aligns with your interests and expertise will ensure an engaging and insightful essay on corporate strategy. Good luck with your essay!

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What Is Corporate Strategy? The Four Key Components

What Is Corporate Strategy?

Corporate strategy refers to the overall plan or direction of an organization in pursuit of its long-term objectives. It includes defining the company's mission, vision, values, and goals, as well as identifying the markets and products it will focus on, the competitive advantages it aims to build, and the resources and capabilities it needs to achieve its objectives.

Corporate-level strategy involves developing a strategic roadmap for the organization to guide its actions. By doing so, the organization stays focused on its long-term strategic objectives while remaining agile enough to respond to changes in the business environment.

What Are The 4 Components Of Corporate Strategy?

Understanding the components of corporate strategy will help you formulate a well-thought-out strategy that’s easy to follow and execute.

Visioning involves setting the high-level direction of the organization—namely, the vision, mission, and corporate values.

Objective setting

Objective Setting   involves defining specific and measurable outcomes you want to achieve over a chosen timeframe.

Resource allocation

This is the practice of allocating human and capital resources to support objectives.

Strategic trade-offs

This is an essential part of corporate strategic planning since companies can’t always take advantage of all feasible opportunities. Leaders must learn how to determine the optimal strategic mix that will balance risks with returns.

👉 Use this free corporate strategy template to quickly start the development of your own company-level strategy.

The Corporate, Business, And Functional Level Strategies

A complete organizational strategy has three levels :

Corporate-level strategy

Corporate-level strategy is the highest level of corporate strategic planning. (We’ll dive deeper into it in this guide).

Business-level strategy

Business-level strategy connects the strategic goals of the company strategy with the needs and capacities of the business unit level.

It turns a corporate-level strategic goal into a practical strategic goal based on business-level knowledge and experience.

Functional-level strategy

Functional-level strategy refers to the specific plans and actions developed by individual departments within an organization to achieve the goals and objectives set out in the corporate-level strategy. These strategies are more detailed than corporate strategies, and they focus on the day-to-day activities of the organization.

Functional-level strategies are developed based on the company's overall goals and objectives. Their aim is to ensure that each functional area of the organization contributes to the company's success in a coordinated and strategic way. 

For example, let’s say a company has set a corporate-level goal to reduce costs. One of the functional-level strategies that the operations team can set is to streamline the supply chain to reduce the cost of inventory and raw materials. Another functional strategy would be to optimize the use of technology to reduce costs.

Corporate-Level Strategy vs. Business-Level Strategy

Corporate-level strategy and business-level strategy are two different levels of strategic planning that organizations use to achieve their goals and objectives.

Corporate-level strategy involves making decisions about the overall direction and scope of the organization. This includes deciding which industries and markets to compete in, how to allocate resources across different business units or product lines, and how to diversify the company's portfolio of products or services. This strategy level focuses on long-term goals and objectives and often involves mergers and acquisitions, joint ventures, vertical integration, or other strategic alliances.

Business-level strategy , on the other hand, focuses on how individual business units or product lines will compete in their respective markets. This involves making decisions about product differentiation, pricing, marketing, and resource allocation to achieve specific goals and objectives. This strategy level deals with shorter-term goals and objectives, often involving product development, marketing campaigns, and operational improvements.

Both levels of strategy are crucial for organizational success and should be aligned with each other. 

📚 Read more: The 7 Best Business Strategy Examples I've Ever Seen 

How The 3 Strategy Levels Relate To Each Other

The three levels of strategy are interdependent and must be aligned to achieve an organization's overall goals and objectives.

For example, a corporate-level strategy of diversifying a company's portfolio by acquiring a new business unit would require a business-level strategy to integrate the new business and align it with the company's existing operations. The functional-level strategy would then focus on optimizing processes, allocating resources, and developing capabilities to support the new business unit's operations and ensure its success.

Understanding how the three strategy levels communicate helps you build a solid strategic plan .

What Are The Benefits Of A Corporate-Level Strategy?

The benefits of a well-defined corporate strategy for an organization increase as the organization scales . It’s possible for small or even medium-sized businesses to get by without investing time in developing their corporate strategy. However, as the needs of an organization grow, it becomes increasingly necessary to develop the strategic planning process in a way that reflects the complexity of that organization.

In the end, corporate strategy benefits any organization, regardless of size .

The three main benefits of having a solid corporate strategy are:

1. Provides strategic direction

By implementing a corporate strategic plan, an organization can establish its desired direction and provide clear guidance to leaders, stakeholders, and employees on how they prioritize decisions, making strategy execution and goal achievement much easier.

2. Helps you stay flexible and adapt when needed

In a dynamic world, organizations need to keep pace with changes as they happen.

By continually defining corporate strategies and strategic goals in relation to opportunities or threats as they appear, your organization will be able to consistently perform optimally.

3. Improves decision making

Without clearly defined strategies at a corporate level, business, and functional level units will perform sub-optimally.

The abstract level of decision-making at the corporate level will translate to better results at other decision-making levels and help employees feel that their organization has a clear direction and purpose.

📚 Recommended read:   Strategic Control Simplified: A 6-Step Process And Tools

The Common Problem With Corporate Strategy

One of the most common problems with strategy, especially corporate strategy, is that it gets stuck in the boardroom. Leaders are the experts, they’ve climbed the ropes, and they have the scars to prove it. It is obvious that they are best suited to make strategic decisions and put together a plan that steers the company in the right direction. 

That statement seems reasonable, but it contains a lie.

Creating a static PowerPoint document is not a strategy, no matter how long or beautiful it is. As Mike Lardner, former Director of Corporate Strategy at Whirlpool points out in Cascade’s state of strategy report : "The main problem with the strategy is that it's usually not even strategy. It's just the first pass at next year's budget!"

There is an annual cycle of secret meetings that exhaust resources and no one can figure out where, why, or what to do. Often, the strategy is left in a PowerPoint until the next year, and it's so manual to synthesize that it's not even updated or tracked on regular basis.

Types Of Corporate Strategy And Examples 

Your corporate strategy must reflect an optimal approach that responds to the needs and the environment of your business. Thus, it’s helpful to divide corporate strategy into four classifications based on external and internal factors.

Growth strategies

These are strategies that focus on a company’s growth and might include entering new markets, increasing or diversifying existing ones, or using forward or backward integration to take advantage of economies of scale.

Growth strategies are typical with most tech companies like Facebook ( Meta ), Google, and Amazon , which consistently take advantage of new opportunities. 

When Facebook launched in 2004, it was a small social media network among several competitors. Using a market penetration growth strategy aimed at Harvard college students and eventually a tech acquisition strategy that purchased emerging technology, Facebook grew from that small campus social network into the ubiquitous company it is today.

Stability strategies

These are designed to consolidate an organization's current position, with an eye toward creating a strategic environment that will provide greater flexibility for the future employment of growth or retrenchment strategies.

Stability strategies are more conservative strategies, focused on preserving profit, reducing costs, and investigating future strategic possibilities.

Steel Authority of India adopted a stability strategy focused on increasing efficiency rather than increasing the number of plants. This move helped address the over-capacity in the industry and retain the company’s position as the third-fastest growing steel producer in the world.

Retrenchment strategies

These are a response to unprofitable or damaging elements of a business or organization, such as eliminating unprofitable assets or product lines.

General Motors (GM) , once the world’s largest automaker, started implementing retrenchment strategies as it pulled out its brands from major global markets like Russia, India, and Western Europe. Declining sales and profitability were the main culprits as its competitors consistently took the top sales spots. 

📚 Recommended read: Strategy study: The Journey of General Motors 

Combination Strategy

Sometimes, organizations combine the above-mentioned strategies even if they appear contradictory. 

For example, a company may utilize a stability and retrenchment strategy to keep profits growing while preserving capital. Or they can continue taking risks to pursue growth while keeping certain portions of the enterprise stable. 

A combination strategy is useful when organizations are large and operate in complex environments, such as having several enterprises operating in different industries with different needs. 

For example, McDonald’s continues to pursue growth by expanding to new markets worldwide while maintaining a profitable core menu and focusing on improving operational efficiency. 

Another example is the move by Hewlett-Packard to split the company into two in order to pursue a stability and growth strategy at once. HP Inc., the stagnant arm that sells personal computers and printers, focuses on a stability strategy to maintain profitability. Meanwhile, HPE, the exciting business that sells industrial-grade server computers to enterprises, focuses on a growth strategy as it taps an underserved market segment. 

📚 Want to study strategies of leading global companies, including Heineken, Coca-Cola, and Unilever? Click here to check out our Strategy Factory with 100+ strategy studies. 

What Should My Corporate Strategy Model Look Like?

There are a number of different models you can apply to the strategic planning process, each with its own merits. We’re going to show you how to build your corporate strategy model based on our tested and proven strategic planning model—the Cascade model, used by +20,000 teams worldwide.

Corporate strategy planning is the highest level of strategic planning within a business or organization and must take into account a huge number of variables.

1. Defining a vision

Reducing complexity is a must . The basis for corporate planning is defining an abstract vision or overarching goal based on the current organization and its environment.

The vision will provide a point of reference for your mission, and the mission will serve as a benchmark for measuring goals and evaluating strategies.

Follow our guide for an in-depth explanation of the process of writing a vision statement . 

2. Describe your company’s values

Your company’s vision statement is a destination. Company values describe how you will arrive at this destination.

The values that you outline should be clear, concise, and, above all, real. To get a good sense of how to define your company values, read our guide .

3. Choose focus areas

Think of focus areas as the foundation for your corporate planning. They are strategic priorities that your organization will be focusing on within a given timeframe. 

4. Define objectives

Once you’ve defined a clear vision and selected your focus areas, you must outline the strategic objectives .

These objectives will represent a more concrete example of what you want to achieve, with stated deadlines and milestones.

5. Establish KPIs

The corporate planning process ends with the definition of KPIs that will allow corporate strategists to track and adjust the strategic objectives based on results.

📚 Dive deeper into each element with this comprehensive guide on how to write a strategic plan . 

Get A Blueprint For Corporate Strategic Planning

Corporate strategic planning gives your company the essential conceptual tools to succeed in competitive markets. Taking the time to plan a well-structured corporate strategy will quickly yield benefits that are quantifiable and provide insights into your operations .

Get your free corporate strategy template to follow a structured approach and create a highly effective corporate strategic plan that keeps everyone aligned with the business objectives. 

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3 Business Strategy Examples to Inspire Your Own

• 03 Nov 2022

Successful businesses often change the way the world lives. Consider Apple, Google, and Netflix and the immense value each offers customers. Despite ambitious profit margins, the companies' business strategies didn't stem solely from financial goals. Each prioritized consumer value through innovations such as smartphones, faster search engines, and video streaming.

If you want to develop a successful business strategy, here's an overview of value creation, how to create value, and examples of companies successfully implementing it into their business models.

Access your free e-book today.

What Is a Value-Based Business Strategy?

Creating value for the customer and company determines whether a business strategy is successful. According to Harvard Business School Professor Felix Oberholzer-Gee in the HBS Online course Business Strategy , "These companies don't win by having the best product or most impressive service. They win by creating the most value."

While this can be difficult to visualize, the value stick framework illustrates how a company can maximize profit while creating more value for its customers, suppliers, and stakeholders.

The value stick is a graph comprised of four components: willingness to pay (WTP), price, cost, and willingness to sell (WTS). Each segment represents how a sale's value is split between a firm, its customers, and suppliers. While each component leads to value, two levers create it: WTP and WTS.

To better understand how these components aid value-based business strategies , here are examples of how you can implement them in your organization.

Raising WTP

Willingness to pay (WTP) refers to the highest price a customer is willing to pay for a product or service. This calculation determines the threshold at which customers are more likely to make a purchase. Any slight imbalance in this number can deter, or even dissuade, consumers from purchasing. Only when a customer is delighted by a product or service are they willing to pay more.

Companies need to know their customer's WTP to remain profitable. According to HBS Online's Business Strategy course, it's influenced by the functional attributes of the product or service and other considerations, including:

• Business sustainability: Is the product or service environmentally sound?
• Social status: Does the media give your product or service additional value?
• Market influence: Does your product or service inspire your competition?

Raising WTP can be an effective strategy for companies interested in increasing profit margins. This difficult balancing act requires an understanding of the product and target consumer. Business Strategy identifies three main mechanisms for raising WTP:

• Conferring status: Earning "status" granted by media and the consumers to gain more value through public attention and brand legitimacy
• Reducing uncertainty: Ensuring quality and purpose within an organization, so customers know what to expect with your product and service every time
• Forming tastes: Taking the time to get your brand to the consumer as soon as possible because of nostalgic drivers

Lowering WTS

Willingness to sell (WTS) is the lowest price suppliers are willing to accept in exchange for materials needed to create products or services. Just as customers must weigh personal versus monetary value in determining whether they want to participate in a transaction, so do suppliers.

Another way to measure WTS is by considering employee engagement and retention. One of the most valuable assets a company has is its talent. Effective leaders nurture and develop employees to ensure salary isn't their only motivator.

Lowering WTS for one or both of these groups can be an effective business strategy for companies that can't raise their WTP. For example, companies that can motivate employees to work for a lower cost by providing value in other ways—such as benefits packages, flexible work hours, and generous paid time off—can lower WTS. Another method of lowering WTS is creating value for suppliers. This can take the form of additional warehouse space or long-term contracts.

3 Companies With Successful Business Strategies

One of the best ways to learn about business strategy is from real-world examples. Here are three companies that faced numerous challenges but overcame them through value-based business strategies.

1. Best Buy

Best Buy, the multinational electronics retailer, is an excellent example of how a shift in business strategy can lead to rapid growth. In 2012, Best Buy faced fierce market competition with online platforms like Amazon and big-box stores like Walmart and Home Depot. As a result, the company lost over a billion dollars in revenue in a single quarter.

Rather than closing stores or developing new products, Best Buy's leadership decided to leverage an existing asset not being utilized to its full potential: its storefronts. Best Buy started using its stores as "mini warehouses," providing faster shipping times, easier customer pick-up, and improved product availability. As a result of enhancing convenience for the customer, Best Buy increased its WTP.

Best Buy is an exceptional example of a value-based business strategy because it subsequently lowered WTS with this initiative. By keeping the vast network of stores intact and allowing vendors to build showrooms within its stores, Best Buy provided a cost-effective option for its vendors. This additional value lowered vendors' WTS, leading to product discounts.

As the largest sportswear manufacturer of shoes, clothing, and accessories, Nike has become one of the world's leading global sports brands. While much of Nike's success has come from its iconic products, it's also resulted from effective business strategies that out-compete in today's crowded sportswear market.

Value-based pricing greatly contributed to the company's reported global revenue of more than $44 billion in 2021 . For example, Nike has consistently leveraged consumers' perceptions of its products to drive prices up within their WTP. Nike can do this by creating the highest quality products to justify charging a premium price.

Many of Nike's competitors struggle to follow this same business model because of Nike's most valuable asset: its image. Company leadership at Nike has long understood that its pricing model isn't just reflected in the quality of its products but in the influence of its logo. By understanding its social and market influence, Nike's exclusive products, such as Air Jordans, have contributed to driving its perceived value to an even higher level. As a result, brand value and customer loyalty are two major pillars of Nike's long-term success at consistently raising its customer's WTP.

3. Starbucks

The world's largest coffeehouse chain, Starbucks, also needed to adopt a value-based strategy to gain market domination. In 2008, Starbucks faced immense financial pressure from increasing fast-food chain competition, rising prices in food and supplies, and global strains on coffee trading. In fact, by March 30, 2008, its profits had fallen nearly 28 percent compared to the previous year, leading to 300 closed stores and 6,700 employee layoffs.

To combat these challenges, Starbucks focused on better understanding the company's WTP. According to a letter by Starbucks CEO Howard Shultz, "The company must shift its focus away from bureaucracy and back to customers. We need to reignite the emotional attachment with our customers."

One method of doing this was the "My Starbucks Idea." Its goal was to create a space for customers to exchange ideas with each other and the company about Starbucks' products, services, stores, and corporate social responsibility . With nearly 93,000 ideas recorded and 1.3 million newly generated on social media, Starbucks tapped into what their customers cared about most.

Understanding what drives customer value led to many business model changes synonymous with Starbucks today. For example, free Wi-Fi, lounge chairs, and Starbucks' rewards program all sparked from customer feedback and forums. As a result, Starbucks is widely known as one of the fast-food chains with the highest WTP because of its loyal customer base.

Making Profits the Outcome, Not the Goal

Companies considering a shift in business strategy are often facing financial hardships. Whether an impending bankruptcy, decreasing profit margins, or increasing employee turnover, business strategies are meant to solve these problems. Yet, this isn't where your strategy should start.

"Profit is not the goal," says Oberholzer-Gee in HBS Online's Business Strategy course. "You treat it as an outcome. It's people first, then business."

Business leaders need an in-depth understanding of customer value to succeed in today's competitive marketplace. While real-world examples illustrate the implementation of these value-based strategies, taking an online course like Business Strategy can help you create an effective business strategy that wins over customers while generating a profit.

Are you interested in learning how customer value relates to financially successful business strategies? Explore our online course Business Strategy , or other strategy courses , to develop your strategic planning skills. To determine which strategy course is right for you, download our free flowchart .

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Lessons from Amazon’s Early Growth Strategy

If you’re interested in strategies for scaling start-ups, this episode is for you.

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So much has been written about Amazon’s outsized growth. But Harvard Business School professor Sunil Gupta says it’s the company’s unusual approach to strategy that has captured his scholarly attention. Gupta has spent years studying Amazon’s strategy and its founder and former CEO Jeff Bezos.

In this episode, Gupta shares how Amazon upended traditional corporate strategy by diversifying into multiple products serving many end users, instead of having a narrow focus.

He argues that some of Amazon’s simplest business strategies — like their obsession with customers and insistence on long-term thinking — are approaches that companies, big and small, can emulate.

Key episode topics include: strategy, innovation, leadership, scaling, Jeff Bezos, long-term thinking, customer focus.

HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week.

• Listen to the full HBR IdeaCast episode: How Jeff Bezos Built One of the World’s Most Valuable Companies (2020)
• Find more episodes of HBR IdeaCast
• Discover 100 years of Harvard Business Review articles, case studies, podcasts, and more at HBR.org .

HANNAH BATES: Welcome to HBR On Strategy , case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock new ways of doing business.

So much has been written about Amazon’s outsized growth. But Harvard Business School professor Sunil Gupta says it’s the company’s unusual approach to strategy that has captured his scholarly attention.

Gupta has spent years studying Amazon’s strategy and its founder and former CEO, Jeff Bezos.

In this episode, Gupta shares how Amazon upended traditional corporate strategy by diversifying into multiple products serving many end users instead of focusing more narrowly.

And he argues that some of their simplest business strategies – like their obsession with the customer and insistence on long-term thinking – are approaches that companies, big and small, should emulate.

If you’re interested in innovation strategy, this episode is for you. It originally aired on HBR IdeaCast in November 2020. Here it is.

ALISON BEARD:  Welcome to the HBR IdeaCast from Harvard Business Review.  I’m Alison Beard.

If you had to name the most successful business leader alive today, who would you say?  I can’t hear you from my basement podcasting room, but I would bet that for many of you, the answer is Jeff Bezos, CEO of Amazon.  This is a man who over the past 25 years turned his online bookstore startup into a diversified company currently valued at $1.6 trillion.

Amazon is a digital retailing juggernaut, it’s also a web services provider, media producer, and manufacturer of personal technology devices like Kindle and Echo.  Oh, and Bezos also owns the Washington Post and Blue Origin, a space exploration company.  Forbes tells us he is the richest person in the world.

How did he accomplish so much?  How did he change the business landscape?  What mistakes has he made along the way?  A new collection of Bezos’s own writing, which full disclosure, my colleagues at Harvard Business Review Press have published, offer some insights.  Here’s a clip from one speech that’s included.  The book is called Invent and Wander.

And our guest today, who has spent years studying both Amazon and Bezos, is here to talk with me about some of the key themes in it, including the broad drivers of both the company and the CEO’s success.  Sunil Gupta is a professor of business administration at Harvard Business School and cochair of its executive program, and cochair of its executive program on driving digital strategy, which is also the title of his book.  Sunil, thanks so much for being on the show.

SUNIL GUPTA:  Thank you for having me, Alison.

ALISON BEARD:  So Invent and Wander.  I get that Bezos is inventive.  You know, he created a new way for us to buy things – everything.  How is he also a wonderer?

SUNIL GUPTA:  So he’s full of experiments.  His company and his whole style is known for experimentation, and he says that in so many words that if you want big winners, then you have to be willing to have many failures.  And the argument is, one big winner will take care of a thousand failed experiments.  So I think that’s the wandering part.  But also his experiments are not aimless.  There is a certain thought and process behind what experiments to do and why they will connect to the old, old picture of what Amazon is today.

ALISON BEARD:  And your expertise is in digital strategy.  How does he break the traditional rules of strategy?

SUNIL GUPTA:  So for the longest time the way, at least I was taught in my MBA program and the way we teach to our MBA students and executives, is strategy is about focus.  But if you look at Amazon, Amazon certainly doesn’t look like it’s focusing on anything, so obviously Jeff Bezos missed that class, otherwise it’s a very, very different thing.

And then you’d say, why is it that so called lack of focus strategy seems to be working for Amazon?  And I think the fundamental underlying principle that he’s guiding his whole discussion of strategy is, he’s changed the rules of strategy.  So the old rules of strategy were, the way you gained competitive advantage is by being better or cheaper.  So if I am selling you a car, my car is better of cheaper.  But the inherent assumption in that strategy statement is, I’m selling one product to one customer.  And what Amazon is basically arguing is, the digital economy is all about connection.  We have got to connect products and connect customers.  Let me explain why that is so powerful.

So connecting products, here the idea is, I can sell you, this is a classic razor and blade strategy.  I can sell you a razor cheap in order to make money on the blade.  So I can sell you Kindle cheap in order to make money on the ebooks.  Now, at some level you might say, hey, razor and blade have been around forever.  What’s so unique today?  I think unique today is razor could be in one industry and blades could be in completely different industrys.

So for example, if you look at Amazon’s portfolio of businesses, you sort of say, not only Amazon is an e-commerce player, but also is making movies and TV shows, its own studio.  Well, why does it make sense for an e-commerce player, an online retailer to compete with Hollywood.  Well, Walmart doesn’t make movies.  Macy’s doesn’t make movies?  So why does it make sense for Amazon to make movies?

And I think once you dig into it, the answer becomes clear that the purpose of the movies is to keep and gain the Prime customers. Two day free shipping is fine, but if  you ask me to pay $99 or $119 for two day free shipping, I might start doing the math in my head, and say, OK, how many packages do I expect to get next year?  And is the Prime membership worth it or not?

But once you throw in, in addition to the two-day free shipping, you throw in some TV shows and movies that are uniquely found only on Amazon, I can’t do this math.  And why is Prime customers important to Amazon?  Because Prime customers are more loyal.  They buy three or four times more than the non-Prime customers, and they’re also less price sensitive.

And in fact, Jeff Bezos has said publicly that every time we win a Golden Globe Award for one of our shows, we sell more shoes.  So this is, and he said it in your book, Invent and Wander, also, that we might be the only company in the world which has figured out how winning Golden Globe Awards can actually translate into selling more products on the online commerce.

So this is a great example of the razor being in a very different industry and blade being in another industry.  Take another example.  Amazon has a lending business where they give loans to small and medium enterprises. If Amazon decides to compete with banks tomorrow, Amazon can decide to offer loans to the small merchants at such a low price that banks would never be able to compete.  And why would Amazon be able to do that?  Because Amazon can say, hey, I’m not going to make money on loans, as much money on loans, but I’ll make more money when these businesses, small businesses grow and do more transactions on my marketplace platform.  And I get more commissions.  So again, loan can become my razor in order to help the merchants grow and make money on the transaction and the commission that I get from that.  The moment I make somebody else’s, in this case the banks, core business my razor, they will make a very hard time competing.  So I think that’s the key change, the fundamental rules of strategy and competition in that direction.

The second part of connection is connecting customers, and this is the classic network effect.  So marketplace is a great example of network effects.  The more buyers I have, the more sellers I have.  The more sellers I have, the sellers I have, the more buyers I get, because the buyers can find all the items.  And that becomes flywheel effect, and it becomes a situation where it’s very hard for a new player to complete with Amazon.

ALISON BEARD:  In this diversification that Amazon has done, how have they managed to be good at all of those things?  Because they’re not focused.  You know, they’re not concentrated on an area of specific expertise.  So how have they succeeded when other companies might have failed because they lacked that expertise, or they were spreading themselves too thin?

SUNIL GUPTA:  So I think it depends on how you define focus.  Most of us, when we define focus, we sort of define focus by traditional industry boundaries, that I’m an online retailer, therefore going into some other business is lack of focus.  The way Amazon thinks about is focus on capabilities.

So if you look at it from that point of view, I would argue that Amazon had three fundamental core capabilities.  Number one, it’s highly customer focused, not only in its culture, but also in its capability in terms of how it can actually handle data and leverage data to get customer insight.  The second core capability of Amazon is logistics.  So it’s now a world class logistics player.  It uses really frontier technology, whether it’s key word, robotics, computer vision, in its warehouse to make it much more efficient.

And the third part of Amazon’s skill or the capability is its technology.  And a good example of that is Amazon Web Services, or AWS.  And I think if you look at these three core capabilities, customer focus and the data insight that it gets from that, the logistics capability, and the technology, everything that Amazon is doing is some way or the other connected to it.  In that sense, Amazon, and there’s no lack of focus, in my judgment on Amazon.

Now, if he starts doing, starts making cream cheese tomorrow or starts making airplane engines, then I would say, yes, it’s got a lack of focus.  But one of the other things that Jeff Bezos has said again and again is this notion of work backwards and scale forward.  And what that means is, because you’re customer obsessed, you sort of find ways to satisfy customers, and if that means developing new skills that we don’t have because we are working backwards from what the customer needs are, then we’ll build those skills.

So a good example of that is, when Amazon started building Kindle, Amazon was never in the hardware business.  It didn’t know how to build hardware.  But Bezos realized that as the industry moved, people are beginning to read more and more online, rather, or at least on their devices, rather than the physical paper copy of a book.  So as a result, he says, how do we make it easier for consumers to read it on an electronic version?  And they’re spending three years learning about this capability of hardware manufacturing.  And by the way, Kindle came out long before iPad came out.  And of course, that capability now has helped them launch Echo and many other devices.

ALISON BEARD:  Right.  So it’s the focus on the customer, plus a willingness to go outside your comfort zone, the wander part.

SUNIL GUPTA:  Exactly.

ALISON BEARD:  Yeah.  How would you describe Bezos’s leadership style?

SUNIL GUPTA:  So I think there are at least three parts to it.  One is, he said right from day one that he wants to be a long-term focus.  The second thing is being customer obsessed.  And many times he has said that he can imagine, in the meetings he wants people to imagine an empty chair.  That is basically for the customer. And he says, we are not competitor focused.  We are not product focused.  We are not technology focused.  We are customer focused.  And the third is, willingness to experiment.  And fail, and build that culture in the company that it’s OK to fail.

ALISON BEARD:  What about personally, though?  Is he a hard charger?  Is he an active listener?  What’s it like to be in a room with him?

SUNIL GUPTA:  Oh, he’s certainly a hard charger.  I mean, he’s also the kind of guy, when he hires people, he says, you can work long, hard, or smart.  But at Amazon, you can choose two out of three.  And I think this is similar to many other leaders.  If you look at Steve Jobs, he was also a very hard charging guy.  And I think some people find it exhilarating to work with these kind of leaders.  Some find it very tough.

ALISON BEARD:  Do you think that he communicates differently from other successful CEOs?

SUNIL GUPTA:  So the communication style that he has built in the company is the very famous now, there’s no PowerPoints.  So it’s a very thoughtful discussion.  You write six-page memos, which everybody, when their meeting starts, everybody sits down and actually reads the memo.

In fact, this was a very interesting experience that I had.  One of my students, who was in the executive program, works at Amazon in Germany.  And he is, he was at that point in time thinking of moving to another company and becoming a CEO of that company.  So he said, can I talk to you about this change of career path that I’m thinking about?  I said, sure.  So we set up a time, and five minutes before our call, he sends me an email with a six-page memo.  And I said, well, shouldn’t he have sent this to me before, so I could at least look at it?  He says, no, that’s the Amazon style.  We’ll sit in silence and read it together.  And so I read it together, because then you’re completely focused on it.  And then we can have a conversation.  But this discipline of writing a six-page memo, it’s a very, very unique experience, because you actually have to think through all your arguments.

ALISON BEARD:  You also mentioned the long term focus, and that really stood out for me, too, this idea that he is not at all thinking of next year.  He’s thinking five years out, and sometimes even further.  But as a public company, how has Amazon been able to stick to that?  And is it replicable at other companies?

SUNIL GUPTA:  I think it is replicable.  It requires conviction, and it requires a way to articulate the vision to Wall Street that they can rally behind.  And it’s completely replicable.  There are other examples of companies who have followed a similar strategy.  I mean, Netflix is a good example.  Netflix hadn’t made money for a long period of time.  But they sold the vision of what the future will look like, and Wall Street bought that vision.

Mastercard is exactly the same thing.  Ajay Banga is giving three year guidance to Wall Street saying, this is my three-year plan, because things can change quarter to quarter.  I’m still responsible to tell you what we are doing this quarter, but my strategy will not be guided by what happens today.  It will be guided by the three-year plan that we have.

ALISON BEARD:  There are so many companies now that go public without turning any profit, whereas Amazon now is printing money, and thus able to reinvest and have this grand vision.  So at what point was Bezos able to say, right, we’re going to do it my way?

SUNIL GUPTA:  I think he said it right from day one, except that people probably didn’t believe it.  And in fact, one of the great examples of that was, when he was convinced about AWS, the Amazon Web Services, that was back in the early 2000s, when a majority of the Wall Street was not sure what Jeff Bezos was trying to do, because they say, hey, you are an online retailer.  You have no business being in web services.  That’s the business of IBM.  And that’s a B2B business.  You’re in a B2C business.  Why are you going in there?

And Bezos said, well, we have plenty of practice of being misunderstood.  And we will continue with our passion and vision, because we see the path.  And now he’s proven it again and again why his vision is correct, and I think that could give us more faith and conviction to the Wall Street investors.

SUNIL GUPTA:  Oh, absolutely.  And he’s one of the persons who has his opinion, and you always surround yourself with people better than you.

ALISON BEARD:  How has he managed to attract that talent when it is so fiercely competitive between Google, Facebook, all of these U.S. technology leaders?

SUNIL GUPTA:  So a couple of things I would say.  First of all, it’s always good fun to join a winning team.  And all of us want to join a winning team, so this certainly is on a trajectory which is phenomenal.  It’s like a rocket ship that is taking off and has been taking off for the last 25 years.  So I think that’s certainly attractive to many people, and certainly many hard charging people who want to be on a winning team.

And a second thing is, Amazon’s culture of experimentation and innovation.  That is energizing to a lot of people.  It’s not a bureaucracy where you get bogged down by the processes.  So the two type of decisions that we talked about, he gives you enough leeway to try different things, and is willing to invest hundreds of millions of dollars into things that may or may not succeed in the future.  And I think that’s very liberating to people who are willing to take on the ownership and build something.

ALISON BEARD:  But don’t all of the tech companies offer that?

SUNIL GUPTA:  They do, but if you think about many other tech companies, they’re much more narrow in focus.  So Facebook is primarily in social media.  Google is primarily in search advertising.  Yes, you have GoogleX, but that’s still a small part of what Google does.  Whereas if you ask yourself what business is Amazon in, there are much broader expansive areas that Amazon has gone into.  So I think the limits, I mean, Amazon does not have that many limits or boundaries as compared to many other businesses in Silicon Valley.

ALISON BEARD:  So let’s talk a little bit about Bezos’s acquisition strategy.  I think the most prominent is probably Whole Foods, but there are many others.  How does he think about the companies that he wants to bring in as opposed to grow organically?

SUNIL GUPTA:  So some acquisitions are areas where he thinks that he can actually benefit and accelerate the vision that he already has.  So for example, the acquisition of Kiva was to improve the efficiency and effectiveness of the systems that he already put in place in his warehouse.  And logistics and warehouse is a key component or key part of Amazon’s business, and he saw that Kiva already was ahead of the curve in technology that he probably wanted to have that in his own company.  So that was obvious acquisition, because that fits in the existing business.

Whole Foods is kind of a slightly different story, in my judgment, because I some ways, you can argue, why is Amazon, an online player, buying an offline retail store, Whole Foods?  And in fact, they bought it at 27% premium.  So that doesn’t make sense for an online retailer commerce to go to offline channels.  And I think, in fact, part of the reason in my judgment is, it’s not just Whole Foods, but it’s about the food business, per se.  And why is Amazon so interested in food?  In fact, Amazon has been trying this food business, online food delivery for a long period of time without much success.  And Whole Foods was one, another way to try and get access to that particular business.  And why is that so important to Amazon, even though you could argue, food is a low margin business?

And I would say, part of the reason is, food is something, grocery is something that you buy every week, perhaps twice a week.  And if I, as Amazon, can convince you to buy grocery online from Amazon, then I’m creating a habit for you to come onto Amazon every week, perhaps twice a week.  And once you are on Amazon, you will end up buying other products on Amazon.  Whereas if you are buying electronics, you may not come to Amazon every day.

So this is a habit creation activity, and again, it may not be a very high margin activity to sell you food.  But I’ve created a habit, just like Prime.  I’ve created a loyal customer where you think of nothing else but Amazon for your daily needs, and therefore you end up buying other things.

ALISON BEARD:  And Amazon isn’t without controversy.  You know, and we should talk about that, too.  First, there are questions about its treatment of warehouse employees, particularly during COVID.  And Bezos, as you said, has always been relentlessly focused on the customer.  But is Amazon employee centric, too?

SUNIL GUPTA:  So I think there is definitely some areas of concern, and you rightly said there is a significant concern about the, during the COVID, workers were complaining about safety, the right kind of equipment.  But even before COVID, there were a lot of concerns about whether the workers are being pushed too hard.  They barely have any breaks.  And they’re constantly on the go, because speed and efficiency become that much more important to make sure customers always get what they are promised.  And in fact, more than promised.

Clearly Amazon either hasn’t done a good job, or hasn’t at least done the public relations part of it that they have done a good job.  Now, if you ask Jeff Bezos, he will claim that, no, actually, they have done things.  For example, they offer something called carrier choice, where they give 95% tuition to the employees to learn new skills, whether they’re relevant to Amazon or not.  Pretty much like what Starbucks does for its baristas, for college education and other things.  But I think more than just giving money or tuition, it requires a bit of empathy and sense that you care for your employees, and perhaps that needs, that’s something that Amazon needs to work on.

ALISON BEARD:  And another challenge is the criticism that it has decimated mom and pop shops.  Even when someone sells through Amazon, the company will then see that it’s a popular category and create it itself and start selling it itself.  There’s environmental concerns about the fact that packages are being driven from warehouses to front doors all over America.  And boxes and packaging.  So how has Bezos, how has the company dealt with all of that criticism?

SUNIL GUPTA:  They haven’t.  And I think those are absolutely valid concerns on both counts, that the small sellers who grow to become reasonably big are always under the radar, and there are certainly anecdotal evidence there, small sellers have complained that Amazon had decided to sell exactly the same item that they were so successful in selling, and becoming too big is actually not good on Amazon, because Amazon can get into your business and wipe you away.  So that’s certainly a big concern, and I think that’s something that needs to be sorted out, and Amazon needs to clarify what its position on that area is, because it benefits from these small sellers on his platform.

And your second question about environmental issues is also absolutely on the money, because not only emission issues, but there’s so many boxes that pile in, certainly in my basement, from Amazon.  You sort of say, and it’s actually ironical that Millennials who are in love with Amazon are extremely environmentally friendly.  But at the same time, they would not hesitate to order something from Amazon and pile up all these boxes.  So I think Amazon needs to figure out a way to think about both those issues.

ALISON BEARD:  And at what point will it have to?  I mean, it seems to be rolling happily along.

SUNIL GUPTA:  Well, I think those issues are becoming bigger and bigger, and it’s certainly in the eye of the regulators, also, for some of these practices.  And not only because it’s too big, and there might be monopoly concerns, but these issues will become larger, and any time you become a large company, you become the center of attraction for broader issues than just providing shareholder value.

ALISON BEARD:  Yeah.  So those are weaknesses possibly for the company.  What are some of Bezos’s personal weaknesses that you’ve seen in studying him and the company?

SUNIL GUPTA:  So I think one thing that stands out to me, and at least in the public forums, I have not seen any empathy.  And it’s, I mean, we talk about that the leaders have, should have three qualities.  They should be competent.  They should have a good character.  And they should have compassion.  So he’s certainly very competent.  I mean, he’s brilliant in many aspects, right, from the computer vision and AI and machine learning, to the nuances of data analytics, to the Hollywood production, etc.  He also seems to have good character, at least I have not heard any personal scandals, apart from his other issues in his personal life, perhaps.

Those characteristics of competence and character make people respect you.  What makes people love you is when you show compassion, and at least I haven’t seen compassion or empathy that comes out of him.  I mean, he certainly comes across as a very hard charging, driven person, which probably is good for business.  But the question of empathy is perhaps something lacking right now.

ALISON BEARD:  Yeah.  The other issue is his just enormous wealth.  He did invent this colossally valuable company, but should anyone really be that rich?

SUNIL GUPTA:  Well, I guess that’s, you can say that’s the good or the bad thing about capitalism.  But I think, and again, my personal view is there’s nothing wrong in becoming rich, if you have been successful and done it with hard work and ingenuity.  But how you use your wealth is something that perhaps will define Jeff Bezos going forward.  I think Bill Gates is a great example how he actually has used his wealth and his influence and his expertise and his brilliance into some certain thing that actually is great for humanity.

Now, whether Jeff Bezos does that down the road, I don’t know, whether his space exploration provides that sort of outlet which is both his passion as well as good for humanity, I don’t know.  But at some point in time, I think it’s the responsibility of these leaders to sort of say, my goal is not simply to make money and make my shareholders rich, but also help humanity and help society.

ALISON BEARD:  If you’re talking to someone who’s running a startup, or even a manager of a team at a traditional company, what is the key lesson that you would say, this is what you can learn from Jeff Bezos?  This is what you can put to work in your own profession?

SUNIL GUPTA:  So I would say two things that at least I would take away if I were doing a startup.  One is customer obsession.  Now, every company says that, but honestly, not every company does it, because if you go to the management meetings, if you go to the quarterly meetings, you suddenly go focus on financials and competition and product.  But there’s rarely any conversation on customers.  And I think, as I mentioned earlier, that Jeff Bezos always tells his employee to think of the imaginary chair in which a customer is sitting, because that’s the person that we need to focus on.  Howard Shultz does the same thing at Starbucks, and that’s why Starbucks is so customer focused.

So I think that’s the first part.  And the argument that Bezos gives is, customers are never satisfied.  And that pushes us to innovate and move forward, so we need to innovate even before the rest of the world even sees that, because customers are the first ones to see what is missing in the offering that you have.

And the second I would say that I would take away from Jeff Bezos is the conviction and passion with what you do.  And many times that goes against the conventional wisdom.  And the Amazon Web Services is a great example of that.  The whole world, including the Wall Street Journal and the Wall Street analysts were saying, this is none of Amazon’s business to do web services.  But he was convinced that this is the right thing to do, and he went and did that.

And part of that conviction may come from experiments.  Part of that conviction comes from connecting the dots that he could see that many other people didn’t see.  I mean, that’s why he went, left his job, and went to Seattle to do the online bookstore, because he could see the macro trends as to what the Internet is likely to do.  So, I think that’s the vision that he had.  And once you have the conviction, then you follow your passion.

ALISON BEARD: Sunil, thanks so much for coming on the show.

SUNIL GUPTA:  Thank you for having me. Alison.

HANNAH BATES: That was Harvard Business School professor Sunil Gupta, in conversation with Alison Beard on the HBR IdeaCast .

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Apple Corporate Strategy & Business Strategies Essay

Introduction.

In the current business environment, competition continues to increase as firms become more global in their operations. Basically, firms use both business-level and corporate-level strategies in order to gain a competitive advantage over their rivals.

Business-level strategies refer to activities that business enterprises undertake to gain a competitive advantage in the market, which in most cases involves exploiting core competencies that add value to customers. This may be in the form of being unique in operations of providing different products from those of competitors.

Basically, there are five business-level strategies that a firm can work on to gain a competitive advantage, including “cost leadership, differentiation, integrated cost leadership/differentiation, focused cost leadership, and focused differentiation” (Ireland, Hoskisson & Hitt, 2010, p. 100).

In this paper, the focus is directed to the Apple corporate strategy and the company’s business-level strategies. The organization operates in the Information and Communication Technology (ICT) industry.

Apple Corporate Strategy: Business Level

Apple corporate-level strategy.

For a long time, Apple has been a dominant force in the technology industry, and this has been enhanced by the subsequent introduction of better technologies in the iPhone, iPad, and MacBook. One area in which Apple beats its rivals is the differentiation of its products, where it has dominated in computers, mobile phones, digital music players, and online music stores (Harrison & John, 2009).

Here, Apple’s strategy is to engage a single company to provide operating systems and hardware for its products (Hill & Jones, 2012). This allows the company to concentrate on design quality. Moreover, the company has positioned itself in the high-end market because it has a reputation for creating products that customers highly value.

Another differentiation strategy that Apple has adopted relates to the distribution of its products, where it has established retail stores around the world. Moreover, the company’s service delivery is unique and superior, as it boasts of a state-of-the-art bar for technical support, continuous and dedicated customer service, and allows customers to first sample their products before buying them.

These strategies have made the company maximize profitability by offering products that stand out in terms of high quality and design, advanced innovation, and user-friendliness.

Cost Leadership Strategy

The company has invested heavily in the innovation of its products through a vibrant R&D department (Ireland et al., 2010). The cost leadership strategy normally involves providing valuable and acceptable products to customers at a relatively low and competitive price. Normally, firms strive to maximize profits through efficient production and delivery of products that enhance cost savings.

This is done by establishing efficient scale facilities, minimizing manufacturing and overhead costs, minimizing costs related to sales, research, development, and service delivery, and installing updated and efficient manufacturing facilities (Ireland et al., 2010).

All in all, cost leadership is the most widely used strategy to gain a competitive advantage in the market while at the same time operating profitably.

Apple has adopted this strategy by producing cost-effective, high-quality products using affordable and economically viable raw materials, which is enhanced by the presence of a powerful, innovative management team and staff in the production, marketing, and delivery of products.

Another cost leadership strategy that Apple has applied is forming business alliances with other successful companies, allowing the company to concentrate on innovation and market intelligence.

For example, Apple offers iTunes service that enables other firms to distribute music, videos, and games digitally at a low cost, thus eliminating the need for physical disks and tapes. In addition, this strategy becomes more successful by eliminating middlemen and selling its products directly through its website.

Apple’s Corporate-Level Strategies

Apple’s corporate-level strategies include the close-related diversification of its products at moderate and high levels, including home computers, personal computers, mobile phones, music stores, and software.

Moreover, the company has a blend of personal computing and entertainment with a high level of integration, allowing it to be more efficient in producing and delivering products at relatively competitive prices while remaining profitable.

One advantage of this diversification strategy is that customers can get their preferred product of a high quality and design standard since all these products are highly integrated and run on the same operating system.

Another corporate strategy involves forming strategic alliances in order to benefit from economies of scale, tap knowledge from competitors, and share risks and costs. Among the alliances that Apple has entered, one may present AT&T for the production of the iPhone, Microsoft for software to be used in Mac computers, and Intel for processors.

Internationalization of production is another corporate strategy adopted by Apple, whereby the company has established its production base in China to take advantage of low labor costs, access to raw materials, a high potential market, and a favorable economic environment due to the stability of China’s economy.

Here, Apple beats the competition by producing standardized products in the global market, as engineering design and manufacturing are closely controlled and centralized. It, therefore, becomes easy to identify Apple’s products, the only customization being the power source due to differences in voltage in various countries (Ireland et al., 2010).

Competition Environment

The technology industry is very competitive, given the presence of many players operating in it. Apple faces stiff competition at all levels and in all lines of its business. In the computing segment, the company observes great competition from Microsoft, IBM, HP, and Acer; in the mobile and smartphones business, Samsung is considered a direct competitor; and in portable music devices, Apple’s main competitor is Microsoft.

With the global market continuing to expand, competition is increasing due to the globalization of trade. Primarily, Apple’s iPhone and iPad are compared with the Samsung smartphones (most notably the Galaxy family).

Indeed, according to Guglielmo (2013), the competition in the smartphone business is very tough. However, the greatest competition for Apple is in the tablet business, where rival brands have taken about 28% of the Apple tablet’s market share in the second quarter of 2013.

Despite this competition, Apple’s business-level strategies have enabled it to continue controlling the market due to a high differentiation strategy that revolves around the company’s ability to design and develop its own software and hardware, continued innovation, and vibrant research and development team.

In a broad competitive scope, the company goes on developing innovative products, most notably iPads, iPhones, and the iTunes store. Moreover, the company has released a new iPad Air, which follows the recently created MacBook Air notebook and Mac Pro desktop (Guglielmo, 2013). Indeed, this differentiation has allowed the company to price the products at a premium while still retaining its loyal customers.

At the corporate level, Apple’s main competitor is Samsung, which is known for its smartphone business line, with the most recent Galaxy S4 putting the iPhone behind in terms of features and technology.

This rivalry is more aggressive considering that Samsung has invested heavily in competitor intelligence (where it studies what competitors are doing and then releases more sophisticated products – call it imitation or fast follower to some extent) and elaborate supply chain and distribution channels. It is for this reason that Samsung’s revenues keep on rising.

However, to counter this challenge, Apple has ensured that all its products share a common design technique platform. In addition, Apple has established retail stores and online stores, providing a convenient way for customers to purchase and allowing the company to operate at low costs. Moreover, its iTunes store and App stores make the company a leader in the accessibility of digital music, video, and apps.

More importantly, the company has identified the strength of strategic alliances, corporate diversification, internationalization, and vertical integration in beating off competition. Given that competition is adversely affecting the market share of Apple in this industry, the company needs to be more forceful in its business and corporate-level strategies.

However, one thing can be stated for sure: Samsung poses the greatest threat in the phone market to Apple, taking into consideration the recently concluded court suit pitying the two firms on accusations of patent and imitation (Hill & Jones, 2012).

Indeed, Samsung seems to be a dominant force in the future, given its strategic approach to innovation, research and development, penetration, and promotion. In fact, the company has invested heavily in advertising.

Competition in Fast-Cycle and Slow- Cycle Markets

The technology industry lies more in the fast-cycle market. However, there are some products that have moved to the slow-cycle market (such as PCs) while others remain in the fast-cycle market. Smartphones and tablets have seen the fastest growth ever witnessed before, with new gadgets hitting the market and being replaced almost immediately, even before customers have been fully oriented to them.

The two main rivals, Apple and Samsung, seem to be pushing very hard to outdo each other in the smartphone market. For example, Samsung introduced the Galaxy S4 smartphone, which immediately hit the market with aplomb, but even before it had sunk into the minds of consumers, Apple hit back with a more sophisticated iPhone, the 5S.

With this trend, there will be a big battle in the future for both companies, and neither can be sure of being the dominant firm in the market and still remain profitable. In the slow-cycle market, Apple seems to have a brighter future than Samsung.

The technology industry is very competitive and requires firms operating in it to be very intense in their strategies in order to not only gain a competitive advantage but also operate profitably. Companies can adopt business-level strategies and corporate-level strategies, which will make them more attractive to customers.

Apple Inc. has initiated business-level strategies focusing on cost leadership and differentiation, which have made the firm a dominant force in almost all its lines of business, with products like Mac computers, iPhones, iPads, iTunes, and App stores taking a big market share. Its strategy of universal engineering design and retail stores, where personalized services are offered, works well for the company.

Moreover, the company’s corporate strategies of diversification, strategic alliances, and internationalization have been very positive. However, in this fast-cycle market, stiff competition exists among such big companies as Samsung.

Guglielmo, C. (2013). Apple’s Pricey iPads Protect Premium Brand, Profit Margins, Leaving Low-End to Android Tablets . Web.

Harrison, J., & John, C.St. (2009). Foundations of Strategic Management . Belmont, CA: Cengage Learning.

Hill, C., & Jones, G. (2012). Strategic Management Theory: An Integrated Approach . Belmont, CA: Cengage Learning.

Ireland R.D., Hoskisson, R.E., & Hitt, A. (2010). Understanding Business Strategy Concepts Plus . Belmont, CA: Cengage Learning.

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