Growth Strategy: Diversification Apple: Name: Aishwarya Swaroop Div:G Roll Number: N095

Name : Aishwarya Swaroop DIV:G
Roll number : N095
GROWTH STRATEGY : DIVERSIFICATION
APPLE
A growth strategy is a set of actions that helps you to achieve a higher level of market share
than you currently have. A growth strategy is not necessarily focused only on short-term
earnings, it can be long-term, too. There are four basic growth strategies which can be
employed for growth of a company i.e market penetration, product development, market
expansion and diversification.
Diversification takes place when a business expands into a new market or develops a new
product. Mostly, businesses diversify to mitigate risk by reducing potential harm to the business
during economic slowdowns. The basic idea is to expand into a business activity that doesn't
negatively react to the same economic slowdown as your current business activity. If one of
your business enterprises is taking a hit in the market, one of your other business enterprises
will help cover the losses and keep the company going. A business may also use diversification
as a growth strategy and for gaining a advantage.
There are two ways in which companies can follow diversification strategy and they are related
(concentric) and unrelated (conglomerate) .Related diversification is the strategy that a
company uses when adding related products or markets to the company to reach a strategic fit
to the company.Unrelated diversification is the strategy that a company uses when adding
unrelated or markets to their line of business when the company's line of business is different.
DIVERSIFICATION OF APPLE
Apple Inc. (previously Apple Computer, Inc) is a multinational organization which was
established on April 1, 1976 in California and was incorporated on January 3, 1977. The
company was named as Apple Computer Inc. for 30 years but as it wanted to expand to the
consumer electronics market and do not only stay in the computer market it changed its name
to Apple Inc. on January 9, 2007.
Earlier Apple operated only in the computer hardware manufacturer segment but slowly they
started spreading their business in other domains also starting from iPods in 2001. The
company has a track record of diversifying to improve its performance and drive shareholder
value. Apple Computer became Apple Inc in 2007, marking its focus on consumer electronics.
Starting from the introduction of iPod in 2001. Here Apple was entering into a whole different
area from the computer market and so he targeted the customers who were very much
inclined in music was aiming for existing customers to buy an iPod and for new customers to try
one and also try the services of Apple.
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Then came the introduction of iPhone. In 2007 Apple introduced the iPhone, the first mobile
phone from Apple. With the specific product, it entered immediately to the mobile market
which was totally new to them and in which did not have any previous experience. Apple knew
that it should have many competitors and it knew that the product will be either a failure or a
success. Therefore, with appropriate marketing and management strategies, iPhone proved to
be a success again.
Then came the introduction of iPad in 2010. With this product Apple was aiming on targeting
the customers who used the Internet almost all time but did not want to carry a notebook with
them. With iPad Apple they did not enter to a completely different market because iPad is like
an iPhone with a bigger screen. Therefore, Apple knew how to handle this type of product.
The next series of products were Apple TV, Apple Watch and Homepods.
Apple is growing the product palette. In 2010, there was iTunes, the App Store, Podcasts and
iBooks. Now there's Apple Music, iCloud, HealthKit, Apple Maps and many more contributing to
this virtuous cycle. Every time Apple sells an iPhone to a new customer, the company ensures a
potential new services subscriber and each new sign-up makes it more likely that the user will
again opt for an iPhone when the time comes to upgrade.
Apple’s recently decided to launch a new credit card and streaming service which has been
looked as an attempt to strengthen its services business in the face of falling global iPhone
sales.Even with a strong list of partners, the company’s decision to become a content curator is
not without risk. It will take time and money to develop a catalogue of high-quality news
programmes, drama series, documentaries and films that will appeal to its global customer
base.The key to de-risking any move to diversify lies in good quality data and knowing how to
use it. In Apple’s case, the business has a ready-made market for its credit card
and streaming service and through a process of consumer market testing by profile, content
type, territory and device, and so can predict demand for its diversified offering with some
degree of certainty. This data can be used to plot a roll-out plan that is geared to optimize
returns while managing and reducing financial risk and protecting enterprise value.
At present Apple has 270 million paid subscriptions, which is up 100 million on a year-over-year
basis. Services delivered $9.2 billion in revenue, which was up 30 percent on a year-over-year
basis. The services revenue is, for all intents and purposes, and ongoing tax on Apple’s users. If
someone owns an iPhone, he will probably subscribe to iCloud to expand storage. If one owns
an iPhone, he will probably download apps and make in-app purchases. If you own an iPhone,
you might even be an Apple Music subscriber. Apple doesn’t break out its margin on this
business, but it would appear to be a relatively light lift for Apple, so it should be a highly
profitable business since, and it should be a business that steady, and growing.
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Summarizing, Apple has a potentially great future business in wearables, it has an amazing
current business with iPhones, and it has a decent recurring revenue business with services. It
looks that Apple is well balanced for the future, just as much as any other major tech company.
Apple has a significantly more diverse product offering now than it had a decade before. This
could have lead to a certain lack of focus, but is hasn’t. All these new products have only served
to make the company productive and much more profitable and progressively valuable.
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GROWTH STRATEGY : DIVERSIFICATION

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