When examining the environment, it is necessary to calculate the level of risk in that environment. Similarly, it is important for a firm to adopt a strategy to deal with that uncertainty. De Kluyver and Pearce describe four levels of increasing uncertainty that range from a clear future to complete ambiguity. A firm’s response to their environment can categorize them as a shaper of the environment, an adapter to the changes of others, or those reserving the right to play (2012). By understanding the uncertainty of their environment and their strategic posture, a firm may develop an appropriate response to change.
Although generally thought of as a general technology company, Apple’s most important business is smartphones. In the third quarter of 2015 alone, Apple enjoyed revenues in excess of $31 Billion from the sale of iPhones. This is a startling 63% of their total revenue for the quarter (Apple, 2015). Clearly Apple’s current standing is highly dependent on the continued performance of the iPhone and their strategy in the smartphone industry. The environment of the industry can best be described as level two — an environment of alternate futures. The industry is dominated by a limited number of firms, and Apple owned a 13.9% market share in the second quarter of 2015 (IDC, 2015). Despite not being the market leader in the industry, Apple has a unique position thanks to their early innovation in the industry and the most popular alternative to smartphones running the Android operating system. As such, Apple has traditionally played the role of shaper in the smartphone industry. In order to maintain and grow their market share, Apple must to continue to innovate in the smartphone industry. As it currently stands, Apple raked in 89% of the profits in the smartphone industry in the fourth quarter of 2014 (Lunden, 2015). Apple must continue to lead the industry in margin in order to enjoy such high margins without dominant marketshare.
Apple, Inc. (2015). Q3 2015 Unaudited Summary Data. Retrieved September 4, 2015.
De Kluyver, C. & Pearce, J. (2012). Strategy: A View From the Top (4th ed.). Boston: Prentice Hall.
IDC. (2015). Smartphone Vendor Market Share, 2015 Q2. Retrieved September 4, 2015.
Lunden, I. (February 26, 2015). Apple Took 89% Of Q4 Smartphone Profits With Android OEMs In A Race To The Bottom. Techcrunch. Retrieved September 4, 2015.