A. Potential Risks
The introduction of new products can be a huge risk for a company, and for many reasons. In some instances, the success or failure of a product launch can make or break a company. One of the most serious risks a company takes on with new products is the financial risk. The amount of effort that goes into the research and development, design, and manufacture of a product is translated into significant capital. The process of developing televisions is a huge undertaking for Apple, just because of the size and specifications of the raw materials used to create it and how greatly they differ from Apple’s flagship products like the iPhone.
The risk increases tenfold when you are developing a new product and are unsure
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Apple acknowledges and accepts that they have already used a large amount of capital in the planning and production of the new product. Some risk cannot be avoided, and the company must accept that.
Secondly, they will need to use the concept of risk limitation in the manufacturing of the new product. Apple is accustomed to manufacturing millions of units to be available soon after product launch. However, this has been done with products that are proven sellers. The new product will be manufactured on a much smaller scale in relation to number of units. This will be done to limit the amount of risk in the new product before they can develop a proper demand forecast. Fewer units will save money, and decrease overhead in storage and shipping costs. It will also work to Apple’s advantage if the initial interest is favorable. Less supply will further drive up demand for the product.
Risk transference is a concept that Apple is quite familiar with. “Risk transference is the involvement of handing risk off to a willing third party” (Herrera, 2013). Apple is notorious for doing this with the manufacturing phase of their production. Apple is able to transfer and mitigate risk in the manufacturing process since all of the labor is outsourced to China, where the assembly and packaging takes place. This transfers risk associated with factory safety,
In the case of the supply chain, Apple needs to maintain control over suppliers like it has been doing. The increasing competition form Samsung could affect the ability to obtain those exclusivity agreements.
This report outlines the various stages and the evaluation processes that are usually encountered when implementing a new product in the market, which is new to the organization.
Even the greatest companies in the world have a weakness, and Apple Inc. is no different. The few weaknesses of Apple Inc. include higher prices than competitors, matching consumer expectations, overdependency on a few products, and incompatibility with third-party products and software (Bhasin, 2018; Dudovskiy, 2018). In 2017, the average price of a cell phone was $400. The cost of a new iPhone in 2017 was about $749 (Dudovskiy, 2018). However, Apple Inc. claims the value and superior craftmanship justifies the higher price tag. As mentioned earlier, Apple Inc. has produced unapparelled products year after. The downside to this is that consumers now have great expectations of Apple Inc (Bhasin, 2018). Consumers want the continued high level of innovativeness year after year which is difficult for any company to provide. The product line-up of Apple Inc. includes seven to eight main categories of products. A fail in any category results in a huge hit to Apple Inc. Apple Inc. products are mostly only compatible with other Apple products. This is really a double edge sword for Apple Inc. On one side, it forces consumers to purchase other Apple products on the other side some consumers refuse to own any Apple products and Apple Inc. loses out on many possible relationships with third-party products and
The information technology industry is very dynamic and extremely competitive. Being an innovator and trendsetter Apple relies on new product development through its research and development division to
Technology Strategies for New Product Development Rationalist approaches to technology strategy, such as that of Porter,1 view technological innovation as a relatively unproblematic aspect of corporate strategy. This article will attempt to show that the development of new products by a rm is a more complex, dynamic and uncertain activity than this, dependent for success on organizational as well as technological factors. It will be argued that strategies for technological innovation are, by implication, risk management systems. Here we are referring to the introduction of some means of control over the cost and direction of new technologies,
The question is whether Apple strategy will continue proving efficiently innovative. Historically Apple suffered of some kind of a crisis every decade. Another key issue is the strong focus on the development of the
Apple Inc. always wants to be in the increase sales non decrease situations. When Apple
After eight rounds of simulation, we concluded that the introduction of new products across the segments was a necessity that could not be ignored if we were to remain competitive in this particular high tech market. Our competitors introduced products early on and such introduction took their tolls early on; our team was able to capitalized on these activities by making the necessary adjustments to the current product line
Because the external environment of any company is ever-changing, opportunities must be sought and taken to succeed and continue to compete in the marketplace. Such opportunities can be derived from a variety of reasons (such as new regulatory restrictions or internal mandates), so taking the time to properly identify prospective opportunities for product development is absolutely crucial for an advantage over existing and potential competitors (Crawford, Di Benedetto, 2015). While many companies' products are in a position where they could likely continue to thrive as they are, seeking and taking new opportunities to sustain product growth could pay off in the long run.
Diversification: Developing new products in new markets can be a riskier strategy given the unproven market place. However, if innovation is a business value it may be worth the risk as long as you understand what’s at stake.
Apple’s management had predicted its margins to be shrieked for the next 5 years; as a cause of that recession that reshaped the market. The management took a fast and smart decision and they
As mentioned earlier, Apple’s supply chain relies on third party suppliers and outsourcing to produce their devices. This strategy can become extremely risky in satisfying demand when resources are limited to one supplier, as seen in the company’s recent failing in meeting demand for the
Apple has done an excellent job of developing a very distinct strategy through industry leading innovation. This strategy has allowed them to be the frontrunners in new product introductions and the improvement of existing products. Apple has employed a differentiation strategy in an attempt to meet the needs of a global market by offering customers innovative new products and improved existing products. An important part of their strategy involves meeting the needs of the evolving digital electronics and computer markets. Apple has chosen to implement its strategy by designing and developing its
Apple’s financial position seems to be their strong point, compared to their operations aspect of their organization. Luckily for Apple, their working capital, net property, total assets, long term assets and stockholders equity has managed to increase over the past three years. Apple’s working capital went from 17.02 Billion in 2011, to a staggering 29.63 Billion in 2013. This type of data shows that Apple has the opportunity to grow and
Starting a new product is never easy for a company. The difficulties they face are diverse in nature, and often they lack initiatives so that customers are not interested in the product.