Strategic Positioning: A Source of Competitive Advantage - Iloka Benneth Chiemelie, Muneeb Mandalla

INTRODUCTION

Strategic position has been a subject of discussion in recent marketing literatures (see Fahy and Smithee, 1999), with these literatures supporting the idea that strategic position of a firm can be used to create competitive advantage. Strategic position of corporations is concerned with the impact of strategy of the external environment, internal resources and competences, and the demand of stakeholders from the corporation (McKee et al., 1989; Golden et al., 1995: Conant et al., 1990; Woodside et al., 1999: McDaniel and Kolari, 1987). Bases for understanding the strategic position of an organization can be viewed from consideration of the environment, strategic capability, the expectations and purposes within the cultural and political framework of an organization.

It is important to take into account the strategic position of organizations, as it helps to aces and forecast whether the current strategic adopted by the company is suitable for the future. it helps organizations in determining needed changes, and whether it is capable of effecting such changes. Overly, strategic position forms an integral part of an organization's strategic management process, and it informs the strategic choices to be implemented as well as evaluating the implementation process (Hooley et al., 1998).

Thus, this research paper will be taken as means of illustrating how managers make sense of uncertain world around their organization. For this research paper, the chosen companies are Hawlett-Packard and Apple. Both companies are fierce competitors within the computer and electronic industries. The research paper will begin with a literature review on strategic position to understand the concept with latest studies, theories, applications and research. Then, the two companies will be analyses in a comparison format with Hawlett-Packard as the main player and Apples as the subordinate competitor. Recommendations and conclusion are contained in the final sections of the research paper, followed by subsequent bibliography for cited contents.

CURRENT DEBATE AND ISSUES IN THE COMPUTER INDUSTRY

GLOBALIZATION OF THE COMPUTER INDUSTRY– ASIM (2011)

The global share of hardware production remained heavily within the US, Japan, and Europe in the 1980s, at a total of 87.1% (with 49.2% for the US and 18.9% for Japan) (Dedrick & Kraemer, 2002). However, by the 1990s, the global distribution of computers emerged dramatically and it stretched the supply capacity of existing computer supply chains as a result of high demands. This period of expansion in the computer industry corresponded with greater liberalization of economies and rapid growth in globalization (Athukorala, 2005; Dedrick et al., 2001; Ernst, 2005; Gaullier, Lemoine, & Unal-Kesenci, 2007).

This growth triggered complications within the computer industry because, companies wanted to increase their revenue through improvement in sales but difference in societies meant that different components are needed in a computer. Therefore, it gave rise to many new extranets especially in east Asian countries with reference to Singapore, Taiwan, China, Thailand, South Korea, and Malaysia) from 3% in 1985 to 28.9% in 2000 (Dedrick & Kraemer, 2002). This globalization of computer industry meant that early companies such as IBM will now have to fight to retain their market shares, as these new faster, better and cheaper computers are also being marketed in the markets they maintain presence.

It becomes an issue for both existing and potential new entrants into the computer industry, as globalization will change the industry due to constant increase in both quality and price of computers as companies fight to gain global presence and maintain high market share. The industry is expected to continue to grow with new entrants and this means higher and more intensified competition in both global and domestic markets. 

INTELLIGENT AND KNOWLEDGE BASES AUTOMATION - MAT´IAS ET AL (2007)

In their research, Mat´ıas et al (2007) answered the question of what are the most suitable approaches the computer industry can use in tackling the emergent automation requirement of the 21^st century. The question was raised from the fact that compute users (both industries and individuals) are demanding a fully automated computer and mobile communication devices that does more than just typing and browsing. Consumers of nowadays want a to do all forms of activities such as typing, taking photos, programming, designing, backup, playing games etc. under inside one gadget, and the computer industry must understand that the features of a devices determine the purchasing decision for such devices.

This is a serious debate because an increasingly overwhelming number of computer users are demanding from the industry, a computer devices that will provides an unlimited amount of information, capable of supporting planning and decision making, and optimizes both individual and industrial process (Mat´ıas et al, 2007). Therefore, computer manufacturers must look beyond the conventional use of computer devices and understand that the industry has grown and transformed into a unit solution for all possible intelligent and knowledge based system.

DECREASE IN MARKET CAPITALIZATION – ANDREAS (2000)

The computer industry has witnessed high decrease in market capitalization due to the downfall of technology stock. By September 2000, Dell's stock was off 28%, Gateway's 32%, and Compaq's 19%, and investors knocked off half of Apple's market capitalisation on a single day (Andreas, 2000).

Investors' reluctance to capitalize the market of computer industry can easily be linked to their greediness of wanting to having higher shares in the company, in attend to gain high returns on investment. But, such decision is affecting the computer industry negatively as the capitalization of the market would have helped to generate more capitals that will be invested in research and development, as well as increasing productivity. Therefore, this is an issue that computer industries are facing and necessary measure is needed for the manufacturers to remain competitive through innovation and creativity.

TECHNOLOGICAL COMPETITION – TIMOTHY AND SHANE (1997)

The structure of the computer industry changes dramatically in the 1990s following a long period of stability. In the early history of the industry, a concentrated industry structure that relied on mainframe computers was the concept. However, advancement in technology has opened new comer opportunities and intensified competition to an unbelievable height with new entrants into the industry (Timothy and Shane, 1997).

This above debate has resulted in rapid and sustainable technical growth as the bases for competition in the industry. Year in year out, integrated circuits and other components are made better, faster and cheaper, providing opportunities for upgrading existing computer and designing new types (Timothy and Shane, 1997). Observers have noticed that supply for computers in recent years has been based on specialization, such as the 24 hours customization offered by Dell (www.dell.com), where customers can customize the computer they want with features of their choice and have it delivered at their door step.

Thus, this is an issue in the computer industry as companies must find ways to satisfy the exact needs of each respective customer, as opposed to the mass manufacturing experienced in the early years of computing.

SUPPLY CHAIN MANAGEMENT ISSUES – ANDREW COX (1997)

This is one of the most common issues in the industry as highlighted by Andrew Cox (1997) is supply chain management. This is an important means of developing competitive advantage as the more products a manufacturer is able to distribute within its target market, the easier and faster the company is able to achieve its sales target.

This is an issue in the business due to the increasing new entrants and advancement in technologies that have aided this new entrant to gain huge market shares. Thus, computer manufacturers must develop a reliable supply chain through management and partnerships in order to gain competitive advantage in their markets.

RESOURCE AND SUSTAINABILITY ISSUES – ROBERT 2001

The resource and capabilities of a firm are described in terms of its possession of higher financial, HRM, management efficiency over its competitors.  This is important especially in the computer industry as competitive advantages are built mainly on human resource capital, in the sense that companies seek development of their workforce as the most preferred means of gaining competitive advantage through innovation and creativity that this workforce brings into the company.

This area of study has been highlighted as the base for Taiwanese improvement in the computer industry as they have increased their innovations through constant development of their workforce and experimental research (Dieter, 2011). Thus, it is a common issue for computer industries as the only way to improve competitiveness within the industry is to create a good base of human resource capability and financial as well as mane mental resource (Robert, 2001). 

2.0 CASE STUDY ANALYSIS

2.1 WITHIN CASE ANALYSIS

2.1.1 HAWLETT-PACKARD

Globalization and supply chain management - HP was established in 1939, and is currently one of the largest IT companies in the world with operations in more than 170 countries (HP, 2012).. Their quality supply chain management has made their products one of the most marketed computer brands in the world.

Innovation and technological advancement - HP's products range from personal computers, servers, storage devices, and printers to networking equipment. Its service unit offer process outsourcing, application development and management, system integration, consulting and other technology services (HP, 2012). The company has been able to expand its products and brands through innovation and this also gives them a great competitive edge.

Market capitalization and customer relationship management – HP's success without a doubt is a product of numerous strategies geared towards positioning the brand as one of the leading computer technology of choice in the market. Their overall positioning strategy was also highlighted in the company's website, where it was stated that.

In order for HP to increase customer loyalty, they will always provide products, services and solutions that are of the highest quality, and deliver more value to their customer as a bid to earn the customers' respect and loyalty. This believe is brought to accomplishment by (1) constant success and improvement, (2) paying attention to customers' need and delivering services solutions that are tailored towards these needs, and  (3) competitive pricing on their service, product and solution offering (HP, 2012).

Resource and sustainability - HP's undertakings under this aspect can be illustrated with its multi-billion investments in research and development, as well as recruitment of the best staffs within the industry. Their management comprises of high trained, skilled and talented professionals that have sound track records on business management. Through this means, the company is able to utilize its human capital resource as a means of creating sustainable business development and product innovation.   

2.1.2 APPLE INC

Innovation and technological development - It is one of the most innovative and creative computer industry the world has ever seen with creations that includes a pointing device known as "mouse" as a peripheral for computer component. In spite of its dysfunctional behavior, apple represents a compilation of engineering talent, innovation, perseverance, and success (Valentin et al., 2004).

Market capitalization and customer relationship management  - Apple Inc has the unique distinction of being the only surviving company from the early days of computer creation that is still successfully acting within the industry, and also challenging top leaders in different areas of information, communication and mobile technologies. However, their success if not as pristine as it sounds, as co-founder Steve Jobs was dropped from the boardroom following a coup in 1985, as the company has too many products and little focus. By 1996, the company racked in $1.5 billion losses, and speculation began fizzling around as who could possibly buy over the company (Valentin et al., 2004).

Resource and sustainability -  in the summer of 1997 however, Apple shocked the world by reinstating Steve Jobs as its interim CEO, and partnered with Microsoft to scrap off some of its products in order to refocus the company. Steve Jobs then introduced a new perception of computer with various colorful gadgets, and thus helped re-establish the company as an innovator in design and ease, and also gained high customer base through loyalty (Valentin et al., 2004).

Globalization and supply chain management – Apple is currently marketed in 64 countries across the globe with their online store selling products to virtually all markets in the world. Its unique customer loyalty that has been developed by passion for their products from their markets also ensure that distribution is coordinated as customer pre-book for unreleased products before these products are finally being made available for the markets. Its supply chain is based on direct sales and it increases the efficiency of the system as they are capable of assigning a similar strategy for all their distribution networks.

3.0 CROSS CASE – RESOURCE, CAPABILITIES AND MACRO-ENVIRONMENT ANALYSES

3.1 RESOURCE AND SUSTAINABILITY

3.1.1 APPLE INC

Apple's most important resource and capabilities are its former CEO, Steve Jobs, and an ally of integrated systems of hardware and software that the company has successfully developed and market. Steve Jobs brought the company back to unimaginable height after their decline in sales and catapulted the company to billions of dollars of accrued valued. Apple's designers, engineers and programmers are not to be left out, as each of them represents key resource as the firms was apple to explore their talents in creating their stream of innovative products and services that has gained them tremendous success.

3.1.2 HP

HP's main resource that has gained them sustainable business is their power of innovation and research as well as vast distribution network. The company as highlighted earlier, recruits some of the most outstanding personnel in the computer industry and they adopt this as their main means of creating sustainability. Compared to Apple, the company is better positioned as Apple's reliance on Steve Jobs took a toe on the company following his death, and they are yet to find another CEO that has the same potentials as Steve Jobs

3.2 GLOBALIZATION AND MARKET CAPITALIZATION

3.2.1 HP

HP on the other hand adopts internationalization as its capabilities. With operation in over 170 countries, the company has been able to penetrate unreached markets, acquire high business intellectual capitals based on a close study of the countries they operate in, and created huge market shares. Operating in numerous markets helps the company to understand the global market needs and HP also responds to these needs by creating new products and expanding its services.

3.2.2 APPLE INC

Compared to HP, Apple maintains presence in 64 countries and their online store makes their products available across the globe. Their quality brand image has gained them passionate customers across the globes that are exceptionally loyal to the brand. They have been numerous cases of customers lining up to buy new Apple products and the charge a high price compared to other brands. All these factors have been crucial in gaining high return on investment and increasing their market capitalization.

3.3 MACRO-ENVIRONMENTS AND INNOVATION

3.3.1 APPLE INC

Besides its resources in terms of human capital, the company has also adopted the growth of technology as a base of positioning itself. Apple store creates a great scene of interaction between the company and its customers were customers can review new products and suggest improvement, and Apple will implement these improvements when deemed necessary.

The macro-environment in terms of country of origin also served Apple good, as the US market and mode of business operation demanded the best qualities and application of relentless efforts. Thus, it can be argued that Apple ability to keep striving not withstanding their previous losses and to reappoint Steve jobs as the CEO is an illustration of how the American business environment has influence the company and greatly resulted in success.

3.3.2 HP

Just like Apple, HP's macro-environment can be argued to have played a crucial role in their strategic position. The company is an American company and its operation is based on an American ideology of unbridled growth by doing things that people deem impossible and reaching new heights through dedication and commitment.

Based on the above analyses, the internal and external comparative analyses of both companies can then be formulated by conducting a comparative SWOT analyses

3.4 INDUSTRY SWOT COMPARISON OF APPLE INC AND HP

Table (1): Comparative SWOT analyses of APPLE and HP

STRENGTH
HP	APPLE
Proven track record – the company has been success for years and this creates a high corporate position as customers are likely to trust them based on past performance. Diversified products – the company offers numerous products in computer and mobile telecommunication industry as well as services, and this provides them with a great competitive advantage in terms of generated sales per annum.	Leader in innovation – apple customers have been known to queue in line for their new products and the main reason is because of its innovativeness. High price value – compared to other computer industries, Apple offers some of the most expensive computer and communication products and this essentially increases their profitability when we compare the prices with gained brand loyalty.
WEAKNESS
Pricing – HP charges a comparative pricing and this can easily lead to its products being linked with low quality in reference to other low quality products that also charge similar prices.	Pricing – Apple charges high prices and this makes the products available for only customers that are willing to pay the price tag. While it differentiates the brand, it reduces its ability to compete with other low priced products and reducing price in the future can easily be linked to reduction in quality.
OPPORTUNITY
High international presence– HP maintains presence in over 170 countries and this gives them the opportunity to acquire huge market shares in by introducing market specific products. Increase growth – HP adopts cutting edge products and capabilities, and this can help them increase their market growth by enhancing their productivity and building higher customer base.	High brand image – Apple maintains a high brand image, and it is gives them the opportunity to diversify into other market segments with their brand images and increase their revenue. Growing trend for smart devices – there is a growing trend for smart devices such as phones and PCs and apple by increase their market shares by tapping into this opportunity through new product development and commercialization.
THREATS
Government policies – while operating in numerous countries offer HP the opportunity to increase its market shares, government policies such as "protectionism policies for local brands" in their country of operation can affect the company to a great extent. Lack of focus – considering the fact that Apple's near collapse before its awakened success was a result of lack of focus, HP's desire to continue product is a threat to the company as managing all brands might prove to be a difficult task.	Death of Steve Jobs – he was the most successful Apple CEO in history and his death is a threat to the company as it will be very difficult to find another person to replace him and contribute to the company as much as he did. High price – with the growing concern for economic crises and numerous competitors such as Dell, Lenovo, Samsung etc., charging high price is a threat to Apple especially for the fact that these companies are not venturing into smart devices that offer customers the same value as Apple's products.

4.0 RECOMMENDATION AND CONCLUSION

The cases analyses showed that strategic positioning is key in business of nowadays, as customers are constantly bombarded with numerous choices and the macro-environment remaining unpredictable. This unpredictability of the macro-environment and high consumer bargaining power in the computer industries has resulted in numerous companies reducing the prices of their products beyond profit margin.

Both Apple and HP illustrated that strategic positioning of a company is essential for success, success is only guaranteed if companies can find ways to reach new height, satisfy their customer needs, differentiate their products and evade the negative impacts of the macro-environment they operate in. the SWOT analyses illustrated that both companies have strategically positioned themselves towards increased and sustainable growth, but their weaknesses and threats are areas that need to be improved.

Thus, it is recommended that Apple should refocus its brand by introducing new substitute products that are charged at a comparative price with other companies such as Dell, Lenovo and HP. This will help them to increase their competitiveness and generate more revenues as well as customer loyalty as numerous customers that would like to have an Apple product are waded off by its high price tag. It is also recommended that HP should refocus its business to ensure that Apple's past experience doesn't befall them. This is because, high diversification results in numerous management difficulties for the company as it will be difficult to find a single strategy that will be used in positioning and marketing all their products.

In conclusion, it can be said that this project paper has been successful in illustrating the importance of strategic positioning within organizations. It is important because it helps create higher customer bases, improve the competitiveness of a company within the industry it functions and better understand the macro-environment and find solutions to all possible problems that the macro-environment will present to the company.

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