Head-to-head competition in modern business setting: Apple vs Microsoft

 Introduction

In the modern business setting, the struggle of corporations to survive is no longer a question of will but a "what should we do" approach to business. This is because competition has plagued the global market (Hart, 1995; Palmer and Oates, 1995; Porter and van der Linde, 1995; Shrivastava, 1995; Russo and Fouts, 1997) due to increased new entry, internationalization, and other economic factors. As such, head-to-head competition seems to be the right answer to this increasingly competitive modern market. In view of that, this research seeks to expand an understanding of head-to-head competition in the modern market and strategic decisions in organizations by referencing ideas from "strategy as stretch and leverage," "strategic intent," and "core competencies and innovation."

Strategic intent: Apple Inc. shows Microsoft who is boss.

From the psychological point of view, an intent presents views held by conscious subjects, capable of forming intentional and mental states that can be linked to external reality (Searle, 1983). It does reflect one’s conviction of being able to attain a certain state of affairs at a given time frame in the future (Bratman, 1999; Searle, 1983). When it comes to management, there are a number of concepts that members utilize to discuss futuristic behavior. The two most relevant of these concepts are goals and vision.

Goals are a clear statement of what one wants to achieve and the expected time to attain such achievement. While goals do not always specify a time frame for achieving a specific result, the main point is that such results should be attainable (Quinn, 1995: 5).In terms of difference, strategic intent is different from goals because it is superordinate to goals (Hart, 1992), it is based on longer-term effects (Prahalad & Doz, 1987; Hamel & Prahalad, 1989; Burgelman & Grove, 1996), there is a higher degree of uncertainty in its achievability (Burgelman & Grove, 1996), and it is linked to core competence and of high significance.

On the other hand, vision reflects a set of desired goals and activities (Gardner & Avolio, 1998). It has the ability to encourage strong corporate values in the strategic process of organizations (Conger & Kanungo, 1987), and as such, it is much like strategic intent in terms of its emotional effects.

Generally, there is a recognition that the practices a company adopts are influenced by a number of motivators (Bansal and Roth, 2000; Banerjee et al., 2003; González-Benito and González-Benito, 2006; Paulraj, 2009), which can include both internal and external factors that are derivable from different stakeholders and institutional pressures.

Thus, strategic intent does play a significant role when it comes to defining corporate values and setting overall performance targets. This is because it urges the company and its system to push towards established benchmarks and enhance their overall performance in the process. In the competitive aspect, strategic intent is the "vision" of what the company wants to be and the "zeal" (motivation) to push towards reaching such heights (Esty and Winston, 2006). As such, a company will be able to attain greater heights if its strategic intent is well aligned with that of a market-moving competitor. In the computer industry, for instance, Microsoft ruled (and continues to rule) the global computer sector. However, Apple Inc. had the strategic intent of matching and potentially exceeding such power right from its establishment days. This led to an increased level of innovation in Apple Inc.’s setting, and the outcome today is obvious as the Apple brands are recognized globally as innovative and pioneering brands when it comes to computing and mobile telecommunications. This clearly demonstrates that competition is not only head-to-head, but also mindset-to-mindset (for example, technological mastery, as demonstrated by Apple Inc. above).

Strategy as stretch and leverage: the competitive way to manage

In the Harvard Business Review, Gary and Prahalad (1993) noted that a good place to start when it comes to deconstructing managerial frames is with the question, "What is strategy?" This is because for the majority of great leaders in Western corporations, the answer to the above question circles on three major elements: the concept of fit; resource allocation; and a long-term perspective of the company’s overall future. In that line, being strategic does imply that the company is willing to take a long-term view, while strategic investments represent investments that require a large and preemptive commitment of resources.

The dominant strategy as documented above is not wrong. The only issue with it is that it is unbalanced. The dominance of these planks within the corporate strategic setting obscures the benefits of an alternative frame in which the stretch concept can be used as a supplement to the concept of fit, resource leveraging is as important as resource allocation, and a company's long-term performance is greatly influenced by consistency in efforts and purpose as well as capital and risk orientations.

In order to clearly demonstrate the above discussion, let’s consider the case of GM vs. Toyota. Prior to the establishment of Toyota, GM had already been acknowledged around the world as the largest and most reliable automobile corporation in the world. With its vast wealth, investments, and continued profit from sales, GM was the global giant, and new entrants had little or no chance of challenging its global dominance. However, the birth of the Toyota brand did not delay the idea of establishing Japan as a world-power in the automobile industry.Competing against a brand like GM was definitely a big issue, as they had little chance of pulling off such an effect. However, unlike the GM approach of "fit," Toyota decided to "stretch and leverage" its management approaches. In contrast to GM's focus on the high income earner, the brand directed production and distribution toward the middle and lower income earners (who made up the vast majority of the automobile industry).Also, the Toyota brand penetrated new markets (such as Africa and South East Asia), where GM has already deemed them unprofitable. Nobody could have predicted the outcome today when Toyota was first founded.However, the decision to stretch and leverage allowed the company to gain huge market presence, high profits, and effectively establish its brand across the world as the reliable automobile of choice. Presently, Toyota not only tops global sales as against GM, but it also competes effectively in GM’s regional market (the USA), something GM cannot adequately do in Toyota’s regional market (Japan).

Thus, being an alpha can be of high disadvantage, as demonstrated in the case above, because the company tends to be reluctant with the management process and focuses more on "fit" approaches, while the newcomers go into more of a guerilla war with these alphas in order to leverage some market share, increase profitability, and even push the alpha brands out of the top position.

Core competencies and innovation: the key to sustainable competitiveness

As Anjana (2004) noted, the increased level of globalization and market liberalization has resulted in organizations trying their best to gear themselves up for aggressive competition. As such, it has become a necessity for corporations that want to remain sustainably competitive to know what they are doing and do things differently (Worthington and Patton, 2005). Just knowing what they are doing (their core competencies) is not enough, as other companies can adapt or even enhance such processes; however, doing it in a different way does increase their chances of effectively competing against other corporations.

In terms of definition, "core competencies" reflect what a company can do best (or at least better than other corporations). It is their competitive edge and differentiation plug when it comes to an aggressively competitive market such as the one being experienced in the modern business setting (Brammer et al., 2012). However, due to increased market liberalization and globalization, labor has become easily mobile. As such, if a company’s core competencies are based entirely on its workforce, it becomes much more difficult for the company to maintain such a competitive edge in the long run due to an increased level of labor mobility.

On the other hand, innovation does involve doing things differently (especially in ways that competitors cannot easily imitate) (Brammer et al., 2012). This is a bigger plus towards supporting both the company’s core competencies and overall performanceors cannot easily imitate) (Brammer et al., 2012). This is a bigger plus towards supporting both the company's core competencies and overall performance. In essence, when a company’s core competencies are hard to imitate, such a company has a greater chance of success in the modern business setting. This is because it can leverage such capabilities to increase preference for its brands as well as create some advanced barriers to new entry.

Still on the topic of core competencies and innovation, Apple will once again be used as a good example of a company that adopts such practices to increase its overall competitiveness and performance. One would have less doubt (if any) that iPhones are the mobile phone gods, while Macbooks represent the same for computers, and iPads play the same role for tablets in the global market. This is because Apple Inc. has established itself in the computer and telecommunications industries as an innovator. It does things in an entirely different way, benchmarking its past and setting the example for competitors to follow. Their products are naturally viewed as a point of reference when it comes to judging computing and mobile technologies. Their preorders far outnumber some of their competitors' total annual sales.Apple Inc. could hardly do any wrong with its pioneering innovations and enhanced core competencies.

Thus, in the global market, companies seeking to advance their overall competitiveness need to understand what they can do best and ensure that they do it in a way that competitors have not done before and will find difficult to do. Besides ensuring effective competition, this can go a long way in differentiating their products from those of their competitors and offering much-needed room for sustainable and profitable performance in the long  run, as Apple Inc. has been experiencing in recent years.

Conclusion

Right from the onset, the purpose of this research was highlighted as being to gain an understanding of the recent developments in competition. This is because the increase in globalization and market liberalization has ensured the internalization of more firms (both conventionally and online). Thus, corporations no longer have to worry about just their fellow local corporations, but instead also need to shift their focus more on MNCs that even have higher wealth to effectively maintain aggressive competition in their local market.

As such, companies have now resorted to studying the mindset of their competitors in order to understand what they do to remain afloat and even do it better than them (Sharma and Vredenburg, 1998; Aragón-Correa and Sharma, 2003; González-Benito and González-Benito, 2005). This led to an expanded study of strategic intent, strategy as stretch and leverage, and core competencies and innovation as a tool for ensuring sustainable competitiveness.

Overall, strategic intent deals with the vision a company aims to attain over a long period of time as well as how it will do so. It focuses more on developing what is right for the company through a strategic corporate structure. On the same note, stretch and leverage are a shift from the fit method into attacking companies in areas where they have placed less emphasis (such as niche markets, etc.). Finally, core competencies deal with what the company can do better than others, while innovation focuses on enhancing such abilities in a way that is difficult for competitors to imitate.

In conclusion, companies that aim to attain a high strategic competitive advantage over their competitors should ensure that they have clearly defined strategic intent that reflects what they aim to become, flexible management that can help them attain their strategic intent, and developed core competencies as well as innovative potential. Such companies will be able to not only attain higher financial performance, increase market shares, and pioneer new products and services, but also benchmark their competitors. This will create the much-needed room for sustainable competition and overall market enhancement.

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