Discuss about the Apple’s Disruption and New Business Model.
Disruption and business model are the two most common terms in business world now days; technologies, demands and consumer’s taste and preferences are changing frequently due to that the level of competition has also increased between business farms. Due to globalization firms are used to serve multiple markets and the need for maintaining the current market trends is also very high. A firm must acquire the knowledge about the current market scenario and accordingly they should make the necessary changes in their business models for its successful operations. Apple’s customer advocacy is one of them which have recently been observed in their new business model. We will analyze on this by elaborating the terms of disruption and business model. Also we will compare the new and existing business model of Apple Inc and highlight the reasons for replacing the existing business model by new business model. For comparison of two business models we will relate few relevant literature reviews for our knowledge and for the support of this essay. The literature reviews are ‘Business model generation’ by Alexander Osterwalder& Yves Pigneur and ‘Customer advocacy: a new era in marketing’ by Glen L. Urban. Lastly we will conclude by discussing the importance of our findings for future business models.
Concept of Disruption and Business Model
Disruption means innovation an innovative approach which replaces the old technology, market, product, service, cost etc. with a creative and effective one (Rao, Rao & Sivaramakrishnan, 2010).
Whereas A business model is a strategy or a plan which a company or an organization follows for its successful operation; it allows an organization to reach into their goal point also it describes the sources from where the revenue can be generated. A well made business model helps a company or an organization to grab the particular market and to establish them as a well known brand. A business model can be made for a short term period or a long term period as per the requirement of the company or depending on the market scenario (Shankar, 2012).
Apple’s Disruption and New Business Model
Apple is a manufacturing firm and it is a pioneer of manufacturing Smart phones, Tablets, Computers and other IT products (Apple, 2016). Apple is a firm who was always focused on self decision making approaches due to that the firm faced lots of criticism in many angles. But recently they outlined their business model and they add customer advocacy in it, an example of that is their newly opened Apple support twitter account. This is quite notable because for a firm like Apple who was recluse in such social media activities (Grecon, 2016). Adding into that they take the opinion of customers before launching and selecting a feature for a particular product or services, they hire few trained customer advocates, the main purpose of this is to maintain contact with their customers whether they are facing any problems regarding the usability of their product or service or not, if yes; then solving those problems and giving an assurance that the problems will not rise again etc. (Plantes, 2013).
By the time everything changes, business models are less durable now days; companies are focused on expansion of their businesses and trying to make better business models than their competitors. Due to high end competition in the IT based firms there is a need for change in business models (Jong & Dijk, 2015).
Comparison Between the two Identified Business Models
If we compare the two business models of Apple then we will notice there is a huge difference between these two, both of these models works in two different manners. From our literature review we have found how Osterwalder & Pigneur has given the view for designing a business model, according to them “Business models define how an organization meets the unique needs of the customer, delivers a differentiated set of products or services, highlights required capabilities, configures resources at the highest level, and generates revenue and profit.” (Osterwalder & Pigneur, 2010). A company should understand what business they are doing and what are the ups’ and downs may occur in the near future. According to their given view, the new business model of Apple is fit for their company because they have adapted customer advocacy which will help them to analyze the customer’s preference what the customer want or what they are demanding in a particular product etc. This will help them to identify the future occurrence. They can easily maintain the stability of the firm because products will be designed as per the requirement given by customers also the risk factor is less involved in this compare to previous business model. Urban has mentioned that customer advocacy must be there in all business models through his journal ‘Customer advocacy: a new era in marketing’ because market scenario is not same in all areas, though Apple is a global brand and they are doing business globally. A self decision approach in business model may work in one area but it may face problem in other markets in the world. The market conditions are different in different areas. Therefore to easily grab the market a customer advocacy business model always leads to succeed (Urban, 2005). Apple has identified this and they have adapted the new business model.
Reasons for Disruption of Existing Business Model by New Model
- Due to globalization the customer’s preferences are changing, in order to grab the market a customer advocacy business model helps them to analyze the market well and to design its products as per the requirements of the customers.
- Technologies are changing frequently there is a huge competition in this field in order to compete with other brands a customer advocacy business model is more suitable for a brand like Apple.
- Due to their self decision making approach model they faced lots of criticisms which affects their brand image and operations, that’s why the outlined the new business model.
- Apple is a global brand and the market conditions are different in different areas and a self decision making business model is not suitable for a firm for doing business in this kind of situations.
To avoid stagnation disruption must be increase; organizations must need to focus on cultures and current market trends accordingly they should go for new innovations this way they can increase the customer loyalty regarding the usability of a particular product or service. In order to capture the market specialized teams’ needs to be established who will be responsible for analyzing the current market scenario. Though Apple was always look for monopoly business in order to that they always produce products or services which are more unique compare to its competitors. But these days has gone when a company can easily sustain only by depending on their product line. A futuristic approach must be there in all business models to deal with the uncertainty of the future and to compete with other brands.
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