Table of Contents
The globalised business environment has led to the development of effective business networks by firms all over the world. Business networks comprise of several operational units of a firm present in diverse geographical regions, the primary objective of which is aligned to the overall strategic organisational goals. An extended network is responsible for supporting and ensuring successful accomplishment of all the business operational and functional activities in a highly efficient manner. It comprises of suppliers, distributors, wholesalers, investors, manufacturers as well as third party developers (Henneberg, Naudé and Mouzas, 2010).
The following paper elaborates the necessity of business firms to operate in attractive global network position to retain a high degree of sustainable profitability. Moreover, it has also highlighted the necessity of maintaining good and cordial relationships with its suppliers and customers to ensure its effective network positioning all over the globe. The sustainable profitability experienced by Apple Inc, the world renowned technological company of United States has been discussed in detail by taking into consideration the aspects of network positioning and powerful relationship with business stakeholders.
Business Sustainable Profitability
The strategic business objective of every firm focuses on ensuring long-term continuous improvement and development to gain degree of profitability. The environmental issues have forced enterprises to adopt sustainable business practices and thereby continue enjoying profitable returns. Sustainable profitability encompasses business firms to develop products and services that do not cause any harm to the environment and at the same time successfully accomplish its strategic objective of earning high profit margins (Challenge Advisory LLP, 2016).
Attractive Network Position
The business network of a firm is termed as attractive when each of the units present in diverse geographical locations are capable of providing the desired level of support and assistance essential for accomplishing the long-term strategic objectives. The attractiveness of the business networks ensures that the firm is successfully developing its products and services and at the same time generating high level of satisfaction to the customer segments (Mortensen, 2012). Moreover, the business networks encompass the fundamental operational units such as the production, development, marketing, sales, customer service, each of which are largely responsible for ensuring high success standards for a firm. A firm capable of positioning each of its business networks by highlighting the capabilities and benefits of each to the stakeholders is likely to enjoy the relative degree of attractiveness in the present competitive environment. The operational objective of each of the networks must be directly aligned with the overall strategic goals of the firm which focusses on gaining huge profit revenue and high degree of sustainability (Mortensen, 2012).
Strategic Initiatives Undertaken by Firm
There are numerous strategic initiatives adopted by business firms in managing its network operations to ensure substantial amount of profit margin and at the same time maintaining sustainability in the competitive business environment. One of the significant initiatives undertaken by the firms in this regard comprises of gaining control and adequate level of power in the present operational network (Kotter, 2012). It is possible by playing the role of a middleman in between the production network and the final customers and continue enjoying high profit margins without investing much. In this regard, business firms can outsource its production and manufacturing operational units to other companies, which serves as effective networks. The firms, on the other hand play the role of a middleman and enjoy profits from selling the products developed by outsourced firms. The firms can strategically bridge their existing network by expanding its present product and service networks. It is also essential for the firms to focus on incorporating new technologies and innovation to each of its new networks (Kotter, 2012).
Network Positioning of Apple
The popularity gained by the American multinational Apple is primarily due to the effective management of its business networks present all over the globe. The global network of the company is largely responsible for gaining high profit margins in the competitive business. Apple extensively follows the strategy of outsourcing its business operations to global companies specialised in handling the respective units. This strategy largely helped the multinational firm to reduce its operation costs by a significant amount and thereby enjoy relative profit margin. The increase in profit was primarily due to the fact that firms do not have to bear the expenses involved in the production of its devices, since it has been outsourced to a Chinese electronic company called Foxconn Technology Group (Ruwitch, 2012). However, the sole control of the production operational network located in China was in the hands of the American multinational firm. The procurement strategies adopted by the firm in product manufacturing is identified as one of the significant factors of ensuring high profit margin and serving as a significant business model for future entrepreneurs (Goel, 2017). Moreover, Apple emphasised on bridging its existing business network by shifting its focus on providing all kind of software and hardware product and service solutions to its global customers. This allowed the company to develop an extensive package of hardware and software solutions instead of focussing on the manufacture of only computers and its operating system. This strategic initiative undertaken by the firm is considered as a visionary contribution to the present networked business scenario.
The entrepreneur strategy of Apple successfully developed several new networks, the foundation stone of which focussed on incorporating latest technological innovations. Apple gained huge success by developing social communication platforms to its customers as well as play games and listen to music, each of which is necessary for a person belonging to 21st century. The expansion of Apple’s product range to watch, iPod, iPads and iPhone along with the magnificent iCloud storage facilities witnessed emergence of several new business networks for the firm (Goel, 2017). The network focussed on entrepreneur business strategy of the firm is primarily responsible for making its offerings unique and innovative over others in the highly competitive business environment of 21st century. Apple used the brand loyalty and preference developed among its customer base to market each of the new business networks developed by it. Moreover, each of this network initiatives of the firm was largely related to the maintenance of sustainable environmental standards in all aspects of production, development, manufacturing and final distribution to the global customers (Fiennes, 2011). Therefore, it is quite evident that the firm enjoys substantial level of sustainable profitability in its operational activities through the incorporation of effective business strategies.
Relationship Management with Customers and Suppliers
One of the primary criteria of a business firm in maintaining high degree of sustainable profitability is establishing good and cordial relationship with its suppliers as well as the customers present in diversified locations. Effective relationship with the business stakeholders ensures that the business firm successfully overcomes the issues and challenge in due course of operation (Seuring and Gold, 2013). This makes it essential for the firms to effectively manage its diversified networks by developing and enhancing business relationship.
Effective Management of Network Position
The suppliers and customers often play a significant role in educating and contributing to the decision-making activities and neutralizing the position of the firm by providing strategic ideas and innovations. The contributions made by the suppliers and customers are of prime significance since it helps the firms to have a better understanding of the present competitive forces prevailing in the environment (Seuring and Gold, 2013). Taking into consideration, the opinions of the suppliers and customers, the firms can develop products that are likely to gain huge profit margins and at the same time maintain high degree of sustainability. This is possible since the suppliers have comparatively more knowledge on the strategies adopted by the competitive brands along with the customers’ knowhow regarding environment sustainability (Seuring and Gold, 2013).
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Influence of Powerful Relationships on Profitability
Customers are identified as the vital asset for accomplishing high degree of profit margins. A firm cannot continue with its business operation without having an attractive and adequate level of customer base (Seuring and Gold, 2013). They play a significant role in motivating firms to develop effective strategies and gain competitive advantage over its present competitors.
Apple is largely valued for its effective management of the relationship with the customers. The firm ensures providing an extensive lifestyle experience to its customers through its product and service (Ogg, 2010). Moreover, the excellent after sales service provided by the firm is identified as a significant criterion for enhancing its profit margin. The sustainable business practices followed by Apple is one of the significant aspects of its high brand loyalty.
Effective business relationship with suppliers is necessary for ensuring timely delivery of the essential raw materials necessary for the process of product or service development. It helps in gaining more business opportunities to the firms and at the same time contributes to the generation of high degree of customer satisfaction (Seuring and Gold, 2013). Each of the attributes are necessary for developing high degree of sustainable profitability.
Apple has developed an extensive Supplier Diversity Program that focusses on ensuring its responsibility towards the society and the environment by a significant amount (Apple Inc., 2018). The company provides necessary assistance, guidance and an opportunity of doing business with the minority, women and disabled supplier base. Moreover, Apple helps its supplier base to understand the changing business environment and act accordingly in providing business solutions to the firm (Apple Inc., 2018).
Difficulties in Sustainable Profitability
Business firms often face issues in earning sustainable profit margins due to the price strategy developed by them and the overheads associated with the overall development, production, manufacturing, marketing and distribution efforts (DeMers, 2016). Moreover, the competitive forces exerted by others are termed as a significant issue in earning adequate level of sustainable profit. The high cost pricing strategy followed by Apple often results in developing negative profit margins along with limited distribution network present in the global business environment. Apple sales revenue is limited only to the premier customer segment.
Business networks comprise of several operational units of a firm present in diverse geographical regions, the primary objective of which is aligned to the overall strategic organisational goals. It comprises of suppliers, distributors, wholesalers, investors, manufacturers as well as third party developers. In the globalised business environment, the primary objective of every business firm comprises of earning high degree of sustainable profitability through incorporation of effective strategies. Sustainable profitability encompasses business firms to develop products and services that do not cause any harm to the environment and at the same time successfully accomplishes its strategic objective of earning high profit margins. The world-renowned technology company Apple Inc. serves as the greatest example of enjoying high degree of sustainable profitability. The firm has set an entrepreneur trend in the present century with the effective distribution of its business networks to all parts of the globe along with maintaining good and cordial relationship with its suppliers as well as diversified customer base.
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