Evaluation of Alternatives
The first alternative is to broaden the company’s business scope into complimentary businesses (Thompson et al., 2014), this will help to strengthen the market position and competitive capabilities of the business units that Apple already participates in (Thompson et al., 2014). There would also be the possibility of realizing economies of scope. Additionally, it splits the business risk between more strategic business units. However, this may be difficult and very costly to implement. It may be difficult to determine the appropriate business(es) to acquire. This alternative has a high level of uncertainty associated with it. Additionally, it may not deal with the declining demand in the PC industry or help to sustain their profitability (Alternatives).
The second alternative is to divest certain business units, therefore retrenching to a narrower diversification base (Thompson et al....
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...e this market needs to be defended from possible new entrants (WS19) (WS19). Increasing the market share to 75% in the next two years will secure a strong competitive position in the market for Apple (WS19). Divesting the Mac unit will allow Apple to redirect some of its focus and resources to this industry, as to maintain product innovation and brand loyalty.
Apple needs to sustain their profitable, which can be achieved through divesting the Mac unit and product innovation in the remaining units (WS19). The target is to have gross profit margins increase by 5%, year over year, for the next 5 years (WS19).
Thompson, A., Peteraf, M., Gamble, J., Strickland, A.J.. (2014).Crafting and executing strategy: The quest for competitive advantage, concepts & cases. In Okanagan School of Business, Strategic management 1 (pp. 214-255). McGraw-Hill.
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