Reference no: EM132179204

Recent media reports rumor about a potential merger between Apple and electric-car maker Tesla Motors which subsequently raises the question whether Apple should be launching a new product, namely the iCar. Should Apple create the iCar?

Answer: Your answer must be between 1000 and 1200 words (e.g., 2 pages, 10pt font).

diversification y el TCE framework

As we know, Apple is a brand that has established reputation, name and loyal customers. Apple’s industry is not the automobile industry, instead they dedicate to the tech industry, therefore launching the iCar implies the entry of a new industry and at the same time a new product. The question here is what corporate strategy best fits Apple’s needs to launch the iCar. According to what we learned in class, corporate strategy is the way a company creates value through the configuration and coordination of its multi-market activities.

In terms of whether Apple should create the iCar we can take a look at the TCE framework. The main goal of the Transaction Cost Economics framework is to asses the efficiency of vertically integrated strategy over market-based strategies, in terms of cost properties. In other words, it helps you to asses whether to make in house or buy a new product that you want to launch. In these types the decisions corporate strategies are necessary. Thus the TCE framework will help us to determine our decision. If the Cost in house <cost market, then the firm should vertically integrate.