Analyze the following case relating to the Deliver Chapter of Operations Managem

Question

Analyze the following case relating to the Deliver Chapter of Operations Management including Supply network management/ Capacity management/ Inventory management/planning and control / lean synchnonization. Write about 2 Page

CASE Study: Apple

This case looks at Apple’s retail operations strategy. Apple has not always had a retail operations strategy, because Apple has not always sold its products through its own shops. It was back in 1990 when Steve Jobs, then Apple’s boss, decided to build Apple Stores because conventional computer retailers were reluctant to stock its Mac computers. They said that the Apple brand was too weak (which, at the time, it was). The original Apple stores were heavily influenced by Gap (the clothing retailer) and so many Gap employees moved to work for Apple that they joked about working for ‘Gapple’. However, even with the experienced Gap retailers, Apple wanted to develop its own ideas. Consequently they built a ‘prototype store’ near their Californian headquarters and tested its retail concepts for a year before opening the first Apple Stores. This early learning period was important. It allowed Apple to come to the conclusion that the two key issues for their retail operations strategy were store location and the experience that customers would have within the stores.

First, store location: Apple has stores in some of the highest profile locations on earth. This is expensive, but the large number of customers it attracts together with the Apple range of products allows the company to produce very high sales. In fact its sales productivity (sales per square meter) is above many luxury goods retailers, for example Tiffany.

Second, the customer experience: according to Ron Johnson, who built up Apple’s shop network, says, ‘People come to the Apple Store for the experience, and they’re willing to pay a premium for that. There are lots of components to that experience, but maybe the most important is that the staff isn’t focused on selling stuff, it’s focused on building relationships and trying to make people’s lives better. The staff is exceptionally well trained, and they’re not on commission, so it makes no difference to them if they sell you an expensive new computer or help you make your old one run better so you’re happy with it. Their job is to figure out what you need and help you get it, even if it’s a product Apple doesn’t carry. Compare that with other retailers where the emphasis is on encouraging Apple’s retail operations strategy customers to buy more, even if they don’t want or need it. That doesn’t enrich their lives, and it doesn’t deepen the retailer’s relationship with them. It just makes their wallets lighter. ’

Yet creating the customer experience is not a matter of chance – it is carefully designed into Apple’s strategy. Employees are helped to cultivate their air of cool confidence through extensive training, and it’s easier to be approachable and calm when there is little pressure to push sales. Training emphasizes the importance of problem solving rather than selling and treating customers with courtesy. For example, staff have been told never to correct a customer’s mispronunciation of a product in case it is seen as patronizing. Of course, Apple’s products are attractive and Apple customers are famously passionate about the brand – but if Apple products were the only reason for the Stores’ success, it’s difficult to explain why customers flock to the stores to buy Apple products at full price when discount retailers sell them cheaper.

Explanation / Answer

Apple’s products are attractive and Apple customers are famously passionate about the brand because

Steve Jobs, whose strategy for Apple had four pillars:

Apple sells its products and resells third-party products in most of its major markets directly to consumers and SMBs through its retail and online stores and its direct sales force. The company also employs a variety of indirect distribution channels, such as third-party cellular network carriers, wholesalers, retailers, and value-added resellers.

Apple uses a retail strategy called “minimum advertised price” (or MAP). Minimum advertised pricing policies prohibit resellers or dealers from advertising a manufacturer’s products below a certain minimum price. MAP is usually enforced through marketing subsidies offered by a manufacturer to its resellers.

Second thing, In Apple, Employees are helped to cultivate their air of cool confidence through extensive training. Training emphasizes the importance of problem solving rather than selling and treating customers with courtesy.

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