Case 16: Apple, Inc.: Still Taking a Bite Out Of The Competition As the Chief Ex
ID: 430785 • Letter: C
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Case 16: Apple, Inc.: Still Taking a Bite Out Of The Competition
As the Chief Executive Officer of Apple, Inc., you are concerned by the loss of momentum in your strategy and declining market share in various segments of your product mix. You have asked your management team to address the key questions below and to reconvene a strategy meeting in two weeks to discuss the results and formulate a new strategy if necessary to raise the stock price. Please review each question carefully and develop detailed solutions to support your conclusions.
What is leadership’s role in Apple’s strategic implementation?
CASE 16 APPLE INC.: STILL TAKING A BITE OUT OF THE COMPETITION?* On February 11, 2015, Apple Inc. made history by becomApple, Fortune magazine's "world's most admired ing the first U.S. publicly traded company to close above company" since 2008,6 had distinguished itself by excel- $700 billion in market value. This put Apple's value nearly ing over the years not only in product innovation but also double that of the next three largest companies in the S&P; in revenue and margins (since 2006 Apple had consistently 500 Index, and it firmly established expectations for future reported gross margins of over 30 percent). Founded as performance. Apple's market value had grown more than a computer company in 1976 and known early on for its 50,600 percent since its initial public offering in December intuitive adaptation of the graphical user interface, or GUI 1980. To satisfy investors, consumers, and company enthu- (via the first mouse and the first on-screen "windows"), siasts, Apple would have to continue to deliver, and doing so Apple dropped the word computer from its corporate name might not be easy. As Apple had grown, the pace of innova in 2007. Apple Inc. in 2015 was known for having top- tion had slowed. There were still opportunities, but would selling products not only in desktop (iMac) and notebook Apple be the company to see them through to fruition? (MacBook) personal computers but also in portable digi- The year 2015 was not the first time Apple had wowed tal music players (iPod), online music and "app" services investors. In September 2012 Apple stock had hit a price (iTunes and App Store, mobile communication devices high of $702.10, at that time making Apple the most valu- (iPhone), digital consumer entertainment (Apple TV), able company in the world, but the company had not been handheld devices able to download third-party applica- able to sustain that lofty valuation. September 2012 had also tions, including games (iPod Touch via the App Store), marked Tim Cook's first full year as CEO and the first full tablet computers (iPad), and online services (iCloud), and year since the death of Apple's visionary founder, Steve the company was poised to enter and dominate the market Jobs. Although most Apple watchers had mourned Steve of wearable technology (Apple Watch) and mobile pay Jobs's death on October 5, 2011, most also realized that ment systems (Apple Pay) (see Exhibit 3) Jobs's appointed successor, Tim Cook, came to the position Although most of those innovations occurred after as CEO with an impressive track record. Cook had conn 1998, when Apple was under Steve Jobs's leadership, there ued to grow the company, and the 2012 year-end numbers was a 12-year period in which Jobs was not in charge. The showed continued financial success across almost all prod- company's ongoing stated strategy had been to leverage uct lines. However, expectations were still very high, and "ts unique ability to design and develop its own opera- rumors of a reduction in Asian supplier component orders tions systems, hardware, application software, and services for the iPhone for 2013 led investors to worry about a drop- to provide its customers new products and solutions with off in demand for the company's flagship product. This superior ease-of-use, seamless integration and innovative worry led to a subsequent drop in Apple's stock price of industrial design."3 This strategy required not only produdct nearly 24 percent. design and marketing expertise but also scrupulous atten- CEO Cook subsequently defused concerns over supply tion to operational details. Given Apple's global growth in chain issues, but that didn't stop analysts and media watch- multiple product categories, and the associated complex- ers from wondering whether Apple had lost its luster. This ity in strategic execution, would CEO Tim Cook be able posed yet again the unavoidable question that had loomed to sustain the level of innovation the company had been large over the then 35-year-old Apple: What happens to a known for? In the coming years, would Apple still be able modern company whose innovations and inspirations are otake a bite out of all competition? so closely tied to the vision of one leader when that lead er's influence is no longer present? By 2015, that question appeared to have been definitively answered: Apple, under Company Background Founder Steve Jobs Apple Computer was was not only the most valuable company in founded in Mountain View, Cai- the world but was poised to grow even more (see Exhibits l and 2). fornia, on April 1, 1976, by Steve Jobs and Steve Woz- niak. Jobs was the visionary and marketer, Wozniak was the technical genius, and A. C. "Mike" Markkula Jr., who This case was prepared by Professor Alan B. Eisner of Pace University and had joined the team several months earlier, was the busi- Associate Professor Paaline Assena of Western Connecticut State University This case was based solely on library research and was developed Sor class discussion rather thato llustrate either effective or ineffective handling of anone person-one computer, and doing so with elegance administrative sitaation. Copyright 2015 Alan B. Eisrer. nessman. Jobs set the mission of empowering individuals, of design and fierce attention to detail. In 1977 the first CASE 16: APPLE INC.: STILL TAKING A BITE OUT OF THE COMPETITION? C117Explanation / Answer
Apple is a multi million brand with huge investment and a a very large number of investors. Their strategical implementation is definitely one of the world's best implemented strategies.
International Strategy.
Apple's international strategy includes a wide range of products spanning from premium pcs to the iPhones. Their international standardization includes standardization of the overall services and the product quality over global markets.High investment on research and development and large number of stores and outlet with state of the art warranty management system makes them the biggest empoyer and tech provider in the same field. One of the main strategies are to provide a feature packed premium device which is generalized in every global region.
Strategic Implementation
Apple's basic strategy is to develop the products and simultaneously improving the design and utilize the overall difficulties by implementation of different strategies. Company's strategy is to build quality product which are based on performance and stands out of the market .
Apple's quality standards are very high hence produced products R&D cost is usually very high and final product si superior in terms of quality. Company also put extreme efforts to do something out of the box.
influence of Governance and Ethics.
Apple's model includes ethical as well as social responsibility and its composition of the legal, Ethical and economical responsibilities hence all the influence of the ethics and social responsibilities reflects in the organization.
a well organized governing system with a proper strategical implementation drives the company and also make a better work environment for the system. Apple's ethics standard is very high and which is applied into the work structure if the company from the very basic level.
Company Social Value.
Apple insist in making their work pattern as on of the best in the industry. Apple inures that it uses the highest standard in making of their products and for the application the overall strategies . They treat their workers with due respect and dignity and also provide a safe and responsible manufacturing facility.
Innovation and Diversification.
Apple has a big diversified range of products . Initially apple used to deal in computers only then they came in the ipod and then mainstream phone business. Apple has evolved itself from a computer company to a big global brand. Constant research and development and high number of best engineers and bright minds are already looking for the best ideas and to create a better product.
Legal limitations.
Apple's legal limitation includes a good act of 1979 in which, Apple has to sell their products as they are described to avoid any claims from customers. Act of 2008 which states that apple has to treat their customers in a fair manner and they cannot use negative sales techniques and promotions. All the market strategies and apples sales promotion have to be in the legal area.
Evaluation and Control
Apple inc. has a large design and development team as well as marketing team , They build everything from the portable music players to the big MAC computers. Apple also provides services and other informatics which is controlled by headquarters on California. Apple has a huge number of employees and earns a huge revenue every year.
Strategic Metrics.
Apple always keep implementing its marketing strategies some of them are introducing a wearable, Apple watch. Every year growth of sales in iPhone is extremely huge and it is almost doubling up every year. Apple has a huge gross profit margin which is climbing up every year which is one of the main watchable metrics for the apple inc.
Apple is a technology oriented company and it is totally invested in technology. By implementing Different Technologies into its organisation Apple has successfully manage to be successful in the business industry. Apple has successfully define its devices as well as different programs which article management towards increasing the overall equilibrium in the organisation.
Apple believes in there research and development and invest heavily in the same program. Nesting a large amount of money in research and development company has successfully provided and implementation in management strategies which are directly oriented towards the different new technologies being implemented into its devices.
Companies overall revenue system is also based on the technology based things just like the iTunes as well as the different products managed by the company. Company directly focuses on the managerial work as from the point of views of the engineers. Include working on the ground bases with the research and development team to provide technological advancement over the competitors.
By having different competitive strategies which are directly focus on completing against implementation of new technologies in to the management of the system from HRIS to implementation of ERP, successfully done everything in form of the digital implementation to improve its overall management structure.
A fine example of the Apple technological management in sales can be described as below.
By implementing sophisticated technological structures for downloading music, all company can loose more of its customers. By introducing a complicated price in system into a music store, can easily confused customers between buying the music online. As the highly competitive market is present, complex pricing system can leave your potential customers to other service providers for buying the music. By properly implementing a generalized rising system which is easier to understand for the customer makes them by the music on a better way.
As any other company in this industry, objective is also to maximize its sales by any downloading of the music as well as the product and services Apple deal into. Apple has successfully increased their growth by 33% in one year in from 2003 to 2004. Increase number of iPod sales and availability of different music players from the Apple created success of downloading music from iTunes and following the complex pricing structure of Apple revenues are increased. As apple's pricing policy falls in the high end segment, reduce in the noodle users in next few years is expected as there are so many competitors are available with better pricing options.
By Linking device to itunes and limiting them to download the music only from our iTunes, apple is creating a Monopoly based music library system which limits the customers find give abilities to there music library in iTunes and to follow the complex pricing system of Apple which is one of the major objective for the major record companies to collaborate with Apple iTunes and earn more revenue from the society.
By having different technological implementations which are out of the box, eating huge revenues from the society and has been successfully implementing the overall technological management work.
Apple offers a very limited number of products and advertise them as a premium products for the market. By focusing on the high and device only the product pricing is also divided into the high and price sector and the customers with high capital are targeted to increase the overall revenue of the company. Company deals in mobile phones as well as the computer system which are always falling in the premium category creating maximum profits as well as the service benefits for apple.
Apple always give priority to its overall profit over the market share. New strategies on how to increase the profits rather than focusing on increasing in market share has always been companies main motto.
Premium pricing of the devices are basically their main strategy for capturing the sector or as well as the high and sector of the customers. Even the company is most nominal devices are priced in mid range but the normal devices are usually price that very high range that normal customer cannot afford. By giving out different contracts with the phone as well as other devices company has specifically developed an ecosystem for its environment off work.
Apple uses the vertical integration strategy to deal with the problems. Company has expertise in Software Hardware as well as the other services. All of these three services are linked together creates vertical integration between the devices as well as their services. Company uses the best available design which is eye catching as well as aesthetic which also increases the number of customers coming towards the company.
Biggest competitor to the Apple is Android, android has grown like a giant in last decade and give the most fierce competition in terms of sales as well as the software. Android price. Unique selling point of the device is as the Android can be very cheap as compared to Apple. Specific difference is making android Run I had in the race of selling devices to the customers.
References. - The Apple Way . -Jefferey L Cruikshank
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