Apple Case: The Evolution Of Industry Structure Over Time Essay
1. What is the evolution of the industry structure over time and its implication for strategic positioning?
PC buyers can be classified in to home,small- and medium-sized business (SMB),corporate, education, and government. Home consumers represented the biggest segment, accounting for nearly half of the worldwide shipments. Evolution :
Though the first commercial computer (UNIVAC) was released in 1951 the credit of mass marketization of computers should be given to Apple-I computer in 1976. Though it was released targeting common man, majority of the Apple users used it for commercial and educational purpose. Due to inconsistence performance and hardware issues this was not a huge success. Four years later IBM with MS Dos revolutionized the concept of personal computer. Due to its consistence performance, user friendly GUI and more importantly affordable price made IBM pc a huge hit in market. IBM – Open source — evolution of IBM clones
Too many market players lead to price war, cost leadership
Apple restricted itself to it’s MAC ecosystem, there by following differentiation. Post steve job’s exit from Apple, Sculley tried to move Apple into mainstream – cost leadership. It failed; Amelio proclaimed that Apple would return to its premium-price differentiation. 2. What is nature of sustainable competitive advantage?
CA rests on the notion that cheap labor is ubiquitous and natural resources are not necessary for a good economy.
“Competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors. These attributes can include access to natural resources, such as high grade ores or inexpensive power, or access to highly trained and skilled personnel human resources. New technologies such as robotics and information technology either to be included as a part of the product, or to assist making it. ‘ Information technology has become such a prominent part of the modern business world that it can also contribute to competitive advantage by outperforming competitors with regard to internet presence.
From the very beginning, i.e. Adam Smith’s Wealth of Nations, the central problem of information transmittal, leading to the rise of middle-men in the marketplace, has been a significant impediment in gaining competitive advantage. By using the internet as the middle-man, the purveyor of information to the final consumer, businesses can gain a competitive advantage through creation of an effective website, which in the past required extensive effort finding the right middle-man and cultivating the relationship.” (This is a generic question so answered it from wiki)
3. What performance was obtained over the different leadership styles? Steve Jobs : setup the company, Autocratic,innovative.
He paired up with Woznivik in 1976 and founded Apple. His mission is to bring an easy-to-use computer to market, which lead to APPLE-II in 1978. He grew it to a 1 billion sales in less than three years. BY 1980, Apple sold 100K computes. Between 1981 – 86 net come fallen by 62% , steve jobs was fired Steve Jobs Part –II : Reshaped Apple. $150 million to invest on a 5 year plan to develop core products. Stopped Apple license sales to the clones for new Mac OS. Introduced website to open direct sales. He want to recover IBM’s imagem retained Pixar CEO position. Launched multi-million dollar marketing campaigns such as “Think Different” Sculley : He pushed the Mac into new markets (mainly in desktop publishing and education). The main focus is on proprietary software like Aldus Pagemaker and peripherals such as laser printers.
He evolved apple as a customer friendly systems that’s just plug and play. Analysts noted that this approach made Apple’s customers ‘love’ their Macs. He tried to move Apple into mainstream by becoming a low cost producer of computers. During his tenure Mac classic was introduced at $999 to compete head-to-head with low priced IBM clones. He tried to forge an alliance with IBM to develop a develop a new OS. He tried to develop a new chipset in collaboration with Novell and Intel to run on Mac OS. His main ambition is to bring a “hit” product every 6 to 12 months and capture the whole PC market. Inspite ofall these efforts Apple’s gross margin dropped to 34% which is an all-time low which lead to replacement of Sculley with Michael Spindler. Spindler era :
Cuts 16% of work force. Globalisation – lead to 45% of sales outside US. JV with IBM to develop new OS failed leading to $69 million loss. Which lead to Amelio as CEO
Amelio era :Back to Premium-price differentiation. Macintosh sales still fallen which lead to recruitment of Steve jobs as the interim CEO. Timeline Apple|
Year| Event| +ve| -ve|
1976| Apple computer started| Jobs and Wozniak’s technology and Markkula’s financing abilities| NA| 1978| Apple II released| $1 billion in sales, Apple becomes industry leader| | 1980| IPO launched| Sold 100,000 Apple IIs, Era of fast growth for Apple| | 1981| IBM enters PC market| IBMs open approach, horizontal and vertical integration, Apple’s refusal to license hardware| Apple’s closed approach.| | | | Apple’s net income fell 62% between 1981 and 1984| 1984| McIntosh is launched| ease of use, good industrial design, technical elegance| Macs slow processor speed, lack of compatibility caused limited sales| | Jobs fired, Scully comes in| | |
1985-1993| | | |
1990| Apple’s complete desktop solution| Apple’s focus on desktop publishing and education, “plug and play”, unique chips, disk drives, monitors.| IBM narrows the gap in ease of use| | | Design versus compatibility| |
| | Love for Macs| Just putting up with IBM machines| | Apple’s premium price strategy| Premium Macs sold for as much as $10,000, Gross profit hovered at 50%| IBM compatibles lowered costs| | Apple tries to move into cost leadership with Mac Classic| | Moving to cost leadership from differentiation| | Joint venture for new OS and multimedia applications| Working towards making Macs compatible, joint project with Intel| Dropped gross margin to 34%| 1993| Michael Spindler replaced Sculley| | |
1993-1997| Spindler & Amelio years| | Reverse trend, Apple lost momentum, Apple and IBM parted ways| | | | $69 million loss|
| | | Cost cutting|
1996| Amelio appointed as the new CEO| | |
| | | 1.6 bn loss|
1997| NeXT is bought by Apple| Jobs takes over as CEO in September 1997| | | Microsoft’s investment of $150 million in Apple| Five year commitment to develop MS office products for Mac| | | | 15 product lines slashed to 4| |
| | Operational efficiency through improved distribution systems, direct sales, focus on innovation, Increased R&D| |
Mac and Apple’s digital Hub strategy
Shift to Intel CPU’s – With Intel inside Mac also became a machine that could natively run a Windows OS along with Windows applications * Operating System – Mac OS based on UNIX with ugrades at greater frequency than what Microsoft does * Application – Building programs on iLife suite – iPhoto, iTunes, iWeb. Web browser Safari, and iwork productivity applications * Distribution – The Apple retail experience. Retail division 280 stores in 10 countries. Partnership with ‘Best Buy’ – World’s largest electronic retailer
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