Apple Computer Case Analysis Essay
I. Executive Summary
Apple was formed by two college dropout students: Steve Wozniak and Steve Jobs with the motto of “Think Differently”. Wozniak, the true technical mind behind the building process of Apple’s early computers, spent the summer of 1976 building the company’s very first computer, the Apple I.2 Meanwhile, Jobs began creating advertisements and found a buyer for the computer. The two Steves were able to build and sell fifty Apple I computers—all from within the confined space of the Jobs family’s single-car garage. This would mark the first of many successful products to come from the company.
Later that time, Wozniak and Jobs began building the Apple II with the help of a few technically-savvy friends and classmates. It was at this time that Jobs first realized his true passion for the burgeoning computer industry. To fuel this passion, Jobs consulted with retired Intel Corporation marketing manager Michael Markkula regarding the possible future of Apple Computer. During this consultation, Markkula worked with Jobs in coming up with a solid business plan and even purchased one-third of the company for $250,000.
After the success of the Apple I and Apple II, the company began work on the Apple III, which turned out to be their very first project failure. The Apple III proved to be an early sign of disagreements-to-come between the president Michael Scott and Steve Jobs. In fact, Scott laid-off 40 employees after the Apple III’s failure—without any consultation or approval from the Board of Directors. Because of his abrupt actions, Scott was demoted to vice chairman, while Jobs was promoted to chairman. Markkula, who had originally hired Scott, took over as Apple’s new CEO. Scott officially resigned from Apple in March of 1981.
In the early 1980s, Steve Wozniak left the company and Steve Jobs hired John Sculley as the President of the company. After facing many failures, Apple launched its Macintosh computers for house hold users. With improvements in the GUI, the Macintosh became a “possibility box” for companies developing similar products.14 Enhancing some features from the Lisa, the Macintosh implemented a desktop, mouse, graphical file system, icons, bit-mapped graphics, menu bar navigation, applications running inside windows, and more. The Macintosh laid the foundation for the entire computer industry. The true look and feel of personal computers today can be attributed to the early design features of the Macintosh.
The Macintosh, however, did not dominate the consumer market as the company had hoped. In mid 1980s, Steve Jobs had to leave the company because of his controversial relations with the president. At that time John Sculley rejected the offer of Microsoft‘s CEO, Bill Gates to license the Macintosh operating system to Microsoft.
After this refusal, Gates developed DOS operating system and in late 1980s, thecompetition between DOS and Macintosh decreased Apple’s sale, workforce and resignation of John Sculley. So, Apple’s current CEO planned to purchase NextStep operating system of Jobs in order to improve the Macintosh operating system.
In late90s Jobs again became the CEO of the company and be started surprising relations with Microsoft by developing a Macintosh version of office software. Apple also took cost saving measures like streamlining the product line, production of printers. Under Jobs, Apple again becomes the innovator of computer market. His leadership leads the company to USBand Firewire ports, introduction of iPod and iTunes website put Apple in the digital computing age.
Apple manages its business on geographic locations. Apple’s sale is continuously growing. In the era of 2000, Apple made one bold move and that was to open retail stores in USA which somehow increased its sales. Its most impressive and fastest growing market is of iPod line of digital music players and iTunes music store website.
The three major competitors of Apple are Dell, Hewlett-Packard and IBM, however Apple also competes with Microsoft in software industry. Dell is the largest computer manufacturer with extremely low cost production strategy. Dell has entered the in the line of music against Apple by its Jukebox. Hewlett Packard is a big brand name and leading provider of technology. Apple combined with IBM enjoyed profit jointly but now Lenovo took over IBM and become a competitor of Apple. Overall, Apple is continuously growing and its future seems bright. With the slight change in their strategies, they can become giants in technology industry.
II. Statement of the Problem
* How Apple can provide differentiated products with low cost in order to maximize its market share?
III. Alternative Courses of Action
A. Continue without any change
B. Go for strategic alliance for producing specific products especially microprocessors C. Go for customized products
D. Product Differentiation
IV. Discussions of Alternatives
A. Continue without any change
If Apple continues without any change, then they can still produce innovative products, offer a high quality and exceptionally elegant designs and personalized services and also, they maintain their patrons and loyal customers by satisfying them with their products. They could also focus themselves more in their ipod and desktop sales while formulating for a better PC unit that will outsale their major competitors. But the downside of this is that if they will continue with this, they will still have a low market share, high operation and marketing costs, lacks the emphasis on the marketing scene of the company and also the gap between the giant companies will still be evident and might be extended.
B. Go for strategic alliance for producing specific products especially microprocessors
If Apple decides to go for strategic alliance –specifically with intel– for producing specific products especially microprocessors, then they will have a chance to reduce their costs since intel microprocessors are cheaper, faster and had lower power consumption. This would be perfect for producing computers especially portable ones because this is one important element that a computer must possess. There would also be a reduction in the product development process because they will work hand in hand with their ally. This means that half of the development and production will be worked by your partner company.
Of course, sharing of resources will be put into practice and this would definitely decrease cost. The only problem in working hand in hand is that there’s a possibility of contradicting cultures of the company especially with their workplace relationship, their differentiated norms and the like. Privacy of developing innovative products will be slightly affected as well since they are supervising each other freely. But in contrast to all of that, Compatibility issues would also be resolved since the partner company can develop a program that is compatible with Mac and other existing OS. In result to this, this would totally increase the profit margin of Apple.
C. Go for customized products
If Apple will decide on the alternative to go for customized product then the targeted niche will be highly satisfied. Customers will of course go to what they prefer so this would increase their market share. They could also understand the changing environment easily since they are giving focus on customers’ preferences and there would be no new channels need to be introduced for sales. Some disadvantages of this are that cost will extensively increase. It would also be difficult to cater all requirements of the customers along with innovation. Chance of ambiguity will increase as well and this would be a negative effect to the brand name and because of this ambiguity, chances of failure may tend to increase.
D. Product Differentiation
Product differentiation is a viable strategy, especially if the company exploits the conceptual distinctions for product differentiation. There is economic value in that strategy. The primary economic value of the said strategy comes from reducing environmental threats. The cost of product differentiation acts as a barrier to entry, thus reducing the threat to new entrants. Not only does the company bear the cost of standard business, it also must bear the costs associated with overcoming the differentiation inherent in the incumbent. Since the companies pursue niche markets, there is a reduced threat of rivalry among industry competitors. A company’s more differentiated product will appear more attractive relative to the substitutes, thus reducing the threat of substitutes.
According to the current situation, the best strategy or alternative for apple is “Go for strategic alliance”. Its reason is that no doubt Apple is going fine now but for future growth it is must to create something new and stylish while keeping the cost optimized. This does not mean that Apple start making whole product with the collaboration, instead they have to go for alliance in making high cost products. This will help Apple in optimizing cost and development process with innovation. Somehow, a problem of conflict will occur but manageable. Nowadays, to sustain and compete in the market companies go for strategic alliances just to reduce the cost and gain high profit margins. So, Apple should go for this strategy
The Apple brand, the company’s innovative capabilities, the quality of its marketing strategy, and continued success in building strategic partnerships are likely to determine the outcome of the company’s forays into the music, mobile phone, and video-on-demand businesses. Apple’s commitments and actions should be integrated and coordinated to exploit the company’s core competencies, strengthen its competitive advantage, and maximize value.
The analysis reveals that, to secure strategic success, it will remain important for Apple Computer to be fanatically protective of the Apple brand image and adequately invest in the company’s competitive advantages in innovation and marketing. Some suggestions for achieving this include:
* Carefully manage brand exposure. * Continually invest in research and development to stay ahead of and lead radical product and technology discoveries. * Enhancement of existing products in all areas (computer hardware and peripherals, consumer electronics products, mobile communication devices, systems software, applications software, networking and communications software and solutions, and Internet services and solutions) will maximize the value and the life of products. However, Apple needs to know when to engage in planned obsolescence to take advantage of the company’s market leader status.
* Maintain and upgrade design appeal to reduce the prospect of new entrants. * The company needs to constantly assess if it is moving away from internal strengths or extending its reach too far beyond its known and manageable markets. * Vigilant management of costs – to maintain pricing flexibility and improve competitive position relative to low-priced competitors. * Leverage Apple’s 70% share in the music market to strengthen the performance of other applications. * Develop the top management team and a succession strategy to reduce over-dependence on one individual to advance the interests of the company. With Apple’s growth strategy, it is likely that Jobs will soon be stretched too thinly, if he is not already.
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