Steven Wozniak and Steven Jobs founded Apple Inc in 1976; currently the company has its headquarters at Santa Clara Valley, California, it is the world largest electronic industry in volume and sales revenue (Apple Inc, 2010). The company started from a humble setting where the entrepreneurs were designing personal computer to Silicon Valley computer enthusiasts.
In 1979, the company made its first mass production of personal computers a product they named Apple II. In 1984, the company invented Macintosh model; they were silicon technology computers targeting learners and business customers. Since then, the company has been successful in the electronic industry. In 2001, the company introduced Ipads and Ipods, which have created the largest revenue source under the leadership of Steve Jobs. In 2008, the company made an operating profit of $4,834M, which was an increase from $ 3,496M made in 2007 (Apple Inc, 2010). The company aims at revolutionizing personal computer industry, through its innovations of consumer-focused products. This paper undertakes a full strategic appraisal of Apple in the context of the recent case study.
External Threats and opportunities confronting Apple Inc.
The world is experiencing growth in globalization, international trade has created an opportunity to Apple sell its products internationally, the increased market has been favored by advancement in technology, on the other the internal cooperation has necessitated for relaxation of legislations that could have offered a challenge to the company venture in international market (Chong, Keng-Boon, Binshan and Pei-Lee, 2010) . Modern population have adopted the use of computers and electronics for their various functions, they are offering an increased market for the company’s products. In 2008, the company recorded the highest sales volume of computers, iPods, iPhones, and iTunes, resulting from an increased demand of the products. People have been enlighten and are adopting to modern means of communication and business application an areas that the company has invested in heavily. From a technological angle, the company is a pioneer in a number of electronic gadgets, this has enhanced the growth of a strong brand that that offers and opportunity to the company as people are willing to associate with a company that aims at meeting their current needs. Despite the numerous opportunities that the company is experiencing, there are some danger posed by the external environment, the most recent threat is the world economic performance; the economic situation in the world is deteriorating thus the company is posed with the danger of reduced sales because of the situation.
In second quarter of 2009, the global demand for personal computers reduced by 5%, such trends are threatening the success of the company in the future (DE WIT and MEYER, 2010).
The computers and phone industry has a number of players each implementing the approach it thinks fit for the market. According to 2009, personal computer sales research, Dell emerged as the highest seller of personal computers, the company adopted a low-cost provider approach; the success of the company has been attributed to low cost computers; the approach by the company is offering Apple a threat since it adopts a premium pricing strategy. In the PC section, Apple has to face competition from other player like HEWLETT-PACKARD and Acer, the advantage that the competitors have is the narrow focus on personal computers only, unlike Apple Inc that diversified its products to other sections. Despite the increased population, the company is benefiting from Business-2-Business marketing strategy as other players open the market through enlightenments and campaigns for the support of computers. When the world is enlightened, the selling of the company’s products is facilitated. In the sector of personal media player Industry, there have been an increased number of companies in the industry in 2009, there were above 100 companies manufacturing personal media player creative such companies include SanDisk, creative and Microsoft. The increased number of personal media player providers has opened the world to realize the benefits that has been offered by technological development, they are offering marketing platforms to apple Inc as its sells its products (Fred, 2008).
Markets and Segments
The world population is increasingly becoming enlightened and the use of computers is on an upwards trend, the company is likely to benefits from the increased enlightened. Other that the young and literate market segments, competitiveness in the world are forcing companies to incorporate the old guards in the technology world, a move that has widened the market further.
Strengths and Weaknesses
The computer world is undergoing an increased innovation with new products being introduced in the market. Apple Inc is well known of its innovativeness; for three consecutive years, 2006-2008, Fortune 500 has voted the company as the world’s most innovative company. Computers, Software, consumer electronics like I-pod and I-phones, MP3 player, and mobile phone, which are the company’s products are being produced by other international bodies and thus for the company’s products to stand out in the market, then innovativeness should be adopted.
The innovativeness of the company has created a strong brand name and some levels of customer loyalty. The company has set pace in a culture of innovationists, the success and the diversion of business to IPads and Ipods, which has continued to head the company’s sales volume was from high innovation of the team of human resources maintained by the company. The company marketing and product development team is credited as one of the strongest in the world and aims at creating close connection with customers. The company have a strong financial base resulting from past revenue operations, the company has the funds and resources to diversify its process internationally. With the international trade growing, the company has the chance of tapping international market. The company has well experienced information technology team: information technology changing fast: Apple needs to undertake massive research and developments of its products. The success of the company can be attributed to research and development programs. The management team of the company has a wide knowledge and experience in the industry; the management has the skills to make informed decisions and assist in product development.
In the past, the company has had bad experiences and the managers that have rejuvenated the company remain, more specifically, the company has benefits from the intellectualism of Steve Jobs. The company’s business processes, supply chain and waste management strategies, the company processes are responsive to the needs in the industry (Meinolf, Ariane, John, and Ikujiro, 2003). One internal weakness facing the company is its business approach; called, proprietary operating system, the approach is not working well with previous PCs holders who feel that learning the operating system of the new improved MACs is difficult. Another weakness facing the company is its pricing model, Apple uses premium-pricing model that places its commodities at a cost slightly higher than that of its competitor, although it is riding effectively on its strong brand name in the pricing mechanism, and the company is likely to loss to its competitors on basis of price.
Steve Jobs has been credited as the manager who have turned table for Apple to the good; however, the future of his innovativeness and success is threatened by his health conditions. He has just returned from a liver transplant, the condition of his heath offer a challenged to the company, as they are not sure of his continued performance (Haberbeg & Rieple, 2001).
Current ‘Problem’ Diagnosis
Leader-managers are the think tanks of a company; the success of a business is dependent on the quality, timeliness and effectiveness of their management team decisions. A chief executive officer creates the atmosphere for proper decision-making and pioneers the decisions made.
He may not be the sole architect of the structure and policies to be implement but his input plays a major role shaping the direction of the firm. Apple Inc has developed from a loss making to one of the best performing electronic companies in the world; the success can be attributed to a management team that is working together to develop an orchestrate company respected for its innovations. The situation as it is now is that the leader of the successful team is not to his best of health; the way forward is the problem of the company. Another problem facing the company is the competition in the market; the company has stuck to personal computers as its main line of business despite the clear indication that the Personal Media Players are taking the leadership role in the company. Despite holding to the PC world, the company maintains a premium pricing strategy that makes the products slightly higher than other players do. The leaders in the PC world are taken a different approach where it has embarked on cost maintenance to have their products sell cheaply. Although the company needs the innovativeness it has adopted, the approach has cost the company; the company is so fast in innovating other products and thus fails to get full benefit of current innovated products (Oster, 1994).
One area that the company is facing a challenge is o n how to maintain the increased revenue when selling its products relatively cheap, it has not been able to adopt the low price approach as taken by its competitors. To sell its products cheaply, the company should adopt a lean principle management approach. Lean system aims at minimizing of any wastes in the company enabling the company to enjoy higher returns; it aims at determining areas of inefficiency and adopting combinations that will lead to less costly commodities. Lean system came into limelight with the invention of a number of combination at Ford Motor Company which were later improved by Toyota Motor Corporation, the system has a general approach of identification and elimination of waste; through the system was used initially in motor vehicles industry, it can be implemented in electronic industry with the same agenda and objectives. Apple with such a strategy will be able to enjoy reduced cost of business and waste management (Sadler, 2003). In the information technology industry, the innovativeness, and how fast a company can adopt to new systems is of great importance, although Apple is doing well, there is danger in the way it really on some few individuals for the innovation, the approach is the one forming threat to the company when Steve Job gets ill. The company should take advantage of virtual teams management and aim at developing an orchestrate team.
The most dominant advantage in virtual teams is information and knowledge sharing. Virtual reality works across time, space and geographical area, thus information or experience in a certain area can be shared to improve services in another organization currently facing a similar issue. Information is power, thus when the systems are adopted, Apple Inc will get access to quality information it can use for informed decisions. Other than getting information, the information is real-time information. Updated information is crucial for decision making in the fast-changing electronic businesses (Peelen, 2006).
Virtual teams can be adopted as a cost saving strategy, because experts or employees will not have to travel across nations searching for information making. Information can be gotten by a click of a button. Operational costs are saved in teams of time, travelling and accommodation costs and reduced cost of research and development. The internal team made by the company seems to have lacked an effective management preparation strategy, the departure of Steve Jobs is seen as the end of the company; the company should change the tactic of concentrating knowledge and power in an individual but aim at having orchestrate team. As much as the management of Steve has been commendable, much need to be done to develop better teams. The team should have the zeal and will to manage already developed products to get the highest benefits from them other than having the greatest approach being innovation of new systems. The situation that the company is having at the moment offers the right time to brand extend along the line of personal media players, the company should have a two internal process improvement approach. As one team increases the market through the line of personal media player, another team should be developing a competitive edge in the main line of business, the personal computers sector.
Market expansion using the Personal Media Player will offer the company much needed finances to expand and develop strategies in the PC sector. Efficiency improvement tools like six sigma, integrated supply chain management and knowledge management tools. Team spirit should be effected within the company to facilitate invention (Wheelen & Hunger, 1998).
The best solution that the company will have is the concentration of the development of an orchestrate team; the company has a team that can deliver however there are areas that need to be polished. It is worth giving the company team credit however, it is by refocusing the team further that the company can beat the competition in the industry. The team should be divided in micro teams supposed to deliver some strategic goals within the company, in the past the company has been taken by the increasing sales and has forgotten to “cool down”, and make strategic approaches to the company’s strategies. The following are the teams that need to be developed for an overall better performance of the company:
Competition analysis team
The company seems to have been taken hostage by its recent success and forgotten that the industry is competitive; this is the reason why it is trailing in its original set of business but performing well in innovations. The new will have the mandate of developing competitive edge strategies that will, see the company out of his competition.
Through the company is riding on its good reputation to sell goods expensively, it’s a high time that it develops cost effective strategies within the company, these strategies include six sigma, lean thinking and total quality management approaches.
Business development teams
Apple should understand that people in an organization come and go, the company need to diverse its thinking tanks and not concentrate their efforts in one person. Orchestrate teams should be developed to focus the business operation further.
Apple is an international electronic company lead by Steve Jobs; it is respected for its innovative strategies that have changed the information and technology industry. The company strength is vested in its strong brand name and quality products; the growth in international trade and increased enlightens of world population offers the company growing business opportunities; however the company is facing high competition from similar companies.
To remain in the leadership position in the industry, the company needs to refocus its team; it should develop a team that aims at reinforcing the current position as it invents other avenues of competitiveness. It has been noted that the company has been focusing so much on innovation; it moves to the next level of technology without having exhausted the benefits offered by the current innovation.
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