• Author / Uploaded
• Jeremiah Peter

Citation preview

Strategic Management Assignment No 1 Apple Inc. Case Study Group No 4

Submitted by Name

Roll nos

Manoj Borse

07

Jeremiah Peter

37

Sandeep Bagri

48

Fahad Nakade

101

Omkar Parte

107

Sanjana Prakash

109

Apple Inc. Case Study Executive Summary Apple has, since the 80’s, been a market leader in the computing and telecommunications arena. This case study sheds light on the various challenges faced by the technology giant and the path breaking innovations that have kept the company afloat in troubled times. The report takes us through the ebb and flow of the Apple journey from designing the world’s first personal computer to manufacturing the futuristic Apple iWatch. Apple has seen several leaders such Jobs, Sculley, Spindler, who through their innovative strategies and unrelenting market expertise have encountered some key challenges. Also, they have been able to pique consumer interest by introducing state of the art technology and reliable quality. Apple has always been ahead of the curve by predicting what the consumer wants. The case study highlights a few products and services which reflect corporate, business, functional and operational strategy implementation.

Corporate Strategies Corporate level strategy is concerned with the strategic decisions a business makes that affect the entire organization. Financial performance, mergers and acquisitions, human resource management and the allocation of resources are considered part of corporate level strategy. In Corporate Strategy, there are two kinds of diversification: 1. Linked 2. Constrained. Companies using linked diversification enter new businesses when it relates in some way to another business they are already in (it is linked to it), but does not necessarily have any connection to their other businesses. If they are using constrained diversification, however, they only enter a new business if it is based on their core resources or competencies. Companies based on linked diversification have little coherence to their overall corporate strategy, while companies using constrained diversification tend to be more focused. Constrained diversification allows companies to maximize the effect of their resources because they are shared. Apple and its strategy Apple uses constrained diversification. Apple is, inherently, a personal computer company (hardware and software), and their businesses utilize their competencies in developing hardware and software. The Macintosh, iPad, iPhone,

iPod and AppleTV are all computers, which allows Apple to share resources between businesses. For example, the Macintosh, iPad, iPhone and AppleTV all run OS X, Apple’s operating system. This creates economies of scope, cost savings for the company because their resources are shared across multiple businesses. The Macintosh, for example, consists of two kinds—desktop and notebook. These separate product lines each share resources and complement each other. The iMac and MacBook Pro are both primarily constructed from aluminium and glass, so not only do they share the same materials (which reduces costs), but they resemble each other, creating unity between product lines.

Each platform, too, complements the other. Apple’s Macintosh computers sync their media and personal data (calendar, contacts, email) seamlessly with the other platforms. Because they work so well together, owning products from each platform benefits users by creating an experience where their devices “just work.” The platform advantage does not apply just to Apple’s devices. Through iTunes, users can purchase music, movies and television shows that syncs across all of their devices, or even do so from their iPhone or iPad. The App Store allows users to download applications for their iPhones and iPads wherever they are, and now the iBook Store, will allow them to do the same with books. Because Apple has chosen what businesses to enter carefully, these platforms reinforce the others and make them more powerful. The sum is greater than the parts. This creates a complete package for consumers to choose, and it is difficult for competitors to match. Their platform strategy makes each individual business more valuable than it would be as a separate entity. This fits Apple’s platform strategy well. With iTunes, Apple’s intent is to make the major forms of media used on their devices immediately and easily available, and the iPad is positioned as a reading device and is perfect for it. Establishing the best print media platform would strengthen their media offering and make the iPad much more convincing as a device. They moved way beyond the iPhone and the iPad. Apple Watch was the brainchild of Tim Cook, with a view to introduce wearable technology. Apple Inc. has hit roadblocks in making major changes that would connect its Watch to cellular networks and make it less dependent on the iPhone, according to people with knowledge of the matter. The company still plans to announce new watch models this fall boasting improvements to health tracking Thus, we sum up saying that brand extension as a corporate strategy has done wonders for Apple as an organization. Today, Apple doesn’t only involve iPhone that’s at the top of the mind, but also iPad, Macintosh and Apple Watch.

Business Strategies Apple has taken some key business decisions under the able leadership of Steve Jobs, John Sculley and Michael Spindler. Some of them are listed as follows:



From 1985 to 1993 John Sculley focussed on desktop publishing and education, stabilizing Apple’s market share to 8%. Also Apple provided a complete desktop solution including hardware, software and peripherals for plug and play.



After being reappointed as CEO of Apple, Steve Jobs halted the Macintosh licensing program.



Soon after, he focussed on core products by reducing existing product lines from 15 to just 4. Apple wanted to maintain a niche audience in the premium market.



After 1998, Apple wanted to create more flexible channels to reach the consumer, hence they launched an Apple website to set up direct sales.



In a closed system bound by secrecy, Apple launched the iMac in 1998 and posted $309 million profit. Moreover, Apple promoted itself as an alternative to other computer brands.



The company positioned its computers as the world’s “greenest line-up of notebooks” that were energy efficient and used recyclable materials.



After the success of Macintosh, jobs pushed the innovation bar by introducing the iPod in 2001. He also forward integrated the market by designing an iTunes store, which further promoted strong sales. Sales shot from 78000 units to 304000 units in just one quarter.



In January 2007, Apple launched the iPhone with features such as touch controls, and a break through internet communications system.



Apple’s core business is based on selling hardware. Other ancillary services such as the operating system, iTunes, the App Store were used to offer a valuable proposition, promoting more sales.



Subsequently in 2010, Apple launched the iPad and built another $30 billion business.



Apple was wary of licensing the iPhone OS to other manufactures as it would cause Apple to lose their market leadership in terms of state of the art software.



Apple was able to provide a differentiated offering due to its hardware and software quality.

Functional Strategies

Research- The company’s primary focus was innovation, hence it dedicated 9% of sales proceeds to research and development, an amount far more than that offered by its competitors. Human Resources Strategy – Jobs hired Tim Cook in 1998 from Compaq and Cook went on to streamline Apple’s supply chain, thereby cutting costs. Under Jobs supervision, Apple strictly followed a closed door policy to enhance intellectual property safety. Marketing Strategy - When IBM entered the PC space, Apple focussed on vertical and horizontal integration and refused to license its software to third parties. Apple tried to resurrect it tarnished image by introducing catchy slogans such as ‘ Think Different’ , ‘It just works’ and ‘ greenest line up of notebooks’.

Operating strategies An operational strategy is a necessary element for a business and supports the firm's corporate strategy. Companies and organizations making products and delivering, be it for profit or not for profit, rely on a handful of processes to get their products manufactured properly and delivered on time. Each of the process acts as an operation for the company. To the company this is essential. That is why managers find operations management more appealing. We begin this section by looking at what operations actually are. Operations strategy is to provide an overall direction that serves the framework for carrying out all the organization’s functions. Apple’s Operation System: Apple Operations International designs, manufactures, and markets mobile communication and media devices, personal computers, watches, and portable digital music players in Ireland. The company was formerly known as Apple Computer Inc. Limited. The company was incorporated in 1980 and is based in Cork, Ireland. Apple Operations International operates as a subsidiary of Apple Inc.

An in-depth report on Apple's manufacturing operations details the gains in flexibility, diligence and skilled labour availability that the company gains from producing its devices overseas, while offering rare commentary from its current and former executives. Tim Cook, Apple's current chief executive officer, has been credited with developing Apple's overseas supply chain. A former high-ranking executive said that Cook decided to move much of its manufacturing to Asia because it can "scale up and down faster" and "Asian supply chains have surpassed what's in the U.S." Apple Inc.’s operations management (OM) involves the application of the 10 decisions of OM to ensure that all aspects of the business are running smoothly.

In operations management, the 10 decisions relate to such aspects as product design, quality management, process and capacity design, and location strategy, as well as inventory management, among others. In Apple’s case, the 10 decisions of operations management are carefully implemented through coordinated efforts in product design and development, sales and marketing, and the firm’s supply chain, along with Apple’s other business areas. With its industry leadership, Apple Inc. is an example of success in addressing the 10 decisions of operations management. Apple Inc.: 10 Decision Areas of Operations Management 1. Design of Goods and Services 2. Quality Management 3. Process and Capacity Design 4. Location Strategy 5. Layout Design and Strategy 6. Job Design and Human Resources 7. Supply Chain Management 8. Inventory Management 9. Scheduling 10.Maintenance

Productivity at Apple Inc. Apple Inc.’s operations management monitors and evaluates productivity through various criteria. The company’s global size and diverse activities translate to different standards, benchmarks and criteria for productivity in different business areas. The following are some of the productivity criteria in Apple’s operations management: 1. 2. 3.

Revenue per Square Foot (productivity of Apple Stores) Product Units per Time (productivity of Apple suppliers and supply chain) Milestone per Time (productivity of Apple employees in product development)

Thus to conclude, Apple’s operational, business and corporate strategies actually work in tandem that helps the company stick to its roots and expand YoY.