Some customers think that Apple products are not cheap but also not high-priced products because the value of Apple products bring to them is never disappointing. When reviewing the history of Apple, it is evident that this attitude permeated the company during its peaks of success. As CEO in Apple, Steve Jobs carefully evaluated competitive pressure and opportunity in market place by continuously pursuit customer experience innovation. Apple Inc is a multinational American company that design and sells computer software, consumer gadgets and personal computers. Apple does not produce laptops in various colors like Dell or Hewlett Packard to increase the choices for consumers. Jobs despised licensing, calling cloners “leeches”. It is vital to remember, “Commitment, coordination, and trust are all important determinants of alliance success.”, Your email address will not be published. Case Study of Steve Jobs: The Ultimate Intrapreneur and Entrepreneur, Case Study on Apple's iPod: The Marketing of an Idea Project, Case Study: A Phenomenon Called Steve Jobs, Effect of Relationship Marketing on Customer Retention, Porter's Generic Strategies - Differentiation Strategy, Organizational Success through Creativity and Innovation, The Concept of Entrepreneurial Opportunities. Apple led the global technology market by developing innovative products such as the Mac, the iPod, the iPhone, and the iPad which redefined their respective markets. The company has been benefiting from its vertical integration immensely. They must be competitive, flexible, fast and meet … Focused on segments worldwide and United States the macro-environmental analysis Apple – A Digital Business Strategy Case Study This is a case study of how in 1997, Apple was able to change their fortunes and transform their business all by having the right strategy. A business strategy, in most cases, doesn't follow a linear path, and execution will help shape it along the way. April 28, 2014 April 28, 2014 / obsurvival. A strategic alliance can be a sustained competitive advantage if it is rare, difficult to imitate, and the company has an organization to exploit it. To realize our ambitious plans we must focus all of our efforts in one direction.” This statement was in the wake of Apple divesting significant software holdings (Claris/FileMaker and Newton). THE APPLE SUPPLY CHAIN. The sponsor procures, advocates, and champions. In terms of applications and software, Appstore provides a platform for customers to download software and applications according to categories. A massive reversal occurred in 1997 and 1998. In the case of Apple, there was the opportunity to manage risk and share costs  facilitate tacit collusion , and manage uncertainty. Later, Apple introduced the easy-to-use iMac in 1998, and updates following 1998. Your email address will not be published. Macbook users are satisfied with Macintosh performance because it is very energy saving where the processor will automatically “close” those programs which are not in use when it is in standby mode. Apple’s business strategy controls its unique ability to design and develop its own operating systems, hardware, application software, and services. Apple’s vertical integration is one of the major factors that set it apart from the competition. However, the difficulties with these drive the formation of strategic alliances. Apple Inc is well-known for being innovative as they kept on producing new innovations from the first Apple computer Macintosh to the more recent iPhone and iPad series. From the study, the conclusion is if the company wants to continue to succeed the same way then it must consider macro and micro environmental factors. He also focused their business and IT strategy on customer center experience. Steve Jobs focused on this strategy because the customers can help the company to understand what customers need and scarcity of the people so that he can use the feedbacks as inspiration to deeply investigate and then to create more innovative, creative and highly advanced technological product or services that can fulfill the needs of the customers. In order to make the company more innovative, Steve Jobs focused innovation on competitive pressure and value proposition by stressing his management style on customer center innovation and customer experience. This generic strategy focuses on key features that differentiate thecompany and its information technology products from competitors. On the other hand, Windows does not have such technology. Apple on the other hand practiced horizontal and vertical integration which gave it the dual advantage of significant reduction in costs as well as its … It also serves as a meter of how products are designed. If the number of competing firms implementing a similar strategic alliance is relatively few, the strategy is rare. Product differentiation is a viable strategy, especially if the company exploits the conceptual distinctions for product differentiation. Moreover, Apple Inc’s dominant position in the global market has changed the trend of consumer usage of electronic appliances such as in virtual communication. It released a highly stable operating system in 1999, and updates following 1999. Case Study on Apple’s Business Strategies, Becoming a Successful Learning Organisation: Case Study of Apple, Five Common IT Problems Encountered by Small and Medium Enterprises, Case Study of Steve Jobs: The Ultimate Intrapreneur and Entrepreneur, Porter's Generic Strategies - Differentiation Strategy, Case Study: Apple iPod Silhouette Ad Campaign, Effect of Relationship Marketing on Customer Retention, Case Study of Apple Inc: An Apple for Your Enterprise. We can describe Apple’s business strategy in terms of product differentiation and strategic alliances. The second strategy applied by Apple is differentiation. A business strategy is a deliberate plan that helps a business to achieve a long-term vision and mission by drafting a business model to execute that business strategy. Apple was founded by Steve Jobs and Stephen Wozniak in 1976; Apple Computers revolutionized the personal computer industry. Therefore, Apple is … Apple is using Macintosh as operating software whereas other personal computer’s producers are using Windows. Overview Apple inc. is a Multinational Corporation operating in 97 countries worldwide. The company offers various products for the different market it targets. It was co-founded by Steve Jobs , Steve Wozniak and Ronald Wayne. If there are fewer firms differentiating than the number required for perfect competition dynamics, the strategy is rare. In 1997, when Apple was seeking a CEO acceptable to Steve Jobs, Jean-Louis Gassee (then-CEO of Be, ex-Products President at Apple) commented, “Right now the job is so difficult, it would require a bisexual, blond Japanese who is 25 years old and has 15 years’ experience!”  Charles Haggerty, then-CEO of Western Digital, said, “Apple is a company that still has opportunity written all over it. If there are socially complex relations among partners and there is no direct duplication, the strategy is difficult to imitate. Activity 3 - Outsourcing (20 minutes) Apple outsource the component creations of its product to many overseas businesses. As for pricing, Apple is using skimming pricing strategy where they set high selling price for their products. Apple established a reputation as an innovator by offering an array of easy-to-use products that cover a broad range of segments. The critic challenges investments, goals, and progress. Thus, Windows’ users might have to charge the laptop more often due to the battery consumption is higher than Macintosh. In 2003, Apple released the world’s fastest PC (Mac G5), which had dual 2.0GHz PowerPC G5 processors. Furthermore, Apple also created a substantial value in highly competitive market and industry which help them to achieve competitive advantages in an industry with stiff competition. It was co-founded by Steve Jobs, Steve Wozniak and Ronald Wayne. Besides that, iTunes also allow consumers to transfer photos from iPhones to PCs. Your email address will not be published. iPhone App Store ” blocks innovation, blocks competition,” and “allows Apple to charge monopoly rents.”. Now, let us discuss about the current expansion strategy that used by Apple that make the company has greater success in marketplace. 500; For delivery through courier (within India): Rs. This move allowed Apple to have a desktop and a portable computer in both the professional and the consumer segments. Summary of Apple Case Study Analysis 1.0 Introduction 1.1 Introduction of Apple: Apple Inc. is the most famous name in the technology sector, it is an innovative electronics manufacturer, which is giving benefits to the consumers and to the suppliers, and the company is using successful strategies in the market so the best results could be achieved. In reference to Apple’s recent advancements, Jobs said, “We are going to do for digital creation what Microsoft did for the office suite productivity.” That is indeed a bold statement. Major HBR cases concerns on a whole industry, a whole organization or some part of organization; profitable or non-profitable organizations. I just did not see how it would make sense. Full strategic case analysis for Apple incorporation including industry , competitor's and firm's self analysis. Apple turned the corner in 1993. Apple has a history of shunning strategic alliances. Apple's corporate strategy – one of creativity, innovation, and the pursuit of excellence – can be summarised in its mission and vision statements: Tacit collusion is a valid source of economic value in network industries, which the computer industry is. “If we had licensed earlier, we would be the Microsoft of today.” – Ian W. Diery, Apple Executive VP, I am aware that I am known as the Great Satan on licensing…I was never for or against licensing. In 2003, Apple released the iLife package, containing improved versions of iDVD, iMovie, iPhoto, and iTunes. Apple was founded by Steve Jobs and Stephen Wozniak in 1976;  Apple Computers  revolutionized the personal computer industry. The company is successful because it efficiently … Specifically, an important source of Apple … In 1996, Apple announced the $427 million purchase of NeXT Software, marking the return of Steve Jobs. Not only does a company have to bear the cost of standard business, it also must bear the costs associated with overcoming the differentiation inherent in the incumbent. The Subject of the following elaboration is the analysis of the strategy of the Apple, Inc., formerly Apple Computer. . Apple prides itself on its innovation. They can also “synchronize” and update the songs in their iPhone with a laptop. It means that Apple will be more focused on looking outwards, market and business drivers rather than at the products or services that already exist. A company’s differentiated product will appear more attractive relative to substitutes, thus reducing the threat of substitutes. We were also naïve to think that the best technology would prevail. Outsourcing is another remarkable business strategy of Apple. Business Case Study: Management at Coca-Cola Next Lesson Business Case Study: Apple's Management Style Chapter 3 / Lesson 8 Transcript This is due to the self esteem where consumers feel good by carrying Apple products because it somehow shows their status as being up-to-date and their taste is better than others. The company’s strategy was. (Linzmayer, 245-8)   After not receiving a response, Gates wrote another memo on July 29, naming three other companies and stating, “I want to help in any way I can with the licensing. Since a company with a differentiated product competes as a quasi-monopoly in its market segment, there is a reduced threat of buyers. Apple lends us an interesting example of how good leadership is vital for the success of a corporation. The entrepreneur manages the innovative unit(s). It begins with the emergence and development of Apple and his initial public offering (IPO), followed by proceedings of inter-nationalization. This role also resolves disputes, particularly among the other leaders. But my approach was stupid. Sculley and Spindler were hoping IBM would buy Apple and put them in charge of the PC business. A company attempts to make its strategy a sustained competitive advantage. On June 25, 1985, Bill Gates sent a memo to John Sculley (then-CEO of Apple) and Jean-Louis Gassee (then-Products President). However, there are still a lot of loyal customers who prefer to spend more money on Apple products. To continue a product differentiation strategy, Apple must continue its appropriate management of innovation dilemmas and maintain the five leadership roles that facilitate the innovation process. Apple Computers Inc is considered to be one of the innovators in the computer industry. Apple’s profitable but risky strategy When Apple’s Chief Executive – Steven Jobs – launched the Apple iPod in 2001 and the iPhone in 2007, he made a significant shift in the company’s strategy from the relatively safe market of innovative, premium-priced computers into the highly competitive markets of consumer electronics. With all of Porter’s Five Forces lower, a company may see economic value from a product differentiation strategy. Other than that, Apple is using specialization strategy where they customized customer’s laptop according to their requirements. Since Jobs took over as CEO in 1997, Apple seems to have resolved the innovation dilemmas, evidenced by their numerous innovations. Then, Sculley and Michael Spindler (COO) partnered Apple with IBM and Motorola on the PowerPC chip. Having a policy of experimentation and a tolerance for failure resolves the commitment to market vision dilemma. Apple continued its digital lifestyle strategy by launching iTunes Music Store online in 2003, obtaining cooperation from “The Big 5” Music companies–BMG, EMI, Sony Entertainment, Universal, Warner. If suppliers increase their prices, a company with a differentiated product can pass that cost to its customers, thus reducing the threat of suppliers. Apple saw itself as a hardware company; in order to protect our hardware profits, we didn’t license our operating system. Even the MacBook and iPhones … Investors and consumers alike see Apple as a powerhouse, which makes it easy to forget the rocky history of leadership within the company. Philip W. Schiller, VP of Worldwide Product Marketing for Apple, stated, “iPod is going to change the way people listen to music.” He was right. Gil Amelio, an avid supporter of licensing, took over as CEO in 1996. “If Apple had licensed the Mac OS when it first came out, Window   wouldn’t exist today.” – Jon van Bronkhorst, “The computer was never the problem. Today Apple Inc. is very well known in the world because of their advanced technology in products such as iPods, iPhone, Macbooks, Apple TV and other professional software. In 2012 Cook reduced component suppliers from 100 -24, forcing Suppliers to compete. Case Study: The Business Strategy of Apple, Business Level Strategies - Cases of Wal-Mart, Apple, Zara and Ikea. They are as depicted below. If there is no direct, easy duplication and there are no easy substitutes, the strategy is difficult to imitate. In 1997, Jobs overhauled the board of directors and then entered Apple into patent cross-licensing and technology agreements with Microsoft. The mentor coaches, counsels, and advises. Apple's Profitable but Risky Strategy 2540 Words | 11 Pages. Price: For delivery in electronic format: Rs. Apple is an American company based Five leadership roles will facilitate the innovation process:   Institutional Leader, Critic, Entrepreneur, Sponsor, and Mentor. Apple deals in the designing, production and marketing of software, mobile and media devices, accessories, personal computers, networking solutions, and portable music players. In 1998, Jobs stated that Apple’s strategy is to “focus all of our software development resources on extending the Macintosh operating system. To resolve these dilemmas, there must be an appropriate organization structure. Case Study on Apple’s Business Strategies. He pulled the plug, essentially killing its largest licensee (Power Computing). This generic strate… It covers all the strategic issues facing the industry and Apple inc. as well as the recommended solutions for these issues on business and corporate levels. Those that are relevant to Apple are product features, product mix, links with other firms, and reputation. The company’s products were used as a basis by other computer company’s in designing the specifications and physical characteristics of their product. Important Soft Skills for Workplace Success, The SCP Paradigm - Structure drives Conduct which drives Performance, Customer Confidence Winning Strategies Adopted by Organizations, PRINCE2 Methodology in Project Management, Apple Computers Inc is considered to be one of the innovators in the computer industry, Understanding Different Types of Supply Chain Risk, Supply Chain Integration Strategies – Vertical and Horizontal Integration, Understanding the Importance of International Business Strategy, Employee Participation and Organization Performance, Psychological Contract – Meaning and Importance, Workplace Effectiveness: Easy Tips to Bring the Team Together, Portfolio, Programme and Project Management Maturity Model (P3M3), Evolution of Logistics and Supply Chain Management (SCM), Case Study on Entrepreneurship: Mary Kay Ash, Case Study on Corporate Governance: UTI Scam, Schedule as a Data Collection Technique in Research, Role of the Change Agent In Organizational Development and Change, Case Study of McDonalds: Strategy Formulation in a Declining Business, Case Study: Causes of the Recent Decline of Tesla, Roles and Responsibilities of Human Resource Management. It offers an array of products from computers to televisions to software. That never came to fruition, because Apple (with Spindler as the CEO) seemed contradictory and was extraordinarily difficult in business dealings. Through thebroad differentiation genericstrategy, Applestands out in the market. Required fields are marked *. AppleInc.’s generic strategyis broad differentiation. Apple BUSINESS STRATEGY Business Strategy Objective: To develop a market demand for Apple products in developing countries to insure the longevity of the Apple brand. Your email address will not be published. This allowed iTunes Music Store online to offer over 200,000 songs at introduction. Ionology’s 7 Principles of Digital Business Strategy is applied to the case. However, Spindler nixed Gateway in 1995 due to cannibalization fears. Since companies pursue niche markets, there is a reduced threat of rivalry among industry competitors. The cost of product differentiation acts as a barrier to entry, thus reducing the threat of new entrants. A Leadership Case Study: Apple. For instance, Apple pioneered the PDA market by introducing the Newton in 1993. It often doesn’t.” – Steve Wozniak, Apple cofounder. Suppliers at Apple register on SID (Supplier Information Database). In 2013, the company annual revenue was … This mini case study sheds light on the role that design thinking and innovation played in helping Steve Jobs rescue Apple with his consumer-driven strategy and vision for the company. Under Amelio, Apple licensed to Motorola and IBM. How has Trading Been Affected in Asia Due to Corona, PRINCE2 Methodology in Project Management, Design for Manufacture and Assembly (DFMA), The SCP Paradigm - Structure drives Conduct which drives Performance, Apple Inc is well-known for being innovative, created a substantial value in highly competitive market, Steve Jobs focused innovation on competitive pressure and value proposition, Apple products design is always attractive and elegant, the innovation of Apple Company by creating digital lifestyle, iTunes allow consumers to categorize and download songs easily, Understanding Different Types of Supply Chain Risk, Supply Chain Integration Strategies – Vertical and Horizontal Integration, Understanding the Importance of International Business Strategy, Employee Participation and Organization Performance, Psychological Contract – Meaning and Importance, Workplace Effectiveness: Easy Tips to Bring the Team Together, Portfolio, Programme and Project Management Maturity Model (P3M3), Evolution of Logistics and Supply Chain Management (SCM), Case Study on Entrepreneurship: Mary Kay Ash, Case Study on Corporate Governance: UTI Scam, Schedule as a Data Collection Technique in Research, Role of the Change Agent In Organizational Development and Change, Case Study of McDonalds: Strategy Formulation in a Declining Business, Case Study: Causes of the Recent Decline of Tesla, Roles and Responsibilities of Human Resource Management. There is economic value in product differentiation, especially in the case of monopolistic competition. It would have been applicable to the industries in which Apple operated. Why Businesses Need an Efficient Management Information System? Customers are required to add in features into the laptop which can serve them better. We had the most beautiful operating system, but to get it you had to buy our hardware at twice the price. Today, in 2016, Apple’s share price is around US $108 and the company achieved revenues of US $233.7 billion in 2015 with net income of US $53.39 billion. The institutional leader creates the organizational infrastructure necessary for innovation. The differentiation in operating software gives Apple a competitive advantage in the personal computer industry. In a nutshell, the key to Apple’s success is down to creating a unique product with the ability for it to be customized to suit each individual’s needs. A CASE STUDY OF APPLE SUPPLY CHAIN . But, like any other brand, Apple also started as a small company. In most courses studied at Harvard Business schools, students are provided with a case study. Apple was founded by Steve Wozniak and Steve Jobs in 1976. This site uses Akismet to reduce spam. There is economic value in strategic alliances. Managing uncertainty, managing risk, and sharing costs are sources of economic value in any industry. Apple then opened its own stores, in spite of protests by independent Apple retailers voicing cannibalization concerns. The primary economic value of product differentiation comes from reducing environmental threats. A U-Form organization resolves the inter-functional collaboration dilemma if there are product development and product management teams. All the high tech products provide consumers with a better living standard in many different ways. However, its links with other firms have been limited, as we will discuss in the next section on strategic alliances. This marked the beginning of Apple’s new strategy of making the Mac the hub for the “digital lifestyle”. What we should have done was calculate an appropriate price to license the operating system. As from 2013 to 2015, the company has recorded a steady rise in annual revenue. Then Apple introduced the iPod, central to the “digital lifestyle” strategy. In this Apple case study, the aim is to identify the internal as well as the external factors that have an impact on obtaining achieving high performances by Apple. Apple subsequently acquired Power Computing’s customer database, Mac OS license, and key employees for $100 million of Apple stock and $10 million to cover debt and closing costs. However, to those consumers who are concerned about technology and high performance, Apple is still the preferable choice. The only person who’s qualified to run this company was crucified 2,000 years ago.”. Harvard Business Case Studies Solutions – Assignment Help. In addition, it resolves the other external factors that present difficulty challenges to Apple Inc. INTRODUCTION APPLE’S HISTORY & PRODUCTS STEVE JOBS ROLE SWOT ANALYSIS PORTERS FIVE FORCES - IPHONE PESTEL ANALYSIS BOSTON I PORTFOLIO SOURCES Therefore, now Apple Inc is known as a strong company and the market leader in industry. Apple Computers Inc is considered to be one of the innovators in the computer industry. A non-equity alliance should have explicit contracts and legal sanctions. The company is often criticized because a 30% cut is a significant commission for small businesses or app developers. Case Study: The Business Strategy of Apple Apple Inc is a multinational American company that design and sells computer software, consumer gadgets and personal computers. For this to occur, a product differentiation strategy that is economically valuable must also be rare, difficult to imitate, and the company must have the organization to exploit this. Gates recommended that Apple license Macintosh technology to 3-5 significant manufacturers, listing companies and contacts such as AT&T, DEC, Texas Instruments, Hewlett-Packard, Xerox, and Motorola. When organizing for strategic alliances, a firm must consider whether the alliance is non-equity or equity. Required fields are marked *. Therefore, Apple products design is always attractive and elegant compared to those existing competitors. The products made by the company offer something different. View our Apple case study presentation slides Get our Brand Toolkit Our most comprehensive package includes over 100 PowerPoint slides for a brand plan presentation, brand plan on-a-page, brand strategy roadmap, business review, brand positioning presentation, creative brief, mini brief, brand concept, brand credo, and brand story This case study is about innovation at Apple Inc. (Apple), one of the most valuable companies in the world in terms of market capitalization. For example, elegant design and user-friendliness ofproducts, combined with high-end branding, effectively differentiate the technologybusiness. iTunes allow consumers to categorize and download songs easily. Beside this, Apple also emphasizes customizability on the part of entertainment that offer computer-build for high performance such as gaming. In terms of design, Apple came out with an ultra-thin Macbook Air which is extremely thin compared to those existing laptops. Apple products like iPods and iPhones are good examples that show the innovation of Apple Company by creating digital lifestyle. There are four primary organizing dilemmas when considering product differentiation as a strategy. Apple business strategy can be characterised as vertical integration in a way that the company has advanced expertise in software, hardware, and services at the same time. How Innovation Contributes to Competitive Advantage? The company does not own and operate manufacturing or production facilities. The company most revered brands are Mac, iPad, and iPhone. That was a mistake. In 2005 Apple won a legal case about a blog that pre-introduced new Apple products. Business Strategy. Apple continued their innovative streak with advancements in flat-panel LCDs for desktops in 2002 and improved notebooks in 2003. Although Apple eventually realized the economic value of strategic alliances, it should have occurred earlier. SWOT Analysis of Apple. Apple had issues within its organization. We were just fat cats living off a business that had no competition.” –   Jean-Louis Gassee, Be CEO and ex-CEO of Apple, admitting he made a strategic mistake. This site uses Akismet to reduce spam. With this trial, Apple force Bloggers to name the source of their information because the company suspected that the information had leaked from its employees. This completed their “product matrix”, a simplified product mix strategy formulated by Jobs. An equity alliance should have contracts describing the equity investment. In 1985 … There are some substitutes for an equity alliance, such as internal development and acquisitions. Instead, hardware parts such as display panels are either bought from third-party manufacturers, and propriety hardware such as the processors found in the iPhones and the iPads are manufactured by outsourced companies. The first strategy that use by Apple Inc for their current expansion strategy is creating innovative idea that slightly different from the competitors that already exists in market and industry. Spindler begrudgingly licensed the Mac to Power Computing in 1993 and to Radius (who made Mac monitors) in 1995. It is easy to search for any application or software by using Appstore. Combining the old with the new resolves the connection to the past dilemma. It brought about different changes to the industry; these changes are still visible in the present. By using iTunes, consumers can choose their preferable album cover for their songs. 500 + Shipping & Handling Charges extra » Business Strategy Case Studies » Case Studies Collection » Business Strategy Short Case Studies » View Detailed Pricing Info » How To Order This Case » Business Case Studies » Area Specific Case Studies » Industry Wise Case Studies Learn how your comment data is processed. Gaming plays important roles to help Apple to customize in features and specification to make the products more attractiveness and creativity. The matrix is as follows: In 2001, Apple hit another important historical point by launching iTunes. But you’d need to recruit God to get it done.”   Michael Murphy, then-editor of California Technology Stock Letter, stated, “Apple desperately needs a great day-to-day manager, visionary, leader and politician. 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