Apple_Computer

Apple Computer, Inc.: Maintaining the Music Business while introducing iPhone and Apple TV Introduction Steven Wozniak had a great idea in which the company he worked for did not see a future in his idea. Steven had the idea to combine video monitors with computers and make it user friendly. This idea would become the personal computer. Approaching his high school buddy, Steve Jobs, it was decided that they should go into business themselves and market the personal computer (PC). On April 1, 1976, the Apple computer was born in the garage of Steve’s parents. Early in 1977 Apple Computer, Inc. was official. The company grew quickly and its annual sales increased to $10 million and began expansion of its workforce. Apple became a public company in the early 1980’s and soon faced some competition for an experienced IBM. Apple has developed innovative ideas and strategies and has remained a viable company still today. 1. Describe the key strategic challenges facing Apple Computer. Apple computer has faced many challenges throughout its 24 year history. Steven Jobs left Apple over disagreements with John Scully, whom Jobs recruited as Apples president and CEO and started next. During Jobs absence from Apple, Apple partnered with IBM and Motorola to produce the Power PC Chip. One of the key strategic challenges that Apple Computers faced was the loss of the exclusive rights to interface design, due to a poorly negotiated contract. With this loss Apple was now in a position in which it needed to gather d its resources and fight a battle toward standardized software as consumers wanted compatible operating systems and the Macintosh ran exclusively on Mac OS, a system not available to other computers. (Hitt, Ireland, & Hoskisson, 2011) Apple went through several CEO’s over the next five years. Jobs returned to Apple a decade later after Apple acquired NeXT with the intent of using its technology for a new operating system. Apple and Microsoft were at odds with each other and Jobs priority was to settle the dispute over the GUI. Microsoft made its Office 98 compatible with Macintoshes. Transformation was about to take place in Apple when Jobs introduced less expensive computers aimed at lower income consumers. Mac users compromised less than 5 percent of U.S. computer users, when Apple introduced iTunes. iTunes was a legal way to download music exclusively on the MAC. This alone was a challenge because you needed to own a MAC, however when iTunes became available for use on the PC sales sky rocketed. In 2002 Apple introduced an iLife a software suite which included iPhoto, iMovie, iTunes and eventually the iPod. (Hitt, Ireland, & Hoskisson, 2011) Mobile security is a strategic challenge as Apple is to improve mobile security with the concern for privacy. Apple lacks experience in security. As Apple introduces more services and devices it needs to understand who the target customer is that they need intend to serve by having a strong business level strategy, which is a core strategy, describing how it intends to compete. 2. Describe the dimensions along which company success can be measured. Company success can be measured in reach, richness and affiliation. Reach is a dimension of a firm’s relationship with its customers. Firms extending their reach add customers in the process of doing so. Apple has reached its customers through a variety of ways. The iPod is for music lovers, the iPhone has combined three concepts: a mobile phone, a wide screen iPod and internet into one device. Apple has marketed itself in such a way as to use strategic agreements with well known brands such as Volkswagen, Burton Snowboards, Nike and Starbucks. Volkswagen offered free iPods to consumers who purchased a hardtop beetle. Burton Snowboards offered a jacket that held the iPod. Apple puts the iPod in the hands of the users and makes it user friendly. Nike and Apple teamed up to create a sport kit that tracked a runners distance, time, pace and calorie burned. Starbucks announced a joint venture that allows Starbucks customers to access at no cost the iTunes Wi-Fi Music store allowing them to browse, search and preview all songs available on the iTunes store. (Hitt, Ireland, & Hoskisson, 2011) 3. Describe the critical external and internal environmental factors that have strategic implications for Apple's future. External environment factors that have strategic implications on Apple’s future are scanning, monitoring, forecasting and assessing. The external environment is often difficult is a significant factor in success, although it is a very difficult task. Identifying opportunities and threats within the general environment helps companies maintain a competitive advantage. Scanning involves studying the general environment to identify potential changes and threats while planning strategically for success. Since the introduction of iTunes.com for windows, Apple has faced a multitude of competitors. (Hitt, Ireland, & Hoskisson, 2011) Using the internet to scan is a good source as it provides information about demographics of their customers and what items were purchased. Monitoring is used to observe environmental changes to see what is emerging from scanning. Both scanning and monitoring should be used to gather information about the markets in which they serve and develop new technologies. Forecasting is the process of analyzing what might happen in the future through scanning and monitoring. Apple needs to continually be looking at their competitors and be innovative in their products through technology so as to stay ahead of them. Once the environmental changes have been determined Apple needs to be able to understand the general environment. Although gathering and organizing information is important, appropriately interpreting the intelligence to determine if an identified trend in the external environment is an opportunity or threat is equally important. (Hitt, Ireland, & Hoskisson, 2011) When analyzing a firm’s internal organization one must examine the firm’s portfolio, meaning that individual firms must possess resources and capabilities that others do not. Apple is creating value to their customers through competitive pricing and product performance; creating above average returns. By creating competitive advantage Apple is creating value superior to its competitors. Apples experiences have shown resources must be managed simultaneously allow production efficiency and an ability to form competitive advantages such as the consistent development of innovative products. (Hitt, Ireland, & Hoskisson, 2011) People are an important part of internal organization in helping organizations grow successfully. 4. Describe how Apple's strategy stands up against industry rivalry. Steve Jobs is passionate about the products that he produces. He holds news conferences and consumers see his excitement of over new products. While Apple doesn’t always pioneer a new product category—there were MP3 players before the iPod and smart phones before the iPhone it always sets out to radically redefine a category with a distinctive product or business model. (Hamel, 2010) Apple creates streamline eye appealing, lightweight products. While most of Apple’s competitors have specialized in either hardware or software, Apple has pursued excellence in both. By tightly integrating the hardware and software design, the company has been able to optimize system performance to the benefit, and relief, of its customers. (Hamel, 2010) As Apple begins to develops a broader range of products and markets them to the mainstream customer rather than just “tech-savvy fanatics” in fields of such as education and design, staying on top of the a game will be increasing more difficult. (Hitt, & Ireland, 2011) Jobs listen to his customers and take their feedback into consideration. Apple has its own branded store in which consumers can purchase products, this was thought by industry to be a bad idea and that the stores would close after a year in operation. The opening of the Apple store has proved to be a great success for Apple as consumers can go touch and play with the products receiving personal assistance. iPod has also entered into strategic partnerships with other well known brands. By affiliating itself with other well known brands, Apple gains consumer confidence as well as exposure through marketing partner advertisements. (Hitt, & Ireland, 2011) 5. Describe the recommendations you would make to enhance the effectiveness of the company's strategy or to change its strategic approach for better results. Apple iphone has exclusive coverage with AT&T as the provider, effective February 10, 2011 Apple iphone will be carried at Verizon as well. In an effort to expand the sales of iphone, consumers should have a variety cell phone companies to be able to choose from allowing bargaining power and brand loyalty in cellular coverage. Apple is becoming more and more popular among consumers, however as smart phones become more popular there is a need to keep the cost down. In order for Apple to remain competitive I would recommend that that they have a tiered service making the iphone available to the middle income as well. A continued commitment to innovation and aggressive advertising facilitates firms’ efforts to take advantage of the reputation associated with its brands. (Hitt, & Ireland, 2011) Apple needs to work on research and development to continually improve upon their brand. Apple needs to team up globally and distribute globally in countries that do not have the iphone. References Hamel, G. (2010, February 22). Deconstructing apple — part 1 [Web log message]. Retrieved from http://blogs.wsj.com/management/2010/02/22/deconstructing-apple-part-i/ Hamel, G. (2010, March 10). Deconstructing apple — part 2 [Web log message]. Retrieved from http://blogs.wsj.com/management/2010/03/08/deconstructing-apple-part-2/ Hitt, M., Ireland, R., & Hoskisson, R. (2011). Strategic management concepts and cases: competitiveness and globalization. Mason, Ohio: Cengage Learning. Hitt, M., Ireland, R., & Hoskisson, R. (2011). Strategic management concepts. Mason, Ohio: Cengage Learning.