Steve Jobs and Mary Kay. The personal computer industry as a competitive environment - Case Study Example

?Is Steve Jobs similar to or different from Mary Kay (please refer to the reading on “Charisma and Control Explain From the two readings, Steve Jobs is different from Mary Kay. From the outset, it is difficult to directly compare these two individuals since they are running two different organizational structures which demand different control strategies. Steve Job’s Apple is a somewhat formal, traditional business that places emphasis on the organizational arrangement and authority structures to get things done because workers have an employment relationship with the firm (surname 134). On other hand, Mary Kay’s organisation is a network DSO where workers are legally independent thus they present a totally different context for the founder with regard to control and maintaining commitment (surname 135). Nevertheless, to enable us arrive at the decision that Steve Jobs and Mary Kay being different we use Weber’s definition of the elements that are requisite for charisma. Jobs was a visionary who sought to change the world through technology (Yoffie & Kwak 1) and most definitely manifested exceptional ability with regards to coming up with strategies that enabled Apple to make a turnaround from making losses of US$ 1.6 billion to making profits in five straight quarters. In addition to this Jobs, like Weber’s elements of charisma dictate, was able to demonstrate his ‘gift of grace’ through the continued success of his mission to turnaround Apple into a ‘happening’ brand. Mary Kay differs from Jobs in the sense that she was able to not only attract a following but also convert them into devotees of her way of working. Steve Jobs seems unable to transfer his ideals to his ‘charges’ in that he has to be present for his vision to be realized. Mary Kay on the other hand has been able to arguably transfer her vision to her followers to prepare them for succession. In a nutshell, we can argue that Steve Jobs is a strategy genius in so far as setting the direction for Apple to go while Mary Kay is more of an inspirational leader who attracts independent individuals and gives them the belief that they will succeed if they join her and follow her tenets. Historically, what were Apple’s major competitive advantages? Apple derived its competitive advantages from the following three unique attributes: technology leadership, proprietary technologies and its horizontal and vertical integration. Apple’s technological leadership is demonstrated several times through its early years. Good examples are: the Apple II that drove the PC industry to US$ 1 billion in annual sales in less than three years, and the Lisa – the first PC to use a graphical user interface and a point-and-click mouse in addition to having a windowing system that allowed multiple applications to run at the same time (Yoffie & Kwak 2). Apple consistently launched revolutionary products that set the bar for computing. For Apple to retain its technological leadership it relied mainly on its proprietary technologies such as its superior capabilities in graphics, design and sound. Unlike its main rivals, Apple had its own proprietary operating system (OS) thus it could easily integrate it with its other software applications to enhance its users’ experience. In the case we are informed that Apple machines were simple machines that ordinary people could use straight from the box (Yoffie & Kwak 1) a competitive advantage that we can attribute to the seamless integration of all Apple software and hardware. The fact that Apple had its own proprietary technologies meant that the organization could increase its customer value proposition through bundling for example the Mac was sold bundled with an OS, Mac application software and other peripherals (Yoffie & Kwak 3). These made its products to be more versatile. Finally, we can argue that it would have been difficult for Apple to retain its technology leadership and proprietary technologies without its extensive horizontal and vertical integration. It is this horizontal and vertical integration that enabled Apple to have the ability to design its products from scratch, specifying unique chips, disk drives, monitors and even unusual shapes for its computer’s chassis (Yoffie & Kwak 2). Unlike its competitors, the firm was able to provide its customers with a complete desktop solution that allowed customers to plug and play to add software or hardware to Apple machines. Analyze the personal computer industry as a competitive environment. How have the key features of PC industry changed from the mid-1980s to 1999? Using Porter’s five forces analysis to evaluate the change in the PC industry’s competitive environment we notice that quite much has changed. To begin with we are informed that by 1999 many components required to manufacture a PC had become standardized. This lowered the barrier to entry for new entrants into the manufacturing business to the extent that by 1998, PCs without national brands accounted for 23% of the market in North America, 50% in Europe and Asia and 90% in China (Yoffie & Kwak 9). The lowered barriers to entry led to increased rivalry especially among the major PC makers, who now had to be more creative and look for alternative strategies to have sustainable competitive advantages. This necessitated PC manufacturers reduce their R&D (from 5% of sales in the 1980s to an average of 1.5 – 2% in the late 1990s budgets, with the exception of Apple) and focus on innovations in manufacturing (e.g. Compaq), distribution (e.g. Dell) and marketing (e.g. Apple) to develop competitive advantages (Yoffie & Kwak 8). The second major change in the PC industry came about due to increased customer computing knowledge. A person with relatively little technological sophistication could assemble a PC from four widely available components for roughly US$ 800 (Yoffie & Kwak 7). In addition to this customers wanted PC built to their specification. The increase in buyer power implied that for PC makers to remain relevant they had to streamline their operations and mass customize their products. PC manufacturers moved from using build-to-stock model to a build-to-order or configure-to-order approaches that enabled them reduce operation costs by up to 10%. To reduce their costs further many firms turned to contract manufacturers to produce components or even entire PCs. Furthermore, they also had to change their distribution and sales strategies because customers were no longer intimidated by technology and wanted to be offered options of where and how to purchase their PCs. Manufacturers therefore played around with the quality of microprocessor, memory and the peripherals put into the PC to satisfy the diverse consumer needs. In this period we also see the emergence of value-added resellers to fulfil the growing demand for networked PCs (Yoffie & Kwak 9) Finally, we also note that supplier power had greatly increased by early 1990s when Wintel (Microsoft Windows and Intel processors) had replaced “IBM compatible” as the dominant standard to the extent that most manufacturers now built personal computers around standard building blocks dictated by Microsoft and Intel (Yoffie & Kwak 7). Evaluate the logic of Apple’s strategies since 1990, focusing on the strategic intentions and actions of its various CEOs. From its inception, Apple was developed and marketed as a superior product. Superior products generally are differentiated through use of premium-pricing. However, immediately after Steve Jobs leaves the next two CEO, Sculley and Spindler opt to move away from this strategy. It would seem logical especially when one considers that IBM-compatible prices continued to drop while Macs looked increasingly overpriced (Yoffie & Kwak 3). It is understandable that both Sculley and Spindler seek to increase Apple’s falling market share through extension of the company’s product line and production of cheaper mass-market computers. The only concern would have been the risk of Apple losing its loyalists who viewed there Macs as superior products through its pricing. Nevertheless, we do not disagree with the idea of producing more pocket friendly devices, what does not seem logical was the ventures that Sculley and Spindler pursued through the federation of corporate alliances that they got into. Getting into the alliances was not illogical in themselves. The error that Sculley made was to use the alliances to divert Apple from its core business into other ventures. The joint venture with IBM to form a revolutionary operating system (OS) and Sculley’s personal ‘pet’ project of developing a PDA were huge distractions in terms of time and resources at a time that the company could have focused on its key competencies such as improving their complete customer desktop offering. In the end, the flops of Newton Messagepad and eWorld, and the unsuccessful alliance with IBM that cost US$ 550 – 600 million were too large as sunk costs not to have an effect on the overall performance of the company. Amelio like Steve Jobs understood that Apple had to return to its erstwhile premium-priced differentiation strategy if it were to distinguish its superiority from the many PC makers. However, Jobs unlike Amelio understood that Apple’s biggets undoing was their focus on too many mediocre products. Jobs therefore reduced Apple’s product lines from 15 to three products that reflected Apple’s core competencies. By returning the company to focusing on what they do best Jobs was able to restore market confidence. This coupled with restructuring, stopping of nonperforming product lines and institution of austerity measures restored Apple back to profitability. What should Steve Jobs do today (where today means now)? In spite of Apple’s turnaround, it remains too America-centric a company for today’s global economy. As a product its appeal internationally is too low for a brand that seeks to be a global leader. This means that Steve Jobs must devise strategies that will make the company attractive in the emerging economies of Asia, Middle East, South America and Africa. Secondly, in as much as Apple has been renowned for technological leadership, there performance so far with regards to web technologies leaves a lot to be desired. The world is moving towards web based platforms where companies such as Google with its App Engine, Amazon EC2 and Microsoft Azure have taken leadership. Apple needs to come up with something more revolutionary that its I-Tunes platform if it desires to remain relevant in the future. Thirdly, Steve Jobs needs to put in place a succession plan and slowly move away from active office much like Bill Gates has done. Too much is still pegged on Jobs such that his illness grossly affects company stock or even the launch of a product. Steve Jobs needs to find a way to separate himself from the business, if continuity is to be realized. Works cited surname, firstname. “Charisma and Control.” book title. Place Published: Publisher. 126 - 159. Print. Yoffie, David, and Mary Kwak. “Apple Computer 1999.” 24 May 1999: n. pag. Print.  Read More