Key Strategic Challenges Facing Apple - Assignment Example

? Case Study Apple Inc. Key Strategic Challenges Facing Apple Challenges in Apple Computer, Inc. began because of disagreements between Jobs and Sculley. This was because of the differences on the best direction to take the company. Consequently, competition and technological changes in the computer industry created the major challenges for Apple. The technological changes proved to be a challenge to Apple as it struggled to produce standardized software in the market. Various organizations, consumers and businesses were demanding more compatible operating systems. In addition, Mac OS was not available for other computers and was used only on Macintosh. In an effort to improve their software products, Apple partnered with Motorola and IBM to produce a power PC chip to run the PowerMacs. Despite this effort, losses in the company increased during 1996 and 1997. While Apple was trying to market its products, a number of competitors emerged in the technological field. This was attributed to the rapid changing entertainment industry. An example of such a company is Got Voice Company, which allows users to record and send voicemail messages in MP3 format to their email accounts, a free service, challenges Apple’s Visual Voicemail on the iPhone. Apple’s effort to expand its business to include more media and software is likely to face challenges. This is an effort to maintain its tech savvy image in the production of its products. The unique design in its products has established a large customer base, which will place more pressure on Apple’s design team. Dimensions along Which Company Success Can be Measured To be able to measure Apple’s success, a number of measures can be used. From a financial perspective, Apple’s revenues can be used to indicate its success. These revenues vary depending on the product and region. For instance, Apple’s net income in 2007 from digital music amounted to $3.5 billion. In addition, other financial criteria that can be used include cash flow records, debts and net income. Customers can also be used as a measure of Apple’s success. This covers the market share, growth and customer satisfaction. By 2007, Apple controlled more than 70 percent of the digital music market. In terms of growth, Apple is aiming to capture at least 1 percent of the global cell phone market. Customer satisfaction is evident from Apple’s huge following of its tech savvy products. Another criterion to be used as a measure of Apple’s success includes its internal business processes that cover product quality, marketing effectiveness, inventory control, cost management and margins. Consequently, Apple’s success can be measured through the introduction of new products such as iPad, Apple television, iPod, iPhone and iTunes. Furthermore, these new products indicate Apple’s advancement in technology and their efforts in research and development of new and innovative products. Moreover, Apple’s strategic agreements with various companies indicate that it has grown. These include agreements with Volkswagen, Nike, Burton Snowboards and Starbucks. These agreements include Apple’s iPhone product. This affiliation with different companies has increased customers confidence in Apple’s products. Critical External and Internal Environment Factors Strengths Internal factors that have an impact on Apple’s future depend on the assets and competence within the company. Some of its strengths include its global presence, brand image, strong media content and a synergistic portfolio. The iPod has penetrated about 70 percent of the digital music market and continues to grow due to its high sales in the portable digital music industry. Recent studies reveal that Apple has opened more than 200 retail stores worldwide. These retail stores have contributed an estimated $200 million. Apple’s ability to penetrate the global market has made it provide high tech products. These products have gained acceptance in different cultures across the world. Apple’s brand image is another strength that provides aspects of future success. Its tech savvy design in its product has enabled it to develop a huge customer base. Such products as the iPad and the iPhone have enabled Apple to make its mark in the technology market. Other products that have increased Apple’s brand image include iMac, iTunes and iPhotos. Apple Computer has a well developed portfolio that incorporates different aspects in the design of its products. In addition to developing hardware, the Apple company has diversified into the design and marketing of media and software. Some of its products that enhance its portfolio include digital music and television shows (Sutherland, 2012). Consequently, the strong media content in its products has provided Apple with a competitive advantage among its rivals such as Napster. Users of iTunes can be able to access over six million songs. Apple’s goal was to provide a solution of reducing illegal pirating of music. Weaknesses Apple has recorded some low returns in its various products. In iTunes, Apple only makes 10 cents per download, which is as a result of payment of royalties. The main use of iTunes is to promote the sale of iPods. In addition, most of software produced by Apple was incompatible with most of the computers used by customers. Another weakness is that Apple depends on IBM to supply its PowerPC chips which serves its Power Mac. IBM experienced manufacturing problems in the production of the PowerPC chips that resulted in delaying shipments of products in 2004. This was detrimental since the technology market depends on speed, which can affect Apple’s competitive advantage in the technology market. Another weakness is that some of the Apple TV features did not become popular among its customers. In addition, Apple’s success has relied heavily on Steve Jobs’ vision and personality, which may affect its future performance in the technology market since sometimes Jobs has been too controlling. Opportunities Some of the opportunities that exist in Apple’s external environment include the brands exposure through its retail stores. Apple has been able to open more than 200 retail stores, which has helped it market its brand. After opening its first retail store in 2001, Apple recorded earnings of about $200 million, which was about 16 percent of its profit for the previous two years. Through the stores, Apple can be able to provide free workshops, direct assistance to Apple’s customers and personal training. Apple’s strategic partnerships with various organizations have helped it gain consumer confidence. This has been made possible due to Apple’s iPod product. In addition, Apple is using these agreements to promote its other products. Another opportunity that is available for Apple Inc. is the use of a new digital platform. This platform can combine iTunes music video content and the television screens of its customers and other portable devices. According to Datamonitor (2006), incorporation of such a digital platform could prove to be beneficial to Apple’s business in the long run. Threats The major threat that Apple faces is the strong competition from other industry players. For instance, in the iTunes market Wal-Mart is the number one online music retailer in the U.S. Datamonitor (2006) indicates that Apple faced most of its competition from companies that sell Windows-based personal computers. This lowered their prices to a great extent. In addition, Apple faces competition from Got Voice, a Web-based company that allows its user’s free subscription for recording voicemail messages challenges Apple’s Visual Voicemail service. Consequently, certain companies have expressed frustration when working with Apple because of the lack of clarity on visions expressed by Jobs. Apple’s Strategy against Industry Rivalry Apple’s strategy against other rivals is based on its unique design of its products. Marketing of products has been an area that Apple has used to be a step ahead of other industry players. In its approach, Apple markets its products to the mainstream customers rather than focusing on the tech savvy individuals. In its design of products, Apple focuses on meeting the needs of the different cultures of its customers (Schein, 2009). Furthermore, Apple offers one-on-one services to its customers. Customers can be able to interact with Apple’s experts to attend to their technical problems concerning Apple products. Further, a shopping assistant helps customers to schedule appointments and select the right equipment for their Apple product. Recommendations Some of the recommendations that Apple can use as a means of promoting their business include continued investment in research and development of new products. In addition, Apple can increase their range of products to meet a wide range of compatibility with personal computers. Furthermore, Apple should develop ideas based on several individual experts rather than depend on one person to lead the company. Moreover, in order to reduce any delays that may result from manufacturing problems, Apple should establish different manufactures to supply its products to ensure that losses are not experienced. References Datamonitor. (2006). Apple Computer Inc. Retrieved from http://www.alacra.com/acm/2009_sample.pdf Schein, E. (2009). The corporate culture survival guide (second edition). San Francisco: John Wiley and Sons. Sutherland, A. (2012). The story of Apple. New York: Rosen Publishing Group. Read More