Routines and Capability of Apple Company - Case Study Example

APPLE 6 Business model Apple’s business model concentrates on communication and leadership in a very competitive industry. As Apple CEO Steve Jobsstates, “My model for business is The Beatles: They were four guys that kept each others negative tendencies in check; they balanced each other. And the total was greater than the sum of the parts. Great things in business are not done by one person, they are done by a team of people” (Jobs, 2010). This requires creativity on the part of the supervisor and a belief in teamwork on the part of the employees. In terms of teamwork, it has been demonstrated that collective decisions are more effective in implementation than individual decisions. This is one benefit of making creative decisions in management through utilizing teamwork. Yet another benefit is that the unity that binds the group together will further ideas of equal participation. There are plenty of people who are content to be a team member, but effective leadership and effective teamwork patterns can help ensure that everyone involves becomes a real team player. “I can tell you as one of the largest sellers of content on the internet to date — price it aggressively and go for volume. That has worked for us. I’m trying to get the press to do the same thing. They need to do it differently than they do it for print” (Jobs, 2010). Apple is an industry leader in many high tech segments. Skills and capabilities Apple has become a more streamlined and efficient company, showing a skill attenuated to focus on the customer. “While Apple was a bloated, operational mess when Jobs arrived, it still retained all the technical and creative DNA, especially in the area of software, that was there before he departed. Apple has less to work with. Analysts say improving on what it already does wont take the company very far” (Can, 2010). In the face of competition, Apple has been struggling to capture the market dominance that it needs to survive in this competitive and dynamic type of industry. Although Apple is still strong in the market generally, it cannot really afford to keep slipping in China specifically. Assessing skills and strategies at Apple means realizing how economics plays a large role in the external environment of Apple’s market, particularly the PC/Mac market and the wireless telecommunications industry, of which the smart phones in which Apple specializes are a part, is very dynamic and competitive. Therefore, over the last three years, many strategic decisions at Apple have been dictated by, a response to, or an attack towards, competitors. “The intensity of industry competition and an industry’s profit potential are a function of five forces of competition: the threats posed by new entrants, the power of suppliers, the power of buyers, product substitutes, and the intensity of rivalry among competitors” (Ireland et al., 2006). This is an industry that has very intense rivalry. Strategic and decision making models in the smart phone industry are complicated, and they are often formulated in relation to competitive forces. Apple is one of the players near the top of the market, which is dominated by just a few makers of smart phones; the gulf between the top and bottom of this market is very wide, as this is an industry that requires substantial start-up and marketing costs. The industry in which the typical smart phone company operates is slightly more complicated than this however, because, as mentioned, it tends to have a small and concentrated number of large and well established companies at the top of the market share, and a relative abundance of smaller companies at the bottom, showing a high entry barrier to get to the top of the market share, but a lower one to get into the industry in general. Over the last few years, Apple has shown strategic directions in three main directions, mainly in response to the competitive forces and pressures mentioned above. First of all, it has expanded its marketing reach and concentrated more on the provision of smart phones, or cell phones which have 3G or 4G internet, cameras, GPS, and other applications which make them more than just phones. Secondly, it has formed tentative alliances with potential competitors such as Nokia, while going after other competitors in legal battles. Because Apple is a large and complicated company, it hires many professionals to fill a large number of positions worldwide. Most of the professional positions within the company require a specialized college degree, and the company is also active, like Microsoft and many other large competitors, in scouting colleges to bring new talent directly to the business. Because Apple is a large and popular high-profile company, it can afford to be very selective in determining an effective level of education, skill, and experience, and this is also an opportunity for the company economically that must be considered. This creates an opportunity loop in the company, because Apple makes the employees happy, and then they in turn work more productively for the company. The company also faces the opportunity externally of taking advantage of good press rather than focusing only on critical stories, and then expecting to achieve a workable plan for solutions. Apple has realized that wireless networking is in many cases quicker than more traditional methods of access, is becoming increasingly affordable, and is also being made available in various public areas to enhance the medium’s convenience and adaptability. Companies and institutions like Apple that employ wireless networking in-house generally do so to increase the convenience of device interface, and to cut down on the confusing tangle of wiring that more traditional networking options often presents. Other companies use the system to improve inventory interfaces. Many current writers in the technology field are optimistic about wireless networking, seeing it as a dynamic and constantly changing type of networking that is capable of providing quick, easy access between devices in virtually any sort of application. Recommendations for improvement It is the plan of the current solution to look at Apple economically at least in part by looking at the internal economics of the company’s staffing and HR policies, as reflected outwards through policy. The impact from the external business environment often impacts the formation of strategy, such as when pricing controls change or when the service or product becomes more or less affordable as technology increases. Apple should maintain focus on its successful operations such as the iPhone. “When cellular telecoms services were launched, phones and calls were very expensive and early mobile operators (carriers) decided to charge for all air time consumed by the mobile phone user. This resulted in the concept of charging callers for outbound calls and also for receiving calls:” (Mobile, 2008). In the US, a lot of smart phone companies are still able to charge for receiving calls, whereas in Europe this has changed somewhat: this shows that strategy formulation has to change in this global industry. “While some systems of payment are pay-as-you-go where conversation time is purchased and added to a phone unit via an Internet account or in shops or ATMs, other systems are more traditional ones where bills are paid by regular intervals. Pay as you go (also known as "pre-pay") accounts were invented simultaneously in Portugal and Italy” (Mobile, 2008). Strategic moves at Apple are also complicated by the entry barriers in this industry. Not just any company can make and introduce a smart phone. High barriers are like high obstacles that keep competitors from entering the industry, while low barriers are more easily surmountable to competitors seeking returns within the industry. It is a rule of thumb within this equation that the fewer competitors there are in an industry, the more they can take advantage of opportunities and strengths to garner better returns. Apple needs to stay ahead of the curve of developing technology in order to stay viable in this highly competitive industry. The established competition for high tech phones means that there is going to be a lot of supply-side competition, and the company that is able to get the product from the producer to the consumer in the most cost- effective and timely manner is going to wind up on top of this market. Therefore, distribution must be concentrated on in terms of its importance to the company’s future in this market. Distribution is also going to be international in this scenario, so Apple is going to have to look to expand its manufacturing facilities based on multinational and continental alternatives; this is also going to affect distribution in terms of how long it takes the customer to receive the product. The establishment of core competency is a prerequisite of strategic management decisions, and this is an important part of Apple’s current business-level strategy. One group of authors state that, “A company’s core competence can relate to any of several aspects of its business: expertise in building networks and systems that enable e-commerce; speeding new or next generation products to market; good after-sale service; skills in manufacturing a high-quality product; (and) innovativeness in developing popular product features;” (Thompson and Strickland). Apple needs to continue to concentrate on its core competency, in the face of increasing competition. “Apple analyst Gene Munster thinks Nokia is looking to extract a royalty payment of 1 percent to 2 percent of every iPhone sold from Apple, which would be about $6 to $12 per phone. With 34 million iPhones sold to date, that would be $204 million to $408 million in back payments Apple would have to pay” (Nokia, 2010). To solve this issue, there needs to be some kind of synthesis of these subjects along with more specific processes to manage conflict and change. “Managing change is a continuous process within most growing organizations but varying environments have to be considered. Group conformity is one of the foremost considerations in this situation with the development of group cohesion as primary but conflicts are, in spite of everything, inevitable behaviors. Managing conflicts in a situation of constant dynamic change is an essential process” (Mushref, 2002). Leadership and teamwork should remain dynamic values connected with Apple’s operations. But external criticism must be addressed, as well, and not just swept under the rug. “George Colony is of the opinion that Jobs’ customer oriented business model doesn’t suit for all kinds of business environments. Many of his (Job’s) strategies do not apply for a wide array of businesses, he says” (Can, 2010). When a case example can be easily attributed to a general rule, it becomes more valid and reliable as an exemplar of that rule. REFERENCE Ireland, Hoskisson, and Hitt (2006). Understanding Business Strategy. New York: Thompson. Jobs, S (2010). Interview. Videos – Free video downloads and streaming video – CNET TV. Cnettv.cnet.com. Mushref, M (2002) Managing conflict in a changing environment. Management Services. Thompson, A.A., and A.J. Strickland (1997). Strategic Management. New York: McGraw-Hill At home with Steve Jobs (1987). Fortune. Can Steve Jobs be an ideal? (2010). The Chief Executive. Nokia sues Apple (2010). http://news.cnet.com/8301-31021_3-10381354-260.html Mobile technology (2010). Business Wire. Steve Jobs (2010). http://www.geeksaresexy.net/2010/05/21/15-things-you-probably-didnt-know-about-steve-jobs/ Steve Jobs is wrong (2010). http://gigaom.wordpress.com/2010/06/02/steve-jobs-is-wrong-the-itunes-model-wont-help-media/ Read More