Apple's Business Tactics - Case Study Example

Introduction Apple, Inc is a US based Multinational Corporation which is well known for the innovation capabilities of its founder Steve Jobs. Jobs’ ground-breaking production innovations and business tactics assisted the company to create a huge group of insanely loyal fans across the globe. Apple fans eagerly wait for the firm’ each new product launch and many of them are willing to pay even a price premium for the product. Undoubtedly, the innovative leadership of Steve Jobs helped the company to be well ahead of its global market rivals including Dell and IBM. For five consecutive years starting from 2006-2011, Apple was the top one in the list of world’s most innovative companies published by the BusinessWeek. As Qing reports, after Jobs’ death on 5th October 2011, the company’s product launches became dull even though its sales continue to be strong. This paper will critically analyze the case study “Apple Computer, 2006” prepared by David B. Yoffie and Michael Slind. Brief overview of the company Apple was founded by Steve Jobs, Ronald Wayne, and Steve Wozniak on 1st April 1976 for the purpose of selling Apple I personal computer kit (Apple Incorporated, 2009). In the following year, the company was incorporated as Apple Computer, Inc. Over the years, the company achieved an eventual growth by introducing products like Apple II and Apple III. In 1985, Jobs exited the company due to some emotional conflicts with the firm’s Board of Directors and established a new company called NeXT Computer Inc. After Jobs’ exit, Apple could not achieve its previous growth status and the firm’s many new projects went wrong even the Apple had experimented with a number of CEOs. Finally, Apple acquired the NeXT in 1996 and appointed Jobs as the CEO of the organization. Over the next years, the company performed amazingly and entirely reshaped the concept of customer experience. Case analysis While going through the case study, it is clear that Steve Jobs has been the central focus of the Apple history since its establishment; and the major vision of Jobs was to “change the world through technology” (Yoffie & Slind, 2006, p.2). He always wanted to make Apple products distinctive and hence promoted the idea ‘think differently’. In addition, Jobs has also suggested his followers seven principle of innovation including “do what you love; put a dent in the universe; kick start your brain; sell dreams, not products; say no to 1,000 things; create insanely great experiences; and master the message” (as cited in Gallo, 2012, pp. 10-11). The case scenario clearly indicates that some of the revolutionary decisions taken by Jobs assisted the company to achieve greater heights. To illustrate, Jobs sold the firm’s stock worth US$ 150 to its rival Microsoft Corporation as part of reshaping the Apple’s business and this alliance benefited the company to achieve a 52-week high stock value (Yoffie & Slind, 2006). Relatively low returns represent a resource weakness of Apple’s computer business segment. Referring to market survey results, industry analysts claim that many people are reluctant to purchase Apple computers because of the company’s premium pricing policy. In addition, Apple’s computer sector largely depends on third parties for key components. For instance, the company performs a significant percent of its manufacturing activities outside the United States with intent to cut down operating costs. In addition, Apple’s management outsources its transportation and logistics operations to third parties. Although this strategy is helpful for the company to achieve a higher bottom line, it greatly limits the firm’s control over production and distribution. Likewise, Apple’s dependency on single suppliers for some crucial components would affect the company’s reputation if those supplies are disrupted for any reason. It seems that Apple’s management anticipates future demands up to five months and keeps inventory levels to meet the projected demand; and the unpredictable shifts in customer demands may force Apple to write down its obsolete inventory and the situation in turn would cause the company to suffer huge losses (5 Apple risks revealed, 2012). Undoubtedly, strong technological capabilities and innovation management add to the internal strengths of the company. A large potential group of insanely loyal customers would aid the company to maintain the current growth status over the next years. The growing share prices of the Apple over the last 10 years add to the firm’s market stature and provide the company with potential expansion opportunities for the future. Apple’s stock chart for the last 10 years from 2002-2012 is given below. (Source: Finfacts, 2012) From the chart, it is obvious that Apple has been posting an almost stable growth in stock prices despite some notable downturns. The organisation has experienced a sharp increase in its share prices over the last year. In order to maintain this growth rate in the current stiffly competitive business environment, the Apple’s management has to be more proactive and innovative. While making business decisions and framing operational policies, the management must consider the fact that ground-breaking product innovations assisted the organization to dominate the industries in which it operates. In addition, the company must try to improve the way its customers are served. Apple’s management has to specifically note that the company’s share prices fell more than 5% immediately on the news of Jobs’ death. It indicates that a significant number of stockholders had tied to Apple because their reliance on Jobs. In this context, the management should strive to maintain its product development capabilities and to convince the stakeholders that Job’s death has not affected the firm’s innovation skill. Recommendations and conclusions From the case study, it is clear that Apple generates lion’s part of its revenues from non-computer products. Therefore, it may be better for the company to withdraw its focus from less profitable Mac business and to pay particular attention to non-computer products like iPod, iPhone, and iPad. In addition, the company should abandon its excessive outsourcing practices. Referring to Apple’s stock prices at the time of Steve Jobs as CEO, it can be stated that the company can maintain its market dominance only if it continues to show its product/technology innovation abilities. References Apple Incorporated. (2009). Retrieved from http://www.appstate.edu/~eb74040/Documents/Research/ApplePaper.pdf 5 Apple risks revealed. (2012). Seeking Alpha. Retrieved from http://seekingalpha.com/article/854751-5-apple-risks-revealed Finfacts. (2012). Apple's share price rises above $500 from $12 a decade ago; Audits of worker conditions at plants in China authorized. Retrieved from http://www.finfacts.ie/irishfinancenews/article_1023925.shtml Gallo, C. (2012). Steve Jobs and the Apple Experience. McGraw-Hill Professional. Qing, L. Y. (2012). Apple showing vulnerability year after Jobs' death. ZD Net, Oct 5. Retrieved from http://www.zdnet.com/apple-showing-vulnerability-year-after-jobs-death-7000005289/ Yoffie, D. B & Slind, B. M. (2006). Apple Computer, 2006. Case Study. Harvard Business School. Read More