Apple Inc and Steve Jobs Management Style - Case Study Example

? Apple Inc Case Study APPLE INC CASE STUDY Question By the end of Apple Inc’s shares listed on the NASDAQ in New York rose to over $660, which took its stock to the highest point in recent history, while raising its market capitalization to over $619 billion (Sutherland, 2012: p52). This is the highest market cap in the world and was over $200 billion for second placed Exxon. This high market cap can be attributed to several factors. The first is the release of the highly successful iPhone 5 with the iPhone being the company’s most profitable product. In fact, it contributes to over 50% of Apple’s bottom line and with the sales of its iPhone 5 surpassing that of the iPhone 4s, the company’s market cap increased significantly. Secondly, the Apple Dividend announced in March of 2012 made its stock more attractive to income-searching retail investors, despite its small yield. However, income fund managers found its $2.65 quarterly dividend more important as the income funds require that the investments must provide income (Sutherland, 2012: p52). Having a dividend made it possible for more investors to buy its stock, which increased its market cap. In addition, although Apple’s stocks have been fluctuating, its fundamentals have stayed the same with over $100 billion in cash reserves and no debts. This ensures that investors see it as a safe bet that will climb again. Apple was able to identify market trends and capitalize on them through various means. With a diverse range of stylish products, Apple capitalized on the fact that consumers wanted to be different. The iPhone and the iPad were released after Apple recognized the high demand for computers and phones but that most products on the market looked the same with similar functionalities (Treacy, 2012: p60). Another reason for Apple’s ability to capitalize on identified market trends is its dynamic business plan, which is always set to resonate with what the market wants. By changing the company’s name to Apple Inc from Apple Computer, the company identified the need for a phone with computer functionalities and broadened their spectrum. Apple was also able to identify the fact that music retail outlets were becoming popular and that outsourcing this capability was not giving them what they wanted (Treacy, 2012: p60). By opening a retail store, they were able to capitalize on consumers needs for a retail outlet on their phones. Apple was able to achieve global success by leveraging brand loyalty. By taking their business to emerging markets with minimal penetration of smartphones but where their brand was already known due to mass media, the company opened up new opportunities for developers in those markets (Treacy, 2012: p72). In addition, by hiring employees from those countries and from diverse fields, including artists and musicians, they were able to create unique and different perspectives from those countries. Apple also built relationships with its customers in various regions of the world by embracing social media and the internet, which meant that people in these new regions saw Apple as a transparent and trustworthy company. In addition, they also used movement marketing, in which they marketed what Apple believed in, contending that they sought to bring personal experience of computing to consumers across the world via innovation (Treacy, 2012: p73). By leveraging brand loyalty, Apple consumers have overlooked glitches as they have emotional connections with their products. However, in order for Apple to gain market share across the world, various companies also had to lose market share and the most affected company was Microsoft. By combining most of what Microsoft offered, including a phone, search engine, office, and operating systems, Apple was able to offer consumers a product that was more appealing (Treacy, 2012: p91). By doing this, Apple was also able to grow various market segments. One of them was the smartphone market, which, although still stagnant at 3%, has pushed its competitors to enter the market, expanding it. Another market segment that Apple’s strategy has grown is the tablet segment through its iPad. This gadget was a rarity prior to Apple’s entry but is now one of the fastest growing technology sectors. Question #2 Steve Job’s management style has been described as perfectionist and demanding, aspiring to position the company as a market leader through trend-setting and forecasting strategies (Gaines, 2012: p51). Jobs sought for Apple to be a quality yard stick. He was also reported to have the ability to change his mind with regards to strategy, which led to changes in design in light of current and foreseeable trends. He was also an autocratic leader with a larger-than-life and compelling personality, while also being ruthless with regards to deadlines. However, most of what is known about Jobs is from conjecture and anecdotes as he was a very secretive individual. What is known is that he used the reality distortion field style of management, in which he used his charisma to motivate his employees. The reality distortion field style involved convincing employees that anything was possible using persistence, appeasement, marketing, hyperbole, bravado, charisma, and charm. This made his employees believe that they could achieve anything, which is most likely responsible for Apple’s remarkable innovation capabilities (Gaines, 2012: p52). After motivating employees to create innovative products, he would then use creative marketing to access a wider market. According to people who worked at Apple under Steve Jobs, the culture was one of innovation, elegance, and simplicity. However, Apple ensures that the environment was very demanding of its employees and pushed them to get the best designs in the market place (Mu?ller, 2012: p110). Instead of imposing the aesthetics that he had in mind, Jobs sought to come up with the best talent in design that he could. In order to work at Apple, it was essential that one was an expert talent at what he/she did, which Jobs used to measure their work. Apple insists that its employees come up with the best possible design without holding down on costs, although it also insists that the products would have to achieve a massive competitive edge over its competitors. Therefore, while Apple inspires awe and loyalty in those working there, which is evident from the minimal leaks of Apple technology, it drives its employees hard to achieve their potential. Working at Apple also means that everyone has to buy into its defined values of innovation, as well as be passionate regarding the delivery of the Apple experience to all its customers. Finally, all employees are required to memorize the culture of the company and ensure they live by it (Mu?ller, 2012: p111). Overall, working for Apple is an authentic and appealing experience but only if one was committed to excellence like Steve Jobs was. However, despite a culture that is good to work in, the company’s corporate social responsibility is wanting. Apple lacks a strategy for stakeholder engagement. For example, their failure to share information with Greenpeace regarding its mistakes about their power consumption at their North Carolina center, as well as failure to respond to environmental groups about their Chinese supplies chain (Hawthorne, 2012: p72). Apple also fails to use triple bottom line strategies, preferring to maximize profits, while addressing social and environmental issues when they do not impact their income. Its suppliers, for example, only make minimal profits, which leads to them “cutting corners” and pushing employees to work for longer. In addition, they do not have a CSR team, which makes social responsibility an afterthought. Their management ethics are also wanting, especially with regards to working conditions and wages in developing countries like China. By using its dominant position in the market to get these services at low prices, Apple’s management seeks to keep a large share of their profit, while giving the lowest possible amount to its employees (Hawthorne, 2012: p75). This management strategy is wanting because better working conditions and wages represent a small portion of their overall costs. As Microsoft manager, I would use a different style by ensuring that the suppliers are paid better and the worker’s conditions are improved. Question #3 Apple’s market share has been fluctuating over the past two years between thirteen percent and twenty two percent, which is dependent on whether they have a iPhone being released, while at the same time, Android has increased to attain seventy five percent of share in the market (Barcena, 2013: p56). Apple has always depended on its higher profit margins in the face of increased losses in market share but this is also under threat from Samsung. In addition, the unit growth for the iPhone is falling to single digits, which means that they have to change their strategy. The latest attempt to regain market share has seen Apple designing low cost iPhones, as well as coming up with new gadgets on a more regular basis to improve profits and sales. However, even in light of this decrease of market share, Apple still has higher profits with at least 57% of all profits in the market, compared to its biggest competitor Samsung, which takes up 40% (Barcena, 2013: p56). Apple’s position as the market leader for both tablets and smartphones has been overtaken by Android-based phones for various reasons. Apple has not been able to forge new frontiers since it released the iPhone and iPad in 2007 and 2010 respectively (Barcena, 2013: p58). In this time, other companies like Microsoft, Amazon.com, Samsung Electronics, and Google have designed their own tablets and smartphones to compete directly with Apple’s IPad and IPhone. These alternatives offer similar functionalities and features as the iPad and iPhone, while selling their products at lower prices. This has undercut Apple’s popularity for their tablets and smartphones, which has depressed its stock price and earnings. This has been the biggest contributing factor to Apple’s decline in share price by 25% compared to a year ago (Barcena, 2013: p58). While there is no reason to believe that Apple will not continue to thrive for coming years, it is possible that it is losing its cool. The main reason for this is that its reputation as the main “merchant of cool” has been challenged by equally stylish but cheaper handsets by its competitors (Gupta & Prinzinger, 2013: p110). While Apple’s smartphone is still the most successful in the market in terms of profits, phones that use the Android OS exceed the iPhone by sales. While no phone has yet managed to overthrow the iPhone, they have managed to co-exist, which is very different from five years ago when Microsoft’s first smartphone failed because of iPhone wave. In addition, the world has come to expect the impossible from Apple and it is possible that they will release another gadget that will re-establish their cool factor. However, the longer they take to do this, the more doubt will be sown about their ability to be cool again. They are also burdened by the fact that they are the biggest tech company in the world, which means that they are either top or slipping (Gupta & Prinzinger, 2013: p111). Therefore, while Apple’s products are still the “coolest” in the market, they are in danger of slipping off their post. Apple was unable to adequately defend its market position because, as afore-mentioned, they failed to come up with new gadgets following their iPad and IPhone gadgets. Their actions began to give the impression that innovation was slowing down as they defended their share with a market view that was more zero-sum, rather than increasing their innovative capabilities as the market leader (Rafinejad, 2013: p34). Another reason is that they have been unable to compete effectively with the Android platform that makes similar products at lower prices. In addition, their outsourcing practices reduce their competitiveness in the market compared to Samsung, which retains most of their manufacturing functions in-house. While Apple maintains its focus on limited devices in the higher range, its competitor’s breadth of its products aids it to ensure that they capture a larger market that can then be shepherded towards higher-range products (Rafinejad, 2013: p34). Therefore, most low-end consumers in developing countries start off with Samsung’s lower-priced products and, as their economies improve, they move to Samsung’s higher-end products. This has caused Android-based phones to gain market share as Apple’s share drops. Question #4 With Apple’s foray into the video-on-demand and music businesses, their marketing strategy, innovative capabilities, and success in the building of strategic partnerships should come first in determining the outcome (Littler, 2012: p67). The company’s actions and commitments need to be coordinated and integrated in exploiting their core competencies, maximize value, and improve competitive advantage. In order to secure its strategic success, Apple should be protective of its brand image. In marketing new products, the company should engage the low-end market cautiously since this could tarnish their reputation as a leader in technology, while also managing its brand exposure carefully for the same reason. In addition, they should invest in R&D so as to stay ahead of competitors and maintain its leadership in radical product development. For the new products, the design appeal should be upgraded and maintained in order to reduce the probability of copies by new entrants. The company’s ability to compete successfully with its new products will be determined by it’s the continuous and timely release of technologies, services, and products into the market-place (Littler, 2012: p67). However, this should also take into account that over-saturating the market with products could lead to a decline in innovation, which is reminiscent of what happened with Blackberry. The company should also enhance existing products in various fields, including software solutions, application software, systems software, and mobile devices to maximize on their product’s life and value (Mital, 2011: p77). In addition, the company should also assess whether they are still operating within their internal strengths, define its customer base more deeply and broadly, and enhance its security settings in order to appeal to a larger base of consumers. Finally, it is prudent to ensure that they manage costs vigilantly by maintaining flexibility of prices, as well as leverage their 70% share in online music retail to strengthen other applications’ performance. I would not want to work for any other competitor because of Apple’s culture of innovation and their market leadership in quality. While they may be suffering at the moment, this will be remedied by more innovative products. References Barcena, M. (2013). The End Of The Imitation Age?: The Effect Of Apple Inc. V. Samsung. Pepperdine Journal of Business, Entrepreneurship , 51 (3), 55-68 Gaines, A. (2012). Steve Jobs. Bear, DE, Mitchell Lane Publishers. Gupta, A., & Prinzinger, J. (2013). Apple, Inc.: Where Is It Going From Here? Journal Of Business Case Studies , 9 (3), 108-117 Hawthorne, F. (2012). Ethical chic: the inside story of the companies we think we love. Boston, Beacon Press. Littler, D. (2012). Marketing and product development. Deddington, Oxford, P. Allan. Mital, A. (2011). Product development a structured approach to consumer product development, design, and manufacture. Amsterdam, Elsevier/Butterworth-Heinemann. Mu?ller, C. (2012). Apple's approach towards innovation and creativity: how Apple, the most innovative company in the world, manages innovation and creativity. Mu?nchen, GRIN Verlag. Rafinejad, D. (2013). Innovation, product development and commercialization case studies and key practices for market leadership. Ft. Lauderdale, FL, J. Ross Pub. Sutherland, A. (2012). The story of Apple. New York, NY, Rosen Central. Treacy, M. (2012). Double-digit growth: how great companies achieve it-- no matter what. New York, Portfolio. Read More