Information Systems - Essay Example

Information Systems Introduction In the history of business, few industries have seen the drama, romance and emotion at the level of the computer industry. From the earliest government sponsored projects to produce computers based on vacuum tubes to today’s multi-core systems, the saga of computer technology has seen major players ousted and minor players become leaders. While many companies have come and gone over the past 40 years, Apple Computer comes across as one of the companies which has stood the test of time and has managed to turn out convincing products that have given it an image of innovation and being a radical organization (Elliott, 1998). About the Company Apple is an American company and one of the front runners amongst computer hardware, software and allied equipment manufacturers. The company prides itself on creating innovative products for the consumer electronics and technology sectors (PC Magazine, 2006). In 2005, it posted global sales of nearly 14 Billion dollars and had more than fourteen thousand people working for it around the world. The company is based out of Cupertino in California where the main offices of the company are situated. The central products of the company are personal computers, portable media devices, software and associated hardware (Apple.com, 2007). However, no mention of Apple can be complete without discussing the cult of personality which revolves around its founder and current CEO, Steve Jobs (Forbes, 2006). Jobs has had a tumultuous relationship with the company he founded since he was removed from service and called back by the board after many years of absence (Beckman & Hirsch, 2001). Writing for The Guardian, Smith says that: “To technology freaks and geeks, he is a demigod, whose product launches are adulatory affairs regularly likened to religious revivalist meetings. The Jobs life story - humble birth, rise and fall, then miraculous comeback - has even been likened by Apple fanatics to the heroic myths of Odysseus, Jason, Krishna and Christ (Smith, 2006, Pg. 1).” Porter’s Five Forces The five forces model shows that Apple has a significantly strong position in the market for some of its products e.g. the iPod and the iTunes Music Store but for others it is positioned on rather weak footing e.g. personal computers (PC Magazine, 2006). In the MP3 player market, Apple has a very strong brand identity and a massive advantage in terms of switching costs over its rivals. Individuals who make purchases from the Apple iTunes store can only play that music on Apple licensed music players which are exclusively sold by Apple to distributors as well as on their own website (Apple.com, 2007). Apple also has strong links with music distributors and media personalities since their CEO (Steve Jobs) is not only the CEO of Apple, he is also the CEO of the media company Pixar and on the board of directors for Disney (Apple.com, 2007). In the shape of the iPod and the iTunes music store Apple has created a proprietary system which being very popular with the public has created strong barriers to entry for the competition. The threat of substitutes to the system created by Apple especially its iPod line of music and video players is very high since quite a few MP3 players can play music and even offer better functions than the iPod such as in line recording and compatibility with several music stores other than iTunes (Beckman and Hirsch, 2001). However, the threat is mitigated by the fact that the iPod is the only player to work with iTunes (Apple.com, 2007). Therefore the final analysis shows that the overall threat of substitutes to Apple’s media package is quite low even if the iPod itself can be replaced by other music playing devices. The position of the suppliers themselves has shifted for Apple in two ways. Firstly, in the music business, the position of the suppliers was improved due to the fact that they owned the copyrights to the music being sold on the iTunes store (Beckman and Hirsch, 2001). However, it was also weakened because Apple becomes the best middle man to use if their music is to be sold legally over the internet which is an exceptionally cheap medium for delivering music content as compared to CDs or cassettes. On the hardware side, Apple has not disclosed its suppliers or manufacturers of the products but it is well known that they are designed in Cupertino and manufactured in China. For the music business, the buyers have a very good position since they can get their music from other means such as ripping CDs and also through illegal download. Essentially, Apple has to continue to offer them a very good deal to act as a better alternative to piracy. On the side of computer equipment since Apple is the only manufacturer for Apple computers and the operating system which works on those machines, the buyers are in a very poor position. On the other hand, the situation for Apple in both the computer and the music market is quite similar when it comes to competitive rivalry since many companies wanted a significant market share position of the music business as well as the computer equipment business (Beckman and Hirsch, 2001). While Apple continues to ask users to switch to buying their iMacs and other computers, it seems that they lost the war in terms of market share for the computers business a long time ago (Lee, 2007). However, they clearly have the first prize when it comes to the media market even if it is only for the present moment. Apple’s Value Chain The analysis of the value chain helps a business to realize the best possible means in which it can deliver value to its customers. As a company Apple has taken various inputs from different manufacturers and has combined them together as well as developed materials on their own to provide value in terms of computer equipment, software and music playing devices. The primary activities of Porter’s value chain include inbound logistics, company operations, outbound logistics, marketing and customer service (MindTools, 2007). Using Apple as an example, it becomes clear that the inbound logistics are the suppliers who create computers according to the specifications given by Apple which Apple can then sell on to customers around the world. Apple uses both the traditional store based supply chain in which customers have to go to an Apple Store location or distributor for Apple products to buy the product or they can come to Apple’s website to buy the products (Wikipedia, 2006). Apple shines in terms of outbound logistics since unlike Dell’s experience with having real world shops in malls and other outlet locations, Apple’s own experiment became a huge success (Lee, 2007). Things such as the Genius bar where Apple users can get help for their computers and the layout of the stores has certainly resulted in getting an improved image for Apple along with the benefit of increased sales (Apple.com, 2007). However, it is basically in marketing where Apple has made its mark since the advertisements for Apple computers have won awards and appreciation from advertising gurus as well as art lovers. Scott (1991) explains the persuasive power of the 1984 commercial as well as the artistic merits of the ad by taking a literary criticism approach to the video. The commercial itself can be described as a young female being chased by masked storm trooper like soldiers as she rushes past trudging workers wearing grey overalls with shaved heads. She approaches a massive screen where a big brother like figure is making a speech and she hurls a sledge hammer into the screen which causes a huge blast. A calm and smooth voice then announces that 1984 will not be like 1984 because of the Macintosh (Scott, 1991). This advertisement simply smashed every advertising convention known at the time since it only carried a minimal corporate identity, no message about the technical prowess of the computer, no mention of direct benefits to the individual, not even the price point of the item being offered. Simply put, as it was known in 1984, this ad could not even be considered advertising. However, if marketing is meant to motivate people then this approach certainly worked because when the Macintosh computer became available in the market three days after the airing of the ad, more than two hundred thousand people were waiting in lines across America to put their money down to buy one (Scott, 1991). A critical analysis of the same advertisement sounds eerily similar to a critical review which might be given to a film noir or to any other art film which has been highly acclaimed at the Sundance festival. Scott (1991) says that: “The theme of the commercial is one of individual action to prevent homogenizing tyranny and its form is a mirror of its theme. The spot communicates through an artful arrangement of images that has its own internal logic. The spot keeps the audience unbalanced and curious throughout the viewing, and thus open to affective experience through which it persuades (Scott, 1991, pg. 67).” Other campaigns such as the ‘think different’ campaign and the ‘switch’ campaign have also received awards (Wikipedia, 2006). The video campaign for ‘Think Different’ won an Emmy but it was the print campaign which made a significant impact for computer sales and also won several awards for the advertising firm of TBWA\Chiat\Day. The individuals used for the ‘Think Different’ campaign are some of the most admired achievers in the world and come from all sorts of fields like government, business, sports, performing arts and human rights activism (Elliott, 1998). Apple does lag behind in customer service since it offers a very limited customer support experience with 90 days of tech support services for its computers and only a one year warranty for its products (Apple.com, 2007). While both of these are extendible with a payment to the company, it should certainly consider extending these services to improve the customer’s post buying experience. A lot of material is available about the value chain support activities of the company with regard to the infrastructure of the firm and the human resource management methods used at Apple. However, the company does not seem to divulge much information about its present technology development or even the future products which are about to be procured by the company for further selling to the clients (Deutschman, 2000). The human resource management aspect of Apple seems to follow an anti-establishmentarian and anti organizational system which reflects the personality of Steve Jobs to a large extent. Normally, an organisation takes a lot of time and places a lot of thought into both hiring and firing individuals since there are legal checks which need to be made and decisions like removing people from service can have far reaching effects on the overall company. By working in a method which can be described as anti-organisational, Steve Jobs working tactics have been discussed by Deutschman (2000) who discusses his working style by saying: “He had total disregard for the hierarchical chain of command. He would remember what several hundred people did and call on whomever he needed, always bypassing their managers. It was as though everyone in the company reported directly to Steve himself (Deutschman, 2000, Pg. 1)”. Keeping things under a tight lid is one of the hallmarks of Apple computers since no one can ever be sure of what new innovation Apple and Steve Jobs are about to release on to the market (Smith, 2006). Rumors and speculation begins weeks before any company event and in the past a lot of information was often leaked to the press. As reported by Deutschman (2000, Pg. 3) “Before Steves takeover, Apple people loved to leak. Steve insisted on his old “loose lips sink ships” policy. At first the employees were incensed. Before long, though, they began to trust Steve to do Apples marketing for them”. Theory X and Theory Y which deal with human resource management within an organization can lead a better understanding of the methods of management used at Apple (Lee, 1982). While the relaxed nature regarding the corporate structure and the work environment point towards a Theory Y management style, the tyrannical image given to the CEO of the company suggests a Theory X management style. However, the profits and financial results speak for themselves and whatever management style is being employed as a part of the support activities in the value chain; it seems to be working perfectly fine. Competitive Advantage By offering customers the ability to buy music from the internet, Apple has created a broad location for their individuals to access their music store. Even though they are limited in terms of where and how they can sell their computers, Apple certainly has a high street image with a culture of being cool since their retail outlets are nothing less than designer boutiques (Apple.com, 2007). They continually hammer how their computers are easier to use, more desirable and have much more in terms of features than the competition. However, they do not push the price point any more than they have to. This puts Apple squarely in the Differentiation zone since Apple touts quality and image much like BMW or Mercedes would as opposed to value and price efficiency that a lesser car manufacturer would. Apple is not a price leader since similarly equipped computers can be bought at cheaper rates elsewhere (Lee, 2007). Apple is not focusing on differentiation alone since it sells a lot more than just computers and its audio visual equipment (possibly future telephonic equipment) is also a recognized segment of the business. At the same time, the premiums charged by Apple are not significantly high as to turn away buyers since the competition within the market is fierce and Apple can not charge an excessive amount for its products. In such as situation, when Apple brings its prices close to the competition, their products become more enticing for users (PC Magazine, 2006). In effect, Apple has a unique, special and highly protected individual position within the computer as well as the music industry which is strongly supported by a relatively closed value chain. This positioning strategy is excellent for mature markets and Apple is therefore coming up with a working competitive strategy. Value Proposition Apple is different from the competitors in very significant ways because it has remained focused on the consumer rather than move towards the enterprise market which companies like Dell and HP have done in the past (Olenick, 2006). Additionally, Apple provides the use of technology to the customer as a means and not as an end in itself. For example, the music player industry is flooded with MP3 players from various manufacturers and producers but the success of Apple is in the way it has integrated the iPod into the iTunes environment making the computer a digital hub for the modern user. Revenue Model The revenue model used by Apple is simply B2C and B2B since they sell their products to both corporate buyers and individual customers. However, since they do not actively sell to the enterprise as much as they focus on individuals home users, their weakness in the computer business is a lack of enterprise level acceptance of their hardware and software but they seem to more than make up for it with their market share in the consumer based music player industry. Information System Steve Jobs seems to have clearly accepted that the PC wars are over and that Wintel machines won the war a long time ago when Apple simply could not match up in terms of distribution or cost. However, the media wars are just starting and Apple has a significant head start on other. Apple may not be able to become the price leader in terms of computer equipment sales, or even the volume leader, or even create the most powerful computer but it certainly can create beautifully styled machines which become more like objects of desire rather than lifeless tools. To become more effective with the organization itself, Apple could implement an information system to better integrate its various departments and businesses. An ERP system would be an excellent step in the right direction if Apple does not already have one. As described by Koch (2006), Enterprise Resource Planning systems (ERPs) are software based solutions for integrating various departments within a given company. For a company the size of Apple, creating an ERP would be a monumental task since the first step alone i.e. creating a unified database of information would take a significant investment. Such an ERP would be a very large and broad based application which could replace the independent tools used in various locations and departments of the company. With a unified interface and a central database to be shared between departments, information flow would be made much easier and the speed of getting information from one person to the next would be improved considerably. Such a system would have several major components such as a manufacturing database, supply chain monitoring software, financial analysis and reporting tools, customer records and support tools, human resource management software and inventory control. Works Cited Elliott, S. 1998, ‘Behind “Think Different”’, New York Times, [Online] Available at: http://www.electric-escape.net/node/565 Scott, L. 1991, ‘For the Rest of Us: A Reader-Oriented Interpretation of Apples “1984” Commercial’, Journal of Popular Culture, vol. 25, no. 1, pp 67-81. Beckman, D. and Hirsch, D. 2001, ‘Mac Is Back in Town’, ABA Journal, vol. 87, no. 8, pp. 70-72. Lee, L. 2007, ‘Dell’s New Lineup May Not Be Enough’, Business Week, vol. 4014, no. 1, p. 13-14. Olenick, D. 2006, ‘Hewlett-Packard Outsells Dell In Notebooks’, This Week in Consumer Electronics, vol. 21, no. 27, p. 106-107. Deutschman, A. 2000, ‘The once and future Steve Jobs’, Salon.com, [Online] Available at: http://archive.salon.com/tech/books/2000/10/11/jobs_excerpt/index.html Forbes. 2006, ‘Steven Jobs’ Forbes.com, [Online] Available at: http://www.forbes.com/lists/2006/10/HEDB.html Lee, J. 1982, The Gold and the Garbage in Management Theories and Prescriptions, Ohio University Press. PC Magazine. 2006, ‘Low-Cost Apple laptop is very enticing’, PC Magazine, vol. 25, no. 13, pp. 31-32. Smith, D. 2006, ‘The non-stop revolutionary’, The Guardian, [Online] Available at: http://technology.guardian.co.uk/opinion/story/0,,1697348,00.html Wikipedia. 2006, ‘Apple Computer’ Wikipedia.org, [Online] Available at: http://en.wikipedia.org/wiki/Apple_computer Apple. 2007, ‘Apple’, Apple.com, [Online] Available at: http://www.apple.com/investor/ MindTools. 2007, ‘Porters Five Forces: Assessing the Balance of Power in a Business Situation’, MindTools.com, [Online] Available at: http://www.mindtools.com/pages/article/newTMC_08.htm Koch, C. 2006, ‘Getting started with Enterprise Resource Planning’, CIO.com, [Online] Available at: http://www.cio.com/research/erp/edit/erpbasics.html Read More