Strategic Management and Leadership Report on Apple Inc - Essay Example

? Apple, Inc. Strategic Management and Leadership Report Contents I. Introduction…………………………………………………………..……………….3-4 II. Ten Year Business Environment…………………………………………………….4-7 III. Sources of Competitive Advantage: August 2011…………………………….……7-9 IV. Competitive Strategy…………………………...………………………………….9-10 V. Key Issues: November 2011…………………………...………………………….10-12 VI. Strategic Management……………………………………………………………….12 Task B…………………………………………………………..…………………….12-13 References…………………………………...……………………………………….13-16 Appendices ………………………………………………………………...…………….16 I. Introduction It has been rightly observed by the analysts and scholars that the only constant thing in the modern world is change. With the massive development in the information technology and communication processes, business organizations across the globe have had to remain flexible and adaptable to achieve sustainable growth in this dynamic environment. This is particularly true for major player of the high-end technology industry. Nowhere is this more evident than in the case of Apple, Inc. The present day giant in the high definition electronics industry, Apple Inc. was established in 1976 with the name of Apple Computer in a garage of Steve Jobs, the founding member. S. Jobs partnered with Steve Wozniak, they were eventually joined by A. C. Marakkula. The company was incorporated in the early 1977. The initial mission was ‘one person – one computer’ (Freedman & Vohr, 1998). The initial years of the company exhibited great prospects for Apple Computer, Inc., but soon the company had massive declining sales. This was primarily because of the technological failures more than any other reason. During this period Apple Computer produced microcomputers as a way forward from the computers that were produced by the IBM’s mainframe computers (Hogan 1987). Though the Apple I started off well, in the early years of 1980s, the sales for Apple Computers drastically reduced, as the platform (Macintosh) of the Apple was not compatible with the prevalent computers of the time ("Apple computer, inc.," 2011). In the mid-1980s after continuing to experience declining, the sales company founder Steve Jobs was fired from his own organization ("Apple computer, inc.," 2011). During Job’s absence the company was negatively affected by the introduction of competitor Microsoft’s DOS operating system (Pascal 1992). Soon, the market leadership of Apple was a thing of past, as Microsoft was more user friendly. Steve Jobs would eventually rejoin the company and call for a series of new ideas. The company placed new emphasis on innovation and produce items like the iPhone, iTunes, iPod and iPad, all of which became immensely popular across the globe. From Apple Computers, the company shifted to the name Apple, Inc. as it enabled buyers to understand that the company also produced other items apart from computers ("Apple computer, inc.," 2011). Today Apple, Inc. is recognized as the world’s leading technology company and has a ubiquitous international presence. When one examines the financial figures from the time Jobs returned, the results are truly staggering. Essentially, he brought an organization from the brink of bankruptcy to one annually generating $25 billion dollars in net income and a stock valuation exceeding $400 ("Apple," 2011). Currently Apple competes in a variety of market sectors: mp3 players, smart phones, personal computers, tablets, and they are rumored to be entering into the television market (Elmer, 2011). It follows that the organization has a variety of competitors, including Microsoft operating systems, a glut of mp3 and tablet producers, and increasing competition from Google’s Android devices in smart phones. II. Ten Year Business Environment Apple, Inc. ten-year business environment involves a variety of complex element. An effective means of understanding the organization’s competitive position is through a consideration of its position within the smart phone market, specifically Apple’s iPhone. Telecommunications have been a central aspect of communication since the early 20th century and the current smart phone environment involves inputs from all of Apple’s operations, including operating systems, processors, and mp3 technology. Within this context of investigation a PESTL analysis has been established as a means of examining Apple’s market position. Political Analysis: To a large degree the organization has avoided significant political restrictions. While the United States Department of Justice (DOJ) readily intervenes in large business mergers, the extensive amount of competition at Apple’s level of operations is such that government intervention is not necessary. Political considerations only indirectly affect Apple through DOJ intervention in large-scale telecommunications suppliers competing for spectrum (Velazco, 2011). For instance, the government recently blocked a merger between AT&T and T-Mobile; the impact on Apple is in terms of maintaining overarching low cost services when usage patterns are considered (Velazco, 2011). One also considers the potential of foreign political risks. Currently over 50% of Apple’s sales are international and one considers the potential of such profits being affected by future political shifts related to patent or licensing concerns ("Apple's international sales," 2011). Economic Analysis: There are a number of economic considerations. One notes the macroeconomic recession shifts in both the United States and Europe hold the potential for a negative impact on Apple’s continued success. In these regards, one considers that Apple’s success has largely come from sales of quality electronics that necessitate a corresponding high price tag. Recessionary headwinds could potentially create a public shift towards lower cost product design. Social Analysis: In terms of social elements one considers that one of Apple’s greatest assets has been its innovative brand and marketing approach. While quality and innovation has greatly driven net profits a close contributing factor has been Apple’s branding as a chic alternative to dominant culture. While such an approach was viable when Microsoft and IBM remained dominant in the market, Apple has since become the mainstream to which they once positioned themselves. With the death of Steve Jobs one questions if they will be able to continue to maintain this cutting-edge brand. Technological Analysis: Apple’s current position in smart phones as a leading provider is most attributable to cutting edge technological design. The iPhone 4 was accompanied by the iPhone 4S in October 2011 continuing Apple’s commitment to innovation (Brown, 2011). In addition, Apple has recently implemented Siri, a voice activated recognition service. Latest reports have indicated that service providers have experienced tremendous challenges meeting data demands (Browning, 2011). Environmental Analysis: To a large extent Apple has been successful in becoming embroiled in environmental controversy. Still, recent reports have emerged regarding the organization’s implementation of Chinese labor wherein workers have been required to sign pledges not to commit suicide (Chamberlin, 2011). While these are undoubtedly abhorrent conditions, the reality is that they are characteristic of manufacturing product life cycles in the 21st century. Legal Analysis: Some of the most prevalent considerations in terms of Apple’s position in smart phones are related to legal elements. As a cutting-edge innovator, Apple has experienced tremendous success through functioning as the first to market on product design. Still, such innovation has resulted in a glut of competitor’s attempting to replicate Apple’s patents resulting in a series of legal battles. For instance, Apple recently won a lawsuit with HTC over copyright infringement (Arora, 2011). Ultimately, there are a number of key success factors in terms of Apple’s continued success in the smart phone industry. One large question concerns the extent that Apple will leverage their current smart phone patents. This report recommends that, rather than continuing closed sourcing, Apple begins licensing out iPhone patents to phone manufacturers. While such competitive and strategic management will undoubtedly drive continued prosperity, the underlining reality is that Apple’s success is because of cutting-edge innovation. In these regards, the organization’s driving concern must be in continuing to remain an organization of creation rather than one of financial and patent management. III. Sources of Competitive Advantage: August 2011 There are a number of considerations regarding Apple’s competitive position in smart phones. From the earliest incarnations of Apple Computer the company sought to carve out a competitive advantage through horizontal and vertical integration that restricted external product licensing ("Apple computer, inc.," 2011). While this approach had been implemented early in the era of the Apple II and Macintosh the organization had gotten away from it until Steve Jobs returned in 1997. Another prominent advantage was Apple’s attention to design elements. Building products from the ground up allowed Apple to implement innovative design elements that created a loyal customer base. One considers the iMac released in 1998 with its eggshell design as prominently implementing this technique ("Apple computer, inc.," 2011). This design advantage also extended into Apple’s image. Apple, Inc. would increasingly cultivate an image that presented itself as the alternative choice to mainstream computer producers. This allowed Apple to become a cultural force resulting in significant market advantage. One consideration is that the iPhone contains Apple’s unique operating system, allowing it significant quality advantage over competitors ("Apple -- iphone," 2011). Indeed, quality product design has become one of the driving forces of Apple’s success and has created a significant competitive barrier for outside manufacturers, such as Google’s (Gilbertson, 2010). One must also consider the iPhone’s competitive advantage in terms of its position in the Apple whole. In these regards, Apple has been able to leverage its competitive position in mp3 with iTunes and its compatibility with the Macintosh operating system as a means of encouraging user identification (Schramm, 2011). The Apple App Store also provides the organization with a unique advantage over other smart phone suppliers. In addition, Apple’s implementation of Siri voice activation technology will surely drive an amount of future sales. Apple’s competitive position has been largely effective to this point (Browning, 2011).For instance, it was once noted that “RIM’s BlackBerry smartphones delivered one of the best mobile e-mail experiences and was a popular choice among corporate consumers. BlackBerrys were offered through approximately 550 carriers in 175 countries” (Kim & Yoffie, 2010, p. 11). Since these announcements, it’s been RIM has announced that they’re newest Blackberry model will need to be delayed, greatly limiting this important competitor. There also exist a number of potential weaknesses regarding Apple’s competitive position. While the Apple App store is a highly important element in the iPhone’s success the Android Marketplace has begun developing a number of competitive applications as a means of threatening Apple’s smart phone sustainability (Wauters, 2011). Still, the greatest weakness is that while Apple has leveraged market share through product innovation the open source models have been able to reengineer many of Apple’s innovations. While Apple has engaged in a series of patent lawsuits, notably a recent victory over HTC, the extent that this remains a viable strategy remains greatly questionable. Furthermore, Google’s position as a cornerstone of the Internet, coupled with the increasing coupling of telecommunication and search, could potentially allow Android to leverage compatibility with Google as a means of competitive advantage. Ultimately, the industry remains highly competitive; if Apple is unable to maintain constant innovation, its competitive advantage will quickly fade. IV. Competitive Strategy Apple’s competitive strategy in recent years has been the cutting-edge design of products. While this seems an over simplification, in this instance the truth is easy to grasp. Still, within this context of understanding there are a number of strategic maneuvers that demand further consideration. Apple has strategically implemented its iPhone operating system through a closed source approach. Not only has Apple refused to license out its operating system, but the organization has also retained exclusive vending control. In these regards, the only way to purchase Apple products is directly through the Apple website or through exclusively licensed Apple stores. This strategic approach has allowed Apple to retain a strong emphasis on quality management, as well as to retain its unique branding image. Apple’s approach to exclusivity has extended into its strategic enforcement of patent violations. In this spectrum of understanding, Apple has engaged in large-scale war with outside manufacturers that infringe on copyrights. In terms of specific outputs, Apple has strategically leveraged iTunes and its App store (Wauters, 2011). With recent innovations in Cloud computing, iPhone users can purchase mp3s on their phone and later find them on their tablet or Macintosh. In these regards, Apple’s quality personal computing design has been used to directly contribute to the iPhone’s competitive advantage. While the organization has recently suffered the setback of the death of company founder and CEO Steve Jobs, there remain a strong number of organizational elements in place to ensure the corporation continues its growth and success. Currently sales of the Apple iPad and iPod devices have constituted powerful company strengths and present a strong means of innovation. Indeed, Apple’s innovative processes coupled with its brand function as the company’s driving force. In advancing through future markets it’s clear that these aspects will constitute the backbone of Apple’s directional strategy. Within this context of understanding, it’s further necessary for the company to implement leverage as a means of retaining their competitive advantage. Sales of the Apple Macintosh as well as iPhone and iTunes technology are such that the company is given access to many new segments of the population (Schramm, 2011). In these regards, it’s necessary for the company to implement their consumer access as permitted in this software as a means of promoting innovative software design and industry leading brand. The following years will be a telling period for Apple in terms of whether they are able to continue this innovate product development after the death of company CEO Jobs, but with the corporation’s significant leverage and brand identity there exists plentiful opportunity for the continuation of the success the company has enjoyed in the previous decade. V. Key Issues: November 2011 In November 2011 Apple, Inc. finds itself in a challenging position. While past product design and the potential impact of the upcoming Apple will drive growth in the immediate future, the death of Steve Job’s could indicate the end of such cutting edge innovation (Elmer, 2011). While Research in Motion’s (RIM) Blackberry has currently been delayed, the Microsoft and Nokia collaborative Lumia 900 will debut in 2012 (Colon 2012). Indeed, this product has received rave reviews at this week’s CES conference in Las Vegas. In addition, the force that is Google’s Android increasingly has taken on a pervasive sort of inevitability. This is reflect in equity valuations where the Google stock has factored into it a higher expectation of future growth with a + 20 P/E ratio compared to Apple’s 15.3 ("Apple," 2011). Furthermore Apple has increasingly faced challenges in regards to meeting customer demands, as the customer base has become increasingly diverse in the 21st century. While future product innovation will be necessary, one considers that one of the main mistakes Apple made after Steve Job’s original company termination was extending into too many markets. Developing a balance between innovation and quality and strategic management will be a pressing challenge for the upcoming five years. There are a number of recommendations I would make to Tim Cook to enhance the effectiveness of Apple’s strategic approach. In response to these changing demographic factors one of the changes in strategy Apple could make would be to decrease the breadth of their focus and target specific consumer audiences. The effects of such a strategic shift would potentially aid Apple in their marketing, as the target audience would increasingly identify with Apple as a company that targets their needs rather than broadly offering technological solutions. While Apple has indicated that they are attempting to expand to this broader market, it seems that this constitutes a failure to understand the changing dynamic of the contemporary world. The 21st century has seen increasing changes in social dynamics and the contemporary economic climate demands not generalized products that work to meet all customers’ needs, but products that focus on the needs of groups of individuals that are more prone to appreciate and become loyal Apple supporters. It is through the continued development of products for these users that Apple will be able to maintain high innovative standards and continue to achieve elements of authenticity in terms of their advertising and marketing strategy. Still, one recognizes that combating the Android open-source onslaught will be the battle to watch in upcoming years. The history of late 20th century technological development contains a graveyard of organization’s that were steamrolled by creative disruption from open sourcing, most prominently the music industry. If Apple hopes to survive they must begin to move towards more expansive licensing agreements while continuing to outperform Google and Microsoft in terms of quality innovation. VI. Strategic Management Steve Job’s once stated, “A lot of times, people don’t know what they want until you show it to them.” To a large degree this statement can be understood to be a defining characteristic of Apple’s approach to strategic management and their overarching industry success. One considers Apple over the last ten years as an organization that has not simply been content to innovate on existing products, but has worked to reach into the blankness and point the way forward for creation. Although the iPhone is an innovation on the phone, it extended beyond any semblance of past form such that it more accurately is classed in an entirely new dichotomy. Ultimately, this might be Steve Job’s greatest genius. While he designed massively successful products, he also engineered the consumer consent for these products, in a sense changing the world. Task B. When I reflect on the leadership questionnaires, I recognize that to an extent my leadership style has changed. Perhaps, the most overarching consideration is that while my past leadership style was largely contingent on individual commitment to excellence, I have greatly shifted this approach to a concern with individual input. In these regards, I believe I have shifted to a more charismatic leadership style that attempts to leverage dynamic personal interaction as a means of achieving collaborative results (Charismatic Leadership (2010). The questionnaire greatly articulated this shift in my development, as it greatly focused not on personal leadership philosophy, but the true to life interaction in human relationships. Throughout the semester I’ve come to understand that these are cornerstones elements to any successful leadership approach. Indeed, to a large degree I’ve recognized that throughout the seminar group charismatic leadership approaches have been perhaps the most effective means of progress. In the group context I believe that the charismatic leadership approach is perhaps the most effective as this context lacks the overarching institutional framework of most business environments where transactional models are perhaps more effective. Still, I recognize that there are a number of weaknesses to this approach. For instance, oftentimes group productivity and quality are sacrificed as oftentimes this leadership model necessitates sacrifices to hard work. Ultimately, however, I believe that all successful leadership to extent involves charismatic interaction as a driving force. References Apple. 2011, January. 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Retrieved from http://techcrunch.com/2011/01/06/apple’s-mac-app-store-opens- with-more-than-1000-apps/ Zachary, G. Pascal, and Stephen Kreider Yoder, 'Apple Moves Its Microsoft Battle to the Marketplace,' Wall Street Journal, April 16, 1992. Appendices Fig. 1 Apple Logo Read More