Business Driven MIS Analysis: Apple Computer Incorporation - Case Study Example

Business Driven MIS Analysis: Apple Computer Incorporation Introduction Today’s fast-paced world calls for effective strategies and infrastructure within business operations and functions. An example of a business function is management information system, which enables the movement of information regarding people, products, and processes across an organization to facilitate decision making and problem solving (Chaffey & Wood, 2005). Consequently, business organizations continue to adopt the use of management information system not only to match the requirements of the fast-paced world but also to achieve competitive advantage (Beynon-Davies, 2002). Evidently, management information systems allow business organizations to remain competitive as they source for materials, interact with customers, and conduct other business functions (Boddy, Boonstra & Kennedy, 2005). Information systems within business operations are aimed at providing support to the existing business strategies and process with a view of enhancing efficiency and effectiveness. A good example of an organization that continues to incorporate technology or management information systems is Apple Computer Inc. The following is an analysis of Apple Incorporation and the application of management information systems towards enhancing both competitive advantage and business success. The analysis includes a brief summary of the case, specific questions and answers on the case study, the “iPad debate” and a concluding remark. Summary of the Apple Computer Inc. Case Apple Computer Inc. experienced a very poor performance in the last 20 years to an extent of almost becoming bankrupt. Apple Computer Inc. is now blazing a trail through the world of digital products with high-level innovation and creativity courtesy of the customers or consumers of the firm’s products. Today, Apple Computer Inc. has a competitive advantage derived from the customers and the users of the products from the firm. Whilst capitalizing on the new trend of business, welcoming of products from consumers, Apple Computer Inc. has been able to produce and capitalize on the iPod, iPhone, and the iPad. Indeed, Apple Computer Inc. has been able merge technology, business, and entertainment. Updated case on Apple Computer Incorporation Indisputably, Apple Computer Inc. has become one of the most unique firms within the digital world owing to its management information systems for its strategies, operations, and processes. Another aspect that continues to make Apple Computer Inc. a unique firm is the fact that it does not concentrate on its rivals but rather develops adequate ways and strategies through which products, people, and processes across the organization in a bid to achieve specific targets in terms of sales, profitability, and market share. Fig. 1 shows the primary and supporting activities within Apple Computer Inc. Figure 1: General Understanding of the operations of Apple Computer, Inc In the above figure, information systems form a major part of the supporting activities. It is on the basis of enhanced management information systems that have made 75% of Apple’s products and businesses to be market leaders as well as innovative solutions, thus; earning the organization competitive advantage (Boddy, Boonstra & Kennedy, 2005). In other cases, there are some products and businesses that are considered the first within the global market. Examples of products that have continued to be market leaders include iPod, iPhone, iTunes, and iMac amongst others (Laudon & Laudon, 2007). Apple Computer Inc. continues to enjoy competitive advantage courtesy of innovation and market leadership from the various products and businesses. Questions on the Case Study 1. Do you agree or disagree that Apple’s iTunes, iPhone apps, and iPad apps give the company a competitive advantage? Be sure to justify your answer. Definitely, Apple’s iTunes, iPhones, and iPods give the company competitive advantage. Apple’s iTunes, iPhones apps, and iPads are amongst the products that are market leaders and innovative solutions to many business processes and operations. Apple Computer Inc enjoys innovation and market leadership as aspects of competitive advantage. The introduction of iPod and iTunes is a brilliant merge of technology, business, and entertainment thereby attracting huge sales and market share (Bulik, 2008). For the iTunes, Apple was able to cause a big blow to the CD industry especially from 2005. Since 2005, the CD industry has continued to experience a decline in sales due to the introduction of the iTunes. It is clear from such impacts that Apple Computer Inc. is taking over the market through the iTunes products, which result from incorporation of management information systems capable of relaying information, products, people, and processes in a bid to enhance innovation. The iPod and iPhones have also taken over the digital markets. iPods have also resulted into a decline within the CD industry since 2005 indicating that the product is taking over as a market leader (Bulik, 2008). Besides, it is clear that Apple Computer Inc. created new products in the market, which was a combination of iPods and iTunes. Even though many firms tried to copy Apple through developing portable music players, Apple had already conquered the market through its two products (Lance, 2009). Apple enjoyed the first-mover advantage, which definitely increased the competitive advantage of the firm. Lastly, iPhone continues to attract huge sales and market share amidst higher competition from other smart-phones (Bulik, 2008). This indicates that Apple Computer Inc. achieved a competitive advantage by creating a first product in the market that had thousands of applications. Indeed, through the iPhone, iPod, and iTunes, Apple Computer Inc. has been able to achieve a competitive advantage over its rivals. 2. Why are data, information, business intelligence, and knowledge important to Apple? Give an example of each type in relation to the iPad. Data refers to raw facts that provide a good description of the various characteristics of an event or an object. Availability of data enables an organization like Apple Computer Inc. to make appropriate business decisions revolving around products to make, material needed to make the products, and the employees to be hired for the purposes of accomplishing the manufacturing or production process (Laudon & Laudon, 2007). Therefore, Apple Computer Inc. uses data to enhance production or manufacturing process (Chaffey & Wood, 2005). Information on the other hand refers to data that has been converted into a meaningful and useful context. Apple Computer Inc. uses information to understand the operations of businesses. Indeed, information is very powerful within Apple Computer Inc. since it enables the firm to understand business operations. Business intelligence refers to information obtained from multiple sources that include suppliers, customers, partners, competitors, and industries with a view of analyzing the patterns, trends, and relationships capable of assisting organizations in making strategic decisions (Curtis & Cobham, 2005). Apple Computer Inc. uses business intelligence in analyzing patterns, trends, and relationships for making strategic decisions especially with respect to achieving the desired quality in the manufactured products (Chaffey & Wood, 2005). Knowledge refers to skills, experience, and expertise coupled with information and intelligence capable of creating the intellectual resources in an individual. Through knowledge, Apple Computer Inc. is able to interpret and analyze the information with a view of making effective decisions (Lance, 2009). Therefore, data, information, business intelligence, and knowledge are important to Apple especially with respect to making quality products that are market leaders and innovative solutions. 3. Analyze Apple using Porter’s Five Forces Model. Porter’s five forces model include competitive rivalry, threat of substitute products, bargaining power of suppliers, bargaining power of buyers, and the threat of new entrants as illustrated in Fig. 2. Figure 2: Porters Five Forces Model Competitive rivalry in the industry is high as it arises from competitors that include the Windows OS and the media player for playing music and video developed by Microsoft, the Linux product of Mac OS X, computer hardware developed by different businesses such as Dell, HP, and Lenovo amongst others (Lance, 2009). Other competitors include the small stylist players for MP3 players developed by Samsung, Sony, and Creative firms. Lastly, Napster produces online music stores that are usually similar to iTunes stores. Threats of new entrants is moderate and come from the streaming audio as well as video that are developed with a combination of v-cast by the Verizon organization, the online services that are on high demand related to iTunes. Other new entrants come into the industry with disruptive technology, which threatens the operations and products of Apple Computer, Inc. Bargaining power of suppliers is high and arises from the increase in the number of suppliers of processors and computer memory such as Motorola, IBM, and Intel amongst others (Laudon & Laudon, 2007). The bargaining power of suppliers is also high for Apple given the strategic alliances of suppliers of the Mac on one hand and the increased suppliers of television programs and movies such as Disney, Fox, Sony, and ABC amongst others. Bargaining power of customer is also high due to the fact that customers share music using peer-to-peer networks that occur without meeting the associated costs for the music. This is done through Ares and Limewire amongst others. In addition, Apple faces high bargaining power of customers given the increased pressure of retailers to have the Apple products retailed at reduced prices. Economic downturns are expectations that make consumers or businesses to have a change in their buying behavior thus; making them have a higher bargaining power. Threat from substitutes is moderate given the fact that Apple enjoys market leadership in many products as well as having products that provide innovative solutions. In this perspective, the moderate threat from substitute arises from existence of satellite radio for music such as XM and Sirius, the availability of entertainment media that includes XBOX and PS2, presence of alternative means to obtain music other than iTunes, and the availability of alternative sources to obtain videos such as through broadcasts, cables, and from theatres. 4. Which of the three generic strategies is Apple following? According to Porter, there are three generic business strategies for firms that wish to enter a new market. New entrants can employ broad coast leadership strategy, broad differentiation strategy, or focused strategy (Lance, 2009). These strategies depend on competitive scope (market segmentation of either narrow or broad market) and the cost strategy as illustrated in Fig. 3. For instance, cost leadership is a generic strategy applicable to new entrants that are entering a broad market at a higher cost, that is, they charge high prices (Curtis & Cobham, 2005). On the other hand, focused strategy is applicable to new entrants entering narrow market irrespective of the cost strategy employed by the organization in question (Mazur, 2005). Figure 3: Porters Three Generic Strategies Apple Computer Inc. is an organization that uses differentiation strategy to provide new products to the market (Mazur, 2005). Differentiation strategy entails provision of a broad range of differentiated products at high prices without losing the customer base or loyalty (Bulik, 2008). In this strategy, Apple Computer Inc. ensures that its products have varied specialty and are also upscale in order to meet the demands, needs, preferences, and tastes of affluent customers. In other words, Apple Computer Inc. provides products that have distinctive qualities, which are able to attract high prices (Chaffey & Wood, 2005). It is important to note that for an organization to employ the differential strategy there is need for an enhanced research and development (R&D) department, which ensures high innovation. Apple Computer Inc. has a leading scientific research through its highly developed R&D department (Annual Report, 2012). Moreover, Apple Computer Inc. has a team of highly skilled and creative personnel for enhancing product development (Mazur, 2005). These are components that make Apple Computer Inc. to comfortably employ differentiation strategy to launch its new products in a broad market. 5. Which of Porter’s five forces did Apple address through its introduction of the iPhone? Apple Computer Inc. continues to develop new products in a bid to conquer the market. Most of the new products are developed in a bid to conquer a weakness or take up an opportunity within the market. The development and introduction of iPhone addressed the threat of new entrants coming from smart-phones that had been developed within the market (Mazur, 2005). Before the development and introduction of the iPhone, there were new entrants that included smart-phones. The smart-phones were an introduction that threatened the operations and businesses of Apple Computer Inc. Therefore, Apple Computer Inc. decided to develop and introduce iPhone as a way of taking charge of the threats of new entrants. On the other hand, Apple Computer Inc. also developed and introduced iPhone as a way of achieving a market leader and providing innovative solutions to the clients (Chaffey & Wood, 2005). In a way, Apple introduced the iPhone as a way of overcoming the threats of substitutes especially from the smart-phone (Mazur, 2005). Earlier on, the various companies such as Samsung, Nokia, and Motorola had developed smart-phones, which posed a lot threats to the products of Apple Computer Inc. leading to the development and introduction of iPhone to address the threats of substitutes (Curtis & Cobham, 2005). Thus, the development and introduction of iPhone by Apple Computer Inc. was to address the threats of new entrants and threats of substitutes. 6. Which of Porter’s five forces did Apple address through its customer-developed applications? Another aspect of Apple to conquer the market was introduction of customer-developed applications. It is clear from the analysis that since the changeover of shift from one product to another is higher, consumers or customers have a higher bargaining power (Curtis & Cobham, 2005). Apple Computer Inc. and other firms need to reduce the higher bargaining power of consumers thereby achieving high customer loyalty. One of the ways or strategies employed by Apple Computer Inc. to capture that customers’ attention and make the shifting difficult was the use of customer-developed applications (Chaffey & Wood, 2005). Once the organization incorporate the customer-developed applications, it was difficult for the customers to leave the products since they felt part and parcel of the same. Therefore, Apple addressed the bargaining power of consumers or customers through the customer-developed applications. The “iPad Debate” The iPad debate has continued to raise a lot of controversies. Tuttle (2011) strongly believes that the iPad is not a useful tool other than for entertainment. However, many other uses of the iPad have argued that the tool is very effective especially when used for the intended purposes. Apple Computer Inc. developed the iPad as a lightweight, portable, and tablet computer that is usually similar to iPhone. The iPad was also developed to allow customers download applications as well as check their emails whilst playing music (Russell & Yilmaz, 2006). Despite the many controversies that have arisen out of the debate, it is clear that Apple Computer Inc. developed a product that has met and achieved the objectives for which it was meant to accomplish. Conclusion On the basis of the above case analysis, it is clear that Apple Computer Inc. has been able to achieve competitive advantage courtesy of their products. More than 75% of Apple’s products are either market leaders or provide innovative solutions to various clients. Examples of these products include iPhones, iPads, and iTunes. These products continue to attract huge sales and extended customer loyalty this enhancing the competitive advantage of the organization. Indeed, the use of management information systems have been effective in making sure that information, people, products, and processes are moved from one place to another in a bid to make sure that the firm continues to enjoy competitive advantage. References Annual Report (2012). Apple Inc., p1-104. Beynon-Davies, P. (2002). Information Systems: An Introduction to informatics in Organisations. Edinburgh: Palgrave MacMillan. Boddy, D., Boonstra, A., & Kennedy, G. (2005). Managing Information Systems: An Organisational Perspective. 2nd ed. London: Financial Times/Prentice Hall. Bulik, B. S. (2008). Apples iPhone steals marketing thunder from iPod. Advertising Age, p.4-55, Retrieved on November 30, 2009. Chaffey, D., & Wood, S. (2005). Business Information Management, Improving Performance Using Information Systems. London: Financial Times/Prentice Hall. Curtis, G., & Cobham, C. (2005). Business Information Systems. 5th ed. London: Financial Times/Prentice Hall. Lance, W. (2009). eBay launches holiday deals app for iPhone. CNet. Retrieved on November 29, 2009 from: http://news.cnet.com/digital-media/?keyword=iPod Laudon, K., & Laudon, J. (2007). Essentials of Business Information Systems. 7th ed. London: Prentice Hall. Mazur, L. (2005). Holistic marketing for Long Run. Finance Week, Vol. 14, Issue 10. Russell, I., & Yilmaz, J. (2006). Information Systems Management, Vol. 23 Issue 4, New York, Prentice Hall: p37-42, 6p. Read More