CASE 14: APPLE COMPUTER, INC

May 01, 2011

Abstract Apple Computers Incorporated is a well-established and competitive electronic company that producing high quality electronics like the computers, iPhones, iPods, and iPads. Apple Computer Incorporated was created by Stephen Wozinak and Steve Jobs. In this paper, describing the key strategic challenges facing Apple computers; the dimensions along which the company success can be measured; the critical external and internal environmental factors that have strategic implications for Apples future; how Apple Computers Incorporateds strategy stands up against industry rivalry, and last the recommendations that would enhance the effectiveness of the companys strategy or to changing Apple Computers Inc. strategic approa ch for better results.

CASE 14: APPLE COMPUTER, INC

Apple Computer, Inc.: Maintaining the Music Business while introducing iPhone and Apple Stephen Wozinak and Steve Jobs established Apple Computer Inc. on April 1, 1976. Wozinak and Jobs have known each other because high school and worked together on various projects. Early 1976, Wozinak wanted to create a user-friendly computer whereby ordinary customers will buy, so he worked on combining video monitors with computers. Wozinak took his idea to his employer, Hewlett-Packard (HP), and they rejected his idea because they did not see a future for Personal Computers (PCs) in the company. Then Jobs suggested that they both should go into business and sell computers together. Their first computer was the Apple I, also known as the kit computer to them and they built the computer in Jobs parents garage. Job named the computer Apple to honor his days working at the orchard while seeking enlightenment and it is stilled to this present-day called Apple. Apple I was original intended for the hobbyist and it only consisted of a circuit board that did not have an exterior casting. The reviews they received for Apple I was not to what they expected so Wozinak and Job decided on expanding their market for PCs by creating a new system called Apple II. In 1977, after taking on new partners they officially became Apple Computer, Inc. and could expand and within a

CASE 14: APPLE COMPUTER, INC

couple of months the recapitalized company introduced the new computer, Apple II and was the first computer to come with a sleek plastic casing and color graphics. The Key Strategic Challenges Facing Apple Computer Apple Computer, Inc. is a very innovative company and has gone through many ups and downs over the past years, and at the same time bringing the most advanced and innovative technology to their customers. One of the key strategic challenges that Apple computers is facing is the customers brand loyalty and the constant changes in technology and entertainment. Apple Computer has tried to expand their product line to include media and software in addition to hardware; by reaching many diverse customers rather than their traditional followers, the technology knowledgeable customers who work in fields because of this Apple Computer will find it difficult to keep a positive brand image among all their customers. Competition is another strategic challenge the company is facing and has become extremely fierce in the technology sector because staying ahead of current technology is a constant battle. Apple Computer has severe competition from other companies like Gateway, Dell, Microsoft, Hewlett-Packard and a few others. Apple Company needs to be more concern about new startup companies as well as their current major competitors. For instance, competitors are taking notice that Apple computers are introducing news ideas and technology so they are trying to outdo Apple Computers by creating similar phones and tablets. Another strategic challenges facing Apple Computer is their maintenance of their competitive advantage in new products hardware. They will need to create strong relationships with powerful suppliers of the media and other services.

CASE 14: APPLE COMPUTER, INC The Dimensions Apple Computer Success can be measured

Apple Computer, Inc. can be measured in several ways to have a successful company, it is important for Apple Computer to work efficiently and effectively. The dimensions along which the company success can be measured are by the growth of its employees, products, customers, amount of revenue generated and the amount of profit earned and enable the company to focus on the cash flow and encourage them to plan base on them. Employees are important to the success of the company because they determine whether a company will be a successful or not. To accomplish this, Apple Computers will have to build a strong relationship between its management and employees, to create a more positive work environment. Then there is customer satisfaction that deals with the needs and wants of the customers, which can determine the success of the company. Apple Computer are aware of this so they make it their priority to make sure that their customers get their moneys worth when they buy any of Apple product or service. The quality of product and service has to be worth the customers money; basically quality is better than quantity and Apple Computer try their best to provide their customer excellent product and service so that Apple Computers reputation would not be ruined. Critical External and Internal Environment Factors that have Strategic Implications for Apples Future Globalization and Technology are major factors that have strategic implications for Apples Future and it influences many of Apples business-related decisions on a daily basis. The critical external and internal environment factors that have strategic implications for Apples future are mentioned below.

CASE 14: APPLE COMPUTER, INC External Environment Factors:

Some of Apples external factors are its competitors like Gateway, Dell, Microsoft, and Hewlett-Packard. Apple Computers will have to make Macintosh more creative and compatible so that their customers will want to continue to buy their products and at the same time attract new customers. Apple has faced a multitude of competitors in the music download; people could download music from other programs either free or at a cheaper price, for instance, Napster, Kazaa, Real Network, Inc., Sony, Virgin Media, Wal-Mart and Yahoo are all rivals for iTunes. Another critical external environmental factor that Apple Computers needs to watch out is their product characteristics (design, size, color), it is what attracts customers to their products and services. They will have to make improvement and make sure that their product unique and different from its competitors. Internal Environment Factors: Internal environment factors that have strategic implications for Apples future is the marketing of Apple Computers products and services. ITunes music store could download any song as well as audiobooks, until recently; it was only compatible with Apple products, customers can load it on to their personal computers. This decision was made by evaluating internally and updating the system so that personal computer users did not have to stop using iTunes. Technology is an internal environmental factor that can implicate Apples future, and needs to be updated constantly on all Apple products. How Apples strategy stands up against industry rivalry Apples strategy can stand up against industry rivalry because marketing has been Apple Computers strengths. Apple Computers has a high track record in industrial design and has a remarkable brand which has outperformed many of its rivals in the past. Apple has believed that

CASE 14: APPLE COMPUTER, INC

to begin with a design of the product there should always be a successful marketing plan. Apple Computers has taking different approach to the designing of their products concerning its low profit margins and cost cutting. Apple Computers has the habit of using the same strategies over and they need to create new and better strategy that can stand up better against industry rivalry. Creating new strategies will keep customers wondering about new strategies and the competitors working on how they will try to keep up with Apple Computer. Recommendations to Enhance the Effectiveness of the Companys Strategy or To Change its Strategic Approach for Better Results The recommendation that would enhance the effectiveness of Apple Computer is to continue to maintain its customer service by creating new ideas and better technology to keep their old customers and attract new ones. I will also recommend that Apple Computers give their old customers incentives and new opportunities to purchase new products from them, by doing this it will make their customers happy and looking forward to new products and services from Apple Computer. Another recommendation would be concerning the pricing of Apples product and services; they should make their products and services a little more affordable because Apples products cost more than any or almost all of its industry competitors. Another recommendation would be in regarding to Apple TV, Apple Computers would need to create a more user-friendly device and make it more compatible so that their customers can use the product directly instead of downloading it to their computer and to the device.

Conclusion In summary, Apple Computers Incorporated is a well-established and very competitive, even though they produce high quality electronics like the Apple computers, iPhones, iPods, and

CASE 14: APPLE COMPUTER, INC

iPads. They still have a lot to work on when it comes to the strategic challenges that they are facing, dimensions along which Apple Computers success can be measured how to overcome the external and internal environmental factors that have strategic implications for their future. Apple computers will still have to find more ways to stands up against industry rivalry. With Apple computers working on all of these they would be able to enhance the effectiveness of the companys strategy or change Apple Computers Inc. strategic approach for better results. References Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2011). Strategic management: Competitiveness and globalization, concepts and cases: 2011 custom edition (9th ed.). Mason, OH: SouthWestern Cengage Learning.