Case Study: The Strategic Management of Apple Inc.

GB520 Strategic Human Resources Management Professor Andrew Klein May 7, 2013

Strategic Management

Strategic management refers to the art of planning your business at the highest possible level (What is strategic, 2011). A great example of strategic management is the story of Apple, Inc., formally known as Apple Computers. This story is innovative, includes traditional business strategies, an amazing record in leading change and unplanned successes. Steve Jobs, one of Apples founders, made the companies mission to be, to bring an easy-to-use computer to the market (Yoffie, 2008). When Apple went public in late 1980 the company immediately took on a new objective to make the stockholders money. The company had several entrusted members that had different managerial strategies that were used to accomplish the objectives. Since the company was founded it has maintained a strategy of continuous innovation in product and application development. In the beginning Apples products were easy to use, revolutionary and profitable; however they struggled due to the lack of alliances with other industries. In the early 90s Apple began reaching out to other industries to establish alliances and that proved to be a strategic move in order to ensure Apple achieved the companys original mission as well as meet the stockholders demand of making money. Apples Leadership Steve Jobs along side of Steve Wozniak founded Apple Computers when they began producing personal computers in 1976 out of Jobs garage. The company quickly grew and began dominating the personal computer industry because of the graphics and sound integration. They had a particular strategy and that was to improve in innovation continuously. In 1984, the pair introduced a new computer, Macintosh, however being that they wanted to remain autonomous started to cause problems for them. Apple Computers was in competition with Microsoft which launched in 1981 and made their product available to everyone and this was the

opposite of what Apples strategy suggested. After struggling for awhile Jobs was removed from the operations side of things and replaced by ex Pepsi Company executive John Sculley. The stockholders were now looking for a new strategy and Sculley was facing an influx of new technology. Several new companies were vying for a piece of the computer business thus making things difficult for Apple Computers and driving prices down. When this happened, Apple dropped drastically to having 6.2% of the market share from dominating the industry just a few years earlier in 1982 (Yoffie, 2008). The new strategy was to improve marketing and education for the products. At this time Apples worldwide market share sat at around 8%, but with the determination of Sculley he was able to capture 50% of the education market while maintaining a demanding premium price. This new strategy was able to keep Apple Computers running smoothly until 1995. During the mid-90s, with the computer technology world continuing to grow, software and hardware options kept growing as well. Apples claims to being superior with user friendliness, audio interface and graphic capabilities began to wash out. Unfortunately the companys market share dropped to 3% thus causing the management team to develop a new strategy. The new strategy to help save Apple Computers was to reduce costs and expand its global markets. Marketing and research expenses were reduced also. Being a more traditional approach this strategy seemed safe for Apple, in my opinion. These strategies were very different from the out of the box strategies that Jobs founded the company on. During 1996, Apple Computers lost almost one billion dollars because though the new management was aggressive in implementing the new strategies they were unable to stop the decline.

Steve Jobs was brought back to Apple Computers in 1997 to run the company. His new strategy was to be innovated while bringing in new products as well as to create new industries. Jobs also was aggressive with implementing industry alliances for the first time in Apples history. He was able to convince Microsoft to invest 150 million in 1997 (Yoffie, 2008). The disadvantages that were perceived of Macintosh began to dwindle and the superior qualities began to show through when Apple made the computers more mainstream in regards to using other company peripherals and software. Jobs created whole new industries. Traditional strategies may have been to look and see what business models were working and sway toward those. Jobs created Apple stores, iPods, iPhones and iPads. Jobs also created iTunes to help increase sales of the iPod. Eventually, Jobs and the management team of Apple Computers dropped Computers from their name and simply went with Apple Inc. This took place in early 2007. The world changed through Technology Jobs original goal to change the world through technology was accomplished! Jobs also accomplished his original mission which was to provide easy to use technology. But, most importantly Jobs was able to achieve the stockholders goal to make money. Over the years Apple stock increased a great deal. It started out being traded for less than $20 a share in the 1980s and it now being traded for over $450 a share today. The Apple Computers story started out with creative ideas and continuous innovation. The companys original strategies of keeping the products autonomous and independent began to drag the company down. These were not enough to keep the company alive. The business strategy attempts seemed only to help Apple slowly move down the inevitable slope. The

strategy that was most helpful and beneficial to Apple Computers was the decision it made to lose some of its autonomy and independence and to integrate itself with other technology leaders. Creating the new products and industries was a risky move but proved to work well for Apple and the rewards have been great. The only thing that I feel the company could have done better would have been to implement these strategies sooner and with the help of Steve Jobs the company may have been able to make the turn earlier and ultimately profit more.

References What is strategic management? (2011). Allbusiness a D&B company. Retrieved May 7, 2013 from http://www.allbusiness.com/management/2975123-1.html Yoffie, D & Slime, M. (2008). Apple Inc., 2008. Harvard Business School, issue 9-708-480.