How well Steve Careers done as Apples CEO? Has he done a good job of carrying out the five jobs of the tactical management reviewed in Section 2? Why or You will want to? What grade might you give him?
If we measure the body of the five task of strategic management we can see that in the case of evaluating Steve Jobs 'performance as the CEO of Apple, we should start in the duty 5 "Evaluating performance and initiating corrective alterations"; Apple experienced already an strategy applied.
When Steve Careers was hired again by Apple in 1996, no one knew about the future of the company. 1 day, through the MacWorld in Boston, Steve Jobs appeared before the general public announcing different and important changes in the business:
New Plank of Directors.
Aggressive MARKETING CAMPAIGN.
Strategic alliances with main opponents.
After these announcements in 1997, the company skyrocketed.
It is clear that the announcements Steve made during the MacWorld in Boston, were the result of a well meditated plan, outcome of any careful observation and analysis of Apples weaknesses and competitor's success.
Steve Jobs became aware that the flexibility of Microsoft buried any Apple chances in the computer market, and their original strategy advanced to a "stuck in the centre" strategy.
Steve Careers foresaw the success of his company launching different and ground breaking products and tactical alliances. Also he understood that under the conditions of the marketplace, Apple should concentrate its strategy as a concentrated differentiation strategy.
Even if it's not explained in the case, it is clear that Steve Careers had establish new goals and goals for the business and crafted and implemented a fresh strategy based in the failures of the last one.
I would give Steve a "B+" for his performance. I am not presenting him an "A" because I believe he has failed in 2 important factors:
Even with the success of Apple, I had not been able to find clear perspective and mission claims.
Jobs either succeeded in explaining the road that Apple will follow in the foreseeable future, and now, along with his health problems, every person is fearful of the companys future. People do not perceive Apple as a "company", people understand Apple as "Steve Jobs" which is not good for a company.
What are the chief components of Apples strategy? How well do the items fit together? Is the strategy evolving?
I think the different important elements on Apples strategy are:
Change the computer strategy to a "focused differentiation strategy": In this manner, Apple will concentrate it sales over a narrower number of buyers (graphic designers, for example) which will be ready to pay extra money for a better computer with special characteristics.
As it is discussed in the case "Apples proprietary operating system and strong images handling functions differentiated Macs from PCs but many consumers and businesses users were hesitant to purchase a Apple pc because of Apples high grade pricing and because of the learning curve involved with learning its proprietary Operating System".
Offer ground breaking products related to the same industry as their key business: All users know the high quality made available from Apple in pcs but Microsoft had a much better strategy.
Currently the majority of users have a Computer rather than Mac, which monopoly seems difficult to break. So, you will want to to use the grade of the computer systems in new and different product lines? Think about making a "monopoly" together with other product line based in the differentiation, technology and tactical alliances, just like Microsoft did before with pcs?
The key of Apples Strategy was to encourage consumers of their innovation and scientific differentiation superior products.
Does it make good proper sense for Apple to be a rival in the computer, digital very good music player and mobile phone industries? Are the value chain activities that Apple performs in pcs, digital music players and mobile phones virtually identical and suitable or are there very important differences from product to product? Which of the 3 products lines do you think is most significant to Apples future growth and success? Why?
For me makes good tactical sense.
Becoming a company of "high-status personal computers" is a really good strategy to conserve that production lines. , while opening the marketplace of new and unique electronic digital products using the competitive benefit of Apples technology.
The development lines and value chains of the three main activities of Apple are very similar and suitable because they're producing the same kind of product: gadgets. I believe this is one of the key items of Apples success: to build small computers formed as phones or MP3 players.
Also I believe that the final goal of Apple is to create a device with all the current 3 characteristics made available from their 3 products: a cell phone which will be a Music player and computer at the same time Plus they almost achieved it already, releasing the iPad.
I feel that the future development and profitability will be based in the smart cell phones and audio (both of them). The computer industry is a hard piece to bite. Major manufacturers are constantly competing to produce least expensive and most effective machines in the market. As technology changes swiftly, competition on the market is to go up. However, Apple is the owner of the 72% of the talk about market for digital music players putting the company as the indisputable innovator of the marketplace where competitors try to imitate or copy the devices Apple produce.
In which industry is competition more strong? Prepare a five-force analysis of each industry to aid your position.
I have decided that the higher competition is more powerful in the computer industry.
The five-force research for the three establishments is:
Five-force analysis for personal computers:
Supplier bargaining vitality: HIGH
There are few suppliers of processor chip systems (Intel/AMD).
Buyer bargaining electricity: HIGH
Infrequent customer buys (we buy a computer for a broad number of years).
Customer transitioning costs in one product to another are really low.
Product commitment of Apple pc users is very strong.
Potential new entrants: VERY LOW
High barriers to entry: there already are too many rivals with strong and brutal strategies.
Competitive rivalry: VERY HIGH
Rapid and consistent product innovation by large businesses.
Possible product technology copying.
Large businesses with different and good strategies.
Supplier bargaining vitality:
Five-force analysis for computers
Five-force evaluation for music players:
Supplier bargaining ability: LOW
There are plenty of suppliers of MP3 technology.
Buyer bargaining electric power: MODERATE
Infrequent customer purchases (we buy an MP3 for a wide period of time).
Customer moving over costs are low.
Threat of substitution: MODERATE
Costs of substituting IPods for a typical MP3 are low because they give similar services.
Product commitment of IPods users is very strong.
Potential new entrants: HIGH
Low barriers to entry: many individuals are happy to pay reduced for some identified advantage, whether is high quality, more technical sophistication or greater ease of use.
Copyright of iTunes and strategic agreements with the key music labels.
Competitive rivalry: LOW
Threat of substitution: MODERATE
Buyer bargaining vitality:
Supplier bargaining electricity:
Five-force evaluation for MP3Apple represents nowadays the 72% of the marketplace talk about of digital very good music player.
Five-force analysis for mobile phones:
Supplier bargaining vitality: LOW
There are plenty of suppliers of cellphone technologies.
Buyer bargaining power: HIGH
Very recurrent customer acquisitions.
Customer moving over costs to between one company and another are low because they give similar products (Androids vs. iPhones)
Product devotion of Ipod devices users is quite strong.
Potential new entrants: HIGH
Low barriers to entry: just as as music players, many individuals are inclined to pay reduced for some recognized gain, whether is high quality, more technological sophistication or higher simplicity.
Wide variety of applications to work with at with the device.
Competitive rivalry: MODERATE
Strong and big competition as Nokia and Blackberry.
Product technology copying.
What will a competitive durability evaluation reveal about Apple, when compared with the market leaders in the non-public computer industry? Among these competition, who likes the strongest competitive position? Who's in the weakest overall competitive position? Has Apples strategy resulted in a considerable competitive advantages over its rivals in the computer industry? What's the basis for whatever competitive gain they have?
Under the competitive power assessment presented within the last table, Apple is positioned as the second main company in computer industry, behind Hewlett-Packard. The weakest computer manufacturing company is ACER.
In my opinion, the product technology, quality, capability of producing new products and design will be the competitive features of Apple.
These competitive advantages stimulate certain niche market of customers to pay more for an apple computer than one of the competence.
These competitive advantages offer a special product: who possesses a Mac is the owner of a top quality computer (like the one who have a Lexus or a Mercedes rather than a Chevy).
If Apple wouldn't normally have high ratings in these factors, would be located in the third place, behind Dell; thus this support and shows that the differentiation strategy located in quality and technical advance is a considerable comparative benefits.
What will a competitive power analysis reveal about Apple, when compared with other main players in the digital music industry? Among these digital very good music player competitors recognise the business enjoys the best position? Who is in the weakest overall competitive position? Has Apples strategy resulted in a considerable competitive benefit over its rivals in the digital player industry? What's the basis for whatever competitive edge Apple has?
Under the competitive power assessment presented in the last desk, Apple is located as the first company in the very good music player industry, while the weakest company is Microsoft.
Even without having the very best quality product (in the case was discussed that other competitors were given with awards in quality), the strategy based in design and the music network (available because of key tactical alliances) has positioned Apple as the key vendor of MP3 players.
The basic competitive benefit and the main element of the success have been, again, the technological advance and invention. The complexity of the technology utilized by Apple helped Steve Careers to achieve important agreements in the music industry, developing (under my perspective) the most crucial product of Apple: The iTunes. As it is explained in the event: "Jobs could negotiate the contract with labels for two significant reasons: First, labels were eager to offer a genuine online source for his or her music that would reduce the stream of pirate music. Second, the music provided by Apple was compressed using Apples proprietary Advanced Audio Coding (AAC) and the music was protected with Apples Fairplay Digital Privileges Management System, one of the strongest of the industry"
The performance for the past three years has been very good:
The gross profit percentage each year has a growing tendency and it is very high, indicating that the company earn enough profits to cover its operating expenditures and have a earnings.
The return on collateral for the three years is avove the averge with s development upward, indicating that stockholers are making on the investment in the company.
Earnings per talk about shows a upward trend every year with a big percentage gain each year.
Current Ratio: with an upward trend every year, ratios higher that 2 are great!
Debt-to-Asset Percentage: very low (under one every year) shows a very low threat of bankrupcy.
Inventory Turnover: Although it has a downward slope continues to be a very high proportion.
Average Collection period: It really is good because demonstrates the company spends less than a month in collecting cash obligations.
What makes up about Apples noteworthy success in the market for smart phones and digital music players, but its overall weakened teaching in the computer industry?
In my opinion the success of Apple in the phone and MP3 industry falls in its innovation and technology used and price position of the product.
As I described before, the complexness of its technology allowed Steve Jobs to sign deals with the key music product labels. The technology used by Apple, offered enough self-confidence to the music industry and forced them to hint contracts to market their content in a copy-protected form in iTunes.
Also, the technology as a primary principle of the company, allowed Apple to lauch unique products into the market: the iPod and iPhones. Eventhough similar products were already in the market, Apple was the only person able to incorporate all together in one device: Music, picture taking, video and design.
Least but not less, the purchase price position performed an important role. Althought iPods and iPhones were more costly than similar devices offered by the competence, the price tag on Apple located its products as "luxury" goods affordable for most of people (To show off is human mother nature).
However these 3 things of the strategy were really succesful for MP3 and mobile market segments, were very bad points in selling pcs.
The technological ease of the standard Personal computers versus the Mac complexity made consumers take a step when buying an Apple computer.
In the same manner, the purchase price position of Mac Computers is high, making their notebook computers nor worthy, in a very competitive and flexible market. Since it is explained in the event: ". Computer owners were hesitant to purchase a Macintosh because Apples high quality price and because of learning curve associated with understanding its proprietary operating system. . "
Finally, the restricitve contracts of MAC Operating-system made the marketing system fail: ". However, hardly any companies ever thought we would license the Apple pc Operating-system because many thought the licensing agreements were very good to restrictive"
Is Apples strategy in its computer business strong enough to remain competitive successfully against Dell and Horsepower?
I feel that Apple won't be able to rival against Dell and HP. Microsoft built almost monopoly using its operating-system and manufacturers of regular PCs are ferocious. Alltogether makes very difficult to improve people habits, and high prices for Apple personal computers make the situation even worst. But I think this isn't Apples strategy. WHEN I discussed earlier, I believe Apple want to go after something differenciation strategy were Mac pc will be identifiyed with designers and fashionable people.
My theory is reinforced by Steve Jobs talk during the MacWorld in Boston in 1997:
". Lastly, I want to just talk a little about Apple and the brand and what this means, I think, to numerous us. You understand, I think you always had to be a little different to buy an Apple computer. I think you had to think really diversely when you purchased a Mac. It was a completely different computer, functioned in a totally different way, used a totally different part of your brain. And I believe you still have to think differently to buy an Apple computer. And I think the people that do buy them do think in different ways and they are the creative spirits in this world. "
Apple will do well over Dell and HP on focusing on that market of particular customers because Apple offers a much more valuable computer that its rivals.
Does Apples strategy for its iPod business appear capable of allowing he company to remain on top of the digital music player industry over another 5 years?
I think so. Apple has reached with the iPod what Microsoft come to 20 years previously with house windows. almost a monopoly with the 72% of the digital music market share. But Apple should keep going with its invention strategy because the merchandise copying is absolutely strong in the forex market and it could happen so it products the become obsoletes fast.
What steps should Apple take to improve its corporate and business performance also to fortify its position in its most important markets?
As I mentioned in the first question, I feel that nowadays the largest hazard Apple is facing, is the uncertainty in the companys future without Steve Jobs. With Steves sickness many people have confidence in Apples "end".
As an organization, Apples main step now should be centered on spreading self confidence across its stakeholders. It is suggested these to clarify the path that the business will follow now without Steve and I'll fight strongly to launch new products or increase the current ones, to encourage that self-assurance. Also this will employ a positive effect in the CURRENCY MARKETS of the business.
Finally, I have pointed out that Apple is not so successful in international market segments or at least not very much as in United States, so I think that future proper steps should be driven into this way.