Fall and Rise of Apple Inc.: Different Factors Influencing the Company’s Growth
Autoria: Henrique Raboch, Lina Wang, Qiong Wu
ABSTRACT
While must studies about fast-growing companies aim at small and young firms that quickly
achieved high growth standards, this study focuses on a large multinational company which
achieved high-growth after almost running out of business. This paper analyses Apple’s
second success era by addressing a multi-theoretical strategic perspective, analyzing different
levels that it may have influence over the firm’s growth: the entrepreneur, the firm, the
business sector, and the macro-level environment. The purpose of this paper is to analyze how
each of the above mentioned factors has affected the firm’s performance on the last few years.
The methodology used consists on a single case study, with several secondary data collected
from different sources. Results show not only how each factor was important for the
company’s growth, but it also advances in explaining the dynamics of these factors’
interaction among themselves. As broader as the factors get, they demand adaptation ability,
which is why the entrepreneur, playing the central role, has the largest importance of all the
factors, by putting his skills on the line to actively exercise influence over the other factors.
The macro environment was also important by gathering the ideal conditions for business
developing. Implications suggest that the strategic choice of business segment changing was
the major responsible for the firm’s growth.
Keywords: fast-growing companies, entrepreneurship, growth strategy.
1 INTRODUCTION
The emergence of fast-growing new ventures is a topic that has drawn much attention of the
academic research, but little attention is given to already mature firms which are forced to
struggle against decreased turnover and failure. The need for companies of this kind to
reinvent themselves and a achieve a continuous growth it may be a harder task than for new
ventures, simply because sometimes it is easier to do something new, from the starting point,
than actually to change an already existing business, given the large amount of efforts
addressed to evaluate different marketing and production contexts that it need to be changed.
In this paper, the case of a renowned computer manufacturer which almost ran out of
business during the 90s is going to be discussed, addressing the question of how different
factors have influenced the firm’s growth retake. The company studied is going to be Apple
Inc., the company that was perhaps the major responsible for the personal computer
revolution in the 70s, but that lost a large market share for Microsoft with its famous
Windows software, which could be distributed in cheap PCs, while Apple focused on selling
an expensive and richly engineered software plus hardware bundle, something that it could
not be afforded by anyone.
At a first sight, the entrepreneur’s role seems determinant on the company success,
since the period of fall and rise process coincides the time that Steve Jobs, founder and current
CEO of the company, was fired in the 80s and came back in 1997. But a broader scope was
chosen to proceed this analysis, approaching the strategic perspective on the company’s
growth, as written by Anderson (2003) who studied not only the entrepreneur’s influence on
the company’s growth, but also factors at firm, sector and macro level.
The literature review about what has been written about these topics is presented on
chapter 2. Methodological issues are discussed on chapter 3. The empirical data is shown on
chapter 4. The results and discussion take place on chapter 5. Concluding remarks and
suggestions for future research are presented on chapter 6.
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2 LITERATURE REVIEW
When studying the growth pattern of three Swedish firms, Anderson (2003) developed a
multi-theoretical framework to study growth from different perspectives. While some
theorists argue which factor is more important to make firms grow, the author analyzed how
the entrepreneur, the firm, the sector and the macro environment may impact on a company’s
growth.
The same framework will be used in this project, in order to verify how these different
factors may have had an influence on Apple’s new growth circle. Studies from several authors
arguing about the effects of each of these factors are presented below.
2.1 ENTREPRENEUR
Many previous researches show that entrepreneurs have been more risk-taking, more
internally controlled, more dominant, and to possess higher levels of achievement orientation
than others. There is a close relationship between the entrepreneurs’ characteristics, growth
and performance of the small businesses.
Entrepreneurs’ characteristics are crucial over the different growth patterns of
different firms (Carland, Hoy, Boulton and Carland, 2008). Entrepreneur is usually an
innovative and ambitious person, who has his own idea and also the motivation to implement.
The research of Alberto, Gianluigi and Alessandro (2008) shows that SMEs entrepreneurs’
innovativeness and their basic personality traits as key psychological aspects of the human
capital existing within their organizations, can stimulate the adoption of innovations. And
Kimberly (2003) found that entrepreneurs are always the key roles in innovation and
management of the business and their characteristics have a great impact on the success of the
company. Innovation is regarded as a new combination, including not only product innovation
but also innovations on the market, such as international expansion in new markets
(Andersson, 2000). And for the Born Globals (Andersson and Wictor, 2003), which usually
refers to the small, young and rapid international growth firms, the entrepreneur’s attitude
towards marketing (Andersson, 2000) and the entrepreneurs’ experience and networks
(Andersson and Wictor, 2003) play an important role in firm’s growth and success. In
addition, entrepreneurs can choose whether to grow their firm or not, and this choice is an
important factor which should be incorporated in theories of growth (Kolvereid and Bullvag,
1996).
2.2 FIRM
The firm level refers to the strategy adopted by the company, comprehending aspects such as
product’s characteristics and market positioning. Aesthetics is a feature that is often
considered by costumers when buying a product. According to the social-culture perspective
of the SLEPT model (Doole and Lowe 2008), aesthetics is considered when a company intend
to introduce their product to different markets. This area covers the local culture’s perception
of things such as beauty, good taste and design and dictates what is acceptable or appealing to
the local taste. Featherstone (1991) says that life has become aestheticised and consumers
look for tactile and intuitive products that also make a personal statement, distinguishing
different lifestyles. Davczyk (2000) stated the importance of aesthetics of trade dress when
selling a product, and Hewer and Brownlie (2007) highlighted that aesthetics matters for
consumers buying a car. Welter (1989) considers product development not a science, but an
art instead.
In a time when consumer’s retention is a priority, given the development o marketing
devices to do it, firms have the challenge to acquire the consumer’s loyalty. Devarajan (2008)
describes the situation as followed: today, as environmental awareness is on the rise and,
further, the media reporting of any managerial misadventure is prompt and instantaneous,
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consumer reactions impinge far more swiftly on purchasing patterns. Blasberg et al (2008)
state by focusing not only on creating the right product for the right consumers, but also on
the right product experience, companies can greatly enhance consumers’ perceptions toward
brands. About the personnel, Mathews (1998) shows that more and more organizations
implement diversity initiatives, personnel and human resource managers play increasingly
significant roles nowadays. Barney (1991) pointed out resources are not only physical, but
also intangible, as to the resources-based view growth strategy, the resource should qualify
the traits as followed: valuable, rare, imperfectly imitable and substitutability. Personnel
belong to the company resource, and its significant impact cannot be neglected.
2.3 SECTOR
The sector comprehends the firm’s networks and its industry. A company’s growth may be
linked to the growth of the industrial segment in which it operates in. According to Davidsson
and Delmar (1998), a growing industry tends to lead firms to grow, such as the technologic
industries. Zahra (2008) considers that hi-tech firms are far more entrepreneurial and market
oriented than the low-tech firms, making both factors to have a larger influence over the
performance of high technology companies, meaning that firms develop capabilities when the
competitive environment makes them feel like needing it. As for the network approach, it
considers that cooperation among other players may give extra advantages for a company to
grow (Håkansson and Snehota, 1995). Álvarez, Marin and Fonfría (2008) think about
networks as very important to increase a firm’s competitiveness and innovation level, through
joint researches, market access and cost-sharing. Watson (2007) found a strong relationship
between networks and firm survival, and also with firm’s growth, but in a lesser extent. The
author also highlights that the network intensity is associated with the firm survival, as long as
the network range is associated to the firms’ growth.
2.4 MACRO ENVIRONMENT
The macro environment consists in every characteristic of the firm’s home market that it may
have influence over its competitiveness. Porter (1990) mentions that exploiting country’s
relative advantage implies in a differentiation that will make them have a competitive
advantage over their foreign competitors. The International Development Path Theory,
developed by Dunning and Narula (1996), explains that the development level of a country
will affect the competitiveness level of its companies, making them to enjoy a nice position
over the international market, specially comparing to companies from less developed
countries. Peng, Wang and Jiang (2008) believe that not only firm and industry factors
impacts on company competitiveness, but also the institutional scenario from the firm’s home
country. Institutional reform as a matter of a country’s firm competitiveness has also been
studied by Del Sol and Kogan (2007), when the authors state the early reforms of the Chilean
economy made the country’s firms to achieve success before companies from other Latin
American countries. Gabrielsson and Gabrielsson (2004) argue that firms coming from a
small home market are more likely to spread its activities among other countries, given the
quicker saturation of smaller markets.
3 METHODS
A qualitative method is approached in this study by making it a case study, that Yin (1994)
considers adequate to address ‘why’ and ‘how’ questions to study a contemporary
phenomenon inside the real life context. Ghauri (2004) understands that the strengths of a
case study relies on allowing longitudinal approach; on its contextuality ability, to help the
researchers to explore the environment; on the analysis depth, which allows theory building,
not only theory testing; and on its holism, permitting the investigation of a phenomenon from
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a variety of levels. Eisenhardt (1989) also defends the use of qualitative studies in areas where
already existing theories seems inadequate.
The company chosen to be subject of our case study is Apple Inc., due to several
factors, such as the fast recovery of a nearly bankrupted company to achieve a high growth
index, and the firm’s marketing competence of making its products desirable and to retain its
costumers preference, even when owning a small market share on its core business segment,
which is personal computer.
Empirical data was collected from several sources of secondary data, such as
company’s website, annual reports, journals, magazines, articles, and even some video and
audio content. All data collected were analyzed according to the different levels of influence
over the company’s growth, as the framework used by Andersson (2003): entrepreneur, firm,
sector and macro environment. Data from the whole company’s history is presented in order
to contextualize it, but the analysis is going to be focused specially on the second period of
business expansion, which is from 1998 onwards. By definition, qualitative research is most
suitable for analytical generalization as an analysis model (Pauwels and Matthyssens 2004),
which means that the outcomes of this research are going to be tested against the theory
surrounding the research topic (Yin, 1994).
4 EMPIRICAL DATA
The company’s headquarters is located in Cupertino, California, in the Silicon Valley area,
where it is settled since 1976, founded by Steve Jobs and Stephen Wozniak. Jobs was the
visionary one with the business feeling. Born in San Francisco in 1955, Jobs was adopted by a
couple when he was a child, went to college for only one semester, and then dropped out to
work with video games, and became more and more interested on personal computing. The
technology expert was Wozniak. Born in 1959, he also dropped out of college to work for
Hewlett-Packard, but he came back and got his degree in the 80s. Both of them have very
distinct personalities. Wozniak is the shy and introverted one who sits in front of the
computer, while Jobs is the one who likes to come in front of the cameras. Indeed, Jobs’
personality is influenced by factors like religion, he is Buddhist, and counter culture, he used
to have a hippie lifestyle before Apple. Also, Jobs likes to see himself as an artist, and usually
sees things beyond what they really are.
Both of them sold some personal belongings and started Apple. The company is a
pioneer in developing personal computers, while most people used to find absurd the idea of
regular people using computers back in the 70s. The first computer, Apple I was hand build
by Stephen Wozniak, but it was the Apple II, the first mass marketed personal computer, that
became highly successful due its easiness to use, featuring two floppy disk drivers, monitor,
integrated keyboard, sound, plastic case and expansion slots, which was an advance by that
time. The Apple II’s production scale was possible due to funds provided by Mike Markkula,
a former Intel employee.
In 1983 the Apple Lisa was launched, featuring a graphical interface instead of
command lines, but it did not succeed on sales due its high cost. In 1984, with the release of
the first Macintosh, introduced by a famous US$ 1,5 million commercial aired during the
Super Bowl and directed by the famous Hollywood director Ridley Scott, the product became
a hit by gathering graphic interface with the use of a mouse. Also, much of Apple’s growth
during the 80s is because of its leadership in the education sector, creating the Apple LOGO
software for schools to use it with Apple II.
Despite his persuasive and charismatic image, Jobs’ temper was bringing problems
inside the company, including the relationship deterioration due to power struggle with the
firm’s CEO by that time, John Scully, making the board of directors to ask for Jobs to resign
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in 1985. By then, his long-time friend and co-founder of the company, Stephen Wozniak, had
also step aside to work in other projects of his own and to teach high school students.
With Jobs out of the firm, Apple performed very well in the beginning, releasing
successful products like the PowerBook, the laptop which established the standard form and
ergonomic layout of this kind of computer as we see until nowadays. But some poor market
judgment by the company, which focused on failed products like digital cameras, portable
audio CD players, video consoles and TV appliances, made the company lose its market share
by the growing Microsoft, which offered a more affordable experience with Windows. As in
matter of fact, Apple actually sued Microsoft for copying the Windows’ graphical interface
from its operational systems, but the lawsuit was thrown out of court. In order to restructure
itself, Apple aligned with formerly rival IBM to develop a new product, which would use
IBM’s hardware and Apple’s software, to compete against Microsoft. Later on, Apple
changed IBM processors for the ones from Intel.
After quitting Apple, Jobs founded NeXT Computer, implementing the business
mentality which he was seeking on doing to Apple, providing highly innovative products,
incorporating new technologies, and strong orientation upon aesthetic perfection. Although it
was cost-prohibitive for many, the products created a group of loyal followers due to the
above mentioned features. Jobs also acquired from George Lucas, in 1986, the computer
animation studio Pixar, which he turned into a powerful movie production company, which
was bought by Disney in 2006. Jobs held the CEO role by then, and went to the Disney’s
board of directors after that.
In 1996, Apple purchased Steve Jobs’ firm, NeXT, to acquire its technology which
would ultimately lead to become the Mac Operational System. As a result of the acquisition,
Jobs got back to Apple. In 1997, Gil Amelio, the CEO by that time, was fired by the board of
directors after the company’s poor financial performance. Jobs then took the role of interim
CEO, beginning the company’s restructuring. Microsoft actually played an important role in
this process, buying US$ 150 million from Apple’s non-voting shares, and developing a
version of the Microsoft Office software version for the Mac Operational System.
The success first came if the new computer, now called iMac, which came with an
integrated monitor display and CPU, made with plastic fabric of different colors, without any
strings attached, which made a very charming product by the time, becoming a major hit.
Other products such as iBook and Power MacG4 followed the same route, and the AirPort
helped to popularizes wireless internet connection. The operational system Mac OS was
released, and a line of retail stores started to operate.
But the company’s most successful product is actually the iPod, a digital music player
first released in 2001, which sold more than 100 million units worldwide so far. The iTunes
store was introduced in 2003, offering cheap songs to download and complete integration
with the iPod, leading to become the market leader in online music services, having sold more
than 5 billion songs in five years.
By now, Apple is currently improving its already existing products, modernizing it,
like the release of MacBook Air, an ultra-thin laptop, and venturing on other markets
segments, such as mobile telephones, with the iPhone, and digital entertainment, with the
Apple TV. This new market orientation made the company change its name from Apple
Computer Inc. to simply Apple Inc., to not be restricted only to the computer segment, but for
electronics as whole.
The company currently has more than 32 thousand employees worldwide, had a
turnover about US$ 32 million in the fiscal year ending in September 2008, and it is known
for its value added products aligned with simplicity and aesthetic appeal, adopting distinctive
advertising campaigns, which over the years created a legion of devoted fans. Its products
won the prizes of best notebook and best design in 1999. Two surveys which were taken in
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2006 show that Apple have a pretty solid image. A study by Satmetrix Systems ranked Apple
as the computer company with the highest customer loyalty. Despite being known for its
production values, Apple is also a company with remarkable marketing expertise.
Graphic 1- Apple's Turnover - 1995-2008
35000
30000
25000
20000
15000
10000
5000
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Company's Annual Report
The Graphic 1 shows how the company’s net sales increased from the mid 90s until
currently. The average growth between 1998 and 2008, the time that Jobs has been hold de
CEO position, is about 18% a year. After 2001, when the iPod was first launched, continuous
growth was achieved, without any report of sales decrease on later years. But Apple’s
performance is really amazing after 2003, when the iTunes store was released, which has
made the firm’s turnover grows almost 40% a year since then.
5 ANALYSIS
Each of the four different levels that may have influenced Apple’s growth proposed on the
theoretical review is going to be discussed here, regarding the empirical data previously
mentioned. Answers for the role of the entrepreneur, the firm, the industrial sector and the
macro environment on making the company grow are going to be addressed.
5.1 ENTREPRENEUR
New ideas and innovations are often created by new and small enterprises which grow rapidly
and sometimes even create new industries. Many of the best known and most successful
companies were founded and developed upon individual innovations. Apple is now one of the
most successful and valuable companies in the world. This status was achieved mostly due to
the founders vision to offer a new kind of a product, the personal computer, which ended up
leading to the creation of one of the nowadays most profitable business segment. Besides that,
Apple also drove the evolution of the product, by modernizing and dictating the industry’s
tendencies, such as graphical interface, mouse, integrated components, the shape of a laptop,
also the thin laptop, and so on.
Although not all of these are Steve Jobs’ idea, he has his credits for bringing all of it to
the market. It is notable that the greatest Apple’s projects were released while he was in the
company. After he left, despite the success the company achieved in the first few years,
subsequent projects did not succeeded, decreasing the company’s performance. When he
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came back, some other evolutionary products, such as the iMac, the iPod and the iTunes, were
conceived, leading the company back to success again. Jobs personality over some of Apple’s
products can be clearly observed, just like mentioned by Kimberly (2003) and Gianluigi and
Alessandro (2008). The simplistic and aesthetical appeal from the company’s products is
related to the entrepreneur artistic sense. For instance, when the first Macintosh was released,
people started the computer and did not see a green cursor and English instruction, but a
smiling face, a simple thing, which made the machine to become more human, due to the use
of the graphical interface. Such factors make Apple’s products to be so desirable among
consumers, turning them into a fashion symptom and avant-garde.
Now Steve Jobs is one of the world’s most powerful businessmen, due to his
outstanding talent as a manager and to lead a company to innovativeness. He gathers some of
what Alberto, Gianluigi and Alessandro (2008) consider as some typical entrepreneurs’
characteristics, such as innovativeness, persistency, and tolerance for financial insecurity,
considering that he sold his car to start Apple. His marketing skills has also been remarkable,
especially in the way that Apple’s brand has been built, making the firm’s products more
desirable than the competitor’s. This ability, according to Andersson (2000), it also positively
affects the company’s growth.
5.2 FIRM
In 1997, Jobs came back to Apple Inc. At that time, the topic that it most concerned Jobs and
Apple was that the company is isolated, although Apple’s products stand for a high standard,
but relevant software and hardware were not adequate for Apple’s consumers. The strategic
move to bring new consumers to use Apple’s products consisted on aligning with rival
Microsoft. Despite saving Apple’s finances, Microsoft also develops some of its software for
Mac computers, such as the Office and the MSN, which smoothed the process of changing a
Windows PC for a Mac. Also when Apple started to use Intel processors to run its computers,
it turned possible to install the Windows operational system in it. So consumers don’t need to
hesitate about a Mac’s compatibility with some popular software. In other hand, due to the
fact that Apple also started producing software for Windows, like the iTunes, which every
iPod owner should install in its computer, the company made it possible for some non-Mac
users to start using its software and getting familiar with it.
At the beginning, Apple aimed to produce personal computers. Nowadays, its segment
is much broader. The iPod is a portable media player designed and marketed by Apple. The
iTunes, a payable music download system was introduced later, which send straight to
retirement products like the Sony Walkman. At the January of 2007, Apple launched the
iPhone, its mobile phone. These all illustrate the trend of diversification.
A firm’s characteristic is that although its products are high priced, Apple has always
possessed a large amount of consumers’ loyalty, which can be argued that this occur mainly
because of two reasons: the aesthetic appeal of product and its smooth performance. Like
mentioned above, the firm’s products are an extension of the entrepreneur’s personality. In the
case, Steve Jobs is very careful about the way his products looks, and this awareness is one
huge factor that it may have made Apple’s products desirable. Before the iBook, for instance,
the shell of the PC were all black. When Apple Inc introduced a blue-orange notebook which
looks like a toy, in 1997, it hit consumer’s taste immediately. Although Jobs may not be the
main product designer, a role that he was in charge of until the mid-80s, much of his concepts
are translated to it. To guarantee that a product’s appearance reaches his expectations, Jobs is
meticulous about hiring personnel and puts a lot of efforts on it.
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5.3 SECTOR
Apple was born as a pioneer firm in its segment, which is personal computers. Since then, an
innovative behavior towards products development has been adopted, being the firm
responsible for many computer’s features that would have become a standard for this type of
product. But perhaps a lack of marketing sense may have made the company to perform very
poorly during the 90s, when the consumers just didn’t care about buying their expensive
products, while they could afford a much cheaper computer running Windows. Despite all the
allegation that Microsoft copied Apple’s product and that the Windows software don’t run as
smoothly as a Mac, people did not have enough reasons to pay more expansive to have a
Apple product. In accordance to Zahra (2008), market orientation is a very important topic for
a hi-tech firm to remain competitive and innovative, and Apple missed that market
orientation. Although they were still innovating and developing high quality products, they
failed to bring to the market products that the market really wanted. When Jobs came back in
1997, he put the firm on the right market track. Even though the company continued
producing high priced products, Apple’s computers got back the status of desirable products,
something that it had been lost along the way, much due to the product’s high and reliable
performance aligned with simplicity and aesthetical appeal.
But the major triumph of Apple’s growth is not exploring its core business. Although
the company’s computers are performing better on sales, it still has a much minor market
share than Microsoft. The firm’s greatest move for growing at high level is foreseeing the
opportunity at the digital music sector. While digital music was a matter of concern for the
major labels in the music segment, Apple entered in this segment, different from personal
computers, and first developed a practical digital music player, the iPod, while still must
people were using portable CD players, and then the firm released its own store to sell music,
where people could pay cheap and download songs in a legal way. Extending the iPod
concept to mobile phones has also been a successful action so far. The success in digital
music has made the firm look up for digital entertainment after releasing Apple TV, but the
results are yet to be seen.
Networks also were important for the company to get back on growth’s track. As
mentioned by Watson (2007), networks intensity are very important for a firm to survive, and
although Apple and Microsoft are competitors, the rival firm injected money when buying
US$ 150 million stocks during Apple’s hard time, and sell it back again a few months later for
the same price. The network intensity is crucial here because the major competitor, who is
someone you’ll never expect to help, took a critical action for Apple to survive through its
financial problems. As for other partnerships, other rival from the old times, IBM, cooperated
with Apple to develop a hardware that would be used by their new desktop computer, iMac,
and the company would later opt to use Intel’s processor. According to (Håkansson and
Snehota, 1995) and Álvarez, Marin and Fonfría (2008), partnerships are important to improve
a firm’s competitiveness and innovation, like it happened with Apple. Cooperation with the
four major record labels, EMI, Universal, Warner and Sony, were also important for the
company to make the iPod and the iTunes popular.
Apple’s strategy of broadening its business acting and entering other sectors besides
personal computer was of great value for the company’s success. Products like the iPod and
iPhone made many people who were not their costumers to start using Apple’s products, and
the need to use iTunes with it made a company’s software to run in many Windows
computers. Not only this strategy brought revenue to the firm, but also the fact of making
people being in touch with one of the company’s products and trying them on probably draw
their attention to also consider buying an Apple computer. Business networks were important
both for the company survival and to improve its competitiveness.
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5.4 MACRO ENVIRONMENT
The United States, country from which Apple comes from, is the richest single market in the
world, which makes high technology products very affordable for the very consumerist NorthAmerican society. It is one country with easy access to technology and with large amount of
investments on R&D. Factors that positively affects the emergence of computing companies,
with demand support and qualified expertise. As mentioned by Peng, Wang and Jiang (2008)
and Del Sol and Kogan (2007), the institutional scenario of the home country may improve its
companies competitiveness. Nevertheless, many hardware and software companies are from
the United States, because it is a country that it gathers favorable conditions for computing
firms’ development. According to Porter’s (1990) view, the North-American computing
industry has used the country’s technological strengths to develop a reference of high-quality
and desirable products, since the majority of the most important companies from the segment
are from the United States. This position would not be achieved without the development of
the internal market, like argued by Dunning and Narula (1996).
In the Apple’s case, the external environment may have an extra influence, due to the
fact that the company headquarters is situated on the Silicon Valley, a major high-tech hub in
California, home to some of the most important companies in the computing industry, which
holds a position of reference on product development and innovativeness. Both founders of
the company, Steve Jobs and Stephen Wozniak grew up there, and the technology-oriented
mentality of the place has probably influenced somehow their directions. Being placed there,
near to some rivals and partners, as well as to qualified labor, has maintained Apple in the
center from where much of the novelty inside its segment comes from.
It should also be considered that the United States is home of major record labels, has
the largest music market in the world, and the majority of worldwide known artists are
originated from country, which makes it the perfect place to launch a innovative product like
the iPod and the iTunes. Although both of them are actually products sold in the whole world,
it makes perfect sense that the origin of the products is from the United States, because the
country offered the proper supply and demand conditions for the digital music market to
grow.
5.5 THE DYNAMICS BETWEEN THE DIFFERENT FACTORS
This research’s results can generate a discussion about how the different factors from the
theoretical framework interact among themselves. So far, it has been seen that each of these
factors had its importance over Apple’s growth, but what it really needs to be made it clear is
the extent of each factor’s importance and how one affects another. The entrepreneur portrays
the role of an individual (which can be more than one person) and, because of it, represents
the narrowest factor. The other factors symbolize a growing coverage, the firm, the sector,
and macro environment, which is the broader level, covering all the rest of them. Having the
broader coverage, the macro environment is less likely to be influenced by the individual (the
entrepreneur), but it can proportionate the ideal conditions for the entrepreneur to start his
firm and do business, and for a business sector to develop. Being from the United States,
Apple faced a propitious market, regarding consumers and technological expertise
availability, to unfold and implement its business, something that probably it would not be
possible in a less-developed market. Although the firm’s products are sold worldwide, not
only to developed countries, Apple’s business idea could not be put into practice in a market
which is neither the United States nor a country with similar characteristics.
On the other hand, the entrepreneur can possibly be the factor which has the greatest
importance of all, due to his ability on aligning its business idea with other broader factors,
such as the sector, and the macro environment especially. By understanding the macro
environment, the entrepreneur identifies needs and profit opportunities. Correctly placing its
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firm on the market, if not an entrepreneur’s duty, is at least a manager responsibility. In
Apple’s case, Jobs’ influence can be seen on its products, and his marketing skills made the
firm a pioneer in segments like personal computers and digital music. Jobs not only has a
large influence over its firm strategy, product development and market positioning, but is also
a player of great importance in developing some business segments by foreseeing tendencies.
If it were not by Apple, personal computing and digital music would have different situations
than they do currently, because the firm is the one which probably has most affected both
segments.
What can be stated is that the two extremes of the framework, both the entrepreneur
and the macro environment, are most important factor due to its capability to influence the
other factors. The macro environment needs to propitiate the right conditions for a business
sector to emerge, and the entrepreneur needs the ability to positioning its venture on the
adequate scenario regarding the sector and the macro-environment. The difference is that the
macro environment exercise its influence by a passive behavior, given that things simply
happens inside the environment, as long as the entrepreneur needs to be active to make it all
work out for its business grow. With the newly emergence of the so called born global firms,
the macro environment may have had its importance diminished, since now firms already start
with activities in a global level. But in the case of Apple, its home market, the United States,
has offered the necessary conditions for the firm to achieve its nowadays standard. And much
of the actual performance is due to the entrepreneur’s choice of targeting the firm’s strategy to
new business segments other than personal computing.
5 CONCLUSION
This paper purpose was to analyze the growth of a large and well known company, Apple
Inc., which was suffering of poor financial performance and loss of market share,
investigating the influence of four different levels of factors influencing its growth:
entrepreneur, firm, sector and macro environment. Although each factor had its degree of
influence, it can be argued that the entrepreneur exercised major importance, due to its acting
towards the firm’s strategy and its business segment. Apple’s success rely basically on selling
a different experience for its computers users than they would have buying a competitor’s PC,
and mostly on entering new segments, mostly digital music, other than computer, its core
business. Networks were also important, especially from the company’s main opponent,
Microsoft, which played a vital role for Apple’s recovery. But all of these just happened after
Steve Jobs returned to Apple, providing the company a sense of market orientation that
perhaps were missing while he was away. It should be also highlighted that much of his
personal beliefs and way of seeing things are presented on the company’s products. The
macro environment has provided adequate opportunities for the firm to grow since its
beginning until nowadays.
This study provides theoretical implications regarding how different factors may affect
a company’s growth, and the main practical implications rely on understanding how
important it is for all of these factors to be favorable for the company, since the negative
scenario for one of the factors may have negative impact over the rest of them.
The limitation of this study is to not provide any primary data. The analysis has only
data that has already been published and it may be known by anyone, but gathering and
structuring in a formal a way provides an advancement to better understand Apple’s growth.
Suggestions for future research it would be to test the theoretical framework with other cases
in order to better comprehend the dynamic interaction among the different influence’s levels.
10
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