Mackenzie Wolter Case Study 4: Apple, Inc. 7/13/12 You cannot speak about Apple without associating Steve Jobs right with it. He was one of the most visionary and charismatic men of the 21st century and has been both applauded and criticized for his leadership tactics. Ever the perfectionist, Jobs brought Apple, Inc. back into the limelight in the 1990s after returning to the company he had cofounded 22 years earlier. He strategically initiated Apple’s rise to become the market-­‐
leading technological company in the industry and one of the most profitable, and recognized, organizations in the world. The SWOT analysis and Porter’s 5 Forces Model below detail the company and the industry in which it plays in more detail. SWOT Strengths Weaknesses • Design – easy to use, almost intuitive; • Very proprietary & authoritative – sleek, not clunky won’t open operating system to outsiders to develop complementary • Retail store hardware • “Upscale,” high-­‐quality service •
Not shareholder friendly – has • Product Development – iPod, iTunes, refused to pay dividend despite huge iPhone cash on hand • Great reputation – brand name •
Steve Jobs -­‐ controlling • Steve Jobs – visionary & charismatic Opportunities Threats • Loyal customer base • Sustain its growth & success • Use reputation to its advantage • Design overtaking practicality or usefulness of products • Move into other computer/media products not served well & set the • Jobs is now gone – can they do it standard without him in the long-­‐term? • Apple TV • Big ideas – easy to imitate, i.e. majority of phones have touchscreen interface now • High-­‐priced products • Google moving into Apple’s smartphone market by giving away its operating system & announcing it will be moving into TV space. Porter’s 5 Forces Model Power of Suppliers -­‐ Moderate •
Key components for hardware manufacturing from single or limited sources, but many components are available from multiple sources • Apple has entered into many long-­‐term agreements that lock prices Rivalry Among Existing Firms – High Threat of New Entrants -­‐ Moderate •
The software area has a high threat, but hardware is much more difficult to enter the already competitive market without necessary capital and the economies of scale. •
•
•
Must continually introduce new products & technologies to stimulate consumer demand Microsoft’s operating system had majority of market share & Apple needed to inspire consumers to switch Key for Apple growing sales is market share growth Power of Buyers – High •
All the success of Apple comes from the consumer & their decision to buy those products, so if demand drops, they must lower prices or bring out new products to increase demand, which could hurt their margins Threat of Substitutes – High • Windows & PC • Switching costs are not very high • All of Apple’s products have substitutes vying for Apple’s customers Though the case study doesn’t speak of it, as it was written in 2008, Steve Jobs has since passed away, leaving the powerhouse company without its prominent leader. Many feared that Apple would suffer immensely without the vision and intelligence of Jobs. However, Apple’s stock since Jobs’ death has skyrocketed, and the company’s value has even grown so much that in March of 2012, Apple was actually worth more than the GDP of Poland, Belgium, Sweden, Saudi Arabia, and Taiwan. Additionally, Apple sources say that Jobs left at least four years worth of products in order to safeguard the company’s future. Even so, I believe one of the most important factors for Apple’s continued success will be continuous investment in R&D in order to remain the technology leader and continue to bring out innovative products, setting the standard for the industry. Though Jobs left the organization plenty to work with, many customers are curious if they can sustain it once those products have been released. Secondly, it is vital to protect their brand name. They must do this by instilling Jobs’ perfectionist attitude and mantra when it comes to Apple products so that the Apple name will continually be associated with top-­‐quality, aesthetically-­‐pleasing products that consumers love. Lastly, it is important to develop the executive management team in the ways the Jobs excelled at. The new leadership has a strong understanding of the company and of where Jobs wanted to go. Tim Cook, CEO, is a good candidate to run the company now that it has become the market leader, whereas when Apple was struggling to stay afloat, Jobs’ visionary strengths were necessary to bring the company back to profitability. Cook is well equipped to maintain the success that Apple has experienced, but it will be vital to develop his inspirational attributes, as Jobs left-­‐
behind ideas will not last forever. The employees and customers must be assured that Jobs vision and perfectionist ideals will live on in every product that comes out of Apple, no matter who is leading the charge.