Session #4
Strategic
Management
Dr. Mark H. Mortensen
Sessions 001 and 270
Thursdays 6:00PM to 9:00PM
Fall 2008
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You Will be Prepared for Today
Iff You:
Have studied for the Quiz on Chapters 1-3
 Have read Chapter 12
 Have re-read the Apple Case and thought
about the two questions (extra! Prepared
some thoughts on SWOT, Major Issues,
mapped out some possibilities, …)
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Today
6:00 Begin
Errata from last class
Important points from last week
Assignment #1 papers back
Quiz on Chapters 1-3 – 30 minutes
Discussion on Apple Case Study
7:30 BREAK
Lecture/Discussion on Chapter 4
Introduce Assignment #2 (due next week)
8:50 End
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Errata from Last Week
"There is nothing so useless as doing
efficiently that which should not be done at
all." -- Peter F. Drucker
Drucker, revered as the father of modern
management in his numerous books and articles
stressing innovation, entrepreneurship and
strategies for dealing with a changing world, died
Friday [11 November 2005]. He was 95.
Drucker's management books included: The
Effective Executive (1966); Management: Tasks,
Responsibilities, Practices (1974); and Managing
in a Time of Great Change (1995).
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Key Points from Last Week - Ethics
To be a good manager, and a good human
being, you need to find a moral and ethical
compass to guide your decisions.
 “Everyone else is doing it” didn’t work with
your parents – and won’t work in life.
 “I was only following orders” didn’t work at
Nuremberg, and does not work in US
courtrooms.
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Key Points from Last Week - Apple
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Various strategies, under a list of CEOs, have
been tried,
Current product strategy is closer to their “roots”
of differentiated, Apple-controlled products with
great “cool factor” from excellent product easeof-use, industrial design, and deliberate
customer experience planning
Retail strategy is combination of direct web
sales, Apple-owned stores, and retail distributors
They are not just computers anymore
(iPod, iTunes, Apple TV, iPhone),
hence, “Apple Computer”  “Apple”
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Assignment #1 Returned
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Name, Date, page numbers, please.
Summary up front is good
Headings are good
Comparison tables are good
Combination of hard data, observations, opinions (yours
and others) is good
An analysis of the above, describing “so what,”
especially in the context of theory, is good.
Everyone did quite well – and “got it.” Some articulated it
better. Some gave a deeper analysis. Some organized it
well. Some wrote “singing prose.”
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Quiz Chapters 1-3
30
minutes
Individual effort
Closed book
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Apple Case Study
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Questions for Apple Case Study
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Has Steve Jobs finally solved Apple’s
long-standing problems
With respect to the Macintosh business?
b. With respect to its broader strategic position?
a.
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Going forward, what should Steve Jobs
do?
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Doing a Case Study -1
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Read the case thoroughly. Read the case
thoroughly. Read the case thoroughly.
 The
first time to get an overview of the industry, the
company, the people and the situation.
 Read the case again more slowly, making notes as
you go.
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Define the central issue. Many cases will involve
several issues or problems.
 Identify
the most important problems and separate
them from the more trivial issues
 After identifying what appears to be a major
underlying issue, examine the related problems.
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Apple SWOT(1): PC Business
Strengths
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Weaknesses
Fanatically loyal customers who pay for
yearly OS updates
Domination of niche markets
Industrial design expertise - “Cool factor”
Apple-owned software applications
FLASH technology procurement
agreements
Mobile Me & Apple Care
New Intel architecture
Hub for Apple iPod, iPhone, etc.
Opportunities
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Higher prices
Low market share of the PC business
Low penetration of business computing
High cost of designing, manufacturing,
and supporting proprietary computer
architecture and OS
Many fewer software and peripheral
developers provide products for
Macintosh than for PCs mean lower value
for the “solution”
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Threats
Transition from
desktop to laptop
Move to solid state disk
technology
Cloud computing
SaaS
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Price decline – OLPC
Freeware OSs (LINUX)
Microsoft juggernaut
Jobs rumored sickness
Macintosh: MacBook (Air, Pro), Mac Mini, iMac, Mac Pro xServe, Airport, Time Capsule, Mobile ME, Apple Care.
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Apple SWOT(2):
Consumer Electronics Business
Strengths
Weaknesses
FLASH technology procurement
agreements
Integration with Macintosh, but works also
with Wintel
Device/iTunes integration
Mobile ME
Excellent user experience
Industrial design – “cool factor”
Agreements with record labels
Open computing environment
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Opportunities
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Higher prices
Few video agreements with owners
DRM hassles
iPhone is more an entertainment
appliance than a SmartPhone for
business
Dependent upon constant product
innovation to succeed, not
structural attributes
Threats
Video market explosion
Increasing complexity –
features and maintenance
Proliferation of important files
(image, video, audio) by
consumers
SaaS models and acceptability
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Myriad competitors (including
Microsoft) innovating as fast as
they can
Open source software (LINUX,
Android) coming out
Video DRM complexity
Jobs rumored sickness
iPod, iPhone, Apple TV, Apple Care, Mobile Me
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Doing a Case Study - 2
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Define the firm’s goals (only if applicable)
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Identify the constraints to the problem (only if applicable)
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Inconsistencies between a firm’s goals and its performance may
further highlight the problems discovered in step 2
Identifying the firm’s goals will provide a guide for the remaining
analysis.
The constraints may limit the solutions available to the firm
Typical constraints include limited finances, lack of additional
production capacity, personnel limitations, strong competitors,
relationships with suppliers and customers, and so on.
Constraints have to be considered when suggesting a solution.
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Apple’s Goals
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Observation: When you go to the www.apple.com web site, you get
information about their products. You have to search – hard – for
corporate information!
Apple's mission statement
Apple ignited the personal computer revolution in the 1970s with the
Apple II and reinvented the personal computer in the 1980s with the
Macintosh. Today, Apple continues to lead the industry in innovation
with its award-winning computers, OS X operating system and iLife
and professional applications. Apple is also spearheading the digital
media revolution with its iPod portable music and video players and
iTunes online store, and has entered the mobile phone market with
its revolutionary iPhone. FAQs at http://www.apple.com/investor/
Product, Product, Product.
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Apple’s Constraints
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Microsoft Office is the entrenched standard
application, although cheap competitors are
nipping at its heels, as well as OpenDocs-based
free software
The Wintel hardware architecture is well
entrenched – getting others to build hardware to
a new open standard to run OS-X would be very
difficult
Features to support large business use by IT
shops would be very expensive, and timeconsuming, to implement for Apple.
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Doing a Case Study - 3
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Identify all the relevant alternatives
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Select the best alternative
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The list should include all the relevant alternatives that could
solve the problem(s) that were identified
Use your creativity in coming up with alternative solutions
Even when solutions are suggested in the case, you may be
able to suggest better solutions
Evaluate each alternative in light of the available information
Resist the temptation to jump to this step early in the analysis
You will also need to explain the logic you used to choose one
alternative and reject the others.
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Alternatives – PC Business
Get out of the hardware business, keep the software
business, licensing the hardware to others
Keep to the niche with the proprietary software,
manage to profitability and expand tactically
1.
2.
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Attempt to Change the Game
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with the PC as the hub of the home entertainment system
as laptops move to silicon storage
as hardware running Windows
expand iTunes into application downloads for PC users
Further bundling software and hardware support, offering a
“total package” for computing, building on the Apple Care
program – playing to the people tired of complexity and hassle
Build on the Mobile Me offering to offer expanded backup and
recovery, SaaS, and cloud computing capability for heavy
graphics users. Thus, MACINTOSH/Mobile Me > iPOD/iTunes
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Alternatives –
Consumer Electronics Business
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Continue with the current consumer-focused strategy,
constantly innovating new products (where does Apple
TV fit?)
Expand into video distribution with Apple TV and iTunes,
building the catalog as done with iTunes
Expand into gaming segment with Apple-produced and
third party games, built on an Apple TV base and
incorporating MMPGs via cloud computing infrastructure
Expand into the business realm with:
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Corporate offerings based on iTunes and Mobile Me technology
as a platform
SaaS with major players such as SAP, Oracle, and
Salesforce.com
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Doing a Case Study - 4
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Develop an implementation plan
 Plan
for effective implementation of your
decision. Lack of an implementation plan,
even for a very good decisions can lead to
disaster for a firm and for you
 Don’t overlook this step. It is important as a
future manager to be able to explain how to
implement the decision.
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Break – 15 minutes, please
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Chapter 4: Environmental Scanning
and Industry Analysis
Environmental
Variables
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Reminder for Next Week
Read Chapter 4
 Do Assignment #2 (Dunkin’ Donuts) either
by yourself, or with your group.
Due by start of class next week
Three people/groups can present – please
volunteer – each person needs to do one
during the term.
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