Global Policy Toward Global Sustainability, Essay Example

Executive Summary

A complete case study of the strategic management decisions at AppleComputer, Inc. will be performed in this report.  The perspectives ofWheelenand  Hunger (2012), Yoffie (2005), Yoffie and Wang (2002) will be researched in this case study with regards to the past, current and future production of strategic management at Apple Computer,  Inc. This case study will examine the performance of strategic management at Apple Computer, Inc. in comparison to its competitors. The frontal assault which had been conducted by Apple Computers, Inc. with regards to IBM in their presentation of the Apple II and Apple III computers will be assessed. The analysis of the future strategic management of Apple Computer, Inc. will be recommended.  The past and present strategic management of Apple Computer, Inc. will be explored from the perspective of an external and an internal study.Preventative strategic approacheswill be discussed(Wheelen et al., 2012, p. 193- 195). The primary lessons which have been learned from the strategic management successes which have been experienced by Apple Computer, Inc. will be defined.  The future challenges which Apple Computer, Inc. is addressing will be evaluated.  The present strategic management challenges will be examined.  Alternative options for strategic management will be introduced.  The standards for the development of the strategic management decisions with regards to Apple Computer, Inc.’s future challenges will be proposed. Recommendations for strategic future action by the management of Apple Computer, Inc. will be made. An implementation design for strategic management at Apple Computer, Inc. will be detailed in this case study. The corporate strategy formulation from Chapter six and seven of the Wheelen et al. (2012) textbook will be delineated.

Analysis of Past Performance

Apple I

Apple Computer, Inc. was formed on April 1^st, 1976 by Steve Jobs and Steve Wozniak. This had been the initial strategic management decisionwhich had been made by the management at Apple Computer, Inc.  As the partners had been working from a garage which was located in Los Altos, CA, they constructed a circuit board which was designated the Apple I. Jobs and Wozniak decided to expand their partnership to include A.C. “Mike” Markula Jr.  Markula was a millionaire who had made his fortune with Intel.  This strategic decision enabled Apple Computer, Inc. to attract venture capital(Yoffie & Wang, 2002).

Apple II and Apple III

In 1978, the Apple II was presented.  The qualities of the Apple II computer were its ease of use and the color graphics.  This was a computer which could be used as it was configured from the factory.  The introduction of the Apple II computer caused the Apple III to attain $1 billion in sales with a period of three years.  This had been a frontal assault which had been conducted by Apple Computer, Inc. When the competitor IBM, realized that this had been a frontal assault on their market, IBM responded by producing a competitive product in 1981. The IBM response had been a computer which used an operating system which combined Microsoft and Intel elements.  As a result,Apple Computers, Inc. lost a percentage of its market share in 1982(Wheelen et al., 2012, p. 193; Yoffie & Wang, 2002).

Lisa Personal Computer

Apple Computers, Inc.developed the Lisa personal computer as a response to the prototype which had been introduced by IBM, Microsoft and Intel. The Lisa computer used a mouse and a system which applied windows which could be viewed at the same time. TheLisa was too expensive for many of the consumers when it was introduced at $10,000. The presentation of the Lisa computer had been a defensive tactic which was intended to perform as an entry barrier in order to deter their competitors’ logical approaches of attack. Instead of taking a guerilla warfare approach, the management at Apple Computer, Inc. elected to take a head on approach by promoting the Lisa computer. This strategic management decision left Apple Computers, Inc. in a weakened market position.  Consequently, Jobs had been replaced by John Sculley as CEO of Apple Computers, Inc.(Wheelen et al., 2012, p. 194; Yoffie & Wang, 2002).

MAC Operating System

Sculley used the technical capabilities which had been attained by Apple Computers, Inc. by developing the Macintosh (MAC) computers in order to sell Apple Computers, Inc. to the commercial users.  Apple’s computers had superior software which included Adobe, and Excel. These qualities enabled John Sculley to transform Apple Computer, Inc. into a multi- billion dollar company by the beginning of the 1990s. During this time Apple Computers, Inc. held a larger personal computer market share than any of its competitors. The EPS (earnings per share) increased to $4.33, gross sales increased to $7 billion and net revenues were $540 million (Wheelen et al., 2012, p. 7 – 7; Yoffie & Wang, 2002).

Although many of the Apple computer users loved their Macintosh computers, John Sculley knew that the key to maintaining a competitive advantage was through innovation.  This caused Apple Computers, Inc.to maintain a competitive advantage.   Sculley applied this competitive advantage in order to form a strategic alliance withIBMin 1991.  This form of strategic alliance between IBM and Apple Computers, Inc. diminished the potential future profits of Intel.  This strategic alliance enabled Apple Computers, Inc. to develop an operating system which functioned independently from Intel(Wheelen et al., 2012, p. 197; Yoffie & Wang, 2002).

Michael Spindler and the Power Mac

Sculley was promoted to Chairman of Apple Computers, Inc.  Michael Spindler was promoted to the position of CEO of Apple Computers, Inc. in the middle of 1993.  Michael Spindler was appointed to the position of CEO at Apple Computer, Inc.  Spindlier was the CEO who implemented the Power Mac into the market.   At the time that the Power Mac had been released, the prices of the Macintosh computers were still $1,000 more than the competitors.  Spindler decided to lower the price of thePower Mac computers and Apple Computer, Inc. market share increased. Lowering the prices in a negative economic environment caused Apple Computers, Inc. to experience financial tension. Spindler made the decision of reducing AppleComputer, Inc. research and development budget to 6%. The period which extended from 1993 to 1996 witnessed Apple Computers, Inc. losing its market share to its competitors (Wheelen et al., 2012, p. 24- 11; Yoffie & Wang, 2002).

Gilbert Amelio and Price Differentiation Strategy

In addition, Spindler reduced the Apple workforce by 16% or 2500 employees and decreased the R& D development period from twenty four months to nine months.  Despite the actions toward cutting costs, Apple Computer, Inc.continued to show decline. Apple Computers, Inc. documented a decrease in equity value which totaled $69 million. Consequently, Gilbert Amelio replaced Spindler as the CEO of Apple Computer, Inc. Amelio’s goal was to guarantee that Apple Computers, Inc.stayed with the strategy of cost differentiation. Amelio believed that the Macintosh personal computers could be sold at a higher price than the personal computers which had been based on Intel processors.  Amelio perceived that the higher prices could be compensated by the service features and specialized Apple Computer, Inc. products (Wheelen et al., 2012, p. 208). In addition to practicing this growth strategy as Apple Computer, Inc. CEO, Amelio perceived that it would be effective strategy for Apple Computer, Inc. to buyNEXT Software and decided that Steve Jobs would be hired as a consultant(Yoffie & Wang, 2002).

Steve Jobs’ Returnand G3 Power Macs

Amelio set out to add other changes.  In 1996, Amelio fired 2,800 employees and announced that in the following year, 4,100 employees would be fired.  These retrenchment strategies did not help and Apple Computers, Inc. showed a $1.6 billion loss on its books (Wheelen et al., 2012, p. 207).  Steve Jobs was placed back in control of Apple Computers,Inc.  Steve Jobs knew that in order for Apple Computers, Inc. succeed, it would have to adapt to thechanging business environment (Yoffie, 2005).

A strategic alliance was formed with Microsoft in order to produce new products which included the Office 98 suite which could also be used on the Macintosh personal computers.  Jobs stopped the practice of cloning the Macintosh technology which had been seen as the reason that the Macintosh market dropped 11%. Jobs perceived that an effective growth strategy would be to amplify Apple Computer, Inc. activitiesin a full integration strategy (Wheelen, 2012, p. 209). Jobs bought Power Computing for $110 million in order to reduce the Macintosh clones which had been produced.  Later in 1997, Apple presented the G3 Power Macs which used the Power PC chip. The production of the Power PC chip was demonstrated as vertical growth.The G3 Power Maclaptop was successful in the market.  Apple Computers, Inc. introduced the G4Power Mac laptop, which was too expensive for the target market (Wheelen et al., 2012, p. 209; Yoffie, 2005).

The new Apple strategy had been to maintain their customer base which was composed of twenty five million consumers.  In addition,Apple Computer, Inc. directed its attention to the new users.  The third group of consumers which Apple Computers, Inc. directed its marketing efforts were the people who were taught to use a computer with a Mac and were switched into accepting a PC computer as professional s in the workplace.  This assessment of the Apple Computer, Inc. customer base was an effective scoring card which had been applied for keeping score with Apple Computers,Inc. stakeholders (Wheelen, 2012, p. 337). The competitive advantage which had been held by Apple and its rival Microsoft is that they manufactured the computers’ operating system.  Jobs equated being the proprietor of the MACoperating system to the “capacity of printing money” (Yoffe & Wang, 2002, p.  14).

Presentation of Apple iPod

Apple Computers, Inc. applied a concentric product differentiation strategy in 2001 with the promotion of the iPod in 2001.  At first, the iPod was only compatible with Macintosh products.  In the following year, the iPods which were compatible with Windows had been introduced.  The iPod was one of the first products from Apple Computer, Inc. which was not connected to the Macintosh platform. Apple Computers, Inc. had been able to conduct a bypass attack with regards to Intel and Microsoft by the presentation of its iPod. Apple Computers, Inc. had been able to apply a concentric differentiation strategy with its iPod, iTunes and iMacdue to its robust function of coordination and collaboration between its marketing, product development and R& D (Wheelen et al., 2012, p. 192- 194; Yoffie, 2005).

2004- Apple iPods, iTunes, IMacs and Apple Stores

The iPod and the iTunes music store enabled Apple Computer, Inc. to enjoy sales growth throughout 2004.  At the same time that the iPod and the iTunes were introduced, Apple Computers, Inc. presented their G3 and G5 iMac laptops.  The iMac laptop represented a 74% increase in Apple Computer, Inc. sales revenue.  Apple’s retail service chain demonstrated robust sales in 2004.  In addition, Apple Computers, Inc. increased its proportion of market share with regards to MP3 players to 66% of the market share. The revenue stream which Apple Computers, Inc. had created by means of its retail stores totaled to over $1.2 billion (Wheelen et al., 2012; Yoffie, 2005).

References

Wheelen, T., Hunger, J. D., Wheelen, K. E. & Hoffman, A. N. (2012). Chapter 11 Evaluation and Control. In T. Wheelen, J. D. Hunger, K. E. Wheelen and A. N. Hoffman (Eds.), Strategic management and global policy toward global sustainability (13th edition). Upper Saddle River, NJ: Pearson Education, Inc.

Wheelen, T., Hunger, J. D., Wheelen, K. E. & Hoffman, A. N. (2012). Chapter 7 Strategy formulation: Corporate Strategy, pp. 171-203. In T. Wheelen, J. D. Hunger, K. E. Wheelen and A. N. Hoffman (Eds.), Strategic management and global policy toward global sustainability (13th edition).Upper Saddle River, NJ: Pearson Education, Inc.

Wheelen, T., Hunger, J. D., Wheelen, K. E. & Hoffman, A. N. (2012). Chapter 6 Strategy formulation: Situation analysis and business strategy, pp. 204- 235. In   T. Wheelen, J. D. Hunger, K. E. Wheelen and A. N. Hoffman (Eds.), Strategic management and global policy toward global sustainability (13th           edition). Upper Saddle River, NJ: Pearson Education, Inc.

Yoffie, D. (2005). Apple Computer, 2005. Harvard Business School, 9(705- 469): 1- 9.

Yoffie, W. & Wang, Y. (2002). Apple Computer 2002. Harvard Business School, 9(702- 469): 1- 22.