Question #1 – The competitive strategy utilized by Apple stems from a strategy used by John Sculley. During the Sculley era, the company formed alliances with rivals to assist with the development of a PC that complemented other multimedia applications and increased the speed and flexibility of the Macintosh computer. Today, Apple utilizes a similar strategy to promote the current Mac PC brand. The company continues to work with rivals to increase flexibility and demand for the Mac PC. For example, Apple worked with Microsoft to develop Microsoft Suite products specifically for Mac computers to ensure the PC had “full interoperability with Office products”, which was critical to the product’s growth and attractiveness among consumers.
Apple further increased its competitive advantage in the PC industry with the opening of its retail locations. In 2009, the company operated more than 280 stores that provided a hub for customers to receive direct assistance from eager customer service representatives while gaining hands-on access to test various product lines. Apple also extended retail sales by partnering with electronic retailers like Best Buy to further introduce and offer its products to consumers.
The final strategies used by Apple to increase its competitive advantage in the PC industry was the shift to Intel computer processing units (CPUs) and the development of its own operating system. The company first started manufacturing PCs that run on the Intel chip in 2006. As a result, the Mac computer’s processing speed increased significantly, which led to an almost 81 percent increase in Mac sales between 2002 and 2009 and decreased the previous disadvantage that prevented the machines from running with the Windows operating system. Despite the advantage created with the use of the Intel chips, Apple also introduced its own operating system that ran on UNIX to further its PCs’ speed and stability.
Question #2 – Apple introduced the first iPod back in 2001 during a time that manufacturers of other electronic devices introduced similar MP3 players. Although multiple MP3 players had already hit the market, the iPod stood out among its competitors for several reasons. The primary reason was its ability to store up to 1,000 songs per device compared to competitors’ one hour of music. The second advantage was associated with the iPod’s sleek design and simple user interface.
In the years that followed the first iPod, Apple continued to redesign the product, increase its storage capacity, and enhance its user-friendly capabilities. To further enhance the product’s capabilities, the company developed the product in a manner that allowed it to sync with Windows operating system and introduced a line of accessories that complemented the iPod. However, at some point, Apple’s competitors became aware of the iPod’s capabilities and introduced comparable products at prices that were between $50 and $100 less expensive. Fortunately for Apple, management knew that it would need to approach the MP3 market with a differentiated approach that would allow it to combat competitors’ attempt to gain a share of the MP3 market. As a result, the company introduced iTunes two years after the first iPod was introduced and drastically reduced competitors’ attempt at taking part in its share of the market.
The addition of iTunes as well as enhanced designs and features such as cameras, touch-capabilities, and inclusion of an iPod in the iPhone devices played a vital role in Apple’s ability to continue leading in the MP3 player market. Despite its market share, the company was always at risk of losing its market share with competitors’ introduction of a more technologically-advanced product that combined the benefits of the iPod with the latest technological trends. Additionally, the introduction of online music stores that allowed consumers to download and stream music at discounted prices was a plausible threat. However, Apple’s operations were not vulnerable because it continued to make heavy investments in research and development allowing it to develop innovative products that met consumers’ ever-changing demands.
Question #3 – Apple faced several challenges towards the end of the case. The primary challenges were associated with the iPhone, specifically the company’s decision to restrict the phone to AT&T’s network. This decision limited the company’s opportunity to reveal the iPhone’s numerous capabilities due to AT&T’s spotty services is some areas. It also resulted in customers choosing to pass on obtaining the iPhone to receive better service from carriers such as Verizon and to avoid early cancellations fees, which were substantially high during the days of the iPhone’s initial introduction. Another challenge associated with the iPhone was limited functionalities such as a weak battery life; lack of a physical QWERTY keyboard; the inability to replace the battery and memory; and lack of support for flash technology, which left some consumers opting to purchase smartphones offered by Apple’s competitors.
Other challenges faced by Apple were associated with the introduction of the iPad and other devices. The iPad exceeded expectations with more than 450,000 units sold during its first week on the market. However, shortly after the product was introduced, competitors like Hewlett-Packard and Dell introduced Android-based tablets with similar functionalities and smaller price tags. Another challenge was associated with the failure of the Mac Mini. Apple introduced this product in an attempt to make the Mac more affordable for budget-conscious consumers. Although the product was offered at prices as low as $599, its limited memory and lack of a keyboard and mouse resulted in miniscule sales. Apple TV was another failure. The concept of this product failed to see favorable sales since its introduction in 2007.
Question #4 – Steve Jobs’ track record exemplified his strategic skills and ability to establish Apple as the brand that it currently is. Prior to his return, the company’s sales were at an all-time low and it had a difficult time gaining a substantial share of the PC market. Jobs returned to Apple with ideas for re-branding it as a technological leader and hip and trendy brand, which is still associated with the company today.
Unfortunately, Jobs’ died in October 2011 and some wondered if Apple would be able to survive after his demise (Gustin, 2013). Fortunately for Apple’s shareholders and customers, the company has not lost its momentum. The company’s stock prices have increased from $54.76 per share in October 2011 to the current stock price of approximately $113 per share and revenues increased from $156.51 billion in fiscal year 2012 to $182.80 billion in revenues in fiscal year 2014 (Yahoo Finance, 2014). Additionally, Apple launched multiple iPhone models that exceeded sales projections after Jobs’ death.
- Gustin, S. (2013). Two Years After Steve Jobs’ Death, Is Apple a Different Company?. Time.Com. Retrieved from http://business.time.com/2013/10/04/two-years-after-steve-jobs-death-is-apple-a-different-company/
- Yahoo Finance,. (2014). Apple Inc. Retrieved 15 November 2014, from http://finance.yahoo.com/q/is?s=AAPL+Income+Statement&annual