The history of Apple computers began with very humble beginnings in a small garage in Cupertino, California. It started with no business plan and no concept of strategy. It was just two friends, Steve Jobs and Steve Wozniak with a vision to make personal computers more accessible. Apple, arose from the hacker community, a loose association of somewhat counter cultural people, connected by their interest in microelectronics. Many members of this community worked by day in the major computer corporations that were emerging, particularly in California . They were mostly geeks, and almost entirely male. The name 'Steve Jobs' may appear on 300 patents but his gift wasn't invention. It was seeing the promise in some early, clunky technology -- and polishing it, refining it and simplifying it until it becomes a standard component . The two never imagined that their love of technology would transform into an immense organization that spans to over 50 countries and 500 retail outlets. Show
Apple has established a culture of innovation and diversity. Its organizational structure involves top notch excellence, creativity, innovation, secrecy and competitiveness. Owning a Mac is embodied in the famous 1984 commercial to “think different”. In other words, don’t buy an IBM. As Steve would repeatedly say. ‘IBM has it all wrong’ ‘They don’t care about people. They sell personal computers as data-processing machines, not as tools for the mind . While IBM was targeting the corporate market, with data- processing machines, Apple was developing a tool for individual use and aiming for early-adopting home-based individuals. The computer was to be a mass product, so shape and size were important considerations. One way Apple accomplished this was by dropping the name “computer” from its corporate name to pursue a bigger market segment (Galloway, 2017 p. 68). Apple has enjoyed much success and in order to continue to make progress, it must continuously innovate, pursue new opportunities, and evolve its organizational structure. IntroductionThis article will perform a general strategic review of Apple Computers. Apple’s ticker symbol on the stock market is AAPL. It is a publicly traded company with its headquarters in Cupertino, CA. Apple is currently the world’s 2nd most profitable company. In the last quarter of 2019 they made 19.97 billion in profit. The article will examine its current products, services, operations, strategy, organizational structure, and provide a specific strategy to help increase its value. Products and Services`Apple offers a variety of products and services. They are diversified company and use direct and indirect channels to reach their end users. They are not only in the computer industry with their Macs, but the music industry with their iPod and iTunes product lines. Also, they are in the cell phone industry with their mobile phone products . The company’s retail stores carry its owns products and also sells third party products. They are located in high traffic areas and in shopping malls where the average foot traffic is higher than the surrounding shopping centers. They use simplistic design for all of their stores to offer an enhanced visual experience. Apple also sells its hardware and software products to enterprise and government customers in each of its reportable operating segments The enterprise market has bigger budgets which means they are more likely to pay more for technology that has resilient security. Firms Value PropositionApples value proposition is in its ability to bring various services and products together. It aims to convince customers that it makes the best products in the world, and then have those products work seamlessly together. The iCloud ecosystem allows its millions of users to link and integrate the various Apple Products to work within the ecosystem . Apple has taken the approach to offer value to multiple stakeholders. They view themselves as having legal and ethical responsibilities to employees, customers, and the surrounding environment. It is difficult to estimate how much value this has created, but undeniably, it has worked for Apple as it has given it a very high market capitalization. As of January 2020, Apple’s market capitalization reached 1.3 Trillion U.S. Dollars, higher than that of competitors such as Microsoft, IBM, and Google, and almost ten times more than its own capitalization in 2006 Apple’s business model today is to sell to people, goods, services, and emotion (Galloway, 2017 p. 75) This has allowed Apple to create a vertical integration by offering a user interface that combines software, hardware, down to the selection of individual components. This value proposition has allowed Apple to differentiate itself from the competitors. By purchasing an Apple product, the user is choosing a brand that is simple, requires less customization, and works with other Apple products across its entire ecosystem. Apple aspires to protect the privacy of its users. Google and Facebook has its users worried about their data and what is being done with that data. Apple, on the other hand, has told its users that the data on a user’s device stays on a user’s device. They want to create a safe and re-assuring eco system to help protect a user’s privacy. Types of CustomersApples target customers are anyone that uses technology and has disposable income to purchase it products. They target consumers who value style, function and aesthetics. They want their customers to use multiple products from its ecosystem. They target consumer that see their product as tools to get things done. Apple has marketed itself as high end product. Its products appeal to all generations that can afford them. It sells millions of iPads, iPhones, MacBook’s, and Apple Watches to about 1 percent of the world. A kind of meta scarcity that makes Apple uniquely successfully (Galloway, 2017 p. 75). Its main market segment are middle class and wealthy consumers. It has positioned itself as a leader, getting consumers to look beyond the price and to consider long term cost of ownership. Apple also targets business customers and schools. They offer education pricing for both students and universities. Operational DesignApple dominates because it consistently brings both operational and innovational excellence to some of the most competitive markets in the world . It aims to convince customers that its products are reliable, great quality, and build to last. From its supply chain to its retail outlets, Apple has shown the world that it can tackle both domestic and international logistics. With over 500 retail outlets and growing, it has put in place control mechanisms, performance evaluation, incentives, shared values, and persuasion to satisfy all stakeholders. After the passing of Steve Jobs, Tim Cook was appointed as the new CEO in 2012. Appointing Cook to run the company was a strategic and logistical decision as his previous background was in sales and worldwide operations (See Exhibit 1). In addition to serving Apple, Cook used to head Apple’s Macintosh division and was a key player in the continued development of “strategic seller and supplier relationships” . To ensure leadership in business performance and to respond to current global and market demands, Apple has adopted a hierarchical organizational structure, with notable divisional characteristics and a weak functional matrix. Like many organizations, Apple understands that human capital is their most important asset and competitive advantage. As a result, employees and managers at the company are categorized and grouped according to their experience and specialty. This allows a combination of individuals to be allocated in departments where they have specific skill sets. As (Grant, 2016 pg. 161) mentions, by allocating individuals to organizational units can then bring about broader groupings. A bird’s eye view of Apple’s organizational structures shows considerable hierarchy . The company has many project based organizations within this hierarchy. For example, Apple understands that technology is constantly changing, therefore, to make their organization more flexible and to react to change, it has implemented project based organizations into their structure. While this can make the organization structure less rigid, it still has Tim Cook at the center. For example, a senior vice president of operations, a senior vice president of software, or senior vice president of hardware are linked and must report to the CEO. Apples organizational structure has evolved and adapted to changing conditions. In 1984 when John Scully was the CEO of Apple, the company was organized by product. This cross-functional organizations had many pros, but prevented products from being compatible with each other. Scully responded by re-organizing Apple along functional lines to reduces costs, improve efficiency and achieve coherent product strategy (Grant, 2016 p. 146). The benefits of a functional structure allows employees to be involved in the achievement of each divisions goals. This allows concentration in each division while at the same time ensuring the resources are shared in the entire organization. The hierarchy in Apple’s organizational structure supports strong management controls in the organization. They have implemented 10 decisions in operation management to ensure all aspects of the business including human capital is running smoothly . Apples design process is handled through various stages in the organizational structure and approved by product officials. For example, the VP of software engineering and the VP of hardware engineering coordinates with VP of Operations to ensure that the outputs of both operations are successful in making great product and software design. The decision area that permeates Apples next move is to ensure that quality standards are in place. Apple has placed a great emphasis on quality. As (Grant, 2016 p. 55) points out, the strategic focus of top management should not be profit, it should be the strategic factors that drive profits; operational efficiency, customer satisfaction, innovation and product development. Apples human resource management works to maximize workforce capacity and to work with suppliers to ensure adequate capacity in the decision area of operations management. Apple is dependent on alliances with vendors, suppliers, and network providers (Katherine & Yang, 2012). They are heavenly woven and interconnected. Apple now has global alliances and even more functional departments. As (Snell, 2018) points out, growth, change, and adaptability are important to the ongoing success of any organism, whether it’s a person or a giant company (Snell, 2018) When an organization operates internationally, it must also keep in the mind that different functional departments develop their own goals, values, and vocabularies and behavioral norms which can make cross-functional integration difficult (Grant, 2016 p. 159). Important EventsApple faces some important recent events that has caused it to close many of its retail stores. Apple announced on March 13, 2020 that it would close all of its retail stores until further notice due to the Corona Virus . The Corona Virus also disrupted supply chains in Greater China. Foxconn, the world’s largest contract electronics maker, said its revenue fell from approximately $8.87 billion to $7.26 billion, or 18.13%, from last year. Other Apple suppliers have also reported weakness due to the novel virus . Another recent event Apple faces is due to its controversy surrounding right to repair. Apple is fighting “Right to Repair” legislation. Public Interest Research Group is having Congress have a long hard look at Apples claims that its products should not be repaired. They argue that when Apple provides replacement parts instead of repairing, they are effectively refusing to repair According to iFixit, a business built on repairing Apple products, claims that the reason why Apple is fighting the right to repair legislation is to create higher prices for consumers and a faster time frame for obsolesce . Most consumers trust that Apple employees will give the best possible advice to service their machines. However, some right to repair activists are saying that Apple employees are charging customers with expensive parts. The right to repair activists argue that rather than allow consumers to replace a cable, Apple charges hundreds of dollars for an entire circuitry board. Another recent challenge Apples faces, is the increased pressure from the FBI and the government agencies to provide access to unlock its iPhone. Apple products are revolutionary, promising privacy to all of its users. The FBI wants to have backdoor access to Apple Products. Creating this backdoor access can damage the reputation of the company. Apple maintains providing this backdoor access can end up in the wrong hands and prove dangerous (Galloway, 2017 p. 65) In 2001, China had officially entered the World Trade Organization. Apple realized that in order to continue its pace of innovation and become competitive on the World stage it had to outsource more of its work to China. Apple eventually took its manufacturing overseas to China. The company still signs all of its products “Designed by Apple in California,”. Apples largest suppliers are located in China. With trade wars and tensions looming. This can cause interruptions in Apples pricing model and shareholder value . Apple relies heavily on its main partner, to assemble its products. Apple didn’t outsource these jobs to save money but rather to save time . Many have criticized Apple for not creating manufacturing jobs in the United States. To overcome this, Apple has moved some of its manufacturing of the MacBook Pros to Texas. Financial StatusApple is financially sound and strong. The company continues to make profits year after year. It maintains strong growth during the past three years. On its website the company says that it designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories, and sells a variety of related services . The company’s fiscal year is the 52- or 53-week period that ends on the last Saturday of September . The company experiences higher net sales in its first quarter compared to other quarter in a given fiscal year. Exhibit 3 shows Apple earning about 84 billion in the first quarter of 2019. They attribute this to the holiday season and new product launches. Apple’s financials shows a net income of 54.9 billion for 2019 (See Exhibit 3). This means that the company is financially stable and has a strong financial position to continue to flourish. Apple continues to use its massive profits to increase spending in Research and Development. Apple increased its funding into research and development by close to 2 billion dollars. Apple relies heavily on Research and Development to compete and bring continuous flow of new products and services (See Exhibit 4). For Apple, its strong cash position is a major strength. It has ample cash. However a lot of its cash is overseas. Apple shows it has 205.9 billion in cash (See Exhibit 5). Bringing much of its cash back home to the United States will incur taxes. For this reason, the company prefers to borrow money to engage in its share buyback program. Apple benefited greatly from the Tax overhaul of late 2017. Apple paid an effective tax rate of 15.9% in 2019 as compared to 24.6% in 2017. (See Exhibit 6) Apples biggest selling product is the iPhone. There was reduced growth in 2019 for iPhone sales. Exhibit 7 shows that while iPhone sales reduced. It’s products from other categories increased. Revenues and net income remain strong each year. The revenue from September 2019 is about 260 billion dollars, compared with 265.6 billion dollars with September 2018 (See Exhibit 8). Total net sales decreased 2% or $5.4 billion during 2019 compared to 2018, driven by lower net sales of iPhone, partially offset by higher net sales of Wearables, Home and Accessories and Services in all geographic operating segments. This also reduced net income to 55 billion (See Exhibit 9). The weakness in foreign currencies had a significant unfavorable impact on net sales during 2019 . The total of its assets is equal to the sum of its shareholders’ equity plus its liabilities. In the case of Apple, as of September 28, 2019, this consisted of $338,516 billion on the assets side, total liabilities of $248.028, and total shareholders’ equity of $90.488 billion (See exhibit 10). Sustainability of firm’s processApples sustainability of the firms process is its remarkable ability to attain compatibility across all of its devices. In its early years with the introduction of the iPod, Apple offered seamless compatibility for the iPod with its desktop application, iTunes. Apple did not have a first mover advantage when it came to offering portable music players. Its ingenuity relied on learning what the market offered and making a better version of the product and then offering compatibility across its remaining services. Apple accounts for a 73% share of the U.S. MP3 player market . Apple understands that first movers run the risk of imitation, therefore they create an ecosystem where all of their products work effortlessly together; something that competitors have a difficult time imitating . Market IndustryApples products are primarily the consumer, small and mid-size businesses, education, enterprise, and government markets. It sells its products in most of the major markets directly to consumers. It also utilizes many direct and indirect distribution channels. . The life cycle of its products are within a few short years. Apple is successful at creating excitement before the launch of its products. They understand that product life cycles are short, therefore, they use the short window of opportunity to provide maximum exposure to the release of its products. As (Grant, 2016 p. 207) mentions that products go through four phases; introduction, growth, maturity, and decline. The research of NYU Stern’s Professor of Finance Aswath Damodaran states that technology firms experience the traditional company life cycle at an increased speed (Galloway, 2017 p. 86). When Apple sees the potential in existing technology, they allocate a budget to design a better version of the product. With the launch of the Apple Ipod in 2001, the industry entered its growth phase. After peaking in 2009 it went into steep decline (Grant, 2016 p. 252). As a result, Apple has to continuously innovate new products to ensure they are not left behind As Exhibit 2 shows the product life cycle of the Ipod. The introduction stage is small because the iPod was not known very well in early 2000. As distrubtion, efficiecy, and popularity improved, it reached significant market penetration. Then once the saturation of the market peaked, there was a demand for a replacement. Lastly, demand for the product dwindles as competitors challenge the industry with new and innovate products as even better substitues (Grant, 2016 p. 209). It is not enough to look at past products cycles of the iPhone or Ipod to determine future sales. It relies on clever marketing, improved features that gets the users to upgrade their device and pricing that impacts the decision process. Apple's strategy is also ambitious when it comes to the pursuit of opportunities to create demand for its products in the global market. Apple’s Strategy to expand into international markets when domestic markets mature are typical of companies in their growth cycle. As (Grant, 2016 p. 2111) mentions running a successful company requires a clear strategy that can develop new capabilities and redesign its organizational structure over a period of five years or more. The lifecycle of new opportunities can continuously be achieved by Apple in smart phone advancements and tablet products due to the growth demand, product differentiation, and marketing. However, Apple will find challenges in markets where low prices are the driving factor towards adoption. Operating and selling beyond the home market enhances Apple’s ability to compete with major rivals and bring knowledge into the organization to expand its pool of innovative ideas. CompetitorsMany of Apples competitors such as Samsung makes frequent product innovations using their own operating system and technological advancements. They utilize competitive pricing and aggressive marketing. They have also established an ecosystem with its Android Operating system that makes it difficult for a user to switch to Apple products. This entails a learning curve if a user wants to switch from Android to Apple. Most customers may not be willing to re-learn a new operating system. Moreover, each platform has its own messaging service. Users that have got accustomed to performing group messaging on the Android Operating system will find it difficult to establish that same group messaging on a different platform as all of their contacts will also have to switch to a different platform. The market for its products are incredibly competitive. The competitors make frequent product innovations to compete against Apples services and features. Apple controls 14.5 percent of the smartphone market, but captures 79% of the global smartphone profits (Galloway, 2017 62). Apple also competes against services such as Spotify and Netflix. Geographical IssuesApples strategy to expand to markets such as China and India allows it to increase its revenue and get its products in the hands of millions of more consumers. It offers many benefits but also challenges. The growth of 3g and 4g technology has allowed Apple ample opportunity to sell its products on an international market. As Apple continues to expand to more and more countries, it has faces many challenges, especially in China. The growth and rise of counterfeit Apple products have been very problematic for Apple. Since most Apple products are made in China, many stores have sprung up in China selling fake iPhones. Apple estimates that more than a million iPhones have been sold in the “grey market” in which consumer unknowingly bought fake iPhone from retail outlets in China and activated their devices on mobile networks in Asia In India Apple faces the challenge of competing against Android to provide low priced phones under $200. Furthermore, some of Apples suppliers in India did not meet or exceed Apples supplier code of conduct Apple did not pursue the contract after repeated violations. Governmental / Political IssuesApple remains the largest taxpayer in the World, paying over $35 billion dollars in corporate income taxes in the last 3 years . Like most corporations, it tries to take advantage of tax laws to pay as little taxes as possible to either foreign governments or to the U.S government. Apple currently holds about $252 billion in profits offshore, where it can avoid paying U.S. taxes. That’s over 90% of the company’s total cash on hand . On August 30, 2016, the European Commission ordered Ireland to collect $14.5 billion plus interest in unpaid taxes between 2003 and 2014 from Apple. The European Union alleged that Ireland made "sweetheart deals" with Apple in exchange for bringing more jobs into the country and concluded that these deals constituted illegal tax benefits, contrary to the European Union's prohibitions against "state aid." . Apple claims that it pays its fair share of taxes and remains the largest tax payer in the world. It states that Apple’s worldwide effective tax rates is 24.6% percent, higher than average for US multinationals . Despite paying significant amounts of money in taxes, Apple has used the recent Tax overhaul introduced in late 2017 to reduce its effective tax rate. Apples lobbying efforts of 2.3 million dollars paid off when it was allowed to have their off-shore profits taxed at a one-time rate of 15.5% . This saved the company roughly 40 billion dollars in taxes . The company announced that it would use the money to create 20,000 more jobs. Some argue that Apples definition of job creation doesn’t entail job creation but rather jobs attributable to the Apple Store ecosystem. These jobs aren’t necessarily in the United States as most App Developers are located outside the United States Technological IssuesAdvances in technology has allowed tech companies like Apple to create many new products. It has Allowed Apple to innovate in ways that were not thought possible before. With such advancements, encryption has become top focus surrounding Apple products. Apple wants to maintain privacy to its users while at the same time work with Law enforcement to hand over information to prevent hard to individuals and society. This technological issue has made it difficult for Apple to maintain a balance. Apple argues that the cost associated with creating a backdoor far exceeds any benefits. The legislation would not prevent third party companies from assisting law enforcement to gain access to encrypted data, it just can’t force Apple to create or modify their code to allow back access door . Apples products contain specialized parts that are available in limited numbers, therefore it is subject to market availability. Some of its advanced chips are produced by third party companies which are purchased on the open market, therefore the price can fluctuate as resources are limited. SWOT ANALYSYSStrengthsApple, and all the products cross over and feed into one another. A combination of vertical and horizontal integrations coupled with an ecosystem of products that offers seamless compatibility has given Apple a formidable competitive advantage. (See Exhibit 12). Apples ability to connect the user experience across multiple devices provides customers loyalty and robust growth opportunities. When a customer purchases most Apple products, they are able to complete a task on one device and continue seeing that same service on another device. This creates an ecosystem that makes it difficult to for competitors to achieve. The company offers hardware, software, content, services and also retails its products creating vertical integration . This provides Apple complete control over every aspect of the technology and its service. It also allows Apple to negotiate lower prices from its suppliers. Apple has a strong brand image that allows it to achieve customer loyalty. Apple has this branding to convince manufactures to white label parts for Apple. Following this trend Apple has also begun manufacturing its own parts. This allows Apple to achieve increased profit margins increased unit sales and pricing power. The pricing power that Apple commands has allowed Apple to define itself as a luxury brand. It has used scarcity to capture 79 percent of the global smartphone profits. (Galloway, 2017 p. 74) More than just providing an integrated service system of tablets, mobile phones, and computers, running on the same operating platform for consumers, the company also offers enterprise software. Apples robust operating system allows it to be used as a Point of Sale device to accept credit cards. Google and Samsung do not offer an integrated software and hardware system to compete in the enterprise market for smartphones and tablets. This allows enterprise customers such as Square and Shopify to use iPad’s and iPhone as devices to process payments. Furthermore, its Passbook software allows credit card companies and hotel chains to integrate with IOS devices. This creates a formidable barrier for competitors to get Apple customers to exit its ecosystem. Apple has successful products launches that other companies have had very difficult time replicating. Its innovation and product launches are shrouded in secrecy. Harvard professor David Yoffie estimated that in the months between announcing and selling the first iPhone in 2007, Apple received $400 million in free advertising by not making any public statements, thereby whipping the media into a frenzy. The combination of vertical and horizontal integration along with product innovation, secrecy, and free marketing has provided Apple a significant competitive advantage over its competitors. Apple has direct and indirect distribution channels. It has over 500 retail outlets in over 50 countries. By operating its own stores and locating them in desirable high-traffic locations, the company is better positioned to ensure improved customer buying experience and attract new customers. Through this, Apple is also able to repair its own products and maintain the customer journey. WeaknessApple has positioned itself as a luxury product and does not offer products in the lower end of the pricing market. This has placed Apple products out of the hands of many buyers. Competitors have recognized this open space and created smart phones to capture this market space. Samsung has captured both the high end price and low end price. By pricing phones that is within reach of most users, Samsung has taken market share away from Apple and fortified them into their own eco-system. As users become familiar with the Samsung device, they are more likely to upgrade to another Samsung device to maintain their existing features. Apple future is substantially dependent on its ability to continue to develop and make improvements in products and technology. As a result, if Apple miscalculates the next big product or service, it can diminish its brand and reputation. Moreover, some of Apples most complex technology is provided by 3rd party suppliers. If one of the parts malfunctions or there is a defect, Apple can lose billions of dollars in revenue. OpportunitiesApple's strategy is ambitious when it comes to the pursuit of opportunities to create demand for its products in the global market Apple products are known around the world. Each new product goes through a product life cycle. The product life cycle allows Apple to continuously upgrade and innovate. Apple also has significant opportunities to tap in the enterprise, government and education markets, which are largely untapped. As 'bring your own device' (BYOD) trend starts making inroads in the corporate sector, Apple can continue to innovate to meet the needs of this market segment Users are now bringing their phones to work and find it difficult to bring two different phones to work. These users are willing to pay premium to only carry one phone if it can be used for both work and personal use. China and India are the largest markets in the world for smart phone sales. Apple has the opportunity to penetrate these new and emerging markets with either used iPhones to create loyalty or produce low priced smart phones. The company’s strong brand and quality phones have the potential in the emerging markets to drive demand for its products. ThreatsApple’s supply chain may be considered one of the best in the world. Apple manufactures and imports its iPhones through a number of manufacturers from China. One such company is Foxconn. Recent trade wars with China, can levy higher than average trade tariffs. Apples supply chain is heavily interwoven and reliant with its partners in China (See Exhibit 14). Apples competitors that doesn’t rely on China for their parts can take advantage of this opportunity to ship and sell products at a lower price. In order to overcome the tariffs, Apples should increasingly move its manufacturing to the United States. Apple operates in various countries and is exposed to fluctuations in foreign exchange rates. Its revenue is exposed to the volatility of the US dollar against other functional currencies such as Chinese yuan, Mexican peso, Swedish krona, Swiss franc, British pound and euro. Apple competes with firms like Samsung, which also uses rapid innovation (Smithson, 2019) Apples competition uses rapid innovation to bring new products to market. This can allow product imitation. The threat is significant especially when technology is constantly changing and some of their suppliers are similar. Organizational StructureApple needs to re-evaluate its organizational structure to address future failures in strategy in a highly competitive market. Top executives are responsible for making strategic decisions that can impact the trajectory of the company. Apple today is an innovation icon, creating breakthrough products and managing global supply chains. It’s no mystery why other companies want to emulate their most successful peers. Apple has built a culture of innovation, secrecy, creativity and fierce competition. It has been fine-tuning its organizational culture overseas to properly match its vibrant business environment in America. Using both product and function, Apple continues to grow into China and beyond. As Apple evolves as an organization and operates internationally, it must also keep in the mind that different functional departments develop their own goals, values, and vocabularies and behavioral norms which can make cross-functional integration difficult. (Grant, 2016 p. 146). Apple need to eventually shakes itself up, regardless of the competitive edge it may have in the landscape. Companies that have stayed too comfortable at height of the S-curve have lost revenue to competitors. Cisco is a case in point, from 1997 to 2001 the company was organized into several distinct units, employees interacted and had most of their interactions within their units When it took a loss in 2001, it decided to reshuffle. Now, engineers that were once incubated into subgroups could collaborate with their peers across the company. This new approach can create newly autonomous groups inside Apple that breaks up any power structure that may be quietly misdirecting a company’s resource allocation . When companies units are organized in silos, communication and collaboration is stifled. As (Grant, 2016 p. 156) mentions that most mature industries, the features of mechanistic organizations are evident in highly routinized operations and controlled by detailed rules and procedures. As a result, the longer things are done in a particular way, the harder it is to adapt when markets shift. Performance ManagementApples talent development needs to be re-invigorated as its agility, direction, and vision come from senior leadership. It’s employees have very little say when it comes to product innovation and direction. Apple employees work in numerous disconnected silos, competing against one another with little foresight into the purpose or intended use date of their work. A strategy must be put in place that frequently changes how employees and teams get rewarded for their efforts. One year for example, Apple should emphasize individual over group in a compensation system, then the following year, Apple should emphasize group performance over individual performance. This type constant change can prevent stagnation occurring and allow the company to remain vibrant. Furthermore, employees and teams that meet performance goals should be given a pedestal when they have a great product idea. Take for example, a brilliant employees that works within an existing group. He or she reaches out to management and offers a different approach to develop an existing product or service. His or her idea should be heard and management should emphasize a culture that even failed ideas are viewed as hard work. Unfortunately, Apples applauds only final results, leaving many too scared to try their ideas. As noted, the rewards and recognition programs at Apple don’t include a component for effort or trying — only final results. Rather than celebrating numerous product milestones, only the final product unveiling is worthy of a major celebration. New Product CategoryThe scale of missed opportunities is something that is difficult to measure or quantify. Apple states the following as one of its values: “We believe in saying no to thousands of projects so that we can really focus on the few that are truly important and meaningful to us. This type of reasoning can make Apple miss on many new product innovations and ideas. If Apple gets too comfortable on the S-curve, competitors can make a new product and capture market share (See Exhibit 11). This can reduce shareholder value, reduce profits, and allow competitors to innovate new products. Many people that work at Apple may be reluctant to experiment or try to approach the company with new product ideas because they are taught to not think too broadly. When looking at the history of technology transitions, companies get disrupted when new product innovations are introduced to the market. Apple has become less and less of a first mover over the years. They improve their existing products rather than niche out entire new product categories or services. As (Grant, 2016 pg 252) outlines, gaining a competitive advantage as a first mover has mixed results. However, for a company like Apple that has an existing eco-system, being a first mover in a new category will work in its favor. It is important to have complimentary resources when innovating new products. Apple has many complimentary resources that can allow it to gain a competitive first mover advantage. Apple has lost many first mover opportunities because its executives have been less reluctant to forecast new technology, services or demand. One example, is a service called Spotify. This streaming music service gained considerable traction allowing many new users listen to music for a monthly subscription fee. After seeing the initial success, Apple launched its own Music streaming platform. Spotify has more users than Apple Music globally. This lack of product innovation and adoption led to shareholder loss as Apple did not implement a first mover advantage. Apple should implement a blue ocean strategy to niche out an entirely new service category. Specific Strategic FocusApple has an effective brand management, marketing, and distribution. They have innovated and created products and services that continue to delight its customers. They have done so well that some of Apples own customers have become evangelists and marketers for its products. Moreover, Apple has solved the problem of aging, as its products have a shot at multi-generational success. Plot a heat of mobile IOS operating systems using GPS and the geography of wealth illuminates (Galloway, 2017 p.75). The problem Apple faces is that only 1% of the world can afford its products. Take India, for example, a country where the average income barely exceeds $2,100, an iPhone is out of reach for many of its residents. Apple has to go up against Android whose phones prices are below $200. With all of the success Apple has enjoyed, it still has left out a significant portion of the world from getting their hands on its products and services. It still thrives by making the iPhone and its products bigger, then smaller, then bigger again. However, innovating and improving its existing product line should not be its primary focus. When Apple tries to compete in emerging markets on product innovation such as India and China, it captures very little market share. Apple will need to implement a blue ocean strategy that simultaneously pursues an entirely different market segment by building a powerful platform around education (See Exhibit 15). Apple should launch the world’s largest university. If Apple wants to make a dent in the universe, then access to a good education can bring hundreds of millions of people out of poverty and bring them to a better life. It can also generate significant revenue for Apple. Education is prime for disruption as its function of price is increasingly higher than inflation (Galloway, 2017 p. 93). According to student borrowing to help pay for undergraduate education is increasing rapidly, both in terms of the percentage of students borrowing and amounts of debt per student. Many more people from around the world have access to the internet allowing students to engage in blended learning. As Zoom has recently shown and solved one aspect; blended learning is a learning system that combines the traditional classroom method of face-to- face classroom practices with computer-mediated activities via Internet and digital media regarding its context and delivery and require the physical presence of both teacher and students. (See Exhibit 16) Blended learning must also offer its users satisfaction and ease of use. Currently, there is a disconnect with online learning tools and the ability for teachers to see and interact with their students. Apple can use its Facetime technology and then build around that an education platform. The Chinese word ‘crisis’ also means ‘opportunity’ The corona virus exposed vulnerabilities not just in the healthcare system but also in the education system. Many teachers began to use software such as Zoom to offer online education to their students. Jennifer Mathes, interim chief executive officer of the Boston-based Online Learning Consortium, a nonprofit group that offers webinars and resources on online teaching and learning. “What we are doing right now is more of a Band-Aid to say these are tips and tricks to do remote learning now.” Apple can offer these tools for free or at a reduced costs to public schools and then by the time the students reach college or university, Apple can use their branding and established ecosystem to help continue their education. In America, tuition costs are rising, for both private not-for- profit institutions, while incomes have remained stagnant. Apple has a brand rooted in education and plenty of cash to build a platform that brings teachers and students together. Platforms have existed for years. For example, malls link shop owners and consumers, Ebay connects buyers and sellers, and even Apple has found great success by using its IOS app store to connect developers and users. Apple makes commission when a user purchases a paid application or subscribes to its services. Therefore, to understand the rise of platforms, we must first understand a product or a pipeline. Apples iPhones are essentially a pipeline built out of product innovation. According to (Grant, 2016 pp 38-39) The success of the of the Apple Macintosh between 1984 and 2004 was limited by Apple’s pursuit of a product rather than a platform strategy. When Apple purused a platform strategy it created for itself a ‘moat’. It now combines its products with the App store that connects App developers and iPhone users, essentially a platform . Apple has already shown that firms can be both a pipeline and a platform. As a result, Apple can use its experience in building platforms, to build an education platform to get its products in the hands of many people from around the world. Apple can create a new project based organization within its hierarchy to construct a new platform that connects teachers and students. Apple can provides all of the tools necessary for teachers to provide great education to their students. The platform can be called Apple University. In Porters five forces model, the power of suppliers, which is threatening on the supply side world, can viewed as an asset on platforms . Just like how Apple pays artists on Apple Music by collecting revenue from the subscribers, the same can happen at Apple University. Each student pays a tuition to Apple and Apple uses a percentage of this money to pay the teachers. As Grant mentions (Grant, 2016 p. 258) the collaborative potential of the internet is most strongly revealed in open-source communities that build highly complex products such Linux and Wikipedia, through global networks of individual collaborators. The critical strategic aim which Apple already does very well is to build a strong up front design that will attract the desired participants and enable interactions. According to (Grant, 2016 pp 248-259) platform based markets are also referred to as two-sided (or even multi-sided) markets because they form an interface between two groups of users: customers and the suppliers of complimentary product. A mutually beneficial platform allows both students and teachers to benefit from the experience. Then once growth reaches an inflection point, network effect kicks in and growth follows and exponential rather than linear trajectory . Apple does not need to be a first mover to build Apple University. There are plenty of Universities that offer online courses. However their online platforms are clunky and outdated. It has a difficult user interfaces, requires separate channel for video confereencing, and limited selection of teachers. The great thing with the Apple ecosystem is that it can bring everything into one place. They can also bring the textbooks inside the platform as part of the course. According to (Grant, 2016 pp 312-313) there has been two primary forces driving change in the business environment during the past half century. One is technology and the other is internationilzation. Internalization is a source of huge opportunity. Rather than trying to compete based on price on the international market, Apple should use differentiation to get users to purchase their products. They can differentiate their strategy by getting users to join Apple University and to choose between thousands of qualified teachers, and then offer Apple products at a discounted price to students. Apple can also offer its platform for certification and job training. There is considerable revenue that can be made for job training. For example, Amazon announced that it would “spend $700 million over six years on postsecondary job training for 100,000 of its soon-to-be 300,000 workers.” For now, Amazon says it intends to outsource that training to traditional colleges and universities If Apple used its traditional pricing of giving 30% to devlopers on its IOS App store, they can use the same pricing and give 30% to educators. If Amazon outsourced its training to Apple University, Apple could make hundreds of million dollars from just this contract. Education is in the process of a digital disruption. This trend is growing rapidly in postsecondary education. Today, roughly a third of students in the United States take at least one online course as part of their accredited higher-ed experience, and over 15% study exclusively online While many platforms exist, there is yet a platform that can offer the branding, the design, the technology prowess that Apple can bring to education. By investing in human capital, Apple can directly train and continue to educate even its own employees. As mentions that human capital is a strong and competitive asset of any company. By connecting trainers with workers or teachers with students, Apple can continue to improve its brand image and marketing to sell even more of its products on a global scale. Apple has the cash, the expertise to provide Apple University to a global audience. AppendicesExhibit 1 Apples Organizational Structure (Rowland, 2019) Exhibit 2 iPod Product Life Cycle (Apple, Inc., 2020) Exhibit 3: Apples Quarterly Sales (Apple, Inc., 2020) Exhibit 4 Apples Operating Expense / Research and Development (Apple, Inc., 2020) Exhibit 5 Financial Data Apples Total Cash (Apple, Inc., 2020) Exhibit 6 Apple’s Effective Tax Rate (Apple, Inc., 2020) Exhibit 7 Apples sales by product and services (Apple, Inc., 2020) Exhibit 8 Apple’s Financial Revenue (Apple, Inc., 2020) Exhibit 9 Apple’s sales and net income (Apple, Inc., 2020) Exhibit 10 Apples Balance Sheet (Apple, Inc., 2020) Exhibit 11 The S-Curve showing the comfort zone Exhibit 12 Apples’ SWOT Analysis Exhibit 13 Apples Vision, Mission and Values (Apple, Inc., 2020) Apple, Inc.’s Vision As located on the company’s website, Apple, Inc.’s vision is the following: “Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings” (Apple, Inc., 2020) Apple, Inc.’s Mission As located on the company’s website, Apple, Inc.’s mission is the following: Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad (Apple, Inc., 2020) Apple, Inc.’s Values As located on the company’s website, Apple, Inc.’s values are as follows:
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Digital Disruption in Higher Learning Education: The Implementation of Blended Learning For Undergraduates. Retrieved from Global Business and Management Research. What are three advantages associated with first movers check all that apply?Benefits of Being a First Mover. Technology leadership. First movers can make their technology/product/services harder for later entrants to replicate. ... . Control of resources. The second benefit is the ability to control strategic and/or scarce resources. ... . Buyer switching costs.. What is first mover advantage quizlet?first-mover advantage. a competitive advantage that occurs when a firm is first to offer desirable products or services that secure customer loyalty.
When a first mover does not have complementary assets barriers to imitation are high and there are several capable competitors the first mover should?When a first mover does not have complementary assets, barriers to imitation are high, and there are several capable competitors, the first mover should: enter into a joint venture to protect the product.
Which of the following is an advantage of being a late mover in the market?Which of the following best describes a Late Mover Advantage? Able to examine the market to establish its value.
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