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Apple Computer Corporate and Business Strategy
APPLE 2002 CASE ANALYSIS
STUDENT NUMBER 899
Executive Summary
Apple began with the mission to “change the world through technology.” More specifically, the company sought out to make the personal computer an accessible and affordable device to the mass market. The proliferation of new software and hardware technology drastically changed the landscape of the industry and Apple adopted a differentiation strategy. Software and hardware integration allowed Apple products to be more “versatile,” reliable, and superior in performance.
Rapidly changing industry dynamics dictated Apple’s competitive strategy. In essence, the intended strategy did not develop into the “realized” strategy. In fact, empirical evidence shows us that realized strategy tends to be about 10-30 percent of intended strategy. What really determines strategy is the “patterns of decisions that emerge from individual managers adapting to changing external circumstances and the ways in which the intended strategy was interpreted.” . What is Apple’s mission and strategy today? Apple’s mission is to deliver a highly innovative and superior solution to a customer’s personal computing needs. Apple’s present day competitive strategy is a return to differentiation. Key elements to this strategy are an emphasis on design, service, branding through advertising, and quality. Drivers needed to attain these objectives are through the firm’s unique marketing abilities, engineering skills, creativity, and R&D.
Apple’s long range objectives are to obviously regain market share leadership and return the company to profitability and maximize shareholder return. Can Apple do so by continuing a differentiating strategy? Yes. To do so, every aspect of the way Apple conducts business and relates to its customers must be involved and driven by strategy. Apple’s distinctive core competencies lie within their ability to provide quality products through their vertically integrated inbound activities. Not only are Apple’s finished goods differentiated by quality, they are innovative and cutting edge. Innovation is driven by consistent investment in R&D.
Although the company has excelled in delivery and order processing, it still has yet to prove its operational efficiency. Therein lies Apple’s principal weakness. In the past, Apple has failed to reconcile the added cost of differentiation with operational efficiencies in production and distribution. Apple has also shown competencies in building brand reputation and generating buzz for its products. Their marketing campaigns have been successful and remain a value added activity. Financially, the company remains liquid with substantial cash reserves and is not highly leveraged in debt.
Apple’s differentiation strategy is uniquely aligned with the changing dynamics of the industry. Firstly, Apple owns the only viable alternative to a “Wintel” machine. All other major computer manufacturers are only slightly differentiated because they are forced to conform to the “Wintel” standards of an Intel chip and Microsoft operating system. They are limited to differentiating themselves based on accessibility, service, and marketing.
Apple has successfully differentiated itself as the only viable alternative to the PC standard. The two [next page]