Apple Strategic Change and Core Competency

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Topic 1: Critically examine a period of strategic change for an organisation of your own choice. Outline the triggers for change and the approach to strategic change in your case. Discuss the extent to which this strategic change built on or transformed the existing core competencies of the organization. Explain the most significant organizational issues facing the managers implementing this strategic change and how effectively they were managed.

[pic] A essay study submitted in the partial fulfillment of the requirements for the subject “Strategic Management 2”

Submitted by Tianyu Lin
Student ID: 4093468

Apple Inc. is an American corporation that designs and manufactures computer hardware, software and other consumer electronics. The company is best known for their Macintosh personal computer line, Mac OS X, extremely loyal user-base, iTunes media application and the iPod personal music player. The company headquarters is in Cupertino, California, CEO and co-founder is Steve Jobs and the company boasts 284 retail locations spanning 10 different countries. Apple was established on April 1st, 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne to sell the Apple I personal computer kit. Steve Jobs was said to own 45% of the company, Steve Wozniak with 45% and Wayne with the remaining 10%. While Jobs and Wozniak were young with little to no assets, Ronald Wayne was older with personal assets and was scared to put these at risk. This resulted in Wayne selling his share of the company back to Jobs and Wozniak for a reported 800$. Today Wayne’s share of the company would be worth over 3 billion dollars.

There are mainly four factors will lead an organization decide to change its strategy: Market change, Technology, Political and Culture. For Apple Inc., in 1981, things got a bit more difficult. A saturated market made it more difficult to sell computers, and in February Apple was forced to lay off 40 employees. IBM released its first PC using Microsoft products as software items. With the power of IBM, the PC quickly began to dominate the playing field. By 1984, the IBM PC had 50%market share. Several competitors such as Compaq, Dell, AST or Gateway2000 entered the PC-market by trying to launch advanced IBM clones, similar to and compatible with “Big-Blue’s” technology. This was the outcome of IBM’s “open-architecture” which Apple struggled to prevent as the below excursus examines: Apple Computer set their individual standards which led to a constant competition against the IBM-Microsoft-Intel model (Wintel standard). Hence, Apple tried to differentiate itself by following a strict non-licensing, patent-regulated policy (no information about Apple hard- and software was given out), by producing higher quality, but by also charging an immense above industry average price for their goods which they considered as legitimate due to their product superiority. As Apple wanted to avoid being “cloned” such as IBM’s PCs and consequent diminishing returns, they didn’t provide free-lancing program writers with necessary information to develop different features for the Apple technology. This provided them with high short-term profit margins, but in the long run Apple had to encounter a vicious circle that even teetered Apple on the brink: 1. Continuously increasing R&D costs as Apple had to develop all innovation on their own. 2. Subsequently, less features available for Apple technology (mainly PC and Operating System (OS)) in comparison to IBM-Microsoft-Intel standard. 3. Problems for Apple in making design and service improvements that kept up with the advances in computer technology. 4. A narrower customer base as the demanded hard- and software either wasn’t offered or if delivered, took Apple to long to create. Most computers were now IBMs or clones and as a result,...
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