Hbs Apple Case

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Business Strategy
Apple Case

09 March 2012

“All men can see these tactics whereby I conquer,
But what none can see is the strategy
Out of which victory is evolved.”

Sun Tzu (1)

1Executive summary2

2Introduction3

3Apple INC.: An overview3

4Strategy Analysis4

4.1Branch of economic activity4
4.2The 8 key concepts4
4.2.1Competitive advantage4
4.2.2Long term4
4.2.3Organization4
4.2.4Scope5
4.2.5Environment5
4.2.6Resources5
4.2.7Stakeholders5
4.2.8Directions5
4.3Analysis of Apple’s external environment6
4.3.1Macro level, PEST analysis6
4.3.2Meso level, Five Forces Model6
4.3.3Micro level, Business Environment8

5Conclusions and recommendations9

6References10

Executive summary

Apple started out small, producing visionary new products. With the combined strength of Jobs and Wozniak Apple computers soon had developed a clear strategy for the company. They wanted to make top of the line computers that work straight out of the box. Apple offered a new and unmatched consumer friendly computer experience. In Apple’s vision unique products are made of unique parts and have a unique sales force. Thus Apple almost naturally applied vertical integration, keeping their scope limited and controlling essential factors contributed to their success. Emphasis on R&D was also key and subsequently budgets for R&D were high compared to competitors. Marketing was also fully integrated within this strategy.

In this period of time, while the pc industry was being defined, Apple had set out to build the best products that the engineers could conceive. You could say that Apple’s main competitors tried to fulfill the needs their customers had today, while Apple was looking at tomorrow. Subsequently the level of budget constraints for Apple engineers was much lower compared to its competitors.

When the computer market started to evolve, prices dropped and competition became fierce. The low budget constraints in the engineering process resounded in the price of Apple products, and made them seem heavily overpriced. This made Apple into an outsider, or how Jobs could have said, a rebel. The position of Apple shifted from an high-end product to an overprized non-compatible PC. Apple started to lose market share and soon became a small, almost insignificant player in the industry. While Jobs did not hold the position of CEO he was thought to be its inspiration. But due to his eradicate behaviour he was forced out of the company. In the period of time that followed there were multiple CEO’s at the helm of Apple Computer, however none of them were able to turn Apple’s position. As the company was doing worse Apple Computers slowly parted with their original strategy, and became more “open”. However Apple was losing market share rapidly and reached a mere 3%, Steve Jobs returned to the company. He quickly set out to steer Apple back on its original course. He halted licensing programs, reinvigorated R&D and returning to vertical integration.

Whilst other PC company’s were afraid of competition from other digital devices, Jobs saw them as complimentary products, all working together. In 2001 Jobs presented the digital hub, with the subsequent introduction of products like the iPod, iPhone and iPad and smart initiatives like iTunes. Apple’s user friendly and compatible products rapidly won market share and turned into a healthy company once again. The official change in the company’s name from Apple Computer to Apple Inc. in 2007 marked the official repositioning of the company.

Today Apple is still winning market share, and though competition is fierce there is enough market share left for growth. Apple has several advantages. People are willing to pay for Apple’s superior technology and the level of integration within the product range. This provides Apple with funding for R&D and...
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