Strategic Management

Assignment No 1
Apple Inc. Case Study
Group No 4

Submitted by
Name

Roll nos

Manoj Borse

07

Jeremiah Peter

37

Sandeep Bagri

48

Fahad Nakade

101

Omkar Parte

107

Sanjana Prakash

109

Apple Inc. Case Study

Executive Summary
Apple has, since the 80s, been a market leader in the computing and
telecommunications arena. This case study sheds light on the various challenges
faced by the technology giant and the path breaking innovations that have kept
the company afloat in troubled times. The report takes us through the ebb and
flow of the Apple journey from designing the worlds first personal computer to
manufacturing the futuristic Apple iWatch.
Apple has seen several leaders such Jobs, Sculley, Spindler, who through their
innovative strategies and unrelenting market expertise have encountered some
key challenges. Also, they have been able to pique consumer interest by
introducing state of the art technology and reliable quality. Apple has always
been ahead of the curve by predicting what the consumer wants. The case study
highlights a few products and services which reflect corporate, business,
functional and operational strategy implementation.

Corporate Strategies
Corporate level strategy is concerned with the strategic decisions a business
makes that affect the entire organization. Financial performance, mergers and
acquisitions, human resource management and the allocation of resources are
considered part of corporate level strategy.
In Corporate Strategy, there are two kinds of diversification:
1. Linked
2. Constrained.
Companies using linked diversification enter new businesses when it relates in
some way to another business they are already in (it is linked to it), but does not
necessarily have any connection to their other businesses. If they are using
constrained diversification, however, they only enter a new business if it is based
on their core resources or competencies. Companies based on linked
diversification have little coherence to their overall corporate strategy, while
companies using constrained diversification tend to be more focused.
Constrained diversification allows companies to maximize the effect of their
resources because they are shared.
Apple and its strategy
Apple uses constrained diversification. Apple is, inherently, a personal computer
company (hardware and software), and their businesses utilize their
competencies in developing hardware and software. The Macintosh, iPad, iPhone,

iPod and AppleTV are all computers, which allows Apple to share resources
between businesses. For example, the Macintosh, iPad, iPhone and AppleTV all
run OS X, Apples operating system. This creates economies of scope, cost
savings for the company because their resources are shared across multiple
businesses.
The Macintosh, for example, consists of two kindsdesktop and notebook. These
separate product lines each share resources and complement each other. The
iMac and MacBook Pro are both primarily constructed from aluminium and glass,
so not only do they share the same materials (which reduces costs), but they
resemble each other, creating unity between product lines.

Each platform, too, complements the other. Apples Macintosh computers sync
their media and personal data (calendar, contacts, email) seamlessly with the
other platforms. Because they work so well together, owning products from each
platform benefits users by creating an experience where their devices just
work.
The platform advantage does not apply just to Apples devices. Through iTunes,
users can purchase music, movies and television shows that syncs across all of
their devices, or even do so from their iPhone or iPad. The App Store allows users
to download applications for their iPhones and iPads wherever they are, and now
the iBook Store, will allow them to do the same with books.
Because Apple has chosen what businesses to enter carefully, these platforms
reinforce the others and make them more powerful. The sum is greater than the
parts. This creates a complete package for consumers to choose, and it is
difficult for competitors to match. Their platform strategy makes each individual
business more valuable than it would be as a separate entity.
This fits Apples platform strategy well. With iTunes, Apples intent is to make the
major forms of media used on their devices immediately and easily available,
and the iPad is positioned as a reading device and is perfect for it. Establishing
the best print media platform would strengthen their media offering and make
the iPad much more convincing as a device.
They moved way beyond the iPhone and the iPad. Apple Watch was the
brainchild of Tim Cook, with a view to introduce wearable technology. Apple Inc.
has hit roadblocks in making major changes that would connect its Watch to
cellular networks and make it less dependent on the iPhone, according to people
with knowledge of the matter. The company still plans to announce new watch
models this fall boasting improvements to health tracking
Thus, we sum up saying that brand extension as a corporate strategy has done
wonders for Apple as an organization. Today, Apple doesnt only involve iPhone
thats at the top of the mind, but also iPad, Macintosh and Apple Watch.

Business Strategies
Apple has taken some key business decisions under the able leadership of Steve
Jobs, John Sculley and Michael Spindler. Some of them are listed as follows:

From 1985 to 1993 John Sculley focussed on desktop publishing and

education, stabilizing Apples market share to 8%. Also Apple provided a
complete desktop solution including hardware, software and peripherals
for plug and play.

After being reappointed as CEO of Apple, Steve Jobs halted the Macintosh
licensing program.

Soon after, he focussed on core products by reducing existing product

lines from 15 to just 4. Apple wanted to maintain a niche audience in the
premium market.

After 1998, Apple wanted to create more flexible channels to reach the
consumer, hence they launched an Apple website to set up direct sales.

In a closed system bound by secrecy, Apple launched the iMac in 1998

and posted $309 million profit. Moreover, Apple promoted itself as an
alternative to other computer brands.

The company positioned its computers as the worlds greenest line-up of

notebooks that were energy efficient and used recyclable materials.

After the success of Macintosh, jobs pushed the innovation bar by

introducing the iPod in 2001. He also forward integrated the market by
designing an iTunes store, which further promoted strong sales. Sales shot
from 78000 units to 304000 units in just one quarter.

In January 2007, Apple launched the iPhone with features such as touch
controls, and a break through internet communications system.

Apples core business is based on selling hardware. Other ancillary

services such as the operating system, iTunes, the App Store were used to
offer a valuable proposition, promoting more sales.

Subsequently in 2010, Apple launched the iPad and built another $30
billion business.

Apple was wary of licensing the iPhone OS to other manufactures as it

would cause Apple to lose their market leadership in terms of state of the
art software.

Apple was able to provide a differentiated offering due to its hardware and
software quality.

Functional Strategies

Research- The companys primary focus was innovation, hence it dedicated 9%

of sales proceeds to research and development, an amount far more than that
offered by its competitors.
Human Resources Strategy Jobs hired Tim Cook in 1998 from Compaq and Cook
went on to streamline Apples supply chain, thereby cutting costs. Under Jobs
supervision, Apple strictly followed a closed door policy to enhance intellectual
property safety.
Marketing Strategy - When IBM entered the PC space, Apple focussed on vertical
and horizontal integration and refused to license its software to third parties.
Apple tried to resurrect it tarnished image by introducing catchy slogans such as
Think Different , It just works and greenest line up of notebooks.

Operating strategies
An operational strategy is a necessary element for a business and supports the
firm's corporate strategy.
Companies and organizations making products and delivering, be it for profit or
not for profit, rely on a handful of processes to get their products manufactured
properly and delivered on time. Each of the process acts as an operation for the
company. To the company this is essential. That is why managers find operations
management more appealing. We begin this section by looking at what
operations actually are. Operations strategy is to provide an overall direction that
serves the framework for carrying out all the organizations functions.
Apples Operation System:
Apple Operations International designs, manufactures, and markets mobile
communication and media devices, personal computers, watches, and portable
digital music players in Ireland. The company was formerly known as Apple
Computer Inc. Limited. The company was incorporated in 1980 and is based in
Cork, Ireland. Apple Operations International operates as a subsidiary of Apple
Inc.

An in-depth report on Apple's manufacturing operations details the gains in

flexibility, diligence and skilled labour availability that the company gains from
producing its devices overseas, while offering rare commentary from its current
and former executives.
Tim Cook, Apple's current chief executive officer, has been credited with
developing Apple's overseas supply chain. A former high-ranking executive said
that Cook decided to move much of its manufacturing to Asia because it can
"scale up and down faster" and "Asian supply chains have surpassed what's in
the U.S."
Apple Inc.s operations management (OM) involves the application of the 10
decisions of OM to ensure that all aspects of the business are running smoothly.

In operations management, the 10 decisions relate to such aspects as product

design, quality management, process and capacity design, and location strategy,
as well as inventory management, among others. In Apples case, the 10
decisions of operations management are carefully implemented through
coordinated efforts in product design and development, sales and marketing, and
the firms supply chain, along with Apples other business areas. With its industry
leadership, Apple Inc. is an example of success in addressing the 10 decisions of
operations management.
Apple Inc.: 10 Decision Areas of Operations Management
1. Design of Goods and Services
2. Quality Management
3. Process and Capacity Design
4. Location Strategy
5. Layout Design and Strategy
6. Job Design and Human Resources
7. Supply Chain Management
8. Inventory Management
9. Scheduling
10.Maintenance

Productivity at Apple Inc.

Apple Inc.s operations management monitors and evaluates productivity
through various criteria. The companys global size and diverse activities
translate to different standards, benchmarks and criteria for productivity in
different business areas. The following are some of the productivity criteria in
Apples operations management:
1.
2.
3.

Revenue per Square Foot (productivity of Apple Stores)

Product Units per Time (productivity of Apple suppliers and supply chain)
Milestone per Time (productivity of Apple employees in product
development)

Thus to conclude, Apples operational, business and corporate strategies actually

work in tandem that helps the company stick to its roots and expand YoY.