APPLE CASE STUDY 1
Companies operate in competitive environments that require them touse differentiated methods of production and customer orientedmethods for them to remain relevant in the market. As the businessscale up their production to reflect regional and international face,they acquaint themselves with new business environments dictatechanges to be implemented in the internal business environment.Changes can emerge from the forces in the market or the practicesused by the competitors. New entrants in the market also forcecompanies to revise their strategies, and this has been one thecontributing factors for big companies that serve the internationalmarket. This paper will lay insight on the source of differentiationand source of change for Apple Computers that have enabled it to berelevant in the market for several decades.
The establishment of Apple Computers was the idea of Steve Jobs andSteve Wozniak, who had dropped out of college in 1976 (Baecker, 2014,p.7). They set up the first company in a garage in California afterselling a van for startup capital. The company has a strong missionto design personal computers along with OSX, iLife, iWork and iTunes(Elliot & Simon, 2012, p. 11).Its vision is to make greatproducts on the face of the earth focusing on innovation andparticipate in markets when they can make a significant contribution.The company does not seek to settle for anything less thanexcellence, and it has a business culture of innovation (Elliot &Simon, 2012, p. 16). It is today a multinational company dealing withcomputers, software, mobile phones, music players and other consumerelectronics with its headquarters in Cupertino, California. Consumersidentify themselves with the company’s brands like iPhone, iPod,iPad Tablet, iTunes media player, Safari web browser among othercreations. The consumers of the companies’ software include OSX andIOS operating systems (Hirshleifer et al., 2012, p. 1457).
The pioneers inclined to the idea of being different, and this hasbeen the basis of the unconventional business strategy employed bythe company. Jobs and Wozniak had the idea of developinguser-friendly products through their commitment and cultivate aculture of open-minded approach when coming up with new technologies.Unlike many companies that have massive red tapes before theimplementation of major decisions, Apple uses a causal approach thatmakes the employees find a homely working environment (Hirshleifer etal., 2012, p. 1458). Space for development given to the employees maybe a major factor contributing to their loyalty and autonomy. Theemployees introduce new business ideas with every invention, and thismakes their product distinct from those of their competitors. TodayApple is the second largest consumer electronic company in the worldand the third largest mobile phone maker. Some of its strongcompetitors include Microsoft, Google, Blackberry, Samsung and Nokia.As of 2012, the company had 72,800 full time employees and 3,300others on reserve. In the same year, the company’s revenue amountedto 156 billion dollars (Hirshleifer et al., 2012, p. 1457). TheFortune magazine listed the company as fortune 500 for the firsttime, placing it in the sixth position.
Since its inception, Apple has undergone several significant changesin its strategy to fit in the dynamic environment. The Apple 1 wasthe first computer developed by Jobs and Wozniak. Since there was noready market, jobs ran advertisements to find consumers for the firstcomputer. After finding an investor to beef up their capital, thefirst change came to be, the increased funding instigated the twoinnovators to scale up their production, and they introduced Apple 2and three consecutively. When the two developed Ape Lisa, it did notdo well, and it was their first failure (Kaliannan, & Ponnusamy,2014, p.26). Jobs identified a need for change after visiting XeroxCorporation, which was well established. The technician at thecompany faulted the ability of Lisa to meet the needs of consumerslooking for personal computers. Jobs adopted the Graphical UserInterface in Lisa, and it became the first computer to have ahierarchical file system. It also contained windows, folders andicons, a mouse, a drop down menu bar and the ability to copy andpaste. The change was due to an external influence of the innovationtrending in the computer industry.
Apple also had a significant dominance in the personal computermarket after the introduction of Macintosh. The only close substitutefor the operating system was the DOS developed by IBM. However, IBMinclined to mainframe computers that were difficult to operate, andthe operating system was not user-friendly (Kaliannan, &Ponnusamy, 2014, p.26). Competitors could not imitate the operatingsystem because the engineers who developed wee loyal to Apple andthey could not be convinced to join other companies. IBM was,therefore, not a threat in the market. Also, the engineers at IBMinclined to a technicality in innovation, and they designedcomplicated applications. In Apple, Jobs and Wozniak developedcomputers from passion, and they were, therefore toy like and easy touse (Kaliannan, & Ponnusamy, 2014, p.27).
However, competitors were working toward neutralizing this monopolyin the market ad when Microsoft introduced the Windows Appleresulted in several changes in its products. To beat the competition,the company revised its products’ downwards. Also, the companyremoved the name “computer” from its identity to reflect adistinct feature from its competitors. In addition, the companychanged its approach from being computer based only and ventured inother consumer electronics like iPhone, iPod and iPad (Hirshleifer etal., 2012, p. 1461). These have been some of the consumer-orientedproducts that have earned the company its reputation. In this case,the inevitable changed emanated from the influence of closecompetitors.
After the conception of the Lisa idea, Jobs spent a lot of timetrying to improve it, and the launching dates had to be postponedseveral times. The management found this as inappropriate for thegrowing company and decided to change the leadership in the project.The Chief Executive Officer by then, Markkula, made internal changesand demoted Jobs from the position of the project leader. Thedirectors then demoted Markkula and hired Scott, who focused onproduction and distribution.
In today’s business environment, a company only has a comprehensiveapproach if it honors the quadruple bottom line. The tool involvesthe aspects of the people, planet, profit, and purpose. A company hasto work towards the sustainability of the four elements. Apple workstowards manufacturing precuts that meet the needs of the population,especially with the changing preferences. The current Apple watchinnovation is a prime example since it serves several purposes likeshowing time and recording changes in the body. Its other productslike the Apple laptop and personal computers are user-friendly, andit is, therefore, a reflection of being customer oriented(Hirshleifer et al., 2012, p. 1460).
Besides, the company works towards using products that do not haveadverse effects on the environment. Its solar farm located in Chinais a source of renewable energy that saves on other energy sourceproduced using expensive means. All of its operators in the UnitedStates run on renewable energy while 100% of its data centers run onthe same form of energy. The management has extended this practice toits operator centers across the globe, and currently 87% of themoperate on renewable energy (Kumar et al., 2012, p. 1281). Additionally, the company is a leader in profits emanating from theuse of its products. The IOS operating system boasts more than 70% inthe Smartphone industry (Nwogugu, 2015).
The current Apple Watch project reflects the company’s efforts toamass profits. The company aims at manufacturing one million unitsevery month, and each unit will have 18 karats of gold. It will beone of the dearest watches in the market, and there are prospects ofincreased profits for the company. Apple’s products respond to thegrowing culture of using digital products that are consistent withthe changing occupations and globalization. The iTunes revolutionizedthe music industry while the iPad is one of a kind in both basicmobile phone services as well as surfing the website. Its purpose istherefore in line with the changing culture brought about by changesin technology.
Case Study Analysis
As discussed, the current Apple is a result of managerial and productchanges that have been taking place since the inception of thecompany. The brain behind Apple could not deliver their mandatewithout involving managers and other engineers. The move led to theinstitution of a structure that identified responsibilities fordifferent people. After being demoted, Jobs felt dissatisfied, and heresigned from the company. However, the management rehired him as theCEO. He strived to make the company an ideal model of the values hebelieved would have desirable results (Jobs & Beahm, 2011, p.15). In his vision for a workforce motivated by their desire forinnovation, he set the example by removing bureaucracies, and thisserved as a motivation for the employees.
Jobs attitude toward work brought an internal change that wasnecessary especially in the competitive environment. Robert House’sPath-Goal theory identifies the importance of a leader’s behaviorin the satisfaction and motivation of the subordinates (Malik et al.,2014, p.172). Steve introduced a casual environment known for hisslogan, “Leave the neckties bring the ideas.” It gave theinnovators a chance to participate in major decision-making andintroducing ideas in the company (Jobs & Beahm, 2011, p. 10). After the introduction of Macintosh that dominated the personalcomputers market, competitors like IBM tried to poach engineers fromApple in vain. The satisfaction they derived from the changesintroduced by Jobs and freedom for innovation made them loyal to thecompany. Jobs’ changes were, therefore, necessary and ideal in thecompetitive environment.
The leadership style used by the company in its formative stages alsoplayed a significant role in attaining the company`s current status.As a co-founder, Job was very passionate about innovation, and he wasagainst the organizational blueprint that the management tried toimpose on the company. Autocracy approach to decision-making wasevident after the failure of Apple three. The chairperson by the nameMichael Scott laid off 40 employees without consultation with theboard of directors (Nwogugu, 2015).
Jobs became the new chairperson John Sculley became the new CEO.However, they had diverging views about the culture that the companywas supposed to adopt. Sculley enforced a settled culture that wasnot very aggressive while jobs proposed a free environment forinnovation. The differences forced him to leave the company. When thecompany re-hired him as the new CEO, he brought fin the culture thestrived to institute (Nwogugu, 2015). He introduced a group-basedform of decision-making process where the employees made an importantcomponent in the running of the business. His idea of establishing acompany driven by innovation welcomed ideas from the innovators, andthis was the greatest sources of satisfaction and loyalty in thecompany.
External factors also played an important role in Apple’sdevelopment. Various factors in the environment like social,economic, technological ad competition instigate companies to changetheir strategies. The Macintosh computers were unique in the market,and this made Apple stand out from the rest and the company reapedfrom the innovation for about ten years. However, other engineers inrival companies were working towards killing the monopoly of Apple’spersonal computers. According to the external environment theory,businesses bow down to the yoke of factors that are not within theirdirect control. Diversification, therefore, becomes necessary towithstand competition and the effect of other policies affecting themarkets. Apple’ management seemed to have borrowed this idea afterMicrosoft introduced Windows personal computers. The attribute ofuser-friendly that consumers sought in Macintosh got a closesubstitute and a stiff competition began. The innovatorsdifferentiate d the company by introducing iTunes and the iPod.Consequently, it sold millions of units, and it gained a new marketfor the products. The change was very timely since the company couldnot have stuck to the manufacture of Macintosh personal computers. Infact, the Macintosh is not among the company’s highest sellingbrand today.
A closer analysis of the growth trend f the company shows that Jobsand other leaders in the company employed a gradual but strategicapproach. Since the inception of the company, Kotter’s eight-stepmodel business development may explain the decisions made by themanagement as well as the culture they developed. After showingprospects of developing user-friendly computers, Markkula made it amatter of urgency to bring Apple Three to the market. He put pressureon Jobs and his team (Jobs & Beahm, 2011, p. 12). However, Jobscould not deliver the improved product on time since he was trying toimprove it from the ideas he had borrowed from Xerox. After it hadfailed, he had to sack 40 employees to make sure that the samemistake was not repeated.
Secondly, the team that oversaw the implementation of Apple’sproducts was competent enough to give it a profitable direction.According to the Kotter’s model, a business that seeks sustainablegrowth should establish a guiding multidisciplinary coalition ofprofessionals with the capacity to see it to its goal (Daft, 2012,p32). Jobs and Wozniak were innovation-oriented, and they workedunder eh guidance of a board of directors, the CEO Chairpersons.Several changes had to be effected in the management especially whenthe individuals acted contrary to the expectations of the directorsand other high-ranking officials. For example, the director’s ideaof demoting Markkula and giving the position to Sculley brought onboard an individual who focused on production and distribution. Theyalso rehired Jobs for his strong leadership skills andinnovation-oriented approach for the company. These changes werenecessary since they were efforts to find the most qualified personsto lead others and maintain an innovation culture as outlined in itsmission (Isaacson, 2012, p.97).
The Kotter’s model also proposes the formations of a strong visionand strategy for business as another important step towards success(Daft, 2012, p33). Apple has a strong mission that lays insight onthe products that it manufactures as well as a strong vision tocontribute to all the markets where they can make a significantcontribution. The workplace culture introduced by Jobs of giving theworkers a free space to develop their ideas is consistent with thefourth step in the model. A team of motivated workers with the rightskills and drive towards achieving the company’s objectives isimperative. The engineers working who worked on Macintosh as well asthose working on the current products like iPad and the Apple laptopwork in a free environment that increases their productivity (Lee &Malerba, 2014).
The change that jobs agitated for in disagreement width Sculley`smodel of a settled business was a requirement for the company sinceit continues to nurture new ideas from the employees. Thebureaucracies also removed lengthy bureaucracies and established acasual work environment. It was crucial for the implementation of theemployees’ ideas since it eliminated barriers to accessinginformation as well as collaboration with the top management. Applealso measures its success in short-term gains from its products.After Macintosh, the engineers developed other products, and this ledto the creation of other departments. These are semi-autonomous andthey develop mechanisms, for profitability that then is integratedinto the entire company’s strategy (Isaacson, 2012, p.93). Kotter’s model proposes the tracking of production and achievementsof single brands in a business for easier correlation with theresults of the entire venture.
The changes exhibited by the company in terms of organizationalculture and differentiation of products contributes to thesustainability cited in the Kotter’s’ model (Appelbaum et al.,2012, p 765). The culture of competence initiated by Jobs left manypeople wondering whether the company would hold after his demise.However, the leadership skill exhibits by Cook confirms the aspect ofsustainability cultivated by Jobs and other senior managers. Finally,the model upholds a continuous change in a company to reflect thealtering business environment. Apple differentiated its productsafter Microsoft entered the personal computers market, and the changehas been continuous with the recent one being the manufacturing ofApple watch.
Most of the changes Apple management implemented created andstrengthened the capacity of the employees. First, the free, casualand innovation–oriented environment introduced by Jobs cultivatedthe autonomy of the employees. They could work without being underunnecessary pressure and share their ideas with others (Shea, 2012,p. 25). The number of distinct ideas increased from computer based tomusic and Smartphone technology and the current Apple watch. His ideaonly depended on the internal environment created by the managementand during his reign, it was not compromised. The Apple Watch and theprojected Apple TV are evidence of a sustained innovation-orientedcapacity within the employees and the management.
Moreover, the introduction of new products like iTunes, iPod and theiPad were important changes to reflect the market need as well asenter into new market niches. The engineers had to design uniqueproducts using the company’s software and their capacity for newinventions was put to task (Shea, 2012, p. 22).The sustained capacityto develop new products is dependent on the willingness of themanagement to maintain a free environment for innovation.
The senior management plays an imperative role in Apple’s case, andthe current position of the company in the international market is areflection if their determination to make Apple the best in consumerelectronics. The change in management involving the rehiring of SteveJobs was a decision of the senior management after identifying thegap for innovation that emerged after he left. When he came in as theCEO, he was among the senior-most managers as well as the co-founder.The management set the tone for innovation and self-development inthe workplace created by Jobs, and this was crucial for the future ofthe company. His casual approach in the company made it distinct fromother competitors like IBM. Even after the company earned a placeamong the Fortune 500, he did not change his casual approach. He was,therefore, instrumental in defining the future of the business(Menzel, 2013, p.18). The innovations that followed Macintosh were aconsequent of the new ideas developed by the engineers and themotivation they got from an innovative oriented organizationalculture.
These changes s implemented by the management in the company were notfutile. The effective management of these changes may be seen throughthe sustainable results directly emanating from them. During theformative stages, the board of directors made several changes thatresulted to various people getting a demotion or quitting from thecompany altogether. Sculley’s approach proved inappropriate for thecompany, and Scott quit the company in 1981 (Isaacson, 2012, p.96).The effective management of the changes was evident in the followingyears since there were few reshuffles in the top positions. After themanagement rehired Job in 1996, he remained as the CEO until hisdeath (Isaacson, 2012, p.95). This was a sign of stabilization of thechange and the ability of the management to sustain an ideal cultureof innovation. After the Jobs led the company in dropping the name“computers” and the introduction of iPhone, iPod Touch and iPadmay show how successfully the management sustained the changes(Kuratko et al., 2014, p.42). The current Apple watch and the AppleTV are also exhibits of the successful management of change. They arethe fruits of the environment that the alterations sought to achieve.
In conclusion, Apple has come a long way to be the company it istoday. The initial idea of Jobs and Wozniak of establishing aninnovation-based company is still in place as Apple is known for itsunique and user-friendly products. The management has played acrucial role in effecting necessary changes in the company thatstarted during the formative stages until the company stabilized.With a workforce of 72,800 permanent employees, it is now one of thelargest consumer electronics company in the world and has entered theFortune 500 category.
Appelbaum, S. H., Habashy, S., Malo, J. L., & Shafiq, H. (2012).Back to the future: revisiting Kotter`s 1996 change model. Journalof Management Development, 31(8), 764-782.
Baecker, R. M. (Ed.). (2014). Readings in Human-ComputerInteraction: toward the year 2000. New York N.Y.: MorganKaufmann.
Daft, R. (2012). Organization theory and design. New YorkN.Y.:Cengage Learning.
Elliot, J., & Simon, W. L. (2012). The Steve Jobs way:iLeadership for a new generation. New York N.K.: Vanguard.
Hirshleifer, D., Low, A., & Teoh, S. H. (2012). Are overconfidentCEOs better innovators?. The Journal of Finance, 67(4),1457-1498.
Isaacson, W. (2012). The real leadership lessons of Steve Jobs.Harvard business review, 90(4), 92-102.
Jobs, S., & Beahm, G. W. (2011). I, Steve: Steve Jobs in hisown words. Agate Publishing.
Kaliannan, M., & Ponnusamy, V. (2014). Apple was sweeter whenSteve Jobs held sway: Company illustrates contrasting attitudes toorganizational change. Human Resource Management InternationalDigest, 22(4), 25-28.
Kumar, S., Teichman, S., & Timpernagel, T. (2012). A green supplychain is a requirement for profitability. International Journal ofProduction Research, 50(5), 1278-1296.
Kuratko, D. F., Hornsby, J. S., & Covin, J. G. (2014). Diagnosinga firm`s internal environment for corporate entrepreneurship.Business Horizons, 57(1), 37-47.
Lee, K., & Malerba, F. (2014). Changes in Industry Leadership andCatch-up by the Latecomers: Toward a theory of catch-up cycles.Future perspective on innovation and governance in development.
Malik, S. H., Aziz, S., & Hassan, H. (2014). Leadership Behaviorand Acceptance of Leaders by Subordinates: Application of Path GoalTheory in Telecom Sector. International Journal of Trade,Economics and Finance, 5(2), 170-175.
Menzel, A. (2013). How well placed Apple is to sustain its recentsuccess in the Consumer Electronics Industry. New York N.Y.:Springer.
Nwogugu, M. C. (2015). The Case of Apple Computers, Inc.: FailedStrategic Alliances, Corporate Governance and Risk Management.Corporate Governance and Risk Management (June 1, 2015).
Shea, T. (2012). Steve Jobs and Apple. New York N.Y.: TheRosen Publishing Group.