Case Study 7: Apple Inc.

, in 2008

1. How well has Steve Jobs done as Apple’s CEO? Has he done a good job of
performing the five tasks of strategic management discussed in Chapter
2? Why or why not? What grade would you give him?
Regardless of a rocky history between co-founder Steve Jobs and Apple, Inc., Jobs was able to return to
Apple in 1997 after a string of CEO's were run through and replaced and the company was losing money.
Since his return, Jobs has taken Apple from reporting quarterly losses to introducing new and innovative
product lines, such as the iPod music player which has become a pillar of Apple's current success and has
helped increased earnings per share from $1.5 million in 2005 to $3.93 million in 2007. Job's has
continued to pursue the introduction of new, stylized, and user-friendly products helping the brand to
increase its market share and new industries and markets.
When considering Jobs success as CEO of Apple, it is important to consider his execution of the five
tasks of strategic management. Jobs was asked to leave Apple in the 1980's due poor management, he was
brought back in over ideas for new development. Jobs clearly saw the market trending towards the
synchronization between mobiles phones and computers as well as the market of digital music players
and focused the strategic vision towards these changes. Objectives were set around financial success and
measuring the performance by units sold. Jobs crafted a strategy of entering these markets by selling
highly differentiated, stylized and easy-to-use products, implementing this by pushing research and
development of new products and evaluating the market trends and reacting with new innovations. The
company's sales have increased between 2001-2007 and Apple has consistently responded to the market
changes by introducing new products and appealing to an ever-widening market and increasing its market
share. When assessing Jobs role as CEO of Apple in terms of changes in both the company's financial
status and strategy, it is clear Jobs has been an integral part of this accomplishment and therefore
successful in terms of his job description.
2. What are the chief elements of Apple’s strategy? How well do the pieces
fit together? Is the strategy evolving?
Despite certain setbacks, Apple kept brining innovative products to the market, realizing that innovation
would have to be the company’s strategy against big companies like IBM and Microsoft. The New
strategy for apple is to go after three strategic areas of the market and for Apple to be a competitor in the
computer, digital music player, and mobile phone industries. With going for these areas it makes Apple
seem more like three separate companies which allows them to diversify and grow as a company. All
these pieces fitting together helps Apple increase in market share. With the way technology is constantly
changing and the way that consumers are buying these products the strategy is constantly changing and
growing along with the economy.
3. Does it make good strategic sense for Apple to be a competitor in the
computer, digital music player, and mobile phone industries? Are the
value chain activities that Apple performs in computers, digital music
players, and mobile phones very similar and “compatible” or are there
very important differences from product to product? Which of the three
products lines —computers, digital music players, or mobile phones—do
you think is most important to Apple’s future growth and profitability?
Why?
Yes, it makes good strategic sense for Apple to be a competitor in the computer, digital music player, and
mobile phone industries. The value chain activities that Apple performs in computers, digital music
players, and mobile phones very important differences from product to product which in return makes
Apple a viable competitor in the market. By Apple following along with their strategic plan I believe this
will help the growth of the company and their growth of profitability by bring their new products to the
masses.
4. In which industry—computers or digital music players—is competition
more intense? Prepare a five-forces analysis of each industry to support
your position.
With Apple’s competitors constantly coming out with the bigger and better things and technology always
changing every six months or so Computer is a more intense competition for Apple or any computer
technology company.
5. What does a competitive strength assessment reveal about Apple, as
compared to the leaders in the personal computer industry? Use the
methodology in Table 4.4 to support your answer. Among these
competitors, who enjoys the strongest competitive position? Who is in the
weakest overall competitive position? Has Apple’s strategy resulted in a
substantial competitive advantage over its rivals in the computer
industry? What is the basis for whatever competitive advantage it has?
Apple’s recent performance has been stellar. In 2008, the company reported its best third quarter in
history with revenues of $7.7 billion and a net quarterly profit of $1 billion. The company also set a
company record for Mac sales in that quarter. Additionally, Apple retired $300 million in debt without
hurting its operating areas. In 2008 Apple took home several silver and gold Industrial Design Excellence
Awards, sponsored by the Industrial Designers Society of America.
6. What does a competitive strength assessment reveal about Apple, as
compared to other main players in the digital music industry? Use the
methodology in Table 4.4 to support your answer. Among these digital
music player competitors, which company enjoys the strongest
competitive position? Who is in the weakest overall competitive position?
Has Apple’s strategy resulted in a substantial competitive advantage over
its rivals in the digital music player industry? What is the basis for
whatever competitive advantage Apple has?

7. What is your assessment of Apple Computer’s financial performance the

past three years? (Use the financial ratios in Table 4.1 of Chapter 4 as a
guide in doing your financial analysis.)
8. What accounts for Apple’s noteworthy success in the markets for mobile
smart phones and digital music players, but its overall weak showing in
the computer industry?
9. Apple’s success with its product lines has not always been stable. Steve Jobs was with the company
from the beginning but had some key decision-making authority taken away after an unsuccessful
coup. In 1985, Steve Jobs resigned as chairman of the company following his unsuccessful removal
attempt of John Sculley (the board voted unanimously to retain him as president and CEO) and after
the board stripped Jobs of all decision-making authority. However, after an extended period with little
success and after several CEO changes, Steve Jobs was rehired in 1996. In 2000, Steve Jobs
announced that he was the permanent CEO of Apple. The current leadership includes Steve Jobs
(CEO), Peter Oppenheimer (responsible for supervision of the controller, treasury, investor relations,
tax, information systems, internal audit, corporate development and human resources departments)
and Timothy Cook (executive vice president of worldwide sales and operations; responsible for
managing supply chain, sales activities and service and support in all markets and countries).
10. Is Apple’s strategy in its computer business strong enough to
compete successfully against Dell and HP?
With the high cost of Apple’s computer products and the consumers who would prefer their product over
 the competitor PC’s such as Dell & HP Apple will still have a success rate that would keep them in
business for sometime.
11. Does Apple’s strategy for its iPod business seem capable of allowing
the company to remain on top of the digital music player industry over the
next 5 years?
As shown in exhibit 7, the overall comparativeness of customer satisfaction overall shows that Apple’s
iPod can remain on the top especially with the sound quality, ease of use and reliability of their products.

12. What steps should Apple take to improve its corporate performance
and to strengthen its position in its most important markets?
Apple’s successes in 2008 are not without challenges. Specifically, Steve Jobs addressed the issue of
competitors in each of its industries. For instance, how will Apple continue to dominate the digital music
player industry considering the growing number of well-funded competitors? How should Apple go about
increasing its share of the market form mobile smart phones? How should the company improve its
relatively weak position in the computer industry? How might changes in customer preferences (e.g.,
desire for sophisticated products) and changing market dynamics (e.g., impending recession) affect the
company’s outlook for growth?