Apple Inc.: A Global Company Linked With Electronics

Introduction

Few companies can relate to the story of Apple Inc., a global company linked with electronics. The company has a great history with the Mackintosh in the early 1990s. To date, Apple Inc. stands out among the most innovative companies of the Fortune 500. Markedly, 2010 was a big year for the company; it recorded almost double the amounts of profits recorded by its major competitor Microsoft. Since 2010, Gartner, a renowned IT research company ranks Apple Inc. as the multinational with the best supply chain in the world (Wozniak and Smith 2006, p. 39). Diversification in the supply chain results from the type of leadership structure initiated by Steve Jobs when he joined the company in 1997. Described as a tyrannical leader with indifferent parenting skills, Steve Jobs established an institution in which the society gave accolade to the leader who was central to all operations at Apple Inc. Few people foresaw the success of Apple Inc. after Jobs’ exit and death. Under the leadership of Tim Cook, the company experienced a change in management, but still progressed fiscally. With a profit margin of about 4.5%, the company rose to be among the valuable capitalisation organisations worldwide.

Apple Inc

In 1997, Apple Inc. recorded a profit margin of about $417 billion from an initial $2 billion. It marked the presence of Steve Jobs in the initially troubled business that initially saw the exit of Steve Jobs to Disney World in 1991. Jobs later worked for PepsiCo before retuning too Apple Inc. Arguably, it became the first time that a company topped the chart by overtaking Exxon Mobil in the world’s most valuable company in market capitalisation of 2011. Notably, 2010 created an opportunity for a major breakthrough for the company that invested in iTunes. Competitively, it defeated Wal-Mart in the retail of music through various electronic devices including iPhone (Malone 1999, p. 13). It means that the iTunes provided an excellent opportunity for innovation, enabling the company to come up with the iPhone, tablets, and iPod among other devices. According to Steve Jobs, democratic principles of governance only aim at creating comfort for companies (Kahl, 2012, p. 7).

Tyrannical techniques create an environment of accountability and hard work. Most workers at the firm established when Jobs took control of all procedures within Apple Inc., and he received accolade for all innovations. Recognition of different workers was impossible even though the leader had excellent motivational and negotiation skills. Apple Inc. took a bold step of using different software including the OS X on phones. The intention was to create room for portability while enabling people to access different applications in small gadgets (Burrows 2004, p. 47). Apple Inc. concentrates on the quality strategy while leaving the price strategy to its competitors. The company ensures that it delivers according to the consumer needs. For instance, Tim Cook believes in efficiency, response to ubiquity, and effectiveness during product development and delivery to the target population. Apple Inc. gadgets have App Stores that provide consumers with every detail they need and different software to make life manageable (Bach 2007, p. 117). With an improvement of the Apple ecosystem, the company was capable of coming up with the iPad in 2010, thus enabling different users to enjoy several capabilities through a single and simple device. By developing the App Store in 2010, the company generated the highest third party revenue in the world, making it one of the most competitive electronics firm in the world. In addition, the introduction of e-newspapers, games, and online services gave Apple an opportunity to reach out to diverse markets across the globe (Elliott and Timmermann 2013, p. 189). It was until Steve Jobs left Apple Inc. that people began showing interest in Steve Wozniak among other founders of the company.

Arguably, Steve Jobs could not settle for a job less than a CEO, and he made major decisions making critics describe him as an arrogant leader. By the time he co-founded Apple, his assets were about $200 million, and nine years later, he left the company following a battle for the topmost position with company CEO, John Sculley. Jobs had to leave the company because workers and the Board of Governors considered him a threat to the company’s leadership. Jobs’ arrogance was explicit following his return to Apple in 1997, but the ability to promote the success of the firm in the same year restored faith in the leader (Sculley and Byrne 1987, p. 10). Today, Apple Inc.’s iPhone 6 battles with other devices from companies such as Samsung and HTC. Critics mention that the phone bends even though the company never created the unique capability to the target consumers of the product. The company still uses the value strategy to target its consumers even in the phase of competitors who focus on the price strategy (Kotler and Keller 2012, p. 9).

Competitive advantage and its sustenance

Changes in the rivalled environment

The electronics industry keeps improving as consumer demands get complex daily. Over the past decade, electronic companies seem to come up with good gadgets that capture the attention of users. Samsung Galaxy and the Apple iPhone seemed to enjoy dominance until the Beijing manufactured Xiaomi surfaced in 2010. Smartphone companies fear that the hi-tech Xiaomi might lure middle-income earners into the company. Critics mention that Xiaomi brands cannot compete with iPhones and Galaxy phones in terms of quality assurance. The Chinese market is robust; it promises an excellent future for the electronics sector. Mi3 handsets from Xiaom have the capabilities of both Samsung and Apple phones. For instance, Xiaomi Mi3 phones have different capabilities including a Sony powered 13-megapixel camera, a 4 chip Nvidia Tegra, and a 2 GB internal memory (Mitra 2013). While Xiaomi’s Mi3 cell phone sells at $327, the iPhone 5S goes for $866, and the comparable Samsung S3 with a 32 GB RAM sells at $2 less the amount offered for Apple 5S. Most companies strive to make their products affordable to the market. This approach threatens the existence of companies such as Apple Inc. within and outside China. Apple Inc. deals with competition from Samsung, Dell, Microsoft and HTC among several other firms. Samsung, Xiaomi, and LG manufacture phones, smart TVs, and fridges among other electronics. Apple Inc. only specialises in the production of iPhone, tablets, iPad, and PCs while still making more profit than their rivals (An, Alon, and Fuentes 2014, p. 132). Even as the iMac sales reduced by 45% in 2010, other products from the firm still dominated the market, earning the company profits of about $700 billion. In a competitive environment, it is important to create a niche market that remains loyal to a company irrespective of market changes (Schneiders 2011, p. 79).

Strategic placement in the competitive environment

Apple Inc.’s placement in the competitive environment aims at achieving sustainability. In the following graph, it is possible to understand how Apple Inc. maintains sustainability in a rivalled environment.

In 2010, Apple Inc. had the greatest fiscal and marketing achievement when its profits exceeded the Microsoft profit margin. The third month of the same year saw the company gain $573 billion over Microsoft’s $273 billion profits because of integration of different areas of the company as indicated in the graph. The iTunes and the internet service provision segments propelled the company, making it earn about 1.1% of the global market equity. By close of 2011, Apple recorded a $108 billion profit margin, and the greatest strength was the ability to create products and services that were impossible to imitate. From the sales of 2010, the company made profits of about $65 billion coupled with the innovative products and services that kept streaming in to the expectant markets (Sheth and Sisodia 2012, p. 83). Clearly, 2010 was a year of great transition for Apple Inc. that had to respond to allegations of child labour in China. Investment in quality products means that consumers cannot survive without the service or product provider. Sustainability for Apple refers to the ability to remain relevant after three decades of operation globally (Guffey and Loewy 2010b, p. 62). Recently, the Finish owners of the Nokia brand had to sell it to Microsoft so that only Nokia Lumia would enjoy dominance over other Android driven devices. Apple Inc. creates an assurance to the different users that it would not change the brand or lose its quality to other companies. Vulnerability to imitators kills brands, and Apple Inc. uses copyright issues and patenting rights to prevent reputational damage. Since its inception, the company battled to keep its hard earned reputation including financial instability in the 1990s, dictatorial leadership, and labour disputes.

Dealing with major competitors

The 3G internet connectivity and iCloud services of 2011 took Apple Inc. to a different level of competitiveness. Apple Store users have the ability to store photos, applications, music, and personal details in a single gadget even as Apple electronics remain the most costly in the world (Grothaus 2011, p. 18). After Jobs’ return to Apple Inc., the company introduced an offer that would see its users get 5GB free space on iPhone if they accepted the iCloud application. It assisted in increasing sales for the company. In 2011, the company made about 1 billion sale of iMac products and services, earning it $108 billion in profits. Apple Inc. outdid the traditional PCs manufactured by IBM and Microsoft. The profit margin from 2011 to 2012 was 14.8% to 20.4%, making it the biggest gainer of the one year stretch (Wooldridge, Schneider, and Wooldridge 2011, p. 15). About six years ago, IBM indicated progress by acquiring PwC, but it also displayed weaknesses as it had to sell Lenovo, a Chinese branch. People became receptive to Apple Inc. over IBM because Apple ecosystem offered the iOS software instead of the Android and the Linux. Apple used the opportunity to provide customers with services they required within the target environment (Paroutis, Heracleous, and Angwin 2013, p. 147). During competition, the ability to provide uniqueness, proximity, affordability, and quality mean a lot for consumer acquisition and retention. Competition from Dell, HP, Lenovo, and Acer only provided Apple with the ability to improve such PCs into innovative and portable products (Nair 2011, p. 50).

Steve Jobs intrapreneurial winning strategy

Steve Job’s input to Apple Inc. in the competitive environment

As the co-founder of Apple Inc. by the age of 21, Steve Jobs changed the way people view Apple. In a rivalled environment, product developers face different types of customers who confuse them concerning the best strategy to adopt. Dell, Microsoft, Exxon Mobil, and Amazon belong to different industries, but they posed competition for Apple Inc. in different ways (Bailey 2011, p. 18). Most of the companies established their human resources and financial ballet grounds when Steve Jobs was absent from Apple Inc. for 12 years. Jobs had a history of success even though people linked him to tyrannical leadership styles (Blumenthal 2012, p. 14). In the competitive environment, the ability to develop a unique product coupled with excellent marketing styles. Apple Inc. saw great potential in Steve Jobs after 23 years when the Business Week named the deceased, the best CEO worldwide. A company headed by an expert in entrepreneurship has the capability of succeeding in a rivalled environment. According to the Harvard Business Review, Apple Inc. finally found a leader that matched its profile in the market (Apple Inc.: 100 million iPods sold 2007). Steve Jobs shared a vision that the entire Apple Inc.’s family foresaw. Apple Inc.’s insiders mention that he could ensure that all areas of Apple worked properly. Critics considered the behaviour as interference with different areas of a company characterised by bureaucratic leadership (Carlton 1997, p. 12). It helped Jobs to know how the integrated areas of the company operated. Workers mentioned that Jobs never allowed anybody to use other applications except the ones manufactured within the company. Finally, Steve Jobs created an environment of internal appreciation of both hardware and software by the insiders (Lakin 2012, p. 11).

Steve Jobs was an intrapreneur

Entrepreneurship and intrapreneurship skills differ, and Steve Jobs had the ability to promote growth within and outside the company. Intrapreneurship refers to the ability of growth promotion within the confines of an organisation. Normally characterised by pilot projects in the phase of product development, intrapreneurs always believe that a product tested within the firm elicits the best response (Napier and Kumar 2011, p. 152). Steve Jobs was strict even though his good motivational and negotiation skills that created a team instead of a workplace for the Apple fraternity. In essence, the team had to use Apple Inc. applications instead of importing ecosystems from other companies for pilot projects within Apple. In the 1980s, the company had about 20 employees that worked as a team because they shared a similar vision concerning Apple Inc. The Harvard Business Week described Steve Jobs as a creative intrapreneur who always ensured that the insiders enjoyed product or service benefits before expecting a similar reaction from the consumers (Guffey and Loewy 2010a, p. 103). Apple Inc. would rather offer a free sample instead of reducing the price of a product or service as it believes that the action would compromise product quality. Unlike John Sculley, Tim Cook, and Steve Wozniak, the leadership style of Steve Jobs created an environment of austerity. Irrespective of the conflicts that emerged following his tyrannical leadership style, Steve Jobs maintained momentum. He led the creation of the iPhone, Pixar, iPad, iCloud, and the iTunes, making the list of innovations endless from 1997 until his death in 2012 (Ray 2014, p. 19). Like entrepreneurship, intrapreneurship involves risk taking, a legacy enjoyed by Steve Jobs posthumous. Competitors such as IBM largely focused on mergers and acquisitions in order to survive in the rivalled electronics market. When Google came up with its Chrome browser, one of the safest and fastest software, Apple Inc. had to plan for the iCloud innovation. Amazon also presented a competitive opportunity for music retail, and the online market became expansive (Ryan 2014, p. 40). Thirdly, Apple had to beat Dell’s direct business model through software technology development instead of collaborations. Such risk principles were very important for Steve Jobs because he initially used the tactics in other companies including Apple (Haller 2014).

Decision making post Steve Jobs

Steve Jobs would not survive at Apple Inc. eternally since both physical and non-existent forces would cause his exit from the company. After the resignation of Steve Jobs, it was very difficult for the company to adjust to the changes under Tim Cook’s leadership. When Jobs took the second medical leave, it was obvious that all he could provide for the firm was consultation services. Tim Cook used democratic principles of governance in late 2011 after Jobs took the medical leave (Gallo 2011, p. 106). Jobs never believed in democracies since they never create an assurance for productivity. According to him, tyranny produced results even though not one worker at the firm had recognition for his input towards the development of a service or a product. All innovations belonged to the CEO, and, sometimes, Jobs criticised innovations that he would later use for product or service launch. Much credit and recognition belonged to Steve Jobs. The fear was that introducing democratic principles of governance would promote laxity within Apple Inc. (White 2013, p. 44).

Jobs left Apple Inc. as a family of employees who shared a common vision under a workaholic leader. Cook shared similar principles even though discipline and market reach seemed to be his greatest strengths. Today, the company enjoys great market share it sought in many parts of the world including the developing countries that initially lacked such products or services. Apple does not reduce the prices of its products to meet consumer demand, but it targets the greatest market including the middle class for its iPhone 5S among other products and services. By the end of the fiscal year 2012, the company announced the sale of about $15.4 million worth of iPads and about $37 million worth of iPhone. Two months after Job’s demise, Apple recorded a revenue increment of about $46.3 billion, but 2013 presented new challenges to the firm as Samsung began dominating the Smartphone market (Apple Inc.: 100 million iPods sold 2007). Since Apple has a supply chain linking it to the US and China, a global financial recession can easily affect the company. It happened in 2008 to 2011 following the Global Financial Crisis (GFC) in which Apple Inc. among other multinationals faced a decline in consumer purchases, and it reduced company’s profits. When dealing with multinationals, there is the need to assess inventories to avoid wastage as surplus sometimes goes unused (Linzmayer 1999, p. 138). Apple Inc. strives at reducing losses by ensuring that the manufactured products and services meet consumer demand across the entire world.

Three dimensional strategic analyses

Companies use different techniques to achieve an end to the means. Apple’s three dimensional strategy aims at developing a niche market that increases company revenue while helping the firm to achieve financial strength. The following illustration best explains how Apple Inc. organises itself in order to maximise on profits and reduce losses.

According to the illustration, Apple Inc. is at the centre of the pyramid, which operates in a cyclic manner. The company establishes a relatively strong market share through adverts, royalties, public relations events, and promotions. Tim Cook established an environment in which consumers believe in the products and services of Apple irrespective of the prevalent competition. Quality assurance drives consumers to iPhone, and the relative market share generates the requisite revenue for strengthening the acquired market. Adverts, sales promotion, and CSR programmes only represent a portion of Apple Inc.’s activities geared at acquiring a loyal customer base (Burrows 2004, p. 73). Loyal customers still have trust in Apple products even in the face of criticism that iPhone 6 bends when placed in the pocket. Apple has a good inventory management programme within the supply chain, and it has to plan for profit maximisation by investing carefully on the customers (Griffin 2012, p. 41).

Understanding the industry

The company approached Google and Amazon to achieve a similar objective. The move indicates that Apple Inc. understands the competitive customer service first (CSF) technique. In industries characterised by the CSF principle, the intention is always to create a product or a service that moves very fast in the market (Gitman and McDaniel 2008, p. 95). Price, place, and product driven elements are likely to move fast in comparison to value driven products. Apple Inc. targets affluent customers since inception, and most products and services from the firm add aesthetic value to the customers. Product and promotion remain very important for Apple Inc. In 2002, the company acquired companies such as Silicon Grail, Emagic, and Prismo Graphics in order to strengthen the brand in a rivalled German market. In essence, Apple Inc. understands that it deals with customers who need quality services or products. The customers also get free customer care services, and the assurance of follow up in case of damages. As such, customers enjoy all benefits of quality assurance since they always return products when Apple recalls any gadgets with technological hitches (Kurtz and Young 2009, p. 81).

Innovation

Improvement of previous inventions refers to innovation; it defines product development at Apple Inc. After the company came up with the Mac that never had internet connectivity, it had to introduce the 3G internet technology for its iPhone. Through the iOS technology, Apple has the ability to improve its digital hub that it introduced in 2001 (Levin 2012, p. 30). The digital hub concept of 2001 introduced PCs, VCDs, DVDs, iMovies, iPhoto, and iTunes in order to show the innovative transition within Apple Inc. The intention is to minimise the size of gadgets used for information storage while promoting privacy (Features in iOS 2014; Morson 2013, p. 16).

Conclusion

Apple Inc. understands that it is very difficult to succeed without collaborations within and outside the company. Even though Steve Jobs was against mergers and acquisitions, the company realised that iTune retail would only be convenient through collaborations with Sony, EMI, Universal, BMG, YouTube, and Warner Brothers among other giants in the music retail industry.

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