Introduction
Apple Inc. is a computer, phone, and software manufacturing company that was founded in 1977 by Steve Wozniak and Steve Jobs. The two friends sold hundreds of gadgets nationwide. By the year 1976, Wozniak and Job had developed another box, which they called Apple 1 computer. That product did not have both keyboard and power supply, however. After selling some of their valuable products at $1,300, Wozniak and Jobs managed to start a company with the name Apple. The company, therefore, became a designer, a producer, and a trader of personal computers, as well as it became a line of portable digital-music players. The company under the leadership of Steve Jobs thrived well till 1985 when Steve Jobs left, for him to return in 1999.
Before Steve Jobs returned in 1999, Apple had been close to filing for bankruptcy. But Apple not only preserved its original niche of professional graphic designers, photographers and other technocrats but also successfully diversified into mainstream consumer markets. In 2011 Apple’s net profit was in excess of $34 billion before interest and taxes. Apple has reached dizzy heights with over 60,000 employees; over $65 billion in global sales have come under increasing scrutiny in every sense of the word. In 2011 the reign of Jobs as Apple chief manager came to an abrupt end when he announced his retirement plan because of health condition. In his place, Tim Cook took over.
Apple’s Product Segment
Apple Inc., as has been previously underlined, started its existence as a designer, a producer, and a trader of personal computers, and digital-music players. The company developed several products in this line that have been spread to the market in varying proportions. The diagram bellow indicates the product segment of Apple (Terifs Team 2011, p 1).
From the diagram above, it can be seen that Apple has six lines of products with the first three being very essential for its survival. The analysis of iphone, ipad, and Macintosh is shown bellow.
iPhone
Since its inception, the Smartphone industry has been on the rise. The consumers have been shifting from the ordinary phones to the smarts ones because of its capabilities. According to the reports by Michaels (2012), the total Smartphone sales accounted for 6% of the entire handset sales in the mobile phones industry. The amount rose to 8% in 2008 and by 2009, it almost doubled when it hit 15.3%.
The average yearly growth was 30% for the last four years up to 2009. This growth momentum is an indication that Smartphone is the top product that is funning the growth of the mobile and wireless network industry. The industry has already experienced the deployment of 3G networks among the wireless network operators, which is faster than the previous devices. A detailed scrutiny of Smartphone industry indicates a rapid acceleration in the adoption of new technology that is being modified each dawn.
Primarily, the triumph in mobile industry was pegged on the signal strength of the operator or provider and the superiority of the gadget. However, what matters nowadays is the software platform and the operating system of the device. In fact, these factors are the key differentiators in the creation of innovative user experience and development of myriads of features to satisfy the needs of the users. As a result, Apple has consolidated over 56% of product segment on iphone as a result of its enormous growth potential.
iPad
iPad is the latest innovation of tablet computers. The Tablet computers are the latest innovation in the computer world that has transformed the face of computer technology. This is because the Tablets come with innovative features subsuming, wireless technology, touch screen, portability, and high resolution. This industry is still developing as attested by regular modifications in the existing brands. In fact, the trend is expected to continue with fierce competition expected in the industry.
The tablet industry was transformed by the launch of the iPad. This is because the iPad brought a totally new dimension into the industry and positioned itself on the leading front in terms of consumer tastes and preferences. For Apple Inc., its iPad lies in-between the massive iphone and the largely flourishing Mac Book line of products. However, there are other companies offering Tablet computers with similar functionality to the iPad. The tablet industry is on the boom. According to a recent research conducted by Gartner (2012, p.1), it was found out that the tablet industry is expected to double its growth in 2012 with the market leaning towards the iPad. As a result, Apple has segmented ipad with over 11% share of its market.
Macintosh
Macintosh is a portable computer of Apple. Apple has concentrated about 10% of its market segment on Macintosh because of its portability. Apple’s sale in its brand, Mac, has been increasing and is on continued increase. For instance, during the last quarter of 2011, sales for Apple Mac reached a record high of 4.89 million units. This amount is a 26% increase in sales based on the sales recorded during the same period in 2010. In fact, this growth in sales of personal computers was six times higher than the total forecast. The increased in sales is attributed to the strategy of size and portability. Mac is more portable and thus convenient for the users. This is based on the fact that 70% of the sales were derived from portable Mac gadgets. In fact, about three out of four of Apple Mac sold was portable.
The sales from the product segments are as shown bellow (Rothaermel & Horbaczewski 2012, p. 7).
From the table above, it can be seen that apple is shifting to iphone, ipad, and Mac. The portable Macs are preferred to the desktops as a result of their portability. Other products from apple including the iPods, the iTunes, and apple TV have a small market segment.
How Apple Positions Its Products above Its Competitors
Apple has a range of competitors for its products. These competitors possess a great challenge to apple and have compelled it to position strategically on the market to oust them. In fact, Apple has always been above the rest on the market. The secret is in its value chain, which ensures that all stages of the products of Apple meet the market taste based on its unique innovative features. The values chain of apple is as shown bellow.
Innovation
Innovation has been the key driver in Apple. New ideas have been created and then incorporated into the market. Innovation and production of new product evolve from basic stage of design creation.
Product creation
The company invests heavily in product design and new technology. In fact, close to nine percent of the revenue is spent on innovation through research and development. The huge investment in research has not been in vain. This is because the company became the first to produce and utilize electronic spread sheets termed as the VisiCalc on its Apple 2 Plus. Furthermore, apple’s digital lifestyle hub was the first one in its kind in the entire market. Because of great insights in innovation and research, the operating system from Apple is globally acknowledged for its stability and reliability as opposed to the windows operating system. The technology is described as cutting edge and places it above its competitors.
Supplies and Suppliers
Th majority of the peripherals utilized by apple in its production, are manufactured from scratch. The company produces its own monitors, chips, and disk drives. During production, the company utilizes its internally made software and hardware bundled packages. Internal sourcing of supplies ensures the originality of the product.
Distribution
Before 1997, Apple was dealing with its customers through some designated outlets. However, after 1997, new distributions systems were created eliminating the previous outlets. The strategy helped in expanding the company’s national image as it could now easily reach the people. The company further resorted to online marketing strategy whereby a website for dealing with customer was created. The process yielded the desired results such that by 2011, 40% of sales volumes had been transacted through online store.
Advertisement and Marketing
Marketing entails the utilization of the best avenue that can create awareness of the existing product so as to persuade people to buy it. This has been the trend in Apple. The company advertises its products through print media, posters, and television commercials. Also, the company is using wrap advertisement campaigns when marketing new products; the strategy has been a boom for the company.
Customer Service
Apple Inc. values its customers and thus they are considered above everyone else. It has a policy of ensuring that its service, products and operations take place in the heart of the customer. In fact, the companys increase is attributed to the loyalty of its customers. The loyalty of the customers is worn through quality and style of its products that meet the needs of the customers.
SWOT Analysis for Apple
The strengths, weaknesses, opportunities and threats for apple are as analyzed bellow.
Strengths
According to Yoffie and Kim (2010, p. 15), Apple has a favorable brand perception world-wide. For instance, Macintosh has achieved customers’ recognition to such an extent that its sales have increased. Also, through its sale of iPods, the brand will continue to flourish. The company has a good track of success in the Tablet and Smartphone industry. This means that it can take an example of the success of Tablet and Smart phones using the foundation of success that has been laid down.
The company has diversified its products. It does not deal with only one line but several. This means that one line can boost the other one. According to Climate Counts Organization (2011, p. 1), Apple is one of the most environmental friendly corporate organizations. The superior marketing provides a good platform for the company to introduce new products, for instance, the iPad 2 (Macnn News 2007, p.2).
Weakness
According to Lai (2011, p. 6), there have been reported some cases of faulty screen on the iPod Nano and also some faulty batteries, which the company has to replace. Also, Apple has been under pressure to increase its prices on music download; this could affect the loyalty of the customers. In 2005, there was some speculation of swapping chip suppliers, from IBM to Intel, if such a case happens, the customers will be confused
Opportunities
The company has several opportunities. The first one is a platform for innovation. The company has the platform for developing its iTunes and music player technology into exceptional mobile phones. A version of the iTunes music store for Apple is already in place. More modification is still possible for exploitation by the company. Customers are always on the lookout for new technology and thus the platform for innovation will make the company favourites in the market.
There is also an opportunity for podcast subscription. Podcasts are radio and television shows that are stored on the internet and then downloaded at the customers’ convenience so as to be played in the iPhones. This means that Apple has the opportunity to attract its customers by offering them free subscriptions to podcasts. There is also an opportunity for the company to capitalize on the market from developing nations. Although the demand is shifting from personal computers to mobile phone devices, there are still some demands from some emerging markets. Computers are still useful as some people are discovering their use (Yoffie & Kim 2010, p.3).
In 2010, roughly one billion computers were in use globally. The trend is expected to continue till 2014 with noteworthy demand increases in Africa and Asia Pacific regions (Hartley 2010, p. 10). Accessible investigations show that customers are acquiring more electronic products. For instance, in India, electronics registers one of the strongest sales volumes and spending on computers and mobile products are significantly strong (Griffiths 2010, p.35). With the falling bandwidth in Africa, many of consumers are after digital content (Hogan 2011, p. 55). This means that Apple has the opportunity to expand and remain in the business.
Threats
The only threat that the company faces is the competition from other similar companies.
Apple’s Board Structure
Apple incorporation was founded by Steve Wozniak and Steve Jobs. The company has been under the leadership of Steve Jobs as the CEO. The company under the leadership of Steve Jobs thrived well till 1985 when Steve Jobs left, only for him to return in 1999. Thereafter, the company grew under the leadership of Jobs only for him to succumb to illness forcing him to resign in 2011. When Jobs left, he was succeeded by Tim Cook. The company has a seven-member board responsible for managing the affairs of the company. Most of these board members have a relationship with the owners. The board makes decisions independently.
Criticism of Apple’s Board
The board has been criticized for the fact that they did not plan for Job’s succession and left him run the company in his way. Moreover, the number of members has been seen as small for a company of such a size. The board concealed the health of Jobs for years meaning that the company had a shadow chairman. At the same time, most of the board members have connection with the owner of the company. Also, this board was criticized for its secret succession plan (Erick 2011, par. 6).
The criticism is not justified because the company has been thriving under Jobs’ leadership. Before Steve Jobs returned like the prodigal son in 1999, Apple was close to filing for bankruptcy. It was very likely that one of the 21st century’s leading brands would have been vanished at the time, like Netscape. However, Apple not only preserved its original niche of professional graphic designers, photographers and other technocrats, but also successfully diversified into mainstream consumer markets. According to Forbes magazine, the stock price of Apple in 2000 was about $6 and by 2011, the stock price was $400 (Erick 2011, par. 9).
This is an increase of over 300% which is an indication that the company is growing tremendously. However, the succession plan ought to be public because the next person may not be as competent as Jobs. For the case of the number of the board members, it ought not to be the case because number is not an issue what matters is output.
Changes That Reformers Would Like To See
Reformers would like to see succession plan for Apple being made public because they felt that Jobs was a shadow leader during his times of illness. Had the plan been implemented on time, Jobs would have been replaced. Similarly, the reformers would like to have an expanded membership board. The seven-member board in place is subject to manipulation since the majority has a relationship with the owners.
Apple’s secretive succession plan
Apple was extremely secretive about its succession plan. The public was not aware of Job’s condition and the person who was to succeed him. The shareholders were not briefed of the situation and only came to learn of the issue when the successor was put already in place. The secret successive plan was justified from the company’s point of view. In the first place, there was need to protect Jobs from public criticism.
He had been sick for a long time meaning that most of his duties were performed by his successor. Had the succession plan been public, it could have been claimed that Jobs was incapable of working, which could have forced him to resign early, yet he was the heart of Apple. Each shareholder could have given his views on the issue leading to politics in the leadership plan, which could have given it an unfair competition from its competitors. At the same time, the board knew the tasks required in the leadership plan and, therefore, had a successor already in place.
The secret plan for succession was not a breach of the board’s fiduciary responsibility to shareholders because the board acted in the interest of the company and not for personal gain. According to Lublin and Thurm (2012), the board had been planning a succession plan for a long time and was acting in honour of the plan. It is not in the capacity of the shareholder to interfere in the management of the company if the board is acting in accordance with the interest of the company. However, it would have been wise if the board had hinted the public about a secret plan for succession in place. In that way, the news of the change of leadership would not have affected the company.
Significance of selection of Tim Cook as Jobs’ successor
Prior to his appointment as the CEO, Tim Cook worked as an assistant to Jobs. He deputized for Jobs on several occasions when Jobs was ill. His selection is, therefore, not a surprise but a wise strategy by the company. Cook has gained enough experience in the management under Jobs and the company flourished under his leadership in the period he was acting CEO.
Based on the selection process, the company has adopted an internal succession strategy which will be used in the future. This also means that the company is concealing its internal designs and leadership marks set by Jobs. As a result, it cannot allow a new CEO form outside with little culture of Apple to come and take over the management of the company. This strategy is totally agreeable.
Top Challenges That Tim Cook Faces
The first challenge is to restore the public faith in him. The public was shocked at Cook’s secret appointment leading a share decrease in the share value by 5% in his first day in office. Another challenge is to maintain the culture of innovation that his predecessor had installed in the company. Also, Cook needs to focus on the growth of the company amidst emerging competition in the smart phone industry.
How Cook Should Address the Above Challenges
In the first place, Cook should steer the company towards unified community social responsibilities. Areas such as provision of free online learning through iTunes U- a program will give Apple a good public relation and restore the faith in Cook’s leadership. Cook should capitalize on the emerging market from Africa and other developing nations. This will increase its market share and increase the shareholders confidence in him. Cook should also implement Consumer feedback mechanism so as to the tailor the products to the taste of the consumers. In this way, the culture of innovation will be preserved.
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