APPLE COMPUTER STRATEGY.   Term Paper ID:26669 Click to get this paper

Essay Subject: Examines firm's problems/opportunities, leadership, competition, product, pricing & promotion & recommends strategy in retrospect.... More...

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Paper Abstract: Examines firm's problems/opportunities, leadership, competition, product, pricing & promotion & recommends strategy in retrospect. Paper Introduction: APPLE COMPUTER CASE: (A) & (B) The Apple Computer Case, Parts (A) and (B) is analyzed. The results of the analysis are presented within the context of the questions posed in each part of the case. Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Initially, the introduction of IBM's PC did not cause too manyproblems for firms such as Apple Computers, because the home and schoolmarkets remained strong. To pursue industry leadership under existing conditions, inturn, threatened the company's ability to operate profitably. As was true of Jobs, Oppenheimer was seemingly unable tocomprehend the fact that Apple Computers, to survive, would eventually berequired to accommodate technology other than its own. While it is true that clone manufacturer's would have madea dent in the hardware market share of Apple Computer, the growth in theoverall Apple system share of the market would have strengthened theposition of Apple Computer as an operating system developer and marketerand as a technological innovator. Apple Computer, third in overall microcomputer sales in the late-197 s, was targeting the home, hobby, and education markets, while Tandyand Commodore were targeting both the business market and the professionalmarket. The first of marketing's four "P," product, is defined interms of characteristics-quality level, features, styling, brand name, andpackaging. Further, refused to allow other manufacturers to clonethe Apple computer designs. Features represented a major problem for Apple Computers. Decision-making in Apple Computers in 1983 was highly centralized.As the principal decision-makers were unable to accept the majorstrategic changes being forced on the firm by external forces, thiscentralization led the company into a strategic morass. It was,however, a customer focus with a difference. In many ways, Apple Computer'sstrategy was more responsible for the Wintel success than were thestrategies of Intel and Microsoft. Therewere, however, several sub-segments within the microcomputer segment of thecomputer market in the late-197 . He tendedto think that a single technology should be incorporated into all ofApple's computers. Where the senior executive leadership at Apple Computer faileddramatically was in planning and reviewing progress toward businessperformance goals. This action would havebeen the single most important step taken by the company in 1983. IBM, which at that time was a bit-player in the microcomputermarket (the company emphasized minicomputers and mainframe computers in thelate-197 s) also targeted both the business market and the professionalmarket. Qualityalso involves the fulfillment of customer wants and needs. Thischange in strategy would have opened the Apple Computer product line toclose developers, an action that would have led to more competitive pricingfor Apple system computers and to greater software selection. This latter feature meant that the IBM PC could accommodate awide variety of applications software programs, with a relatively smallamount of RAM. This chain of eventsspelled disaster for Apple Computer; however, the senior executives atApple Computer refused to recognize the true scope and nature of theproblem facing the company. Price proved to be a thorny issue for Apple Computer. Thecompany touted the ease of use characteristics of their computers, butconveniently overlooked the inability of the machines to perform the high-level multitasking operations demanded in many business use environments.The result was that Apple Computers developed great customer loyalty in amarket niche, and in 1996 the company's market share of the microcomputermarket was around eight-percent and moving downward. Each ofthese outcomes would ultimately have proved to be highly beneficial toApple Computer. The resultsof the analysis are presented within the context of the questions posed ineach part of the case. Apple Computer's message tothe customer appeared to be "do it our way or do without Apple Computer."This approach started the process of moving Apple Computer from theposition of a dominant player in the computer market to a near boutiquestatus. In 1995, however, the slippage became anear landslide. As a consequence, the firm failed to do many of the things thatwould have been expected-such as developing and implementing a strategicplanning system, and preparing contingency plans for unforeseen events.The rapid growth and financial successes achieved by Apple Computer in anessentially non-competitive environment appeared to convince the firm's topmanagement that they were gods who could do no wrong, and that the firm'stechnology, which within the firm an in much of its existing markets wasconsidered superior to that of competitors, permitted the firm to ignoremarket forces. Apple Computers ineffect told consumers that "we make a great product, and you're nuts if youbuy an IBM compatible." Most of the market, unfortunately for AppleComputers turned out to be "nuts." The second "P," price, as stated earlier in this case analysis, alsoproved to be a thorny issue for Apple Computer. Allthat Sculley had to do was to notify clone manufacturers that they werewelcome additions to the Apple team. Apple Computer focused on these sub-segments, addressedthe needs of these users, and developed a loyal following for the company'sproducts. was, in the late-197 s, the largest producer ofmicrocomputers participating in the American microcomputer industry. A creative genius, Jobs was unable to accept thefact that Apple Computers was not in a position to dictate industrystandards. Industry projections in late-1978 indicated thatthe greatest growth would occur in the professional market, the businessmarket, and the home market. By contrast, Apple Computer, the early leader in themicrocomputer market, maintained a proprietary strategy that prohibitedmajor efforts by third-party hardware vendors and operating systemdevelopers. With theintroduction of the Macintosh product line, the company also begantargeting the office market, however, its biggest markets remained the homeand school. A second result was that Jobs was forced out of thecompany he helped to found.Recommended Strategy In early-1983, Apple Computers could still be described as theindustry leader in microcomputers, and, in 1982, had recorded another in along line of record breaking financial and operational performances. Hebelieved than the answers to the company's problems lay in theintroduction of products with greater capabilities to meet the changingdemands of the market. In early-1983, Apple Computers had to develop and adopt astrategy for the future in a changing industry. Thus, otherfirms could develop additional features for the PC, which could be easilyassimilated, or added-on, to the PC. The senior executives at Apple Computer reinforced a customer focuswithin the company. While the companywas relatively strong financially, it did not possess the resourcesrequired to successfully challenge the caliber of its new crop ofcompetitors. The company perceived thatits product was the superior product and priced it accordingly-higher thanthe competition. By contrast, Microsoft, the company that producesthe operating systems for the "Wintel" machines, and the manufacturers ofthe IBM compatible computers completely ignored Apple Computers in theiradvertising. Apple Computer faced two strategic marketing issues inthese contexts. Apple, however, likely was "preaching to the converted"hoping to stem further market share loss, as opposed to an attempt to gainmarket share. Industry projections in the late-197 sindicated that the greatest growth in the 198 s would occur in theprofessional market, the business market, and the home market, in thatorder. Alan Oppenheimer, the company's Director of Marketing Research viewedthe company's strategic problems in the context of product line. Part (A)Initial Strategy The Tandy Corp. The firm was soon to find out that its earlier machineswere not acceptable in the business and professional market, and, that bypersisting in an assumption that Apple was the industry standard, its newermachines, regardless of their attributes, were rejected by the bulk of thebusiness and professional market. In the earlier days of the personal computer market-the late-197 s andthe early-198 s, the primary markets for the personal computer were homesand schools. The first and foremostelement of a new strategy would have been to end the proprietaryrestriction on clone manufacturing. These sub-segments were (1) the hobbymarket, (2) the education market, (3) the home market, (4) the professionalmarket, and (5) the business market. There were just too many things that the early personalcomputers could not do, for them to play a major role in the office market. The companyperceived that its product was the superior product and priced itaccordingly-higher than the competition. Such an outcome was much moreimportant than presiding over a dwindling band of true believers.Strategy Implementation The strategy recommended could have been implemented overnight. The choices were (1) a relativelysimple operating system, such as the PC-DOS, which left ample memory forapplications software programs, but which was limited in the things that itcould do itself, or (2) a relatively complex operating system, which wascapable of performing many desirable functions, but which left little RAMfor applications software programs. Additionally, Apple Computerrefused to allow other manufacturers to clone the Apple computer designs.IBM clone makers, however, caused price reductions for IBM compatibles, anda surge in market share away from Apple Computer products.Recommended Strategy When IBM introduced its PC in 1979-198 , it also introduced a newoperating system-PC-DOS, and its counterpart, MS-DOS, which could be usedon all IBM compatible machines. In the case of Apple Computers in 1983, however,environmental changes were occurring which threatened the firm's industryleadership. The senior executives at Apple Computer did reinforce a customer focuswithin the company. Second,Sculley should have accelerated work on a new operating system to securemarket leadership for Apple Computer in the future. Apple Computer's initial strategy was to target specific sub-segmentsof the market that the company's management believed could be best servedby the company. Its corporate objective was to remain theindustry leader, while its business objective was to continue to operateprofitably. This customer focus was largely responsible for thesuccess of the company's initial strategy.Problems Beginning in the 198 s The highly successful initial strategy followed by Apple Computerproved to be both a boon and a bane. One result was that Apple Computer lost itsadvantages to IBM. The third element of the strategy that would have been recommended toSculley in 1983 would have been to embark on the development of an advancedoperating system that would be able to outperform PC-DOS in business andother higher-level applications. When IBM developed its PC, it made two significant decisions withrespect to design. This feature also meant, however, that the IBM PC was notcapable of assimilating some features, without the addition of significantamounts of new RAM. First, should their products competing with those of IBM be designedas open systems, as was the IBM PC, so that new features could easily beadded-on to the machine, or should the Apple machines be closed systems,to insure that any new business would come to Apple Computer? Jobs was a strong advocate of the failed strategy. The fourth "P," promotion exposed a huge flaw in the Apple Computerscorporate psyche. This approach created a powerful customer loyaltyamong a rapidly declining share of the market. The largest of the sub-segmentmarkets in the late-197 s was the business market, which was followedclosely by the professional market. IBMselected to Intel microprocessor for use in its own personal computers andadopted a product strategy that not only allowed but encouraged third-partyvendors to develop and market hardware and software to support the IBMpersonal computer. A second element of the strategy that would have beenrecommended to Sculley in 1983, however, would have been a policy thatdropped Apple Computer's proprietary stance towards its technology. Apple Chair Steven Jobs viewed the company's strategic problemswithin the contexts of new product development and introductions. Therefore, asignificant strategic issue facing Apple Computers was deciding whether to(1) develop machines which were compatible with the IBM PC, or (2) continueto develop machines which employed their own unique operating systems. This new operating system quickly becamethe standard in the office market for personal computers, because Apple'soperating system was proprietary to its own products. The strategy that would have been recommended to Sculley in 1983 wouldhave included a policy of maintaining and operating system that was notcompatible with the PC-DOS operating system. As the market share for the company's products declined, computerretailers reduced the selling area allocated to Apple Computers products.The result is that even for those consumers wanted to buy an Apple computerit become increasingly difficult for them to either find the product or tofind a good selection of Apple Computers products. Competition in the microcomputer industry was rapidly increasing in1983, and many of the new players in the industry, such as IBM and DEC,were far more powerful organizations than any Apple Computers had faced inits history. The values atApple Computer sacrificed this aspect of quality when a focus on thisaspect of quality precluded a modification of the company's proprietaryapproach to production and operating system design. For Apple Computers, everything seemed to fall into place from thebeginning. In fact, Apple Computer did implementthis facet of strategy.Strategy Implementation To implement the recommended strategy, Sculley should first have endedthe proprietary policy toward clone manufacturers. In its initial operations, as notedabove, Apple Computer targeted the school and home markets. By 1983, however, supply was beginning to catchup with demand in the home and school markets for personal computers.IBM's PC was already being projected by many observers to become thedominant machine in the office market for personal computers. At the technical level, Apple Computer senior executives establishedhigh quality levels, and they expected and demanded that these levels bemet. IBM clone makers, however, caused pricereductions for IBM compatibles, and a surge in market share away from AppleComputer products. Change in the competitive structure of the microprocessor market wasdriven primarily by Intel's success in that market, which, in turn, was theoutcome of the combination of Intel innovation, IBM's personal computerproduct strategy, and incredible strategic blunders by Apple Computer.Intel designed a microprocessor for use in personal computers, and thencontinued to improve the product through technological innovation. Apple Computer Case: (A) & (B) The Apple Computer Case, Parts (A) and (B) is analyzed. ThePC was a machine which could do many of the tasks required in offices-anddo them well. One outcome of this combination of events was the rapiddominance of the personal computer market by machines driven by Intelmicroprocessors. There was no particularadvantage to Apple Computer in embracing compatibility with the IBM PCoperating system. Part (B)Sculley and Jobs While the market share in the microcomputer market for Apple Computershad been slipping for several years, the quality level of Apple Computerproducts remained generally high, the brand name remained strong, andneither styling or packaging were major issues. The IBM product strategy created opportunities for third-party hardware manufacturers to produce clones of the IBM PC, and activitythat increased the market share of Intel-based machines and, in turn,Intel's own sales. In late-1978, the largest of thesesub-segment markets was the business market, which was followed closely bythe professional market. Apple Computer more than anything elseneeded more machines in the hands of users. Steven Jobs, after participating in the highly successful launching ofApple Computer, lacked the flexibility to effectively deal with a changingexternal environment. The market share in the microcomputer market for Apple Computers hadbeen slipping for several years. Quality, however, has a dimension other than the technical. The massive market for Intel microprocessors thatdeveloped attracted competition for the development of microprocessors thatessentially were clones of the Intel microprocessor. The company's envy over the success of the so-called"Wintel" machines was evident in the "put-down" character of the company'scomparative advertising. Under most circumstances, these objectives would have beenquite compatible. The recommended strategy in the late-198 s would have been nearly thesame as it would have been in the early-198 s. Second, the PC-DOS operating meantthat it did not require a large amount of RAM (random access memory) foroperations. This customer focus was, as stated above, largelyresponsible for the success of the company's initial strategy. Thesecond of these issues involved the type of operating system which shouldbe incorporated into the Apple machines. The principal strategic decision, in Oppenheimer's viewwas a choice between Apple II technology and Lisa technology for the newproducts the company would introduce to target the home and businesscomputer markets. Thecompany was in the business of providing personal computers toorganizations and individuals. Apple Computer believed thatthe company's products and its business strategy was superior to those ofits competitors, and throughout the 197 s and 198 s refused to compromiseon these positions. Once Apple Computers determined to become pricecompetitive in 1995, many consumers saw that action as a desperate bid bythe company to generate cash, and stayed away from the sinking ship. In the 197 s, Apple Computer had practically invented the personalcomputer as it has come to be known. Apple Computer was focusing on a sub-segment market that wasneither the largest nor the one for which the greatest growth wasprojected. This situation changed in 1982, however, when IBM introduced its PC. First, the PC would be easily expandable. Thus, thedominant strategic issue facing Apple Computer was the development of alarger penetration in the office market for personal computers, in the faceof a potentially dominant competitor-IBM. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.