COMM 401: Strategic Management
JMSB Concordia University
Wednesday, October 16, 2013
As a result of the amazing innovation and vision of Steve Jobs, Apple is now recognized as the most valuable company of all time. The recently deceased CEO revolutionized the digital age and created a powerful brand that stands as an image for groundbreaking technology. Today, the question that looms through everyone’s mind is: will Apple still be successful without Steve Jobs alive? The person that will now control the business is the new CEO, Tim Cook. With a slightly different vision of how to run the company, Cook has a huge challenge ahead of him: sustaining the current success of Apple. This paper will provide an analysis on the firm’s historically successful strategies and provide future recommendations to continue that success.
Firms do not have the power to control the general environment segments around them.
However, they have the possibility to create a strategy based on theses external segments. In the early years, Apple’s objective was to create a computer that was easy to use, no matter the user’s computer proficiency. In order to do so, the company had to analysis the demographic and technological factors influencing society at that time so they can create a computer that would meet their goal. Through significant research on the market and their advanced knowledge on technology, they were able to create the Apple II. With this invention created in the 80’s, Apple quickly became the industry leader (Yoffie, 2012).
In order to stay on top of the game, organizations need to differentiate themselves by implementing a strong strategic competitiveness to earn above-average returns. Porter’s Five
Forces Analysis allows a firm to understand its current and future competitive position (Hitt, Ireland
& Hoskisson, 2011). Nowadays, it is almost impossible for a company to enter the computer industry. New companies need large amount of capital, time to study the market, a strong distribution network and of course a strong brand name. This means that the threat of new
competitors in the computer industry has a relatively high barrier of entry. A few decades ago, the barrier of entry was much lower, as barley any competition existed. In the mid 80’s, IBM gained significant share of the market, by offering the first home computer. Apple focused too much on design and elegance, while IBM became the new industry standard (Yoffie, 2012).
Another of Porter’s important forces is the bargaining power of suppliers, which can in some cases be very limited in the PC industry. This occurs due to a low concentration of small suppliers that highly depend on large volume orders. However, Intel and Microsoft have a huge control over supply, hence developing a high bargaining power. Recent consumer spending trends indicate that people are more willing to pay a low price for a good quality computer. This means that the bargaining power of buyers is high as consumers are becoming price sensitive, and the industry is becoming more standardized. Apple always offered their computers at a relatively high price compared to other companies, which is why they need outstanding device features that differentiate them from others. Threat of computers substitutes has varied a lot through time (Hitt, Ireland &
Hoskisson, 2011). When computers were a relatively new product, there was a very low threat due to the lack of competition. As the industry was growing, buyers faced fewer switching costs and substitutes products prices were decreasing. Recently, products such as smartphone and tablets have become the new threats to PCs. However, Jobs had this vision of a ‘’digital hub’’, which consisted of having a Mac to control and add value to all other devices such as iPhone, iPod or iPad
(Yoffie, 2012). This strategy would turn the apparent threat of