apple inc 2008 case study summary

Apple Case Study

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Executive Summary

Introduction, measuring capability performance, options, recommendations and implementations, list of references.

Since Apple was established in mid 1970s, its popularity has become immense especially in computer technology industry. Its full potential was realised when it shifted its focus from marketing and promotion of computer products to development of innovative industrial design in modern electronics, unique hardwares, operation system and application softwares and services. It provides customers with new products and solutions that are easy to use and seamless integration.

The relevant competitive models chosen for this assessment includes the Michael Porte’s five forces such as entry of competition, threats to substitutes, bargaining power, power of suppliers and rivalry, SWOT and Industrial analysis as well as micro analysis in order to assess Apple Inc. strategic capabilities and suggest future directions for the business. Apple assessment also analyses the results of a study presented to examine how it utilises customer satisfaction data obtained from formal feedback mechanism.

Company background

Apple was founded in 1970s by Steven Jobs who then became the company CEO. Apple first started as a computer company in 1976 and was fast recognised for its intuitive adaptation approach of graphical user interface that saw the adoption of the first mouse and first onscreen windows.

Steven Job innovative approach focused more on specialised products and by 2001, its full inventions came into play with the introduction of iPod, a product that ranked top in the market leader in music players. Eventually, iPhone came into play in 2008, followed by iMac, iPad and iTunes which have also been widely successful. This meant that electronic products combined with eminent good customer support throughout its product base were slowly becoming the company’s primary objectives.

Summary of Macro Analysis

Macro analysis also known as PESTLE is an analysis of the external macro environment in which a business operates. PESTEL analysis includes factors such as political, economic, social, technological, legal and environmental issues. For a detailed analysis, the following table illustrates the macro environment of Apple Inc:

Apple Case Analysis

Apple ranged top in customer satisfaction with phone-based technical support, feedback, face-to-face communication, email communication, and information exchange in the American Consumer Satisfaction index (ASCI) in the second quarter of 2009. These companies were credited for offering the best technical customer satisfaction service within the Personal Computers category with a base score of 77 on a 100 point scale and earned 83 points in the second quarter of 2006.

Business analysts have argued that the companies’ ability to focus on product innovation and customer satisfaction has won the company loyal customers compared to other PC vendors. Quality of customer service is always the determining factor for success of any company and not its products, and the three companies for this case have gained tremendously from such strategy.

Van Amburg, the managing director of the American Customer Satisfaction Index (ACSI) argues that customers from other service providers were very frustrated with company’s customer service despite the quality of its PC hence loss of loyal customers and the services continued to deteriorate as years went by (Moore & Knight 2010; Keizer 2009).

In ensuring quality satisfaction in information collection, Apple launched Consumer Privacy Policy that ensured the collection, use and disclosure of personal information regarding customer issues are kept at optimum security. The company pledges to safeguard personal information collected when visiting the company’s website, purchase of products and services and when a customer calls the sales team or support associates.

Personal information collected here is aimed at helping the company deliver higher customer service and provide convenient access to company’s products and services. Information collected from customer’s reviews also helps the company implement and post the latest product announcement on special offers, software and events (Apple 2010; Levitan 2004; Prasaad 2009).

Summary of Industry Analysis

Porter’s analysis focuses on the threat of new entrants, bargaining power of suppliers and buyers, power of substitutes and rivals on profitability in an industry.

The following table presents Porter’s five forces analysis of the micro environment of Apple Inc.

The industry analysis of our company in the market displays strong competition in the computer technologies and electronics. Apple maintained its competitive edge by progressively innovating product designs and operational execution.

Its product lines were also diversified and supplied its products to retail stores and eliminated third-party retailers. The company also opened up to 247 stores including 19 internal locations averaging to $29.9 million in sales revenues. The company has numbers of loyal, & the customer base reports the permanent growth (Keizer 2009).

Suppliers have helped Apple diversify their products. Apple entered into a multi year agreement requiring its major key components that included dynamic random access memory DRAM, LCD displays, NAND flash memory and microprocessors that included partners such as Hynix Semi-conductor, Intel Corporation, Samsung, Micron Technology and Toshiba Corporation. It also partnered with other corporations internationally to ensure final assembly of its products are concentrated on quality issues (Keizer 2009).

On market research aspect, Apple was reported to collect personal information on various occasions for market research purposes. This information is aimed at gaining better understanding of customers needs, improve products and determine how best to provide useful information (Apple 2010; Hewlett-Packard Development Company 2010).

Apple partnered with other service vendors such as MobileMe and iTunes stores to help in collection of information by requiring customers to customer’s to create an “phone company ID” before purchase of products.

The ID is strategy is designed to help customers have easier access to web services and saves them time since they don’t have to give their personal information when requesting for services. The procedure requires creation of personal profiles by adding the name, phone number, email address or credit card number together with a suitable password that will be used to access the profile.

Once the signing up procedure is completed, the customer is allocated personal ID and a password that the system generates automatically. Therefore next time the customer enters the website to re-purchases products is welcomed by personal greetings by mentioning his name and is able to access up to date information regarding the product purchased which can be used wherever the client goes (Apple 2010).

In order to survive in the competitive environment, company’s have to device a number strategies to beat their competitors like changing the price of the product-which is in fact a temporary solution, improving product features- key to success, creatively using channels of distribution and exploiting relationship with suppliers. When we look at these examples, brand recognition seemed to cut down costs of advertisements.

On this perspective, Apple diversified to digital consumer electronics such as iPod, iPhone, iMac among others widened its product markets. Apple dominated computer markets introducing itself a premier provider of technology solutions for educators, web designers and graphic artists, to digital entrainment company. The software iPod was later integrated into windows version of iTunes making it easier for everyone one to purchase and use (Keizer 2009).

Apple introduction of feedback system and outreach programs enabled customers to report on defective machines and the company to attend to problems before they occur. For example, one of the Company’s products “iMac” was widely reported for to be giving clients problems and the company responded by giving 15% refund bonuses to all faulty 27 inch iMac in the UK and was also reported to extend $300 apologies to all its aggrieved customers in the US.

In resolving the issue, the company responded quickly by offering free repairs to all the affected machines and launched a support page where it described how minor problems could be resolved and the resulting warranty extension for each affected machine. The company also reimbursed customers who used their own money to repair the faulty machines and advised them take their drives to official Apple repair channels (Moore & Knight 2010; O’Reilly & Anderson 1980).

On bargaining power of suppliers’ aspect, Apple’s primary segments included America, Europe, Africa, Japan and Middle East and other retail divisions Italy, Canada and the United Kingdom. It offered its customers wide range of products and invested heavily on R&D year after year. Apple’s products were distributed all over US retail stores where customers could easily access and report of defective devices (Mank & Nystrom 2000, p.504).

Summary of Internal Analysis

Internal Analysis also known as SWOT analysis determines company’s competitors and develops sales & marketing strategies for the company that allow it to achieve its marketing & strategic objectives.

The SWOT Analysis of the Apple Inc. position in the market is necessary for the development of the marketing plan.

Resources Analysis

Amidst the financial crisis, Apple continued to introduce strongest products lines, with most talented employees and best customers with sales revenue totalling to $10 billion in quarterly revenue of 2009 and $25 billion in cash safety bank with zero debt. Demographic & socio-economical factors like population distribution changes & increase/decrease in income levels of social group also affected the company to a considerable extent (Apple reports 2008; Hesseldahl 2009).

Dynamic Capability Analysis

Dynamic analysis refers to the innovative strategies a firm employs to gain competitive advantage over its competitors. In other words, what Apple is doing different that sets it apart from other companies. For instance, the company has progressively applied technological advancement and business diversification over the years.

Apple continues to diversify its product line from PCs inventions, to iPods, iPhones, iTunes and other peripherals. Also, the 2007 smart phone technology that saw the integration of wireless phone, music player, video player as well as internet browsing demonstrated how the company continues to diversify in our markets (Apple reports 2008).

Strategic Capability Analysis

Apple’s strategy to integrate Intel-based iMac desktop and the MacBook Pro portable softwares increased its company’s market share. Also, the introduction of feedback system and outreach programs that enabled customers to report on defective machines seemed to have gained the company a competitive edge over its competitors. The company also introduced support centre strategically designed to attend to software problems before they occur (Apple reports 2008).

Apple’s recent merger with software developers and leading voice-entry technology providers demonstrated its strong command and reputation in information technology. However, Apple should take adequate time in testing its products before rushing to introduce them to the markets like case for MacBook Air that left many customers disappointed (Apple reports 2008).

Gap analysis and assessment of current strategy

Gap analysis is a methodology that helps a company identify gaps and decide upon marketing strategies and tactics. The company has moved beyond personal computer industry to music, videos, movies, and television. Diversification is in it itself a good marketing strategy, but the company should concentrate on development of quality products to cut down on increased numbers of defective products and recalls.

Apples hiring John Sculley from PepsiCo spearheaded marketing and operations of the company while Steven Job focused on technology that lead to the introduction of more creative products like Macintosh in 1984. The new CEO enabled breakthrough in electronic products in terms of elegant design and easy use. The company should employ the same strategy in future to in employing competent workforce that will turn boost company sales revenues.

How does strategy match the macro environment?

For Apple, there is a large gap between product strategy and socio-economic and demographic changes. Keeping in pace with technology helped the company gain competitive advantage over its competitors and the uniqueness of goods and services offered facilitated the further strengthening of market position. However, its inability to adjust to socio-economic and demographic changes might undermine its market position in future.

How does strategy match the industry environment?

Apple engaged in a head to head competition with Dell in the computer markets with company CEO Steve Jobs claiming that market shares weren’t everything. This statement is in itself contradictory since company’s engage in business activities for profits. Dell was able to dominate the markets due to its efficient supply chain management although Apple outperformed it in inventions and other metrics. Apple should look into fixing sufficient price flexibility and adjustment to socio-economic changes.

Since compatible software were introduced in the markets, IBM prices dropped and Apples costs for R&D were higher industry costs since the company spend a considerable amount of its sales revenue on R&D. Scully innovative efforts were not enough to sustain the company’s poor performance. Apple could have taken time to study its markets demands before heavily investing in unprofitable deals. Since Michael Spindler came into play in 1993 introducing PowerMac, Apple moved to price-performance edge.

The new CEO’s strategy was to let other companies manufacture Mac clones, a strategy that saw many clones stealing 20% of the Macintosh unit sales. For this case, Apple should be seeking a CEO that upholds their key capabilities and strengths, whilst being able to improve in other areas that are deficient (Mank & Nystrom 2000, p.501).

Apple’s current strategy of launching more new products to expand the markets should be sustained. However, the company should also try to promote its products through media advertising and offering products at discounted price to increase the satisfaction level of the customers. Apple never seemed to experience intense competition since it had strong market power and had the ability to introduce new products.

Its strategies to beat the markets severely stretched its budgets that amounted to further losses. For example, when Macintosh was first introduced in the markets quickly became people’s favourite with large graphics but had slow performance and could not be integrated with many softwares in the markets. NeXT Computer introduced after Macintosh proved costly and did not yield the company any profits. For this case, Apple should incorporate through market analysis to avoid sipping in market shares.

Apple., 2010, ‘ Apple Customer Privacy Policy ’. Web.

Apple reports fourth quarter results, 2008. Quarterly results. Web.

Hesseldahl, A., 2009. Apple’s impressive quarterly numbers . BusinessWeek. Web.

Hewlett-Packard Development Company, 2010. Overcoming the no. 1 challenge in data center transformation . Web.

Keizer, G., 2009. Apple still can strive, sans Job. Computer World, 56 (2), pp.1-4.

Levitan, B., 2004. Improving customer loyalty through proactive communication. Consumer Interaction Solution . Web.

Mank, D. & Nystrom, H., 2000. The relationship between R&D spending and shareholder returns in the computer industry. Management of Society Proceeding , 20, pp.501-504.

Moore, C. & Knight, D., 2010. Apple Retains Lead in Customer Satisfaction, iMac Screen Problem Resolved, 64 GB for Mac Pro and More . Web.

O’Reilly, C. & Anderson, J., 1980. Trust and the Communication of Performance Appraisal Information: The Effect of Feedback on Performance and Satisfaction. Human Communication Research , 6, pp.290-298.

Prasaad, S., 2009. Establishing successful customer relationships through effective communication: An Indian perspective. Marketing and Management Communication , 64, pp.1-71.

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Apple Inc., 2008 – Case Solution

In the early months of 2008, Apple Inc.'s revenues and stock prices soared high due to the high demand and sale of its newly launched iPhone mobile phones. This case study looks at the history of the company, which was formerly known as Apple Computer. In order to foresee what the future holds for the company in terms of sustainability, a study of the past would be helpful.

​David B. Yoffie and Michael Slind Harvard Business Review ( 708480-PDF-ENG ) February 29, 2008

Case questions answered:

• Case Synopsis for Apple Inc., 2008.
• Was Apple’s recent success just another temporary “up” in the entire up-down history? What are your recommendations and conclusions? Has the company finally established a sustainable strategy?

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Apple Inc., 2008 Case Answers

Case synopsis – apple inc., 2008.

Apple Inc. was founded on April Fool’s Day in 1976 in a garage in Los Altos, California.

Throughout the entire journey, during the ups and downs, the company’s primary focus has been delivering the best experience and product to its customers.

Let’s take a look at the timeline of things that happened to understand the journey of Apple.

1. 1970s – The Start of an Era

• Apple Inc. was founded, and the first Apple I machine was developed to give ease of use to existing computer users compared with the existing DOS systems. This resulted in USD 1 Billion in sales in less than three years.
• Vendor specialization of the Mac Line – To maintain customer satisfaction and experience, the company never allowed third parties to develop or make clones of their computer systems.

2. 1980s – The Beginning

• IPO of Apple Inc. – and in the next couple of years, the company became the Industry Leader.
• BM, a major competitor, entered the computing market and challenged the company, resulting in a major change in Apple’s competitive position.
• With tough competition from IBM, the company’s Market Share dropped to 6.2%, and net income fell by 17% as the company could be clearly seen to go into crisis.
• Steve Jobs was also removed from the organization, and John Sculley was made the new CEO (he was hired by Pepsi-Cola for his excellent marketing skills).

3. 1990s – The Change of Hands

• The major focus during this time period was on low-cost production and also to shorten the Product Development Cycle.
• To achieve the above goals, Apple Inc., under John Sculley, entered into an alliance with IBM by forming a Joint Venture (Taligent) – with the sole aim of creating an exceptional and revolutionary Operating System (OS)
• However, the Gross Margin continued to drop to

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Apple Inc. 2008 Harvard Case Solution & Analysis

Home >> Operations Management Case Studies >> Apple Inc. 2008

Apple Inc .

Overview of the company – Apple

Apple Corporation Inc. is a multinational company, which is based in America and has been headquartered in California. The company is renowned for its hardware products , which are Mac line of computers, iPhone smart phones, iPod media player and the iPad tablet computers. Along with this, it is known for the consumer electronics products, computer softwares, personal computers and the online services that are offered by the company. The online services that are being offered by the company are the iTunes Store, icloud and the Apple playstore where customers and users can come in shop online. The software version used by the company is called iOS software. The company was founded by Steve Jobs on April 01, 1976 to sell and develop personal computers. The company was made a public limited company in the year 1977 where the name was changed to Apple Computer Inc., however, the name was again changed as Apple Inc. in 2007 (W. Chan, 2004).

Apple is the second largest company in the information technology sector behind Samsung electronics. It is ranked as third largest company in cell phone manufacturing after Samsung and the Nokia. According to Fortune magazine, Apple was declared as the most admired organization in the American market and it continuously won the same award for four consecutive years. In 2013, Apple became the most valuable brand in the world after Coca Cola as declared by Omnicom Group's "Best Global Brands" report.

Apple has its retail stores in 14 countries globally with approximately 425 stores. Apple Inc. has been the largest public traded company in the world by the market capitalization. The total number of permanent employees in the company is approximately 72,800 worldwide, while the number of temporary employees is 3,300 worldwide employees. The total amount of revenue for the company as per the annual report of 2013 showed a figure of $170 billion. In 2013, Apple entered the list of top ten companies on the list of Fortune 500 list with the ranking of 6th place in the list.

Assess their current situation

Apple Inc. has grown rapidly since the birth of the company. It has manufactured number of products globally and locally. The company with such huge expansion in the market has gone various changes in the culture of the company. The company has also transformed its organization structure in the recent past. The reason for all these changes has been entirely because of the increasing competition in the industry. Apple to remain a competent force in the industry has tried to create a balance between various options available from the company in its internal competency. For example, the company Apple has looked to overcome the various organizational changes globally to transform itself as a competitive company (W. Chan, 2004).

The current situation of the company is quite strong with the company having different revenue streams where the company is not dependant on single business to generate revenue for the company. As far as growth in the high end tablet is concerned and market phone market is concerned the growth has actually started to decline globally. However, it is important to understand that the iPhone’s unit sales will remain stable in the coming time as the company Apple has actually maintained a very high retention rate for it smart phone industry. The iPad demand although is decreasing but it will still be enough to support the company in investing at the R&D department for the company to stay as a revenue generating department for the company. Apple’s sales with this strategy can beat the expectations for the company (W. Chan, 2004).

The retention rate of customers has been a major factor or source of inspiration for Apple as they have looked to maintain a good level of satisfaction with each one of them. With the future of the industry driving towards innovation and technically advanced, Apple to remain competitive has to counter the challenges in sales mix to overcome any shortcomings. The ability of Apple to cut the cost has been a key factor in expanding or maintaining higher sales volume in the smart phone business. However, with the intense competition in the industry, Apple management is looking to introduce ideas to reduce the cost and drive earnings to increase future estimates, which are handy for the overall price of the share (Robert, 2000).

Choose which of the three topics below would be most relevant to their current needs

Out of the three options, Apple is more focused with the concept and idea of design thinking. Innovation is powered with the understanding and the observation what people might desire and need, like and dislike. It is basically a form of solution based thinking that actually starts with what is meant to be the desired achievement instead of starting within a certain problem. By focusing on the present situation and the future predictions, the parameters and the problems are resolved skillfully simultaneously (Michale, 2008).............................

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In January 2007, three decades after its incorporation, Apple Computer shed the second word in the title and became Apple, With that move, the company signaled a fundamental shift from its historical status as a supplier of Macintosh personal computer (PC) line. Mac sales remained vital for the future of Apple, but now they are less than half of total revenue. Line of the company in a bid media players, its ITunes online store content and its newly launched iPhone mobile phone business was a large portion of their operations. In early 2008, due to the rapidly increasing sales in these areas and a resurgent sales of Macintosh products , revenues and Apple's stock price has reached record levels. The case is considered the sustainability of current business models of Apple, which is positioned at the same time in the PC industry and consumer electronics. While Apple enjoys a high market share in digital media players and online music sales, it has remained a niche player in the global PC industry. The case examines the history of Apple's strategic moves under the direction of leaders Jobs, Sculley, Spindler, Amelio, and (again) work space, these steps in the context of the structural features of developing the computer industry, and covers the iPhone and iPod business much longer. "Hide by David B. Yoffie, Michael Slind Source: HBS Premier Case Collection 32 pages. Publication Date: February 29, 2008. Prod. #: 708480-PDF-ENG

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Publication Date: February 29, 2008

Source: Harvard Business School

In January 2007, three decades after its incorporation, Apple Computer shed the second word in its name and became Apple Inc. With that move, the company signaled a fundamental shift away from its historic status as a vendor of the Macintosh personal computer (PC) line. Mac sales remained vital to Apple's future, but they now accounted for less than half of its total revenue. The company's line of iPod media players, its iTunes online content store and its newly launched iPhone mobile handset business made up increasingly large shares of its operations. In early 2008, on the strength of sky-rocketing sales in those areas and by resurgent sales of Macintosh products, Apple's revenues and its stock price reached record levels. The case explores the sustainability of Apple's current business model, one that positioned the company simultaneously in the PC industry and the consumer electronics industry. While Apple enjoyed a high market share in digital media players and in online music sales, it remained a niche player in the worldwide PC industry. The case examines the history of Apple's strategic moves under the leadership of CEOs Jobs, Sculley, Spindler, Amelio, and (again) Jobs; places those moves in the context of structural features of the evolving PC industry; and covers the iPod and iPhone businesses at considerable length.

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Apple inc., 2008 Case Solution & Answer

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Apple inc., 2008 Case Study Solution

Introduction

Apple Inc. is one of the leading mobile company, founded by Steve Jobs, Ronald Wayne and Steve Wozniak, in 1976. It had captured a huge market share of the Mobile industry by adopting unique positioning strategy, the timely advanced innovations and through the introduction of iPod in the industry. The company provided rapid advancement in its models, which led it towards increased number of model and manipulated the financial aspects. The profits margins and product lines had decreased because of complexity in the organization. Steve job rejoined the organization in 1997 by making some prompt adjustments in the operational concerns. Number of product lines, new projects and modifications in distribution and marketing strategies had been decreasedin order to increase the company’s sales and profitability. For the year 2008, Mac sales were representing a 43% margin in total revenues of Apple.(David B.Yoffie & Micheal Slind, 2008).

Problem Statement

Throughout 21 st century, Apple hadundergone many changes, such as: an expansion in new business lines, the company’s profile and microchip architecture. Despite of all these changes, Apple only made 3% consistent increase in its market share, which was not satisfying the rapid growth expansion. Top management was concerned about this new strategy change and its effects.(David B.Yoffie & Micheal Slind, 2008).

Situational Analysis

Throughout the 21 st century, Apple had made many changes, such as: an expansion in new business lines, company profile and microchip architecture. Number of product lines, new projects and modifications in distribution and marketing strategies had been downsized in order to increase the company’s sales and profitability.  For the year 2008, Mac sales were representing a 43% margin in total revenue of Apple.

Initial strategy

In the year 2007, Apple started to sell its new iPhone model,(which was a multifunctional communication device) with the help of its distributor partner- AT&T Mobility and the Mobile operator.Apple had reinvented the phone and made a new device, which shared smartphone’s qualities as well as internet facilities.

SWOT Analysis

A detailed in-depth analysis has been performed in order to examine the loopholes and effectiveness of the previously adopted strategy by Apple for iPhone(Dyson, 2004).

Apple had reinvented the phone and made a new device, which shared smartphone’s qualities as well as internet facilities. In this iPhone many features were introduced, such as:e-mail capability, text messaging, web access, address book, calendar, 2-mega pixel camera and other PDA functions. In addition to this, the system was based upon the Apple’s OS platform. It was an effort to integrate the mobile services with iPod device. Steve jobs had reported an expected sale of 10 million units of iPhone for the year 2008 and succeeded to sale approximately 6 million units by the end of the June 2008. (See appendix 1)

Apple had adopted a unique strategy to sell its iPhone. It made big efforts to come under the category of worldwide market, in which handsets were costing more than $300 and contributingin only 5% of sales. The company then decidedto set a pricing strategy for 16-GB model of about $499 and for 8-GB model of about $399. Service charges per month would be $59.9. Furthermore, Apple did not use a fastest growing network 3G for wireless solutions because of its negative impact over its battery life and preferred to use 2.25G Edge network……………………………..

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Accounting for the iPhone at Apple Inc.

Harvard Business School Accounting & Management Unit Case No. 111-003

Posted: 18 Feb 2012

Francois Brochet

Boston University - Department of Accounting

Krishna Palepu

Harvard University - Harvard Business School; Harvard University - David Rockefeller Center for Latin American Research; Harvard Business Review; NBER; International Academy of Management

Lauren Barley

affiliation not provided to SSRN

Date Written: February 24, 2011

Apple initially recognized revenue associated with its iPhone product using subscription accounting. However, in 2008, the company started providing non-GAAP supplemental numbers where substantially all of the revenue was recognized upfront. Market participants' reactions to the disclosure were mixed. Was Apple "right" in arguing that subscription accounting was inadequate for the iPhone? Learning Objective: The case provides an opportunity to discuss criteria for revenue recognition in the context of multiple deliverables. It also serves to illustrate the interactive nature of the standard setting process.

Suggested Citation: Suggested Citation

Francois Brochet (Contact Author)

Boston university - department of accounting ( email ).

595 Commonwealth Avenue Boston, MA 02215 United States

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Apple Inc. in 2020

• Format: Print
• | Language: English
• | Pages: 31

About The Author

David B. Yoffie

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• Apple Inc. in 2020  By: David B. Yoffie
• Apple Inc. in 2020 – Select Market Data  By: David B. Yoffie