Apple How a Company Comes

Apple

How a company comes back from being in declines -- a case study of Apple Computer

The ability of a company to recover from decline has long been a topic of discussion in the sphere of organizational behavior. This is viewed as a topic of interest because every company experiences declines and recoveries.

However many companies that experience declines never recover because they are not equipped with the necessary tools. As such this particular topic is important because it allows managers to examine the strategies of a company that has been able to recover from significant decline.

Business decline and business failure are fears tat every company has at one time or another. While it is inevitable that a business will experience some decline during certain years, it is possible for companies to prepare for such decline so that they do not lead to the total ruin of the company. Companies must also know that business decline could serve as a catalyst for unprecedented growth and profitability. The best way to inform companies of the alternatives that they can seek when faced with business decline, is to evaluate a company that has experienced decline and recovered from the decline.

For the purposes of this discussion we will focus on Apple Computer Company and the strategy that the company utilized to recover after a significant decline. This particular company was chosen because of what it has come to symbolize in American culture in recent years with the advent of some extremely innovative products that are new on the market. This company was also chosen because of the monumental profitability that the company has realized in the wake of the released of the aforementioned products. Let us begin our discussion with a review of the literature concerning business decline.

Literature review on companies coming back from decline

From a historical perspective there have been many companies that have experienced declines. However very few businesses have been able to recover from almost certain financial ruin. This has been an issue in various industries. Business failure is a fear that many entrepreneurs have at all times. The fear exists when the business ids being developed, once the business has begun to operate and even years down the line. The fear of business failure is one of the reasons that businesses and investors alike got to great lengths to develop business plans and develop strategies to combat declines that may occur.

According to an article entitled "business decline" the idea of a business in decline is often wrongly associated with a business that was once profitable. However the article points out that most often business decline is a sign of inert managerial ideas, inability to focus on the needs of customers, poor organizational design, and incessant unwillingness to change (Carlson 2006). The author also asserts that in most cases business decline occurs as a result of high price elasticity of demand, lack of innovation, reduced or negative profits, and declining selling prices, small amounts of renewable investment, industry congestion and unappealing entry (Carlson 2006).

The author asserts that when decline is evaluated from a strategic standpoint that is a limited amount of differentiation and growth among competitors and as such there is no significance in advertising, distribution and access to advertising gradually becomes a foundation for competitive advantage, the entire industry is unable to eliminate the congestion so many companies are confronted with cash flow problems, and the rate at which companies leave the industry decreases as a result of fixed and sunk costs that are substantial (Carlson 2006).

The article explains further that the majority of decline occurs as a result of external events that are actually outside the control of all companies within an industry (Carlson 2006). Whatever the cause of the decline, they can be difficult to forecast and even more difficult to overcome (Carlson 2006). However, the author asserts that decline can also serve as an opportunity and there are a variety of strategies that can be implemented to discourage the negative effects of a decline and generate new wealth (Carlson 2006).

Although many companies are likes to experience a decline, there are also strategies that can assist companies as they work through a difficult time. For instance, the article asserts that the most common is a strategy of dominance and leadership.

Under these circumstances the business would aggressively increase market share to gain a dominant position in the market place with the objective of price control. Dominance is aided by weakened rivals with no commitment to the industry seeking exit; this exit can be aided by the dominance seeker in the form of acquisitions to further facilitate dominance. If other firms are trying to pursue dominance there can be destructive and costly competition. The opportunity costs of the decision must play a critical role in the senior management group choosing dominance as the ideal decline strategy (Carlson 2006)."

There are many other strategies that the article names. All of which are geared toward ensuring that decline does not lead to disaster as it relates to businesses and their ability to recover.

At the current time companies such as Ford and General Motors are being faced with substantial financial problems. These car manufacturers have been negatively impacted by poor sells that the increased popularity of other car manufacturers such as Toyota. In addition, Ford pays out large employee benefits and pension plans for employees.

For the Ford Company a recovery is of the utmost concern because the stakes are so high if the company does not recover. The company has already been forced to close several of its plants. Some of these plants had been in operation for many years. The employees of these plants were offered buyouts, training in a new field and some were able to transfer to other plants. These steps were taken with the belief that the company will be able to recover from the losses experienced in recent years.

For companies on the brink of collapsing it is vitally important that they have the strategies that will enable them to recover and experience profitability again. The risks in not doing so could be the displacement of thousands of employees and economic problems for society as a whole if several companies go out of business simultaneously.

Indeed, ensuring that a business can recover in the wake of a decline is an important subject for a number of reasons. One of the primary reasons is to preserve jobs for workers. In general that higher the employment rate the higher the quality of life will be in a location. In addition companies go into business to be profitable and to serve the needs of customers. Companies need a clear understanding of how to work through any declines that may occur so that business failure can be averted.

Case study

History of Apple Computer

Apple Computer INC was created in April of 1976 when two young men from California Steve Jobs, 21, and 16-year-old Steve Wozniak created the company (Thirty years of apple). The company's first public recognition came in San Francisco at the Homebrew Computer Club. Both Jobs and Wozniak were members of the club for individuals that liked to create gadgets (Thirty years of apple). It was through this club that Woziak was convinced that he would be able to sell the gadget that he designed (Thirty years of apple). This gadget was the Apple I computer (Thirty years of apple).

Although the two young men did not have any capital to produce and distribute the gadget, they showed great entrepreneurial spirit from the very beginning (Thirty years of apple). They were able to produce the gadget by getting a local store to buy 50 of their computers and then getting the electrical company to give then 30 days of credit on the parts to build the machines (Thirty years of apple). In doing this the company was able to start producing product without any investors (Thirty years of apple).

One of the major devices to come form the company was the creation and introduction of the mouse, the desktop and WIMPS (windows, icons, menu and pointer systems), which are still utilized today (Thirty years of apple). The mouse was an important invention because for the first time no commands had to be memorized and ordinary users had unprecedented access to computers (Thirty years of apple). This has been referred to as "GUI or graphical-user interface. But the real point was that it was intuitive. It gave everyone access to a world previously closed to all but an elite few (Thirty years of apple)."

The pair made some money from the Apple I, but to manufacture the type of computers they wanted to create the men needed a significant amount of capital (Thirty years of apple). Jobs wanted to sell the company to Commodore the plan did not succeed but Mike Markkula saw Apple's potential and invested in the business (Thirty years of apple).

With the assistance of this investor the Apple II computer was created in 1977(Thirty years of apple). The Apple II computer was successfully launched and the company began to take shape and in 1980 the company went public and was able to produce more money than any company since Ford in 1956 (Thirty years of apple). When the company went public it also created more millionaires than had ever been created up to that point (Thirty years of apple).

There were several other computers that were released prior to 1984 when the Macintosh computer was released. By 1986 Wozniak left the company and in 1983 Steve Jobs had been ousted from the company (Thirty years of apple).

Charismatic leader of Apple Computer

Steve Jobs

Steve Jobs is known as one of the most charismatic and successful CEO's in the world. It has been asserted that "While Wozniak was the technical brains, Jobs was the idealist. He wanted his computers to be both technically and visually beautiful - and he was convinced that Apple could provide software and hardware without involving anyone else (Thirty years of apple)."

Although Jobs let the company in 1985, he returned to the company in 1996 with many new ideas that have proven to be beneficial for the company. These ideas are directly responsible for the company's comeback after experiencing such a significant decline. The products that Jobs is responsible for producing include the iMac, the iPod, the iPod nano, iTunes and now the iPhone.

Analysis

How Steve Jobs influences Apple Computer (founding-leaving-return)

Steve Jobs appears to play an instrumental role in Apple form the very beginning. Much of the research pertaining to Steve Jobs asserts that he was always dedicated to the innovation of new products. Not only did he want the products to work well form a technological standpoint but he also wanted the products to be well designed. The research insist that this was always the case with Jobs, even to the point of making significant mistakes that cost the company and caused his ousting in 1985. According to an article entitled "Steve Jobs- the Silicon Valley Pioneer"

In September 1997, Steve Jobs was appointed the 'interim CEO' of leading information technology (it) company, Apple Computers (Apple), by the Apple board. Considering the fact that the company's board itself had ousted Steve in a coup in 1983, this development was watched with interest by media and industry observers. Steve's comeback was being seen as Apple's desperate attempt to survive one of its worst phases: losses for 1997 amounted to $1.6 billion ("Steve Jobs- the Silicon Valley Pioneer")

It is clear that when Steve Jobs returned to the company in 1997 he became the primary decision maker. It seems that by this time the company was somewhat desperate to regain some part of the market share and to compete with other companies in the industry. At this point Jobs had to make critical decisions regarding the types of products that would be pursued and the need to pump new life and ideas into the company.

According to one article, when Steve Jobs returned to Apple he told company officials that the problem with the company was the product offerings. The article explains that Jobs went on to say that the company was in so much financial trouble because the products "sucked" ("Steve Jobs Magic Kingdom"). He also states that the products were no longer sexy and the whole approach to the product line needed to be altered ("Steve Jobs Magic Kingdom").

Indeed, Jobs felt that the product line was the primary problem with the company and the reason for the company being in financial ruin ("Steve Jobs Magic Kingdom"). It seems that the problem with the products could be found in the company's inability or unwillingness to push the envelope or to focus on innovation. This problem was serious and Jobs and other executives were painfully aware of the stakes involved. Apple being a public company made the situation even more critical because the company wanted to ensure that they could regain the competitive advantage and attract new investors.

As far as Steve Jobs was concerned the development of superior products that would be attractive consumers would require a certain set of management skills.

As such Jobs tried to focus the company on the goals that needed to be met. In addition he had a great deal of faith in the strategy that he wanted to implement throughout the company ("Steve Jobs Magic Kingdom").

Indeed, for many years Jobs basically restructured Apple with a more proprietary approach, and he ignored the negative feedback coming for Wall Street Analysts ("Steve Jobs Magic Kingdom"). In addition the article points out that one of his first strategies was to eliminate a great deal of Apple's product line ("Steve Jobs Magic Kingdom"). He did this by taking away several products and only focusing on four.

The former Apple Chairman has since revealed that Jobs move to reduce the product line down to four sent shock waves throughout the company. The article also asserts that "Time and again since, Apple has eschewed calls to boost market share by making lower-end products or expanding into adjacent markets where the company wouldn't be the leader."I'm as proud of what we don't do as I am of what we do," Jobs often says ("Steve Jobs Magic Kingdom")."

This type of straight forwardness and charisma was what the company needed at that particular time. In addition, the company was in no position to not listen to Jobs; perhaps the company being in such financial turmoil is what actually saved the company from an impending demise. That is, if the company had not been so desperate to recover from the shape that is was in, it would not have listened to Jobs and would not be enjoying the success that it is enjoying at the current time.

In addition to the position that the company was in Steve Jobs had also matured and although he was still charismatic and driven, he had learnt how to work better with others over the years he spent away from the company that he helped to create. One article asserts that "his passion for doing, and saying, just about anything to help create the kinds of products that consumers love. In the nine years since Jobs returned to Apple, his unique modus operandi has sparked broad changes in the world of music, movies, and technology ("Steve Jobs Magic Kingdom")."

It seems that the problem facing Apple at the time could not have been handled better. Although Jobs approach was unconventional it appears to have been exactly what was needed at the time. I do not know that this particular approach would have worked at a different company that was not already familiar with Jobs leadership style. Another company may have fired Jobs before they could realize his talent and ability to develop innovative products that people have purchased in droves.

An alternative approach to the solving the situation may have been to encourage others within the company to create some new product ideas. This may have been encouraged through the offering of rewards or incentives if the product was taken into development and consequently went to market. Perhaps this would have generated more of a teamwork atmosphere for the company.

The company may have also chosen to retrain employees and get them more accustomed to an environment in which innovation would be the focal point. In addition, because Jobs pays careful attention to aesthetic design, perhaps training about aesthetic design would have been useful. Such training would teach employees what customers are looking for in the design of their technological devices.

If these alternatives were implemented perhaps products such as the Apple Ipods would have even sleeker designs because there would have more input form workers concerning the design.