The company's consistent top line revenue growth also illustrates it has been successful in transforming its supplier network into one that operates more on knowledge, less on purely price or product decisions. As a result the company is capable of competing more at the process level and less at the purely price-driven one (Reese, 2007).
In terms of the company's factors for success, the greater opportunities is to move into the global houseware and specialties market in addition to gaining greater market share in the global footwear markets, relying on its supply chain expertise to accomplish this (Reese, 2007). The company's focus on the accelerating market for global apparel, accessories and luxury goods in its key countries and regions sold is also a critical factor in the long-term success of the firm. Overall the ability to continually improve its procurement and strategy sourcing processes however will make the greatest potential impact on the positive growth of the company over the long-term (Ayling, 2007).
a) Did Apple gain a competitive advantage from its decision to invest in an online music business?
b) Will this competitive advantage last forever? Why?
c) Using Michael Porter's Five Forces Model, analyze Apple's buyer and supplier power. Which of the 3 generic strategies is Apple following (cost leadership, differentiation, or focused strategy)?
d) Which of Porter's Five Forces did Apple address through its introduction of the iPod? In what way is the iPod a logical extension of Apple's pre-existing product line?
Apple created an economic ecosystem that is fueled by its continual advance of iPods, iTouch and iPhones to support digital video on the one hand and an online store with now over 100 million digital items sold on the other (Vossoughi, 2008). Apple has created an economic ecosystem that scales well and provides a multitude of partnership and co-marketing opportunities. It is debatable if this will be a competitive advantage forever as Nokia, AT&T and many others who have digital convergence platforms including cell phones are working to replicate the success of Apple with this concept. Ultimately there will be imitators of the iTunes store yet the MP3 device business will continue to see price competition and continual strategies on the part of competitors to add more features at a lower price. Using the Five Forces Model (Porter, 2008) to analyze the success of Apple's buyer and suppler power, their focus on differentiation as a competitive strength is evident. Apple chose to integrate the Digital Rights Management (DRM) technologies across the iPod, iTouch and iPhone in addition to its laptops and workstations that also can interpret and mix sounds using the DRM format the company has standardized on. The differentiation aspects of the model are also such that the product strategy is actually in catch-up mode today (Vossoughi, 2008). Eventually every MP3 player will have digital file viewing capability as well.
Apple has an exceptionally loyal customer base, the most loyal in high tech, with a repurchase rate of nearly 90% on systems and accessories (Cuneo, 2003). Apple has extensive analytics on their customer base and realized that with the introduction of the iPod they could potentially risk alienating their most loyal fans yet the company realized it needed additional revenue to grow. As a result, the iPod addresses two areas in the context of the Porter Five Forces Model (Porter, 2008). These include Bargaining Power of Customers and Threat of New Entrants. The Bargaining Power of Customers is exceptionally strong in the Apple customer base (Cuneo, 2003). They have over time been fed a steady diet of exceptional innovation and brilliant products and software. The Threat of New Entrants however is also very significant as the Apple customer base is also one of the most profitable in the high tech industry as well. Taken together these two factors within the Five Forces Model explain how Apple has been successful in attracting new customers while retaining their most loyal and profitable over time. In conclusion, the Apple iTunes concept is being actively imitated by cell phone services companies and manufacturers in addition to other systems software companies including Microsoft for their Zune platform. None of these have been successful as of yet as each suffers from a lack of integration across the broader product lines of the firm. The success of Apple in this area is attributable to their focus on the bargaining power of customers and alleviating threats from new entrants.
5. (iPremier, ChoicePoint) Privacy & security.
a) What lessons were learned through the iPremier & ChoicePoint cases regarding the security of personal information?
b) What can you say regarding the business and public relations implications resulting from compromise ( & potential compromise) of personal information?
c) Analyze (describe) the relationship among ethical, social, and privacy issues that are raised by these cases.
O f the many lessons learned from the iPremier and ChoicePoint cases the most critical is to have oversight and compliance programs in place to safeguard intellectual property in the from of customers' confidential data. As these are service organizations who aspire to be called trusted advisors by their clients, their internal auditing and validation systems need to reflect his commitments over time. The lessons learned included defining more effective means of monitoring and auditing the use of internal company records, defining in employment contracts and agreements the right to hold an employee criminally liable for selling this data and a definition of periodic yet unannounced audits of systems to ensure they are in compliance. Only after these steps are taken can an organization such as iPremier or ChoicePoint be able to begin to grow their credibility again over time. In conjunction with these periodic audits it is also critically important for the company to define a series of rules and constraint-based checks and balances on transactions to spot this type of activity over time (Swartz, 2007). Clearly the need for better controls and audit approaches is necessary for the lapses at iPremier and ChoicePoint to be overcome. Using an enterprise-wise compliance and quality management (ECQM) system would also specifically assist in making sure this did not happen as easily as it had in the past.
From a business and public relations standpoint the issue is even more severe as there has been a violation of customers' and the publics' trust. Ironically these companies hold themselves out to be trusted advisors in their industries, yet sell data files with hundreds of thousands of names in them that comprise each person's identity whose name is included. This violation of trust forced the companies to offer credit verification and fraud protection, yet that is seen by many as merely a temporary solution. What needs to be done from a business and public relations standpoint is that the companies need to publish their audit results and freely share them over the Internet. Only by doing this act of openness and transparency and additional ones like it will their credibility be retained.
From the standpoint of the ethical, social and privacy issues, the companies must admit they failed in protecting the public's trust in them first and then set out to completely re-architect the systems they rely on to do their jobs. Only with a thorough analysis and audit of how these breaches happened and a continual transparency over the results of improvement can either company hope to improve. Creating a governance framework (Swartz, 2007) and then actively managing to it and also posting scorecards of the extent of compliance is critically important if both companies are going to improve over time. The bottom line is that to achieve the role of trusted advisor in their industries, these companies must adopt entirely new approaches to measuring, monitoring and managing the personal data they handle as part of their core business. Without trust they will eventually go out of business and face regulatory action.
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