The Modern Firm

¶ … Firm

The present day approach of the modern firm towards business is concentrated on "strategic planning." The top management which has the inclusion of the board of directors, and corporate planners has their role to play in the overall strategic management of companies. However, the starring roles remain for the general managers of the firm and its significant and competent operating levels. Strategic management concentrates on 'second-generation planning' which is the analysis of the level of business and the preparation of various scenarios and areas of consideration for the future. This paper analyses the strategic planning process of Apple Computer and various analysis. Apple Computers is engaged in the designing, manufacture and marketing of PCs and associated software, peripherals, and personal computing. The products of the company range from the Macintosh series of desktops and notebook computers, the Mac OS X operating system, the iPod music player and collection of software and peripherals intended for the education, creative, consumer as also business customers. The company has been on the path of transition.

For nearly their entire business regime they have been a computer hardware company focusing on premium end niche market. The company is now on the path of transition to become a media electronics company bringing about a higher focus on software and electronic devices. The frontline product in this category is the iPod- a music player which Apple dominates cornering 90% of the market in the premium end of the market and over 35% of the remaining market. As regards their personal computer business, their latest iMac namely the iMac G5 goes back to the period of original Macintosh with the computer built directly into the display. However, the strategy at Apple has been to shift focus from the PC. This strategic decision to ensure that the iPod is compatible on Windows also was a step in this direction by separating the two. Apple performed a crucial strategic shift away from the PCs. Hence for the company it is the opportune time at avoiding the biggest setback in the present mass use of the personal computers. (Apple Computer, Inc.)

Business DESCRIPTION AND HISTORY

The origin of Apple Computer dates back to the year 1976 when Steve Woznaik and Steve Jobs launched the first Apple I Computer. The computer had a video interface, 8k of RAM and fetched a price of $666.66 with initial volume sales of about 200 units over a period of 10 months. Apple was incorporated during the year 1977 and with that was launched the second model of Apple II computer with a price tag of $1,298 having color graphics for the first time in a PC and an audio cassette drive was used for its storage. (Inventors of Modern Computer) Subsequently the company came up with Apple Lisa in 1983 credited to be the first PC equipped with the Graphical User Interface - GUI which Microsoft later adopted in its PCs with the Windows Operating system.

The LISA was subsequently renamed as the Macintoch XL which is thus far the most famous product and whose latest models continue to find favors among its specialized lovers with great cool looks, feel and functional ability. (The History of the Graphical User Interface or GUI -- The Apple LISA) The company is commemorating the 20th anniversary of the Macintosh in the year 2004 and enjoying the fruits of its launch into the business of digital entertainment with Apple selling 7,30,000 iPod music player in quarter ended December 2004. This apart, iTunes the downloadable music service from Apple Computer has already sold 30 million songs since its debut in April 2003. (Where does Apple go from here)

In January 2004, Steve Jobs, CEO of Apple flagged off the Macworld Exp with the launch of iPod Mini that uses new generation of smaller hard disks, contains 4 GB of storage that translates into 1,000 songs in just half of inch thick case the size of a business card. The tiny gizmo will be priced $249 and will be equipped with MS-Office and it will come in handy for those customers who are looking for compatibility with documents created on PCs that run on Windows operating software. With the new mini iPod a smaller version of iPod could help Apple maintain its leadership position in the market for portable MP3 players. However the only deterrent factor remains is the price. This is a crucial phase for Apple who has made forays into a wide array of multimedia software and hardware all designed to be used with the PC as the centre. The company is also a Grammy Award winner during 2002 for its technical contributions to the music community. The latest products from its entertainment stable under the iLife umbrella are iPhoto digital photography package that supports 25,000 photos; iMovie- digital video editing software and; iDVD- DVD creation software. This package will be priced $49 dollars or might be distributed free of cost with the new Macintosh. (Apple Unveils smaller iPods, new software)

ENVIRONMENTAL ANALYSIS

The PC market space in the year 1983 was getting intense for the marketing war among the broad range of competitors entering the market. Pepsi's John Sculley's appointment was indicative of a trend other PC companies were observing while hiring skilled managers to take them ahead of being fledgling start-ups. It was debated that in case PC companies had to make business they will need to adopt the marketing styles which other companies of the United States employed to make their brand and products very popular. Compared to other PC companies, Apple had an unrivaled capability to generate media attention. Though an amount of this was because of its fast growth and its initial position of market share position as top ranked company, it was also the outcome of the event-marketing strategy by Sculley. The aim of the event marketing exercise was to produce attention for both releases of the product as well as the product also. The launch of the Macintosh in 1984 was the inaugural 'apple event' and gives an instance of an approach which Apple still utilizes. Another aspect unique to the Macintosh launch was the 1984 advertisement broadcast during the 1984 Superbowl that increased the media interest. IBM was making the workers and only way out was for a Macintosh to rescue them. The launch date was given extensive publicity, some outlets focusing on the technology aspect while others pointing out the imminent battle with IBM for gaining control of the desktops of America. (Getting the juice on Apple)

SITUATIONAL ANALYSIS

SWOT Analysis of Apple Computer

Strengths:-

(i) Ease of use: Apple products continue to be regarded as the simplest to use in the marketplace. (ii) Firmly established in the PC market, the oldest manufacturer of hardware. (iii) Product control: Apple has a unique combination of being both a manufacturer of computers as well as the operating system on which their computers run. This facilitates Apple to deliver a cohesively coupled, integrated product. (iii) Innovation: Apple is credited to have pioneered the Graphical User Interface - GUI in computers much before Microsoft. (SWOT Analysis)

Weakness:-

(i) One of its strengths of the ease of use factor in its machines has become an image problem with a lot of people from the business community considering the Macintosh as a toy instead. (ii) Inability of demand prediction and the ability to deliver sufficient PCs to fulfill demand within a short period of time. (iii) Apple Computer's are not IBM compatible due to which the company has not been able to capture mass market. Even though a lot of developments have been made as regards connectivity, Macintosh is not compatible. (SWOT Analysis)

Opportunities:

(i) Making forays into creating new markets for software and selling the hardware into these markets. (ii) In higher education and schooling under the education sector the ease of use and low maintenance costs are striking. Considering that schools prefer to go outside the realms of local authority, mass purchase of Acorn computers is less widespread, opening up a new market. (SWOT Analysis)

Threats:

Apple's core product continues to be the Mac has failed to bring out anything beyond the Macintosh in the PC business. The company's strategy of selling its products at a good profit margin to a core group of loyal users and not becoming worried about the market share is a threat to the company. Mac's share stands at a mere 2 to 4% of the total PC market which is not feasible in the long run and the company has never been a mass market player. And due to this Apple has not been able to make any real profits out of its Mac business since the last three years. There are about 25 million Mac worldwide in its full installed base. However, the reality is that genuine number of active users is nearly 8 million, which is a miniscule market for any electronic business for a feasible market. (Where does Apple go from here?)

STRATEGY FORMULATION:-

Steve Jobs- founder and chief architect of Apple is regarded to be the most important person in the history of the company. It was in his leadership that Apple sparked off the PC revolution during the 1980s with the Macintosh. The company is committed to unleash the personal computing at its very best to students, educators, professionals from the creative world and consumers throughout the world through its innovative hardware and software. Since the final goal of organizations is to earn profits, the mission statement of Apple gives the particulars of its strategic position to accomplish profitability and the competitive edge. The strategic position of Apple is to present the users with the best experience in computing through innovation in hardware, software, and Internet offerings.

The age of digital lifestyle is the vision of Apple poised for next era of PCs. Apple believes users will connect their MP3 players, DVD players, CD players Digital cameras, PDAs and other devices to a central computer called as the digital hub. The strategy of Apple has been formulated as such Apple wants their computers to be the hub of activity that can interoperate and support external devices. Users can have the choice of editing videos, transfer MP3 songs their hearing gadgets, write and mix CDs from MP3 everything with the digital hub known as the Mac comprising of the entire range viz. Powermac, iMac, Powerbook. Apple desires to position its computers in a strategic manner as a hub. (Steve Jobs: The Savior of Apple)

STRATEGY IMPLEMENTATION:

In keeping with implementing of strategies Apple is moving away its focus from personal computers to a digital lifestyle comprising of music, music players, and software which focuses on audio and video editing. The computers continue to be major source of earnings and innovation, and continue to play the maximum part in the ongoing development of Apple. But, with the passage of time, it is expected that Apple will continue to move its focus away from personal computers and in the direction of a broad array of devices, software and services. In the PC market, a huge amount of money and endeavor is being made by the dominant players to achieve convergence- the idea of the computer merging with the cable box, TV, videogame system, stereo system and DVD/VCR/DVR to be a single hub in the living room of the consumer. Apple is also enlarging its iPod line with novel features, including the iPod Photo facilitating users to store and view digital photographs on the iPod. Apple's core strength is in innovation mainly in making computers and electronics simpler to operate and stylish.

However, this strength is frequently a transient one as rivals of Apple emulate the Apple's innovations rapidly. The choice made by Apple to move into portable music is an excellent one. Post 2000, Apple's sale of desktop computers has been deteriorating. Sale of Laptops was growing albeit from a smaller base. As in past in the history of Apple, it had build peripherals which function with the Apple brand personal computers. The strategy has been simple which entailed to build products and software which focuses on the target market, and thereafter employs these to attract the customers to buy the main product, a costly high margin Apple Macintosh. Apple marketed the iPod in the similar manner, however at some point Apple appreciated that the prospective market was immense, in case they were agree to sever it from Apple Computer. They acted in that manner and were greatly successful as a result. Idyllically, Apple will be developing a broad rang of products in which every product look identical, have similar user interface and style. These will be present in the store and improved by an online presence. They will join to create a network having an increased value compared to each individual piece. An initial example is the iPod -- iTunes combination. A song bought on iTunes will get downloaded into the iPod. Apple should enlarge on this mechanism so as to ward off rivalry. (Apple Computer, Inc.)