Apple Inc. Case

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Apple Inc. History

Apple Inc. was established on April 1, 1976 by Steve Wozniak and Steve Jobs.  They created the first powerful easy-to-use computer for the desktop use. After it, Jobs & Wozniak recruited A.C. Markkula to assist Apple Inc. to become a million-dollar firm. However, all three founders left the company’s management unit in the late 1980s.

In the early 1980s, Apple grew rapidly by stimulating the software development for their machines. For example, landmark programs such as VisiCalc and other spreadsheet programs were developed first for the Apple II. Additionally, Apple Inc was one of the first companies to award grants for the development of education software. Its revenues reached $583.3 million by fiscal 1982. The development of original Macintosh GUI (Graphical User Interface) became the catalyst for desktop publishing and was considered the second technological revolution performed by Apple. In 1985, Jobs and Wozniak decided to leave the company’s CEO positions. At the end of 1983, Jobs recruited John Sculley as Chairman of the Board, who had served many years as PepsiCo’s executive. John Sculley replaced Jobs after his departure. The latter was caused by their different views on Apple corporative strategies, with the Directors Board supporting Sculley, stripping Jobs of his duties. Nevertheless, John Sculley increased Apple’s turnaround remarkably. Under his command, the firm experienced a massive reorganization to control operations and expenses in a proper way. Macintosh gained maximum sales throughout 1986 and 1987, making a 40% jump from $1.9 billion to $2.7 billion in fiscal 1987.

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In the early 1990s, Apple became the world’s computer sales leader, reaching the $7 billion net sales mark. However, in the period of 1993 to 1995, Microsoft and Intel began to dominate the PC market. The new Windows system imitated Mac OS, and, as a result, Apple lost its competitive edge. In June 1993, Sculley left the company, with Michael Spindler becoming a CEO of the company. Even so, Spindler had failed to reverse the company’s status and was replaced by Gilbert Amelio. Amelio only aggravated Apple’s situation, making it lose half of its stock value. On December 20, 1996, Apple Inc. bought Steve Jobs’ NeXT Company for $402 million. In July 1997, Jobs replaced Amelio as Apple’s interim CEO.

Steve Jobs terminated many of Apple’s existing projects. In May 2001, the company started the reopening of Apple Retail Stores. Apple introduced its first portable audio player, namely iPod, with an additionally provided iTunes music store for its users. In 2002, Apple introduced a redesigned iMac based on a 64-bit processor. However, despite this fact, it failed the sales expectation. In 2004 and 2005, Apple opened its first stores in Europe and Canada. Later on, in 2006, Jobs announced the first Intel-based Macintosh, the iMac, and MacBook Pro. By this time, Apple had become a leader of a completely new industry, selling over 41 million iPods in 2006 and controlling 75.6 % of the market. ITunes became the leading media downloading tool in the world.

In May 2007, Apple’s share price passed the $100 mark. On April 2, 2007, Apple and EMI announced the removal of DMR technology, allowing music tracks to be played on 3rd party players. In July 2008, Apple launched App Store to sell 3rd party applications for its products. The latter exceeded all expectations, selling 60 million applications monthly (or $1 million daily). In September 2008, Apple was considered the third-largest mobile handset supplier due to the popularity of the iPhone.

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On January 14, 2009, Jobs announces a six-month absence due to his health issues. Despite his absence, Apple recorded the revenue of $8.1 billion and the profit of $1.2 billion on its best non-holiday quarter (1st quarter of 2009). In May 2010, Apple Inc. overtook the leading IT position from Microsoft for the first time since 1989. In October 2010, its shares hit the all-time maximum price of $300.

Steve Jobs as an Entrepreneur

Steven P. Jobs was born in San Francisco on February 24, 1955. In 1972, he graduated from Homestead High School, located in Los Altos, California. After graduation, Hewlett-Packard hired Jobs as a summer employee, where he met Steve Wozniak. Jobs helped him sell his innovative device to customers. In 1972, Jobs dropped out from Reed College in Portland, where he had enrolled in various classes, such as philosophy and calligraphy.

In early 1974, Steve Jobs was a video-game designer of Atari, one of the pioneers of arcade gaming. After his return from India in 1975, Jobs and Wozniak built their first prototype of Apple I and offered it to a local electronics retailer. After this offer, they decided to form Apple Computer Company as a partnership.

In 1984, the company’s profits reached $64 million because of persuasive and charismatic Steve Jobs. Having a demanding and aggressive personality, Jobs led Apple through hard times of brand new technologies and products linked with intense competition.

In 1985, Jobs formed a new computer company, namely NeXT. NeXT’s futuristic UNIX-derived machines were well known among academic and scientific organizations. However, they had no widespread commercial success due to the fact that not all organizations could afford them. Jobs sold the company in 1996 to Apple for $402 million and became an iCEO of Apple in July 1997. During that period, he reconstructed the company-outsider from the foundation, making it globally competitive again. His aggressive but meaningful policy of cutting the less progressive products and ideas led Apple Computer Company back to the innovation race.

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In 1986, Jobs purchased Pixar Animation from LucasFilm for $5 million and became its CEO. Under his command, Pixar, in partnership with the Walt Disney Company, created half of the highest-grossing animated movies of all time. Each of these films was the highest-grossing cartoon for their release year. Opposite to his earlier management style at Apple, Jobs offered freedom of actions to the Pixar’s creative staff. The Walt Disney Company’s CEO, Michael Eisner, had an intense relationship with Jobs during the years of their companies’ cooperation. In 2005, Jobs refused to renew the contract with Disney due to Eisner’s arrogant decision to leave the distribution agreement as it was. This mistake caused Eisner to be replaced by Robert Iger on October 1, 2005. On January 24, 2006, Disney bought Pixar Animations for $7.4 billion, making Jobs one of the Disney’s directors and its largest stockholder.

In 2009, Jobs announced a six-month leave of absence due to a cancerous tumor in his pancreas. However, he still consulted on important strategic initiatives at Apple. In April 2009, Jobs endured a successful surgery on his liver and returned to his position as a CEO in 2010. On January 17, 2011, Jobs announced his second leave of absence for health issues, making Tim Cook a CEO of Apple, Inc.

Steve Jobs had received many honors over the years of his career. The first one, in 1985, was the Medal of Technology from President Reagan. In 1987, he was among the first people to ever receive the Samuel S. Bear Award. In 2007, Jobs was included into the California Hall of Fame. In August 2009, he became the most admired teenager entrepreneur according to the survey conducted by Junior Achievement. In 2010, Steve was chosen by Fortune Magazine as “Executive of the Decade”, and Forbes named him the “17th Most Powerful Person on Earth”. This list had only 68 individuals. He has also been referred to as the “Henry Ford” of the current world business market.

Apple’s Strategies

First, Apple’s business strategy is based on its ability to design and develop software, hardware, operating systems, and services to support new products. The company is making continual investment in the research and development of innovative products and technologies. For example, it spent $1.8 billion to cover these expenses in 2008. Apple Inc. also provided a platform (iTunes Store), to deliver third-party digital content and applications. Additionally, the company expanded its distribution to reach more customers and offered high-quality support for its products (AppleCare). It included printed and electronic manuals, online support as well as a fee-based repair and diagnostic services, also known as APP (AppleCare Protection Plan).

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Apple Inc. induced knowledgeable salespersons to convey the value of its products and attract the customers. It also conducted an Apple Premium Reseller Program to improve third-party resellers’ focus and expertise among Apple products. In September 2010, the company had 317 retail stores all over the world. They were often located in high-traffic areas, especially malls. The retail stores were of various sizes to accommodate market-specific demands. Apple Stores employed experienced personnel to provide the best direct contact with a customer. Additionally, these stores expanded the assortment of accessories and peripherals that complemented the company’s products.

Furthermore, the company encouraged students’ thoughts and ideas by providing educational grants and developing special educational equipment and software, such as individual laptop programs and education roadshows. Apple also improved a real-time distribution and accessibility of educational materials through iTunes U – a student-oriented iTunes’ plug-in. Additionally, the firm sold its hardware and software products for the government, enterprises, creative and scientific needs within their geographic segments, granting a possibility to many third-party developers to create additional Mac-compatible hardware and software.

Apple Inc. competed against well-funded and experienced participants, such as Microsoft and Intel. This fact forced the company to rapidly adopt technological and product advancements and improve its pricing policy for consumers and businesses. Apple also collaborated with other companies and software engineers to offer more competitive solutions and created brand new markets (iTunes as a media market, for example). Apple’s competitive strategy was always based on quality and high performance of its products.

Despite the fact that Apple Inc. systematically obtained components from limited sources, its supply had never failed due to favorable pricing and stable agreements. In addition, the company used some custom parts, uncommon to other producers, and introduced new products that often used these components. Almost all Apple’s assembled products were manufactured by outsourcing partners in single locations in Asia, primarily because of its low-costing labor and producing quantities. The final assembly is mostly performed in a manufacturing facility in Ireland. The company also devotes much attention to patent applications and copyrights to protect its inventions. Currently, it has accumulated a portfolio of several thousand issued patents worldwide.

Even though the United States is the largest Apple’s geographic marketplace (44% of net sales), the company improves its global status by opening new Apple Stores in foreign countries and providing seasonal discounts and a long-term warranty on its hardware products. Due to some countries’ environmental policies, Apple provided a possibility to return their products to be recycled at the end of their technical lifecycle. However, it does not participate in any environmental researches and discussions, which may become very reasonable in a few decades.

What should Tim Cook Extrapolate, and Why?

Despite stable positive development trends of Apple Inc. over the past decade, Tim Cook should take into account many important factors to ensure the effectiveness of the company.

First, it must be assumed that the IT-sphere is the fastest-growing technological niche of the modern industry. Therefore, there is no excuse for saving funds on research and discoveries that can and should be applied in the future generations of already built devices and software franchises. In this case, there was repeatedly cited Apple’s concentration of resources on account of the given terms, which showed an increase in total revenue and the number of items sold in the outcome. An example is the release of iPhone 4, which in 2010 demonstrated a yet unseen performance and quality of service called Siri.

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Second, Tim Cook may borrow management strategies from other prominent SEO, such as Steve Jobs. Jobs was a decisive leader and an excellent orator, and, thus, gained worldwide fame. However, he repeatedly criticized Scully for his avid desires and elimination of creative professionals from certain projects. He recalled that Scully was only trying to increase profits, not the overall reputation of the company. Therefore, a CEO must always focus on the needs of the customer base but not on the value of the shares. This strategy should also include deliberate cooperation with other IT conglomerates and manufacturers of high-quality hardware base, such as cooperation between Pixar and the Walt Disney Pictures in the 90s. Additionally, Tim should not forget to purchase startups that may damage or, on the contrary, contribute to the development of the company.

Thirdly, it is necessary to remember that even if almost half of Apple Inc.’s earnings comes from the U.S., it is not necessary to reduce the distribution in other countries. Logically, if the company has a greater influence (quantity of Apple Stores, advertising campaigns, etc.) not only on the territory of the United States, it could significantly increase its revenues. Incidentally, Apple’s advertising and presentation of new products should focus on solving user problems and opportunities that can improve people’s lives. Therefore, the market increase is as important as merchandising and implementation of the human dreams.

Tim Cook should also be prepared for a rough rejection or approval of possible projects that are questionable in terms of implementation or not quite appropriate from the standpoint of users’ needs. An example could be 64-bit MacBook released in 2005, which had no great success, as in the case of the iPod. A CEO should be oriented towards the effectiveness of a decision-making process. Although Steve Jobs also made mistakes, he was never afraid to take risks and always tried to implement what many thought impossible or uneconomic. An example of this solution is the Macintosh that revolutionized the presentation of the user interface in 1984, which until then had generally been built on text commands.

How It Works

Despite the widespread use of Apple products and services in education, communication, media, and geographic location, the corporation still has much development space. Information technology can be used in the least expected areas of human life. Hence, Tim Cook should also pay attention to areas such as medicine, science, industry, where the bright ideas of the given innovative company can be applied. Another important task is to maintain the viability of older Apple products or introduce updates and operating system services. As known, the owners of Apple products rarely switch to the products of the rivals, including Microsoft. Therefore, implementing and supporting the saving, protection, validation, and relevance of the customer data and associated equipment should be the main course of Apple Inc.

Tim Cook has repeatedly proved his professionalism in the absence of Steve Jobs; thus, it can be assumed that he can extrapolate these findings from the given information.

John Tarpey’s concerns

John Tarpey asked the right questions about the purchase or sale of corporation shares. The analytical data collected by him for the last time can alert the shareholders.

The first thing he noticed is a direct dependence of the shares on the presence of Steve Jobs and his leading the company. For example, his disappearance from his post as a CEO in 2009 reduced the share price by 14%, and the second – by 5%. However, despite this fact, Steve Jobs is not Apple’s general representative; he is not a corporation, overall. The company will develop in the future even without his charismatic persona, support, and creativity.

The second thing that alarmed Tarpey was the possibility of other large companies to overtake Apple Inc. in the development and introduction of appropriate technologies during the period of the given realization. The company has always competed and will always compete with its rivals for the position of a leader in a particular field. Over the period of 2010, iPhone had been considered a leader among the smartphones of the so-called premier series. Its only serious rival is Samsung Galaxy. It proves that the company’s concerns about a place in the world technology and product ranking are, of course, appropriate, but do not play a significant role as they forces Apple Inc. to involve in innovative activity. It cannot be stated clearly when the other companies will catch up with Apple in the spheres of its influence and will be able to present something more useful and better than the company does.

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Furthermore, Tarpey faced the question of the recommendations concerning the purchase/sale of shares of the corporation. The obvious fact is that Apple Inc. has no adverse material changes in its management and development policy, with the sales and overall company value steadily increasing. In addition to this, the company is still a leader in media services and device market. Thus, it can be concluded that the sale of shares is not only illogical but unprofitable. Why would one sell the shares of the company during the period of its maximum power? On the contrary, John Tarpey has to persuade the shareholders to buy additional shares until they had not grown to the highest possible mark, as there is a possible price increase of the given stocks over the next few years. Therefore, it is evident that selling Apple Inc.’s shares at this stage is simply impractical.

As it is known, for nearly 40 years of its existence, the company has gone through its rise and fall, but was still able to stay on the market and even lead it. As mentioned before, Apple Inc. needs to find alternative methods of raising its capital to maintain these positions. For example, these strategies may include the implementation of new technologies in the secondary sectors, projection of brand new gadgets, and improvement of services and software. The expansion of professional staff and cooperation with outsourcing firms would be equally important for the realization of these processes. In conclusion, it should be mentioned that, at this stage, the company should primarily focus on mobility, portability, ergonomics, and efficiency in the development process of devices, because these qualities are inherent in the overall tendencies of the 21st century.

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