The Iphone A Technology Disruptor - Case Study [PDF]

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“THE IPHONE: A TECHNOLOGY DISRUPTOR” A Case Study

I.

EXECUTIVE SUMMARY

Apple Computers, Inc. was founded on April 1, 1976, by college dropouts Steve Jobs and Steve Wozniak, who brought to the new company a vision of changing the way people viewed computers. Jobs and Wozniak wanted to make computers small enough for people to have them in their homes or offices. Simply put, they wanted a computer that was user-friendly.

Jobs and Wozniak started out building the Apple I in Jobs' garage and sold them without a monitor, keyboard, or casing (which they decided to add on in 1977). The Apple II revolutionized the computer industry with the introduction of the first-ever color graphics. Sales jumped from $7.8 million in 1978 to $117 million in 1980, the year Apple went public.

The company is committed to bringing the best personal computing and music experience to students, educators, creative professionals, businesses, government agencies, and consumers through its innovative hardware, software, peripherals, services, and Internet offerings. The company's business strategy leverages its unique ability, through the design and development of its own operating system, hardware, and many software applications and technologies, to bring to its customers new products and solutions with superior ease-of-use, seamless integration, and innovative industrial design.

II.

CHARACTER/PLAYERS

Main Character/Players: Tim Cook is the CEO of Apple and serves on its board of directors. Before being named CEO in August 2011, Tim was Apple’s chief operating officer and was responsible for all of the company’s worldwide sales and operations, including end-tomarilengraceabejero_casestudy2

end management of Apple’s supply chain, sales activities, and service and support in all markets and countries. He also headed Apple’s Macintosh division and played a key role in the continued development of strategic reseller and supplier relationships, ensuring flexibility in response to an increasingly demanding marketplace. Katherine Adams is Apple’s general counsel and senior vice president of Legal and Global Security, reporting to CEO Tim Cook. Kate serves on the company’s executive team and oversees all legal matters, including corporate governance, intellectual property, litigation and securities compliance, global security and privacy. Kate joined Apple from Honeywell in 2017, where she worked for 14 years, most recently as senior vice president and general counsel. At Honeywell, Kate was in charge of the organization’s global legal strategy across more than 100 countries. Eddy Cue is Apple’s senior vice president of Internet Software and Services, reporting to CEO Tim Cook. Eddy oversees Apple’s industry-leading content stores including the iTunes Store and Apple Music, as well as Apple Pay, Maps, Search Ads, Apple’s innovative iCloud services, and Apple’s productivity and creativity apps. Eddy also leads the newly created team responsible for developing all aspects of Apple’s worldwide video programming. Eddy’s team has an excellent track record of building and strengthening online services to meet and exceed the high expectations of Apple’s customers. Craig Federighi is Apple’s senior vice president of Software Engineering, reporting to CEO Tim Cook. Craig oversees the development of iOS and macOS. His teams are responsible for delivering the software at the heart of Apple’s innovative products, including the user interface, applications and frameworks. John Giannandrea is Apple’s senior vice president of Machine Learning and AI Strategy, reporting to CEO Tim Cook. John joined Apple in 2018 and oversees the strategy for artificial intelligence and machine learning across the company and development of Core ML and Siri technologies.

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Greg “Joz” Joswiak is Apple’s senior vice president of Worldwide Marketing, reporting to CEO Tim Cook. Since joining Apple in June 1986, Joz has played a pivotal role in developing and launching some of the world’s most beloved consumer products, including the original iPod and iPhone. Joz began his career at Apple working on the early Macintosh computers and supporting the Mac’s community of third-party developers. Sabih Khan is Apple’s senior vice president of Operations reporting to COO Jeff Williams. Sabih is in charge of Apple’s global supply chain, ensuring product quality and overseeing planning, procurement, manufacturing, logistics and product fulfillment functions, as well as Apple’s supplier responsibility programs that protect and educate workers at production facilities around the world. Luca Maestri is Apple’s senior vice president and chief financial officer reporting to CEO Tim Cook. As CFO, Luca oversees the accounting, business support, financial planning and analysis, treasury, real estate, investor relations, internal audit and tax functions at Apple. Luca joined Apple in 2013 as vice president of Finance and corporate controller, and has worked closely with Apple’s senior leadership since his arrival. Deirdre O’Brien is Apple’s senior vice president of Retail + People, reporting to CEO Tim Cook. As the leader of Apple’s retail and online teams, Deirdre supports their work to enrich the lives of millions of Apple customers every year. With a laser focus on the connection between customers and the people and processes that serve them, Deirdre and her team create retail experiences that educate and inspire.

Johny Srouji serves as senior vice president of Hardware Technologies at Apple, reporting to CEO Tim Cook. Johny has built one of the world’s strongest and most innovative teams of silicon and technology engineers, overseeing breakthrough custom silicon and hardware technologies including batteries, application processors, storage controllers, sensors silicon, display silicon and other chipsets across Apple’s entire product line. marilengraceabejero_casestudy2

John Ternus is Apple’s senior vice president of Hardware Engineering, reporting to CEO Tim Cook. John leads all hardware engineering, including the teams behind iPhone, iPad, Mac, AirPods, and more. Jeff Williams is Apple’s chief operating officer reporting to CEO Tim Cook. He oversees Apple’s entire worldwide operations, as well as customer service and support. He leads Apple’s renowned design team and the software and hardware engineering for Apple Watch. Jeff also drives the company’s health initiatives, pioneering new technologies and advancing medical research to empower people to better understand and manage their health and fitness. Lisa Jackson is Apple’s vice president of Environment, Policy and Social Initiatives, reporting to CEO Tim Cook. Lisa oversees Apple’s efforts to minimize its impact on the environment by addressing climate change through renewable energy and energy efficiency, using greener materials, and inventing new ways to conserve precious resources. Isabel Ge Mahe is Apple’s vice president and managing director of Greater China, reporting to CEO Tim Cook and COO Jeff Williams. Isabel provides leadership and coordination across Apple’s China-based team. Tor Myhren is Apple’s vice president of Marketing Communications, reporting to CEO Tim Cook. As head of the Marketing Communications group, Tor leads a talented and creative team focused on Apple’s advertising, internet presence, package design and other consumer-facing marketing. Adrian Perica is Apple’s vice president of Corporate Development, reporting to CEO Tim Cook. Adrian is responsible for the company’s mergers, acquisitions and strategic investing efforts. Since joining Apple in 2009, he has overseen the successful integration of vital technologies and new businesses across hardware, software and services. marilengraceabejero_casestudy2

Phil Schiller is an Apple Fellow, responsible for leading the App Store and Apple Events.

Supporting players: Board of Director - Apple's Board of Directors oversees the Chief Executive Officer and other senior management in the competent and ethical operation of Apple on a dayto-day basis and assures that the long-term interests of shareholders are being served.

Arthur D. Levinson, Ph.D. James A. Bell Albert Gore Jr. Andrea Jung Monica Lozano Ronald D. Sugar, Ph.D. Susan L. Wagner

III.

SUMMARY OF ISSUES

Main Issue: How will Apple Iphone survive the ever-changing competitive market?

Supporting Issues: 1. Stagnant Apple Iphone sales; 2. Agitated investors; 3. Issue on innovativeness; 4. Issue on Marketing; 5. Brand management.

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IV.

TIME CONTENT

It was in 2019 that is set to be one of the toughest years that Apple has faced. It's bad enough that Mac sales are pretty much flatlined, and iPad sales are on a downward trajectory, but what makes Apple's predicament much worse is that iPhone sales are weakening, and investors have become agitated that Apple has said that it will no longer report on iPhone unit sales.

V.

VIEW POINT

Tim Cook, the CEO is grappling with his toughest challenge since replacing co-founder Steve Jobs 7 years ago. Even as he tries to boost iPhone sales, Cook also must prove that Apple can still thrive even if demand doesn’t rebound. CEO Tim Cook blamed sales decline on a mix of factors, including a slowdown in China, foreign exchange rates, a popular battery replacement program and reduced smartphone subsidies from carriers. Cook traces most of Apple’s iPhone problems to a weakening economy in China, the company’s second biggest market behind the U.S. The company is also facing tougher competition in China, where homegrown companies such as Huawei and Xiaomi have been winning over consumers in that country with smartphones that have many of the same features as iPhones at lower prices.

VI.

CENTRAL PROBLEM

Apple Iphone is exposed to stiff competition with competitors that offer low prices products and in the technology markets and because of aggressive competition and imitation of their product design.

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VII.

OBJECTIVES

MUST - To be able to create a strategic plan that will expand the product line to other products that is less expensive but uses rapid innovation in the next two (2) years.

WANT - To be able to enter the mobile communications market to provide their products a lower price and to retain its competitive position in the market.

VIII. AREAS OF CONSIDERATIONS

SWOT ANALYSIS STRENGTH

WEAKNESS

Global recognized brand image High-profit margins Product set high standards in the market Intuitive product design and utility

Limited distribution network High selling prices Sales limited to high-end market Very proprietary and controlling

Analysis

IX.

OPPORTUNITIES

THREAT

Distribution network expansion Creation of new product lines Rising demand for tablets and smartphones

Imitation Aggressive competition Rising labor cost in countries where Apple plants are located Tough competition in the industry

ALTERNATIVE COURSE OF ACTIONS (ACAS)

1. Use its strong brand image and rapid innovation processes to successfully develop and launch new product lines that is less expensive

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Advantage: Lower-cost device will help the company in competing in the Indian and Chinese market. Disadvantage: Lower-priced iPhone don’t have the same display quality of higherpriced iPhones, which means low quality compared to other cheap China and Korean phones with high specifications.

2. Use strengths to exploit the opportunity to expand its distribution network.

Advantage: This will help the company increase their sales in the global market. Disadvantage: This will require time-consuming labor and material resources.

3. Work on the competitive factors such as product features, design and appeal, quality and reliability of the product, after sale services of products, relative prices and capacity to market.

Advantage: This will further enhance its existing products in all aspects so as to maximize on value and will help redefine consumption behaviors because people will stick to their thinking that Apple iPhone is a high-quality product compared to other cheap smartphones in the market. Disadvantage: Entails additional costs since they will Invest in research and development so as to stay ahead of the competitors.

X.

RECOMMENDATION

From among the three (3) courses of actions, it is recommended for Apple to (3) Work on the competitive factors such as product features, design and appeal, quality and reliability of the product, after sale services of products, relative prices and capacity to market.

One of the reasons for its competitive advantage over others is its Brand equity. Apple is known for delivering the best quality products and services. It has marilengraceabejero_casestudy2

maintained the trust levels among the customers for years. However, in 2019 most consumers find the new iPhone lacks in innovation. It only focuses on its camera and design but nothing is special with its features anymore compared to the roster of smartphones available in the market.

XI.

PLAN OF ACTION

1. The company should redevelop its model for generic strategies that defines strategic options that the company can use to develop its competitive advantages in the consumer electronics and information technology and services industries; 2. Revisit its generic strategy against its major competitors like Samsung, Google, Amazon, Microsoft, Dell, HP, Lenovo, Sony, IBM, BlackBerry, Huawei, LG, among others. This generic strategy means that Apple always aims to set itself apart from competitors not by low price but by competitive advantages based on product design that attracts customers; 3. Improve or maintain its elegant design and user-friendliness of products, combined with high-end branding and effectively differentiate the technology business; 4. The company must continue emphasizing innovation through research and development. Apple must keep developing innovative products so that the business maintains its competitive advantage.

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