ME 425

Name: Raymar B. Aquino Section: BSBA-4B

ACTIVITY: Case Study

Introduction

Apple Inc. is one of the biggest and most innovative leading electronic product
companies in the world.

Apple was founded by Jobs with other 2 of co-founders in his garage where the original
generation of Apple computers was produced. The company has experienced its ups and downs
in the highly competitive technology and consumer electronics industry environment since it was
founded-rapid increase in business within a few years since founded, struggling for survival
while Jobs was away, successful turnaround under Jobs’ lead while returned the company and
etc. the priod that Jobs returned and became CEO was especially paid attention to since it was
such a successful turnaround.

Moreover, Apples’s business strategies were not like ordinary strategies that any other
tech companies apply. People were interested in the business strategy that Jobs renewed to
manage Apple’s legendary comeback. While Steve Jobs was away, Apple lost direction and
competitive position in the market – “the sales dropped due to the higher price in the market; the
costs were higher than its competitors and the products lost its charm, ets.” None of the changes
made by new CEOs manages to turn the business around since Jobs left, and Apple was on the
edge of shutdown. Things started to look up after Apple bought “NeXT” for external help on its
product development – a software company that Jobs founded after he was kicked out by Apple.
Offered the position of Apple’s CEO, Jobs started renewing business strategies, revitalizing
focus, and developed new breakthrough products that gained customers loyalty. Series of
activities brought Apple back to life and obtained huge success.

Analysis
After Jobs returned, he firstly pointed out the problem was the products that “there was
no sex in the products anymore”. He has made following strategic changes:

- Re-building an innovative organization: Refocus on innovation capability – Core

value
 Cut off 70% of new developing products, kept 30% ‘gems’, added new projects that has
breakthrough potential Innovations in line with loyalty to user friendliness– redefined PC
industry Entered consumer electronics, entertainment and phone industries with breakthrough
innovation.

- Combination of hardware and software in phones and music players

Play by different rules in the industry: sticking with a proprietary ecosystem, seeking
proprietary ecosystem (keep everything in-house) – Core competence Corporate culture and
human capital Intense work and perfectionism in a casual environment, encourage employees to
think out of box and reward by best product than salary

Apple certainly acquires competitive advantage in its changed strategy. This is achieved
by a unique business system – firstly position priority (innovation as core value); strengthen core
competencies by taking advantage of its existing strength in resource and having all experts and
know-how in-house, which creates more holistic product system and more tightly knit
organization system.

Apple tends to have a more resource-based perspective than a market-driven one, as its
competitive advantages come more from its strengths inside the company. Rather than being
driven by the market, Apple concentrated on its own proprietary ecosystem. Therefore it applies
an ‘inside-out perspective which believes that strategies should not be built around external
opportunities, but around company’s strengths.’

Apple indeed focused on enhancing its strength and let the market followed the
opportunities created by its strengths. Apple focused on creating an innovative business system
hard for any rival to duplicate in short time. Steve positioned ‘innovation’ as core value and
clearly identified its organization strength: 1) Resources –both software and hardware which
makes a tight integration and intimacy between its own software and hardware meaning a
coherent product system; 2) Capabilities that enable a holistic organization system which comes
from keeping all experts in-house than outsourcing (including product design, hardware
development and software development).

Apple used its strength to create opportunities in the market: making computers, music
players and phones with Apple’s own hardware, software and applications. These products are
not only better products than competitors’ because of the better integration of hardware and
software from its own but also revolutionized the industry by making the breakthrough
combination as innovation that is never made by others in the industry. This point refers to the
‘paradox of firm compliance and strategic choice in industries’.

This is also a reason that Apple gained sustainable competitive advantages over its rivals
– break the rules in the industry which is a bold and right decision. Unlike its competitors who
comply with industry change, Apple chose to follow an industry leadership perspective which is
consistent with ‘demand for strategic choice’ in the paradox.

Apple played a different rule when most others just find a focus at what they do best and
outsource the rest. On the contrary, Apple proceeded series of acquisition in order to strengthen
the ability to do everything by itself (e.g. acquisition of company PA semi to do chip design in-
house).

This core competence of Apple – a proprietary ecosystem reached by vertical integration

of value-adding system has raised the barrier of industry new entry, lowered supplier’s bargain
power, prevented copycats and raised the complexity to copy its system for rivals. It is also this
competence that allowed Apple to innovate the products that revolutionized the PC and
consumer electronics and entertaining industries – this also relates to ‘discontinuous renewal
perspective’ in ‘paradox of revolution and evolution’.

Conclusion

In conclusion, Apple’s strategy of sticking to innovation as core value and enhancing its
proprietary ecosystem as core competence achieved by implementation of series strategic
activities, have all along in the service of each other and successfully, forcefully and effectively
created the company a sustaining competitive advantage hard for rivals to copy; helped turn the
business around in a short period of time.