Apple Case Study Solution – Group 8, Sec B

Shankar Bansal, K Siva Prasad Reddy, Gulshan Jain, Kilaparthi Chaitanya, Khedekar Pritam Govind

1.
Apple is facing severe problem in terms of profitability. Company is on a downward path since
1992. Its sales dropped drastically by approx. 80% in 1993 from previous year. Its market share
was further reduced by 1.6% points in the next years and eventually company started incurring
losses viz. $68 million in 1995. Its market share was further reduced to 3% in total and company
incurred heavy losses to the tune of $2 billion in 1997.
Apple has replaced 3 CEOs in past 5 years along with massive lay-offs in human resource to stay
afloat while suffering heavy losses. Further, company started generating some value with
launch of products like Apple II, Macintosh etc. in early years. Company’s investments for the

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past 10 years in its Newton Inc. project has not created any real value due to bad customer

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experience because of flaws in the technology. It has also not added any further value to its

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core market which was general public and shifted its focus to businesses.

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ERRC Grid of Blue Ocean Strategy:

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Eliminate the R&D expenditure on the projects like Newton Project which are not generating
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profits or sales.
Reduce Company’s positioning as Hardware Company and improve accessibility of the
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operating system to people. Reducing the prices will help company change its image as one
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catering to only sophisticated and creativity-inclined users and attract general public.
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Raise research on innovative products that will focus on needs common public.
Create products and services which will be user friendly & customizable to cater to needs
ranging from entertainment to work
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2.
In which industry did Apple create a blue ocean? was that industry attractive?
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Was Apple a new entrant or an Incumbent in the industry?

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When Apple created iPod and with its iTunes store it created a blue ocean in the Music
industry.
Yes, the Industry was and still is attractive. Apple is a new entrant in the industry as iPod is the
first product introduced by Apple into the industry which was dominated by Sony with MP3
players and Walkman till then.

3.
Where did the innovation come from?

The Innovation for the iPod came from the fusion of hardware technology and software

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 expertise to provide seamless experience. It is born out of customer centric approach where
they satisfied unstated customer’s need by eliminating the need to buy many compact discs.

Did Apple focus on the existing core customers?

Apple focused on its turning existing customers of iMac and iPhone to extend to iPod with the
elegant design and great user experience to which its customers were accustomed to. But it
also focused on new customers who were Walkman and MP3 users till iPod came out.

Did Apple pursue either differentiation or low cost? Or both?

Apple pursued both differentiation and low cost. Differentiation with concept of iTunes store
and Apple’s sleek design but also low cost since it eliminated the need to buy many CDs with its
‘99 cents a song’ offer.

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4.

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In 2011, Sony Corporation struggled with a series of natural disasters along with huge loss of
$3.1 billion. There were many deep rooted problems in the company in terms of its strategy,

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product focus, culture etc.,
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With the failing TV business, company was in loss even though it had some profit making
divisions like insurance. Company was also not able to offer value to the customers as Sony
clung to CRT TVs when the competitors like Samsung, Sharp etc., moved on to flat screens. The
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work culture at Sony was divisive and rigid with hardware and software departments not in
sync. Employee attitude towards change was one of the biggest hindrances for Sony at a time
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when agility was the key to survival with the rapid changes happening across the industry.

ERRC Grid of Blue Ocean Strategy:

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We could follow the below strategy to revive the company along with the restructuring of
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company to be provide more cooperation and synergy between different divisions.

Create
 A platform for its PlayStation users to connect and interact, play together.
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 Develop apps for its phones through which they can access and purchase Sony music
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and videos

Raise
 Improve the OS for Sony phones to provide a more user friendly
experience in collaboration with Google
 Open Customer service centers around the world to provide support and service for
various Sony products

Eliminate
 The outdated or very similar products need to be dropped.

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 Reduce
 Need for customer to buy separate Walkman, phone etc.,
 Hassle with difficult user interface

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