Submitted by: Anoba Zaheer

Submitted to: Dr. M. Ismail Ramay

Course: Strategic Management

Due Date: 11th October 2022

TOPIC APPLE INC.: PERFORMANCE IN A ZERO-SUM WORLD

ECONOMY

CASE STUDY ANALYSIS

The article is about what the senior financial analyst John Tarpey how he should analyze
2010financialper-formance and strategic strategies of Apple In. The basic question he sought answers
to with this in-depth analysis was how Apple's performance continued to be outstanding, While the
world and U.S, economy was flat to negative,
A second, and more important question, was if Apple could sustain this high level
of performance and major innovation. After analyzing Apple's most recent balance sheets and income
statements and integrating that information with his knowledge of the company, John Tarpey was
unsure of his next move. As a senior financial analyst of a securities firm, he was obligated to make a
recommendation. Should he tell his clients to buy, hold, or sell Apple's common stock?
He had a number of concerns about the company's future. For example, how dependent
was Apple on Steve Jobs? The shareholder proposal at the most recent shareholder meeting
asking the board to develop an executive succession plan indicated that current shareholders
were certainly worried about Jobs' health and ability to lead the company. In addition, how
long would it take for Apple's competitors to catch up with the company's lead in product
development and perhaps even surpass Apple? There was no doubt in John's mind that Apple's
stock price had done very well over the past few years. Was this a good time to be buying more Apple
stock or was the smarter move to sell the stock and take some profit while
it was still a solid performer?
Given Apple's history of boom-and-bust performance over its lifetime, what should the
company be doing to cement its market leadership in this constantly evolving industry? So the article
this has brought up these problems that how these must be addressed

INTRODUCTION

It is needless to say that Apple Inc. is currently the world leader in computer products. The
company was initially started as a one dealing in computer hardware and software. But nowadays, the
company is into other products also like Apple IPod, Apple Watches, Apple TVs and a host of others.
The success story of Apple was possible only because of the vision and outlook of Jobs who turned
the company on its head in the tough times. However, all of these returns on investment, profitability
and so forth came to reality because of the company's commitment to utilize strategic management
processes allowing them to make better strategic decisions that are appropriate for dealing with the
complex and changing environment. The problems came as there were several controversies regarding
some of the decisions taken by Jobs sacking of few of the employees in the beginning of his tenure. But,
this was done to make sure that the right people were put in the right job after that, Apple did not have to
look back.
Today, Apple Inc., is considered as one of the benchmark electronic goods manufacturing companies all
across the world. The company has also been recognized as one of the best employers to work with
worldwide. The company was able to attain success during early years through marketing and
technology innovation. Steve Jobs is credited for the company success through his leadership. Apple
business success has been underpinned in its strategy of giving users the best experience through
innovative designs of its products and services. Entrepreneurs such as Jobs need to possess certain
traits that make them stand out from the common man. Out of Jobs innovative leadership Apple
Company continued to grow amidst the falling US economy. Such situations can only be achieved
through certain levels of personal dedication.

APPLE’S HISTORY

BACKGROUND

Apple Company has been one of the world’s leading companies both in the field of technology as well as
being the best-selling company. Analyst have done research on the Company with the attempt to
understand what strategies the company employs to ensure that it remains at the position it already holds.
The secret to the company dates back from its birth and the continued advancing it has embraced over the
years. Apple Company was founded in the year nineteen seventy six through partnership of Steve Jobs
and Steve Wozniak. The two gentlemen had to sell some of their assets to gather the starting capital and
from their garage they made the very first personal computer revolution. In 1985, amid a slumping
market, Apple saw the departure of its founders, Jobs and Wozniak. As Chairman of the Board, Jobs had
recruited John Sculley, an experienced executive from PepsiCo, to replace him as Apple’s CEO in 1983.
Being smart entrepreneurs they employed Markkula to help with the company’s marketing plans. From
the very first years of its birth, Apple continued to thrive from the fact that the company employed the
right marketing strategies and technological innovations. The strategies that the company employed gave
them the lead among all other companies which were in the same business field as them.

Having ensured that the company was excelling as he had expected, Jobs recruited John Sculley to take
over as the new Apple C.E.O. In the process of retiring Jobs sold all his shares except one which made
him still a part and parcel to the company. At the same time, Apple’s other partner Wozniak left the
company and they all left the company under new management. The company’s success kept growing
more than any other company. In the year nineteen ninety, the company was still topping with the net
sales of the company growing to approximate seven billion dollars. The industry then was changing a lot
and so was the company’s management. These changes made the company to take a turn and in the
process Apple lost its competition leading to the resignation of Sculley. A new CEO, Michael H.
Spindler was immediately appointed and took over management of the company. The company was
nowhere recovering from its downfall which made the founder of the company Jobs to intervene and take
over management. Once Jobs was back in management he had to make different changes in the
company’s management which included dropping of various projects such as iBook. Under Jobs
management the company grew to an extent of opening new stores in different countries such as Canada
and Japan. Jobs entrepreneurship skills helped him grow the company making the Apple regain its
position of being the best. Some of the other changes that Jobs made to the company were changing the
company’s name from Apple Computer, Inc. to Apple Inc. since the company was no longer limited to
computer production. To the present day Apple company continues being in the lead from its diverse
technological involvement with the world’s evolutional changes.

EVALUATION OF CASE

SWOT ANALYSIS OF APPLE INC. BASED ON THE CASE STUDY:

STRENGTHS:
From the available case article, it can be seen that the company has strengths of the functional
units available. It is a pioneer of high tech and innovative quality products. A very well recognized brand
name along with a well-equipped Research and Development department are strong points for the
company. The company has a unique ability to develop and design its own operating systems, services,
application software, and Hardware. They are into expanding their distribution department which would
take the brand to every corner. They are able to provide good quality sales and post sales experience.
Third party development of Hardware and Software that do compliment company offerings is a
significant strength.
WEAKNESSES:
Price of the products is very high, they require outside financing in order to sustain the current
growth rate. Cannibalization of their products, such as iPod cannibalizing iPhone sales is a considerable
issue. They operate 44% of their manufacturing in third world countries; it is limiting the ability of Apple
to control its manufacturing environment. They do high dependence on jobs for direction.

OPPORTUNITIES:
They can continue their expansion in International retail markets, Apple strength of innovation
can be leveraged upon this high innovative market. They can expand third party companies’
partnerships. By adopting the concept of iPod in iPhone, it is moving to the mobile phone market. It can
pursue education and government departments that are not under the contract.
THREATS:
Aggressive cutting in price strategy is being adopted by competitors. Direct competition with
giant Google is making it difficult for the company to expand. The trend in technology industry is that it
frequently adopts new product introductions. This would lead to competition surpass and take the market
share of the company. Sales figures are subject to fluctuation depending upon the time of year. MNCs are
subject to tariffs, anti-dumping penalties and exchange rates.

TIM COOK STRATEGIES OF MAKING APPLE A BETTER COMPANY

Tim Cook being the predecessor of Jobs he has quite a lot to handle if he has to maintain the company’s
picture and position of excellence. This is from the fact that Jobs left the company when it is at its
excellence peak and maintaining that calls more than personal sacrifice. To maintain the company’s
position, Cook has to better the practices that Jobs put into practice during his management era. In
bettering the practices Jobs used, Cook needs to first understand the success traits Jobs possessed. One of
the very fascinating characters that Job had was the trait of being visionary and a fighter. Possessing
visionary traits opens up chances for an individual to be creative and innovative in his designed sector of
operation. According to Jobs being innovative during designing is the major factor that makes the
difference between Apple’s products and other company products. Therefore Cook needs to carry on with
that spirit as well as bring better innovative ideas that will fit with the evolving technology sector.

Another major aspect that Tim Cook needs to integrate in his daily activities as the company leader is the
issue of being a risk taker. Steve Jobs was the daring type of entrepreneur and through being fearless he
made the right changes that others feared venturing into. This was evident from the fact that he would buy
some major competing companies with the attempt to fight off competition. Some of these practices put
the company’s future at stake but that did not deter him from doing what he thought is right since he was
passionate about it. Therefore, Tim Cook needs to be fearless and venture into company endeavors with
passion knowing that it is the only way that he will take the company to the next level.

JOHN TARPEY’S CONCERNS

A quick analysis of Apple’s balance sheet leaves John Tarpey stuck with the decision of whether to buy
more Apple shares or sell all. The main reason why John is stuck between two hard places about the
company shares is due to the fact that Jobs was leaving the company. Over the ages, the company’s
success is fully attributed to Jobs outstanding entrepreneur skills. As a result, the company has become
fully dependent on Jobs management practices. John happens not to be the only worried person about the
company’s future since the board members exhibit traits of being worried. This happens to be the major
concern since Jobs health is deteriorating and so is his company’s leadership ability. The past years have
been successful years for the company which is directed to Jobs leadership ability to run it effectively.
Considering its past trends, the company excelled at its start when Job and his partner started it making it
the very best selling company. However, this success was short lived since after Jobs departure the
company started its down fall until the very same date Jobs came back to management. Therefore, it is
more than evident that without Jobs intervention the company is doomed to fail. Despite such realization,
the question that John should ask is the very essential traits that Jobs possessed that made the company a
success. By so doing, then he and the board members can be in a position to gear the company further and
continue excelling as in the years Jobs was in management.

STEVE JOBS IN HIS MANAGEMENT PRACTICES WAS NOT SUPER POWER OR

DIFFERENT FROM ANY OTHER PERSON. He might have been one of the world’s most
outstanding leaders but leadership is not innately acquired. Therefore, the company can recruit a leader
who will possess traits similar traits as Jobs had and by so doing they are assured of continuing the
company’s future. According to Jobs, being visionary is the most important goal that any leader must
possess if they expect to make a change and be different from others. Technology sector is evolving so
fast and requires a leader that is flexible and one that is updated of the trending patterns. Jobs never
invented any new products but used the already available products to make unique products that are
consumer friendly. New management should therefore be in a position to observe the competing
companies and implement the products they are already offering and make them better and suitable.

STRATEGIC ALTERNATIVES
Apple’s strengths can be attributed to many factors. First, Apple’s premium-price or product
differentiation strategy as well as their retail strategy have proven to be essential to Apple’s past and
will continue to play a vital role in Apple’s future. As a result of their past success as recognition as
innovators, Apple has attracted the attention of many companies whom have recognized Apple’s
potential for successful strategic alliances For example, Apple’s successful alliance with AT&T,
provided Apple with the opportunity to improve their iPhone’s technology. Apple was able to the lower
the iPhone’s price to consumers, as well as, up-grade the iphone’s network coverage. In
addition, Apple entered into partnerships with YouTube and Google in order to provide their iPhone
users with cutting edge “search, mapping, and video features”. These partnerships allow Apple to
further differentiate their products and add value to their users. Similarly, Apple’s reputation as a
strategic alternatives Apple’s strengths can be attributed to many factors.
For example, Dell, one of Apple’s biggest competitors and one of the top four P.C. producers, offers
customers array of bundling options when purchasing a computer. This allows customers to choose
hardware and software components as well as somewhat control the price of the computer. Instead,
Apple offers their computer customers packages with very few customization options.
Secondly, a problem for Apple exists in their reliance on Apple’s C.E.O., Steve Jobs. Jobs has been
a guiding force at Apple, acting as Apple’s savior when the company saw their lowest financial
numbers in 2002. Steve Jobs was responsible for Apple’s expansion and the introduction of one of
Apple’s most profitable products, the IPod. There is a question as to if Apple could continue to operate as
they do currently in the absence of Steve Jobs. Still, there are alternatives to Apple’s current problems
in regards to Apple’s low market issues, an alternative would be to add a product with a lower price point
to Apple’s current product line. Similarly, an alternative to Apple’s reliance on Steve Jobs, would be
to create another executive position for someone act as liaison between Apple’s top executives and
Jobs. Thus, preparing Apple for the post Steve Jobs era. In lieu of their drawbacks, Apple is still
presented with opportunities to experience growth and success. Apple has established itself as a
continuous innovator in the ever changing electronics.
Apple is continually working to produce products with improved compatibility, allowing their
customer more flexibility and increasing the ease-of use of their products. By continuing with their
premium price or price differentiation and retail strategies Apple can continue strive and uphold their
reputation as an innovator in the electronics industry.

Options Apple does have; Grow, Pause or Retrench

Stockholders’ option:

Buy

The advantage is they would have potential to grow continuously

The disadvantage is the company is not going to bear the shareholders’ lose money.

Sell

Selling at this time would give a lot of profit to long term shareholders

If the company keeps increasing its value then the shareholders would lose the potential to make profit.

Hold

If further the company is growing, shareholders would make profit.

If the company could not sustain growth then the shareholders would lose value.
 RECOMMENDATION/SOLUTIONS BASED ON THE EVALUATIONS AND
CONCERNED QUESTIONS OF ARTICLE
When Apple first entered the computer industry, they were first movers. They were able to revolutionize
the way home computing was both viewed and accessed. This naturally have them a large market share,
especially with the huge successes of the Apple II. However, IBM soon entered the market with a more
user friendly and compatible computer and Apple saw their market share on the industry drop
dramatically to 6.2%. Ever since then, Apple has trailed the computer industry leaders in market share
However, in more recent years, they have seen many successes from targeting a smaller market of trendy,
higher quality customers that are devoted to their company. While maintaining a low market share of the
computer industry, Apple has continued to produce a quality product. This quality has been seen
throughout all of its many products and is not viewed as a lesser product compared to the competition. In
addition to the quality, Apple has always been able to make more of a profit off of its computers than
other distributors. Because of the reliance of companies like Dell and HP on Microsoft's Windows
operating system, almost half of their revenues are cut by paying back Microsoft for using their product.
 This quickly turns Apple's small market share into an extremely profitable market share.
Apple’s low market share is turning far more profit per percentile than their competition because
while Apple is making money, the other companies are usually only reaching their break-even
point or slightly above.
In addition to the competition that is seemingly strangling Apple's computer market share they
must also battle against an economic downturn that has affected the whole industry.
While all companies have seen a slow in sales and a loss of profits, Apple' has seen a greater loss in its
computer revenues. Because of the nature of Apple's products, they are seen more as high-end items and
more expensive luxuries rather than as necessities. Because of this many people are buying cheaper,
lower quality computers from customized manufacturers in order to save money. Normally, this would
lean Apple towards developing a lower priced computer that could compete with these personal computer
models However, this strategy has been tested before with the Mac Mini. What Apple found was that the
sales of the Mac Mini were cannibalizing on the sales on other, more expensive models.
 This previous failure should be viewed as a warning and disclaimer against any further
pushes into the low-cost market.
One Apple product that will never be viewed as a failure is the iPod. Contrary to Apple's computers, the
iPod has a giant lead over the competition when market share is concerned. Because of its success, it has
introduced an entire generation to the Apple brand.
 By using the iPod as a gateway, Apple should in my opinion based on the data given in
article continue to push its trendy image to new customers in order to gain more and more
computer customers.
 Apple should look at further expanding on their small but efficient market share. However,
with the current Microsoft user base, it is going to be increasingly difficult.
 The company should focus on its core competencies in order to stay successful. Apple's
customers are incredibly dedicated. Many people that buy Mac computers continue to buy more
Mac computers as well as other Apple branded products, hardware, and software. Even though
this is deemed as a niche market, Apple would be foolish to try to take the world of Microsoft
and PC distributors head on. The difference in market shares is far too large.
 By focusing on their current customers and slowly expanding this base, Apple should try to
better position itself for a future attempt to capture back the market share that it maintained
many years ago. During the time that Jobs was absent from Apple, the company had a long
period of ups and downs. New products were released to both success and failures. It was during
this time, however, that their status as a niche market retailer began to form. Apple customers
 were extraordinarily loyal. Many people were buying IBM and other personal computers because
they had a need for the devices. On the other hand, many people were buying Apple brand
computers because they wanted an Apple machine.
Due to this increasing amount of dedication to the company, Apple was able to charge a higher price for
their high-end, high-quality computers. This allowed them to stabilize financially as well as discover a
new identity as a company.
After this new identity was established and Steve Jobs was reestablished as CEO of the company, Jobs
was able to take this identity and expand on it. By targeting their now niche market, he was able to follow
a product differentiation strategy to turn the company around. With the release of the iPod and iPhone, he
was able to tap into markets and succeed in areas that were previously never explored or considered.
Even though the deficit in computer industry market share remained relatively unchanged, Jobs’ foresight
allowed Apple to reach new levels of profitability and success.
 Whether the Apple enthusiasts like it or not, Steve Jobs will not be around forever. While he
has done great things for the company, he has left Apple in a precarious situation. What will
Apple do when he leaves? Apple's last response to not having Steve Jobs as their CEO was
eventually to rehire him as CEO. In order to survive once he is no longer leading the company
 Apple needs to begin depending less on Steve Jobs and balancing responsibilities
throughout the company and among select individuals. In order to prepare for Jobs’ future
absence from the company,
 Apple will look ahead and find a future replacement for Jobs. In order to sustain peace in the
Apple world, such a replacement will preferably be chosen by Jobs himself. That way, the
replacement will be able to learn and continue Jobs’ success as the company when Jobs’ role was
reduced to that of a chief advisor or to that of no role at all. Continuing the Jobs to prepare for
Jobs’ future absence from the company, Apple will look ahead and find a future replacement for
Jobs.
 I personally believe is important for the firm to keep growing in the market to remain a
strong competitor in the industry.
 John Tarpey should advise to its already existing shareholders to hold their stocks. This
strategy would help to hedge risk, seeing at the historical swings in Apple growth rate
“Boom and Bust”.