RUNNING HEAD: Apple Inc Name Grade/Course Tutor’s name (28, 01, 2011

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Apple Inc 1. Describe the key strategic challenges facing Apple Computer According to Apple’s chief executive officer, Steve Jobs, Apple was going to be at the forefront of digital market. He said that he was going to ensure that the t rademark computers the company was producing, the Macintoshes were going to be t he hub of digital world to customers (Chapman & Hoskisson, 2008, p. 192). This is what consequently led to the development of important applications like iMovi e, iPhoto, iTunes and the iPod. This was a very great opportunity that apple saw to exploit the music sales. The advent of Napster had presented a way to look i nto the future of digital entertainment and Apple optimized its invention based on the new trend of sharing music and on the internet specifically. This lead to the iTunes being the key factor of exploiting the market, however, there are ma jor challenges to this inventions by Apple (Chapman & Hoskisson, 2008, p. 192). Since the launch of the iTunes.com in the year 2003 there has been increased com petition against Apple for its products. Napster was the originator of the idea of sharing music where peers could download free music without subscription serv ice or a centrally managed library source. However, this has changed and Napster as well as other music download providers new requires subscriptions (Chapman & Hoskisson, 2008, p. 198). The main competitors to the iTunes have been Napster, Kazaa, RealNetworks Inc and Sony among others. Due to the hard stance on quality, Steve Jobs has been very strict with the comp any suppliers for the company’s hardware. For this cause he tends to be so control ling and this has had a bad impact on good suppliers. Its relationship with Texa s Instruments, Samsung, Philips and other suppliers is not a smooth one. Apple i s expected to strike a balance in order to keeps its good suppliers and stay ahe ad of the competitors (Chapman & Hoskisson, 2008, p. 198). Apple Inc has been doing very well with its marketing strategies especially the advertisement. Through this has been the strength of apple, staying on top of th e market will require more input and aggressive marketing as apple increases the diversity of products it is offering. The client base is increasingly becoming more diverse and the managers have a great challenge because it is very difficul t to satisfy everyone (Chapman & Hoskisson, 2008, p. 200). 2. Describe the dimensions along which company success can be measured When it comes to innovation, Apple Inc has it all. The company’s success can basi

cally be measured in terms of innovativeness more than anything else; the greate st invention being the iTunes online music store. During the launch of this prod uct, its CEO described it as a landmark turn in the music industry because this was going to be a legal online music service that would compete against illegal downloads (Chapman & Hoskisson, 2008, p. 189). During its first week of launchin g, the iTunes sold over one million songs and the sales have been increasing sin ce then. The iTunes brought a great shake up in the industry because the free do wnloads from other music sharing sites were mandated to have subscription requir ements to protect music labels. The iTunes also greatly promoted the sale of the iPod because this digital device was capable of storing the music downloaded fr om the iTunes (Chapman & Hoskisson, 2008, p. 193). Since its inception in 2003, iTunes grew very fast to dominate the digital music industry and it secured a m arket share of 70%. Furthermore, iTunes market is anticipated to grow and flouri sh even more as the company launches other innovations, the Apple TV which can p lay movies and video clips downloaded from the iTunes (Chapman & Hoskisson, 2008 , p. 193). Besides that, the iPhone has hit the market and it’s doing great on the market because of the features it offers, the touch screen, ability to play mus ic from iTunes and so on. The company was named by the Business week as the most innovative firm of the year for a third time running. Now Apple is able to offe r a variety of digital services because of its software suite that allows applic ation like iPhoto, iMovie, and the iPod. A flurry of products has been coming fr om apple including the PowerBooks, the iMac and the iBook, computers that are af fordable by the low income customers (Chapman & Hoskisson, 2008, p. 194). Besides being every innovative, the Apple Inc’s marketing strategy is another succ ess. The marketing has been characterized by very appealing advertisements that have seen the company’s sales skyrocated (Chapman & Hoskisson, 2008, p. 200). In 2 003, Apple was awarded the advertising age’s marketer of the year because of its o riginal and outstanding ads of its iPod. It’s also been cited by a number of sourc es as the best marketer over years hence developing a very strong brand on the m arket. It’s said that even competitors recognize that Apple has eye-catching desig ns and it’s dominant on the market (Bach, 2008, p. 33). . Its CEO on the other hand has a very good rapport with the media and uses that as a promotional aspect. He is even fondly referred to as the face of the compa ny and its brand champion (Chapman & Hoskisson, 2008, p. 200). His public relati ons skills pay off well in terms of marketing the company. Additionally, Apple p artners with some well established and famous companies to boost its reputation and increase brand awareness. The company has partnered with Motorola and IBM to manufacture PowerPC chip that was to be used in the company’s new PowerMac and th is made these Macs to do better than other computers that were being powered by the famous Intel microprocessors (Chapman & Hoskisson, 2008, p. 192). 3. Describe the critical external and internal environmental factors that h ave strategic implications for Apple s future. The internal environment that is crucial to the future of Apple is basically the way Jobs deals with the suppliers and the marketing strategy. Apple has always not been forthcoming with company information but some investigations into the c ompany’s dealing show that many firms express frustration working with apple inc. This is because, the CEO, Steve Jobs is very strict on the quality of the produc ts he purchases and as results he oversteps his jurisdiction and becomes control ling to other firms, the suppliers (Chapman & Hoskisson, 2008, p. 196). This is a tricky issue as for the Apple Inc to remain strong in the market it has to be able to maintain its suppliers and also keep vigilance of the quality of product s it offers. Striking a balance is very crucial for apple competitiveness so th at it stays ahead of competition (Bach, 2008, p. 33). Apple is also going to be faced with a marketing strategy crisis if it continues increasing the product portfolio and the market share. The customers now range from technology savvy fanatics to scholars and designers (Chapman & Hoskisson, 2 008, p. 200). It’s becoming very hard to satisfy all the clients due to increased diversity. Apple would want to market its new products aggressively as it did wi th the iPhone which penetrated the market well because of the company’s reputation , however when customers do not believe that their expectations are met then the

 

prices, brand equity and investor confidence is tarnished (Chapman & Hoskisson, 2008, p. 200). External factors that could have serious implication on the company include comp etition and partnerships. Since its launch in 2003, there has been multitude of competitors coming up with even cheaper products to fight a share of the market with Apple (Chapman & Hoskisson, 2008, p. 196). Some even offered free music sha ring stores in the internet. This was intervened by legal proceeding which saw N apster and other online music service become subscription services like iTunes. However, the pricing has been a challenge. As iTunes offer $ 0.99 per download a nd $9.99 for an album, companies like RealNetworks offer the same at $0.49 and $ 4.99 respectively. Napster has a provision of $12.95 monthly subscription for me mbers to have unlimited access. The idea of going global is a tough one and even as Apple seeks to further incre ase it product portfolio to media and software besides it traditional hardware w ill be a great challenge (Chapman & Hoskisson, 2008, p. 196). The company will s truggle to reach many clients rather than its traditional customers who just lov e technology to those who actually want to use the technology in practical field s like design and education. This will be very difficult for the company to keep a positive brand image to all its customers who are increasing every day (Bach, 2008, p. 33). 4. Describe how Apple s strategy stands up against industry rivalry Apple stands out from competition based on its innovativeness and marketing stra tegy (Chapman & Hoskisson, 2008, p. 189). The marketing plan usually starts by t he design of the product for every producer. However the digital media industry is now being faced with a problem of low profits, free content on the internet, fake products and firms are taking measures of cost cutting to maximize the retu rns. However amidst all these hurdles, Apple still applies unique style to desig n and market its products (Bach, 2008, p. 33). Whereas competitors struggle to i mplement cost cutting measures apple in its side uses design strategy (Chapman & Hoskisson, 2008, p. 200). It produces dazzling products and markets them aggres sively. Furthermore, their invention is usually followed by a succession of othe r applications the similar technology therefore providing customers with more se rvices. For instance, the iTunes music was encrypted in a manner that they could only play on the iPod. Apple has developed am more advantageous strategy where it has opened over 200 r etailing stores in several nations. This move was ahead of competitors because b y the time it was being implemented in 2001, no other computer company was opera ting its own branded outlet. This move was a fast one saw sales increase by 16%. 5. Describe the recommendations you would make to enhance the effectiveness of the company s strategy or to change its strategic approach for better results The success of Apple now lies in carefully thought-out marketing and promotional strategy. This is because of the rate at which the company is increasing its pr oduct variety and innovations can have a daunting task of balancing between the needs of the investors and operating a successful firm (Chapman & Hoskisson, 200 8, p. 200). The company’s strategy has been to create new products and aggressivel y introduce and market them on the market so as to secure a niche with the brand reputation in play. This has to change now because the customer expectations as well as investor confidence are now increasing hand in hand. Besides, with a la rger product portfolio and more client base, it will be a very difficult job to maintain the quality of all the diverse products (Chapman & Hoskisson, 2008, p. 204). Apple plans to increase more of the media and software product and these a re going to find more use to customers who have greater expectations. Any little fault could cost apple a great deal. For instance, the iPhone and its pricing e xperienced dissatisfaction only after three months in stores and Jobs, the CEO a nnounced that it had cut the price by a margin of 33% but not because the gadget was faulty (Chapman & Hoskisson, 2008, p. 204). Apple needs to continue being innovative and always coming up with the latest te chnology because the competition in the technology and entertainment industry is very aggressive and there are always changes. Apple needs to be concerned about

 

 

the major competitors as well as the upcoming companies so that it can always r edesign its products to beat competition (Bach, 2008, p. 33). For example, GotVo ice provide an application that allow customers to record MP3 formatted voicemai l messages and send these messages via email, this is a very fierce competition to Apple’s visual voicemail, an application that is offered on the iPhone. Besides the service is free of charge and unlike Apple’s visual voicemail that is applica ble to cell phones only, GotVoice can be used with home and work phones. It will be a great challenge for apple to venture into new hardware, software and media and still maintain good rapport with influential suppliers in digital industry.

Reference List Bach, B. (2008), Implications of Enabling Technologies for Apple Inc.: Cyber Mar keting & Enabling Technolgies, Munich, GRIN Verlag publisher Chapman, R & Hoskisson, R. (2008), “Apple Computers Inc.: Maintaining the Music Bu siness While Introducing iPhone And Apple TV”. Understanding Business Strategy: Co ncepts And Cases, Ireland, D., Hoskisson, R & Hitt, M.A Boston; Cengage Learning , pp. 189 – 204