Section A (20 Marks)

Write short notes on any four of the following

1. Importance of Technology and Innovation to Business
2. Process and Tools for Managing Technology
3. teps in trategy !ormulation Process
". Three #$s of Implementing trategy
%. trategic #ontrol &pproach
Section B (30 marks)
(Attempt any three)
1. 'lucidate the (ac)ground and structures of technological innovation system.
2. *iscuss a(out the lin) (etween strategy and innovation.
3. *efine generic strategies. What are the various types of generic strategies+
". Briefly, e-plain the various tools for strategic planning and evaluation.
Section C (50 marks)
(Attempt all questions. Eery question carries !0 marks)
.ead the case /trategic Planning0 The #ase tudy of &pple #omputer #ompany in 1112.2 and
answer the following 3uestions0
Case Stu"y# Strate$ic %lannin$# &he Case Stu"y o' Apple Computer Company in !((2
By )ary Cao
%ro*lem Statement
The single most important pro(lem for &pple #omputer is the a(sence of a new vision and a
comprehensive strategic plan. &pple is losing its advantage in personal computer 4P#5
technology. .ather than focusing on customer6s needs, &pple has (een complacent and 7out of
touch7.
%ro*lem +e'inition
&pple does not understand its corporate strengths and wea)nesses. 8et income in 1111 was
931: million, compared with a range from 9":: million to 9";" million in the previous three
years.
.eturn on '3uity 4.<'5 in 1111 was 11=, compared with a range from 32= to ""= in the
previous three years. &pple6s mar)et share has (een stagnant 4>= to 1:=5 compared with the
mar)et si?e growth 4worldwide hardware revenue increased more than "::= from 11>3 to 11115
and other fast growing competitors 4IBM6s mar)et share increased from @.:"= in 11>1 to
1@.:%= in 11115. Without a clearly defined new vision, strategies and action plans closely
lin)ed with its mission, &pple #omputer will (e 7on the glide path to history7 and (ecome a
victim of the competitive mar)etplace and its own complacency.
%ro*lems an" Situation Analysis
1. Industry 'nvironment
&n e-tremely dynamic industry environment and a highly competitive mar)etplace have
contri(uted to &pple6s pro(lem.
*irect competition AA By 1111, the mar)et si?e was 9%: (illion for hardware, 93: (illion for
software, and an installed (ase of 1:: million P# units. The top 1; P# manufacturers increased
their mar)et share to @2= (y revenue 4"%= (y units5 in 1111 from 31= 42:=5 in 11>1. The
com(ination of Microsoft < with Intel microprocessor has a mar)et share close to 1:=. Two
maBor platforms e-it in the mar)et0 IBMAcompati(le P#s 41:= of the installed (ase5, and &pple
Macintosh 4Mac5 P#s 4less than 1:= of the mar)et share5.
8ew 'ntrants AA !or the five layers in the P# industry, two of them 4microprocessors and
operating systems5 have relatively higher (arriers of entry. The other three layers 4platforms,
applications software, and distri(ution5 have low (arriers of entry with relatively low capital
re3uirements. #ommoditi?ation is the industry trend, especially for hardware.
Buyers AA Three categories of (uyers e-ist0 Business and government 4units @:=, revenue
;1=5, educational institutions 41=, ;=5, and individualChome 431=, 23=5.
uppliers AA Intel supplies >;= of the microprocessorD Microsoft < enBoys >>= of the installed
(aseD Independent oftware Eendors 4IEs5 write application software for the operating systemsD
hardware 4memory chips, dis) drives5, peripherals 4printers, modems5 and service suppliers also
participate in the game.
u(stitution AA u(stitutes of P# are wor)stations of networ)s, laptopCnote(oo) P#s, and
Personal *igital &ssistants 4P*&s5.
,n"ustry &ren"s
This industry has several trends that deserve attention. To survive, P# manufacturers must
com(ine lower cost with higher 3uality. Farge spending on .G* forced companies to form
alliances to share ris)s and ma)e resourceAallocation more efficient. #ontinuous technological
innovation is vital to a company6s success, and open systems tend to set industry standards. The
IBMAcompati(le P# is an open system compared with &pple6s highly proprietary, closed Mac
P#.
The IntelCMicrosoft alliance set the industry standard for IBMAcompati(le P#s.
Customer -ee"s
The mar)et mechanism wor)s in favor of the customer and for open competition. If &pple
continues to separate itself from the mar)et transition, it will lose its popularity, shrin) to a small
mar)et niche, and possi(ly go out of (usiness. The customers, as endAusers, have the ultimate
power in choosing the (est product in each different niche 4segment5 with the highest
performance and lowest price. &pple has not paid attention to the most important customer need.
#ustomers want all of the following attri(utes in a P#0 userAfriendly <, high performance, low
price, suita(ility to their specific needs. Before 111: 4when M Windows came to the mar)et5,
customers had to ma)e a hard decision (etween two alternatives0 a lower priced open system
with a less userAfriendly < 4IBMAclone P# with IntelCM *<5, or a higher priced close system
with a more userAfriendly < 4&pple6s Mac5, for roughly the same performance 4speed or
capacity5. &n open system P# with userAfriendly < would (e the ideal product for customers
without compromising each of the two items. &pple once had the most loved, userAfriendly HII
<, (ut Microsoft *< had the advantage of the open system. !urthermore, in 111:, Microsoft
Windows went to the mar)et, narrowing the gap (etween Mac and *<, and ma)ing the trend to
IntelCMicrosoft IBMAclone P# even more popular. #ustomers would see a P# as a commodity,
not a lu-ury toy. Mar)et mechanisms wor)ed as an e3uali?er0 the ordinary people thin) and act
rationally and choose the productCservice with the (est com(ination of features.
.pen Systems
!rom the facts that IBMAcompati(le P# has 1:= of mar)et, Microsoft has >>= of the <
mar)et, and Intel has >;= of the microprocessor mar)et, &pple should have learned the
importance of an open system. IBM6s entry in 11>1 changed the P# industry (y offering an open
system. The specifications of IBM6s P# were easily o(taina(le, allowing independent hardware
companies to ma)e compati(le machines and independent software vendors 4IEs5 to write
applications that would run on different (rands. <pen systems gave customers a (ig (enefit
(ecause they were no longer loc)ed into a particular vendor6s product, and they could mi- and
match hardware and software from different competitors to get the lowest system price. P#
consumers6 preferences in the maBor (rands 4IBM, #ompa3, &pple, etc.5 show that product
compati(ility is the most important factor 4""=5. &n open system meets this need, whereas
&pple6s Mac does not.
7. To achieve its mission, &pple needs a clear vision on the mar)et trend, a (alanced set of
o(Bectives, a comprehensive strategic plan, an action plan, and an effective implementation of the
plan. It also must carefully evaluate its strengths and wea)nesses using the following four
criteria.
Ealue AA &pple6s performanceCprice ratio is lower than some of the maBor competitors. It did not
have maBor technology (rea)throughs for its < since 11>", even though it had a niche from
11>@ to 111: as the easiest P# to use in the industry with unmatched capa(ilities at des)top
pu(lishing.
.areness AA &pple6s HII < was once uni3ue and innovative (ut has (een losing this
advantage.
ImitationCu(stitution AA IBMAcompati(le P#s with Intel chips and Microsoft Windows came to
the mar)et in 111: with the intention defeating &pple6s product.
<rgani?ation AA &pple is not well organi?ed for the competition. It invents, designs, and
produces most products it sells. In this closed system, .G* is not efficient. !ive large dealers
sell >:= of &pple6s products.
In summary, the industry structure is very unfavoura(le for &pple to survive. &pple restructured
somewhat in 111: and 1111 to adapt to the mar)et. These actions included developing a costA
cutting strategy and 7hit product strategy7, creating #laris as its software su(sidiary, setting up
two Boint ventures 4Taligent and Jaleida5 with IBM. Kowever, the fundamental philosophy
remains the same0 &pple (elieves that (y innovation, it can charge a premium price and resist
industrial trends toward commoditi?ation. It has not paid ade3uate attention to what most P#
users really want. This philosophy has hurt &pple6s mar)et share and profit growth. Before
&pple can revitali?e itself in the dynamic and competitive P# industry, it must address
consumers$ needs.
/uestions#
1. What was the pro(lem faced (y &pple inc.+
2. Kighlight the industry environment of &pple Inc.
3. What were the industry trends for &pple Inc.+
". Hive an overview of the open systems in the a(ove case.
%. ummarise the a(ove case in your own words.