Running Head: Harvard Business Case Study: Apple Inc.

Harvard Business Case Study: Apple Inc.

Dennis Stovall

Kaplan University

GB 520 Strategic Human Resources Management

March 25, 2014

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Abstract

This business analysis focuses on the commercial enterprising activities of a world leading

consumer electronics company, i.e. Apple Inc. and how, through its technologically advanced

creativity and electronics expertise, it succeeded in introduced the world to a radically new era of

multimedia innovation. Apple Inc. opened up an entirely new method in which microchip

technology was to be developed and used for industrial, institutional and commercial use. It is

due in large part through the amazing talent of Steve Jobs that this esoteric technology managed

to achieve stellar proportions with regards to the open market.

The purpose of this case study is to shed some light on Apple Inc.’s adopted business plan, the

one that led to the advent of a revolutionary new market, i.e. microcomputers and later iPods and

iPhones. It serves to address why this business plan, if in fact there was a creditable one to begin

with, did not achieve’-in terms of business management’- an unprecedented if not historic record

of business design and implementation; at least one that could be looked upon as a shining

example of how to introduce an amazing new product technology and sell it to the worlds

consumers so as to obtain record profits while helping to stabilize the market and influence

world wide business conduct as a whole.

Keywords: microcomputers, iPods, iPhones

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Harvard Business Case Study: Apple Inc.

After reviewing the Harvard Business Case study concerning Apple Inc. It tends to make

one wonder why as of 2008 a review of Apple Inc.’s product design and sales activity should be

critiqued for any reason other than to contrast this CE Company’s business activity with the

Great Recession that was fully materializing, at least in the U.S., at that very time.

Is Apple Inc. being blamed for helping to usher in the recession, and if so how is this

innovative education and media electronics firm to be held responsible in any way for something

that has occurred due to a number of credit mismanagement transactions concerning housing

loans as it relates to the U.S. (credit bubble) and subsequent liquidity problems on a major scale

as it relates to the incompetence of certain world renown banking institutions and vulnerable

economies.

Granted, Apple Inc.’s rise to prominence and acclaimed notoriety as being the number

one industry leader and innovative pioneer of microprocessor technology has followed a rocky

path strategically speaking, in business terms anyway. However this only goes to prove that as

ingenious as an invention can be and how scintillating it can seem to the consumer-public’s eye,

it can still tend to overwhelm and/or leave top executives clueless as to how to correctly

proliferate the development of such products let alone marketing said products based upon the

fact that they simply do not understand how they truly work, technically speaking, and to whom

they should be targeting such products for sale.

If this has any bearing what so ever on a being a –‘disruptive influence’- as far as how to

integrate the design and marketing techniques of an amazing product then yes Apple Inc. could
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and possibly be held responsible, in some respects. Apple Inc.’s approach to cost effectively

developing and subsequently marketing their unique brand of electronics through the years

leading up to the current recession leaves something to be desired. Although Apple Inc. has led

the industry as far as innovation and sales it has been noted that in a manner of speaking Steve

jobs invented an amazing product that none of his affiliated partners really understood the

working of and which he himself lacked the ability to market optimally.

In this way it may be said that although the firms products invigorated the mercurial

sales of some really amazing products, the radical and somewhat amateurish business strategies

that made tremendous profits for the firm to and including many imitators, still proved that the

way in which they proceeded-‘recklessly - ending up disrupting the balance of trade with

respects to the sales proliferation of these types of devices which in turn may also have helped to

influence careless business behavior on a global scale.

The question which relates best to this case study is-‘were the strategic management objectives

associated with the development and marketing of Apple Inc.’s products a success or a failure.

And if these examples are any indication then there is only one reasonable conclusion. In 1976 a

college .dropout, one Steve Jobs and his partner Steve Wozniak-‘founded Apple Computers’- in

a garage. It is truly noteworthy however that through the revolutionary electronics designs efforts

attributable to these pair of inventors-especially Job’s-that the birth of the very popular and

highly successful Personal Computer took place.

During the years leading up to the mid 1980’s Apple computers commercial acceptance

and sales success, due, primarily as a result of new product innovation and differentiation of

design and applications proved radically successful. However during most of this time Apple

Inc. operated in a marketing capacity similar to that of a niche sales market, although it had been
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publically incorporated. Now beginning in 1983, due to slow processor speeds and lack of

compatible software -both a Job’s operational design oversight-the Macintosh personal

computer, though considered a breakthrough in design engineering and elegance at that time in

1984, was the primary cause for the firms loss of 17% in net income for the entire year, which

was deemed an unacceptable loss.

It has been noted by Slind &Yoffie, (2013),” In April 1985, Apple’s board removed Jobs

from an operational role. Several months later, Jobs left Apple to found a new company named

neXT” (p.2). In my opinion this action proved not progressive as far as invigorating and

stabilizing a business enterprise with respects to securing the reputation of Apple Inc. but rather a

diversified tactic to remove an iconoclast from the business entirely.

John Sculley replaced Steve Job’s as CEO of Apple Inc. immediately during which time

during his eight year tenure he negotiated collaborative business contracts-in which to share

technology- with Apple Inc. primary Microcomputer manufacturing rival IBM. It is my opinion

that the lucrative sales that escalated for a time-which saw to it that Apple’s new products pricing

rose to levels that exceeded the average middle class market disposable income was the result

of technological/commercial exploitation-if a term such is suitable.

Sculley realized that due to manufacturing costs the prices the prices that had been set for

Apple Inc. line for products both new and old needed to be reduced. However in my estimation

he did not realize that a major appeal which invigorated the sale of the firms products was the

fact that they were primarily manufactured domestically, in the U.S.

Scully chose to outsource most of Apple’s manufacturing labor cost and as result the

firms gross margin drop 34% which was well below the firms prior 10 year average. Sculley was
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subsequently replaced by Michael Spindler as president and CEO and after serving a short term

as chairman of Apple Inc. he resigned for good towards the end of 1993.

During his tenure as the head of Apple Inc. one of the first moves Spindler made was to

cancel the reduce the intensity toward the collaborative contracts that the firm had with other

manufactures such as Intel and the sharing agreement that allowed Apple Inc. products to

incorporate Intel’s patented microprocessor technology. At the same time initiating a move that

would allow Apple Inc.to clone its own brand name products.

A plan to slash costs was also implemented under Spindler and major layoff soon

followed by 1995 Apple Inc. had lost a large portion of its market share. The

collaboration/sharing agreement that the firm had with competitor IBM was completely

dissolved and by 1996 following further lay-off the firm reported a $69 million dollar loss in

revenues. As a result Spindler was thereby replaced by Gilbert Amelio a former Apple Inc.

director who assumed the position as the firms CEO. Although Amelio was properly familiar

with the firms product technology he ventured off into areas of product development that for the

most part were not aligned with the firms recognized brand of CE products. After repeated

attempt to restructure the firm which resulted in delays of highly anticipated computer systems

software amid additional cutbacks the firm reported a loss of 1. 6 billion dollars during his

tenure.

Due to the fact that during his time as CEO of Apple Inc. Amelio did collaborate on a

merger which involved software product acquisitions from neXT which was the company

owned by Steve Jobs, it resulted in the subsequent hiring of Job’s as CEO of Apple Inc. after

Amelio was let go.

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Conclusion

Although the return of Steve Jobs as head of Apple Inc. did see an aggressively

successful product redevelopment and marketing trend occur during the remaining years of his

life as CEO of Apple Inc.; it could be debated as to whether good or bad just how his approach to

the restructuring of the firm’s business strategies and subsequent launching of yet another CE

product marvel, e.g. the iPad and later the iPhone impacted the industry and the world market as

a whole. Given his cavalier attitude in which he did approach the subject of product engineering

and marketing it seems likely that at some point the influence that this mega-buck technology

company- which was led by a radically different type of CEO- who held a totally different

perspective towards business enterprising, did in fact disaffect the systems of world trade at least

to some degree.