Apple Inc Case Solution

2. Company Overview

Apple Inc. Previously known as Apple Computer is the leading company in electronics business throughout the world. If was founded by Steve Jobs and Steve Wozniak in 1976 in California. Before that, the company had manufactured computers for two decades. Since then, it has established a great brand name and worldwide reputation mainly through its distinctive marketing strategies and decision-making process (Lazonick, et al., 2013).

Apple Inc. is currently involved in designing and manufacturing a range of electronics products such as personal computers, tablet computers or IPADs, mobile phones or iPhones, laptops, Mac books, media devices, and portable music players known as IPODs. The company initiated its marketing strategy through market skimming strategy to grab a bunch of loyal customers instead of going after a large market share at once. Apple has vast number of sales throughout the world including America, Europe, Asia and Middle East. The sales channels are also diversified such as online sales mediums, third party sellers, retailers and wholesalers and other similar strategies (Apple, 2015).

Apple realises the fact that the world has changed in a digitalized era therefore consumer electronics are in demand. Computer users are not confined to a particular area rather they belong to all spheres in mediums. That is why; Apple has developed its targeting and segmentation strategies very effectively (Apple, 2015). Presented below are different strategic choices Apple made throughout its history and their short term and long term impacts.

3. Strategic Journey of Apple Inc.

Strategic journey or choices are not limited to one area of organisation’s operations. These are wide choices that extend to many areas described below:

i. Psychological Factors

Psychological factors refer to human characteristics that are quite important in making strategic decisions. Analysis of people's responses towards decision-making is necessary to understand in order to make right choices. For example managers' cognition and biases play an important part in making rational, logical and systematic decisions for the organisation (Johnson, et al., 2013). Apple Inc. has developed a comprehensive psychological contract based on understanding of mutual expectations of people involved in direct or indirect relationships within the organisation. During its historical development, Apple has adhocracy phase rather than the bureaucratic phase to manage psychological issues. The former refers to the boundary fewer organisations that offer horizontal career growth to employees while the latter refers to companies that use internal labour market, less diversity and lifetime opportunities for employees (Wellin, 2007).

Since psychology plays a great role in understanding of people within the business environment, the challenge faced by Apple Inc. is diversity. It has a large workforce and managers who belong to different backgrounds and thus their behaviours and instincts are derived from the different range of factors. Understanding all of them through one psychological contract is practically impossible. Since it is constantly expanding, in the next 3-5 years, the company is expected to face the same problem of a diverse workforce.

Though the decision-making process is sound but the organisation is prone to certain biases such as availability bias, cognitive bias, anchoring effects and conjunction effects (Johnson, et al., 2013). Apple has also faced Gambler's fallacy in the past because its managers and executives have always given excessive weight to previous events and products and for so many years, the company could not engage in out of the box thinking, so it kept on introducing new versions of the same products to stick to its status quo. Thus, status quo bias has always been prominent in strategic decision making of Apple Inc. (Ren, 2014).

ii. Stakeholder Management

A stakeholder is "an agent that is in the relationship with an organisation"(J.K.Thompson, et al., 1991). Internal and external stakeholders have a direct influence on business management. For Apple, its customers and suppliers are internal stakeholders because they have no input in company's decision-making process. They do not have say regarding what happens in the business and what specifications the products should have. Apple's owners are the most important stakeholders because their viewpoint about any decision is considered to be the final one (Heracleous, 2013). 

Though without getting complete satisfaction of all stakeholders it is not possible to generate large number of sales and profit margins but still, Apple Inc. has managed to be quite successful without excessive stakeholder and customers input. A map of Apple’s stakeholders is given below (Heracleous, 2013).

Hence, Apple's stakeholders are important because unless they are satisfied, the company cannot dwell on the path of long-term stability. However, the difference between Apple's stakeholder management and ordinary stakeholder management is that it does not encourage input from all of its stakeholders. Although they are kept aware of updates and happenings the executives and owners have the final say in the decision-making process. Thus, Apple follows classical strategy known as "shareholder theory of the firm."

The electronics industry is expanding rapidly and in the next few years, it would not be possible for Apple to gain many profits without taking into account views of customers and suppliers. Using instrumental logic, it needs to develop a strategy based on the interdependence of all stakeholders and encouragement of multiple perspectives because stakeholder relationships are the primary domain of strategic management within any organisation. Moreover, it should also classify and prioritise stakeholders according to matrix model and then take input from them accordingly (Hillman & Keim, 2001).

iii. Decision Making

A strategist or decision maker can play the role of the game changer for any organisation. For Apple Inc., Steve Jobs play the role of a strategist, who during his life launched six MacBooks, three iPhones, two Ipads and a few IPODs. The wide acceptability of his decisions indicate that he played a great role in Apple's success (Davenport, 2011). Jobs was a micromanager who decided everything ranging from a particular design to the analysis of which markets the company is going to target. After his death, a New York Times magazine quoted that “Mr. Jobs's research and intuition, not focus groups, were his guide. When asked what market research went into the iPad, Mr. Jobs replied: "None. It's not the consumers' job to know what they want" (Markoff, 2011).

However, not all strategic decisions made by Steve Jobs were exceptional; there were some problematic choices too. For example: he continued to rely on the same customer base that was developed in initial years of Apple and did not target any new markets whereas the competitors such as Samsung, Sony and Microsoft expanded their electronics products to a range of new variety. The growth of electronics industry indicates that if the trend continues in next 3-5 years, there might come to a saturation point beyond which the sales volumes would not increase as rapidly as they did in the past (Lohr, 2011).

iv. Role of Middle Manager

While Steve Jobs acted as the main strategist of Apple Incorporation, the middle managers also acted as strategists mainly by transferring the executive information to different teams spread in different operational areas of the world. They play an important role to combine the strategic choices made by Jobs and the actions performed on these choices by the lower level managers. In Apple’s case, most of innovation, creativity and idea making lied with Steve Jobs and the middle managers used to translate information into actions (Apple, 2015). 

v. Hyper competition

The electronics industry is full of hyper competition all almost all of Apple’s competitors are financially strong organisations who enjoy better customer reputation (Sahota, 2014). Apple’s major competitors are:

• Dell

• Sony

• Hewlett Packard

• IBM

• Microsoft Corporation

• Amazon 

• Google

All of these firms rely on same suppliers for components of their final products such as LCDs, processors, operating systems and so on. The structure of electronics industry is derived from monopolistic factors due to which there are low entry barrier and less differentiation among all these companies. The market is fragmented and saturated with a lot of similar options available. What makes Apple stand out in this hyper-competition is its differential edge over the companies described above. Apple has its operating system, and it manufactures products that have no readily available substitutes or alternates in the market (Latif, 2014).

Since Apple's Smartphone and laptop prices are high as compared to competitors, in the next few years it might face financial challenges due to its high price policy. This is because of the current economic scenario of the world and increasing inflation. Unemployment rates are high while consumer incomes have stayed the same therefore spending has reduced throughout the world(Latif, 2014). In the next 3-5 years, if Apple continues to increase prices as it has done in the past, it might lose a bunch of its loyal customers who will be constrained by economic barriers and financial conditions in their home countries (Sahota, 2014).