Entrepreneurship Class- Case Analysis

Apple Inc. in 2010

As it is the year of 2019, it is safe to say Apple has established it’s footing within the

consumer electronics industry. With 64% of Americans owning an Apple product and the

average American household owing 2.6 Apple products – the “Digital Hub” Strategy founded in

2001 by Steve Jobs has been proven successful (Liesman, 2017). Yet, Apple was not an

overnight sensation – the Apple seed was planted in 1976 and has encountered several issues

outlined within “Apple Inc. in 2010”.

Similar to the product line of Apple, the past issues of Apple went through generations –

from the executive team to strategy and decision making implementation, 5 major issues are

present within the case. The first issue that was showcased within the case was the lack of a

supportive (strong, patient, and goal-dedicated) executive and founding team. Being a startup

company within the dynamic and restless technology industry, the beginning stages were result

orientated and not goal orientated. Expecting nothing but excellence after the IPO in 1980, after

falling 62% in 1984 due to Jobs relying on proprietary designs, Apple was eager for results

which is dangerous. Changing the CEO of a company 4 times within two decades due to hasty

and stagnant decisions delayed Apple’s success greatly. This led to a spiraling case of hasty and

horrible executive decisions which al could have been avoided if a strategy and organizational

structure were to be in place.

Going hand in hand with this issue, the second issue was Apple Computers at the time

had no strategic plan or vision (in align with the rapid CEO changes). The company lived in the

moment and thrived for results rather than orientating itself around longevity and sustainability.

If there were to have been a strategy and vison in place, the 1990 price reduction of the Mac

Classic, ultimately lowering the brand image (premium pricing) to fit mainstream competition

would have never occurred. Forging an alliance and working with the ‘foremost rival’ of IBM on

projects, resulting in a company low of 34% gross margin, and lastly licensing to outside parties

to make ‘clones’ of the MAC, losing $1 billion and market share from 8% to 3% would have

been avoided. There was no strategy or strategic position in the beginning stages of Apple, the

company’s activities were not interdependent nor did they have fit as “strategy is creating fit

among a company’s activities” (Porter, 1996).

The problems didn’t stop there, the third issue highlighted being complicating the product

offering and moving faster than the company’s feet could move. At one point, Apple had 15

product lines before Jobs took over again. Apple Computers shifted to Apple Inc. 6 years before

they even officially changed the name (in 2007), by launching the iPod in 2001and working on

the iPhone simultaneously. This being a major issue, leaving the initial focus of the PC market at

a languish 5% and the MAC in the shadow (global market share dropping from 3% to 2%). As

both the iPhone and iPod ended a success, there was no strategy in place nor did Apple take the

correct precautions when evolving (discussed next). At this point in time, Apple was too focused

on the external environment and trend analysis of the technology industry – yet this did help

Apple discover the “Digital Hub Strategy” where the infamous ecosystem was born.

The fourth issue being the hasty decision making and not knowing the worth of their

offerings. With choosing AT&T as an exclusive carrier during the initial years of the iPhone,

Apple Inc. lost a projected $1 billion over a 3-year period due to the lack of service-sharing and

the stigma behind AT&T. This being an extreme hasty decision just to launch the iPhone

globally, but the opportunity cost outweighed such. Also, the hit of iTunes and the pricing

decision behind such, giving the music labels 70% of the sale and leaving the company with

nearly no profit. Decisions like these were made due to a combination of no strategic vision for

the intended product, moving too fast, external and competitive focus and positioning.

Lastly, after establishing tremendous success with the iPod and iPhone with uniform

strategy – Jobs decided to use a ‘flexible strategy’ for the new product offering in 2010 of the

iPad. This issue being the ‘growth trap’ as Apple begins to “attempt to compete in several ways

at once which creates confusion and undermines an organizations focus” (Porter, 1996). Jobs

wanting to expand the Apple ecosystem, yet did not stay in line with the proven successful

strategies of the iPod and iPhone. The iPad using its’s own chip (A4), and letting the third parties

involved (publishers) to determine their own price unlike the App Store $.99 strict pricing, was a

perfect example to grow. As this product would not derail Apple’s momentum, yet highlighting

the overarching issue of strategy and positioning the could have been avoided with correct

planning and implementation.

Electronic Die: 5 – The Perspective/Reaction of The Company’s Sales Head

Being the sales head for Apple Inc. in 2010 and after analyzing this case, I would have a

racing headache. As the sales head, I want to focused and all in on one offering, service, and/or

product with clear strategy and positioning. Yet, through the history and recent years of Apple,

this is simply not the case. Apple has remained consistent with the premium pricing and

positioning with all of its offerings (with a few exceptions in the past), which is great as a sales

head because I know the intended value proposition. Also, Apple having its own retail locations

and partnership with Best Buy, I know where my Apple customers, how to reach them, respected

ASP’s, and I am controlling my sales funnel. Yet, the reasoning for the headache is no company

strategic vision, focus, and overall strategy. From the original Mac and the PC offerings up until

2000, to the iPod in 2001, to the iPhone in 2007, and finally the iPad in 2010 – Apple’s focus is

constantly changing and extremely dynamic. A company that focused only on computers (Apple

Computers until 2007) now has nearly 0% focus and sales drive for computers and PC’s. As

sales head, it was made clear the focus was the iPod when it was released, then 2007 came the

iPhone, completely abandoning the iPod. In more recent time the iPad established in 2010

became the sales push and initiative as the CEO thinks it is going to be a “game changer” and it

will “drive new consumer behavior”.

Never mind the revolutionary iPhone only being provided by AT&T in the early stages,

cutting out nearly half of my beachhead market. As Apple ecosystem products sold themselves

based off of brand prestige and image, the lack of focus and depth of similar offerings confuses

the brand and customers. While simultaneously trying to upsell a customer two or three products

(that all have similar activities and weaknesses) priced far above competing products, the

incremental buyer can be hard to obtain from a sales head perspective.

Works Cited

Liesman, Steve. “America Loves Its Apple. Poll Finds That the Average Household Owns More

than Two Apple Products.” CNBC News, CNBC, 10 Oct. 2017, www.cnbc.com/2017/10/09/the-

average-american-household-owns-more-than-two-apple-products.html.

Porter, Michael E. “What Is Strategy?” Harvard Business Review, Harvard, 3 Oct. 2017,

hbr.org/1996/11/what-is-strategy.

Yoffie, David B., and Renee Kim. “Apple Inc. in 2010.” The HBS Case Method - MBA - Harvard

Business School, Harvard, 13 Apr. 2010, www.hbs.edu/faculty/Pages/item.aspx?num=38679.