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Free «The Strategic Analysis of Apple» Essay Sample


At the time when a basic hand built gadget which could hardly be accepted as a computer was put on sale in the year 1976 in the month of July for $666, nobody in their craziest dream might have anticipated it as the forerunner of the singled out Apple products of our day. Christened Apple 1, as it was called, was designed and created by Steve Wozniak himself, who later co founded Apple with Ronald Wayne and Steve Jobs who would later take Apple to soaring heights.

The company materialized in the year 1977, without Wayne, who sold off his allocations to Jobs and Wozniak for merely $800. Within a little time after integration, Jobs, along with Wozniak launched Apple II that defined the age of desktop computers. The company went public in 1980 at $22 per share, the largest IPO offering since Ford went public twenty four years earlier (Stanton, 2001).

The Apple Tree

John Sculley was appointed as the CEO in 1983 but a power struggle ensued soon after between Sculley and Jobs. This paved way for Jobs leaving Apple and founding NeXT Inc. Economic crisis hits corporate America in the 80’s but Apple resurfaces triumphant with its stock price up by 75% (Hornby, 2006). Apple launched many upgrades which were successful and for a while it seemed that there will be no turning back for Apple. But the golden age did not last long. Apple’s trialing with many customer electronic products became unsuccessful.


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Major items’ flops and dilapidated performance was responsible for making Sculley being substituted by Michael Spindler as CEO whilst Apple confronted the massive Microsoft, devaluing profits, stock prices and market shares. In the year 1996, Spindler was substituted by Gil Amelio who along with countless other revolutionizing initiatives, employed considerable layoffs.  A choice by Amelio to choose NeXT made Steve Jobs join back Apple. Amelio, in 1997, was exiled and Steve Jobs developed into the acting CEO. Streamlining attempts by Jobs resulted in Apple being able to gain profits and launch successful products (Hornby, 2006).

Apple’s core strengths include widespread innovation, strong marketing and branding coverage. Apple competes on innovation, unique product differentiation strategy and tightly integrated products. Customer bargaining power and substitute threat is high with the plethora of computer companies while supplier power is low, decisions made based on lowest prices. Entrants to the industry will face high capital requirements, impenetrable distribution channels and strong brand preferences. Microsoft’s CEO, Ballmer once stated that

Microsoft’s success is guided by: creating new business process, pushing authority downwards, establishing cross company objectives and building customer loyalty and industry trust (Greene et al, 2002).

Whether or not these principles apply across the board, remains debatable.  In a study done by Business Week, it was found that there are 6 points tech companies should keep in mind during an economic downturn: Have cash on hand, boost technology spending, build outwards now, buy on the cheap, advertise and layoffs to come as soon as possible. We shall see from the following whether Apple has stuck to those principles.

Growth Issues

Apple encountered two crisis periods during the years of 1985 till 1997. One interval was during Sculley’s reign and the other during the entire 1990’s when Microsoft monopolized the desktop computer industry (Hornby,2006). The problems identified were fourfold:

•Firstly, the PC market during the late 80’s, was saturated with PC clones. Apple was under pressure from Microsoft to license out Mac OS to other PC makers.

• Secondly, the lawsuit against Microsoft, sealing its fate as being ‘one of the followers’ and Microsoft as the ultimate market leader.

•Thirdly, Apple experienced component shortages and faulty equipment.

• Lastly, Apple continued layoffs and decreased spending in R&D costs. Two sacred cows what IT experts admonish PC companies should never do.

The Farmer’s Strategies

In Apple’s life span, there have been many CEOs but none has been more prominent that these three: John Sculley, Gil Amelio and Steve Jobs. In order to understand the path that Apple took in turbulent times, it is critical to examine the type of leadership styles these gentle men had and the eventual solutions they came up with to solve problems.

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John Sculley’s management style was more of autocratic nature. If it weren’t for the topsy-turvy 80’s IT market, Sculley would have been Apple’s saving grace. Soon after he was appointed, Sculley set new heights in the PC industry with the introduction of Lisa, the first personal computer with graphical user interface. Next, he rolled out the landmark Macintosh, together with Jobs, in 1984, which emerged quite powerful in the market, thanks to its advanced graphic capabilities.

An adherent to big brand marketing, Macintosh was launched by a million plus dollar television commercial directed by Ridley Scott, now considered a turning point event for the success of Apple. But intense competition, an economic recession and a decline in PC demand saw Apple retrenching hundreds of workers and internal rivalry caused Steve Jobs leaving Apple to develop his own software company. However, Apple’s stock prices resurrected in 1988, due to Sculley’s swift cost-cutting measures (Hamn, 2002).

The only stain that is on Sculley’s report card is the disastrous failure of the Newton PDA, released on an immature market that was not ready for such advancement in technology (Stanton, 2001). Even though Apple spent significant sum of money on researching customer desires, Sculley’s unworkable market forecasts contributed to Newton’s breakdown. If Apple made a more humble monetarily and technically bet on the Newton and had entrusted it to an organization the size Apple was when they launched the Apple I, it would have been an achievement. Gil Amelio’s stint at Apple was small but his impact was significantly felt. His management style was methodical, sources say his demeanor was more suited to the Chief Operating Officer post. Upon his appointment, his proposed turnaround strategies included focus on multimedia and the internet and layoffs of couple of thousand employees.

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Upon retrospection, it could be noted that his suggestions did not vary much from forerunner Sculley’s. Moreover, due to inaccuracy, he laid off more people than required. Amelio, ultimately fired by Apple’s board, nevertheless he disprove that his proposals were held back due to the board’s dread of change, reluctance to contend intensively and of development into overseas markets.

Jobs, the Maverick Farmer

Steve Jobs’s leadership style can be categorized as ‘aggressive’. This characteristic showed the most when he was the acting CEO in 1997, after Amelio left. Jobs’ critics believed that Apple’s troubles were calculatingly rooted by Job so he could be Apple’s idol in time of need.

It may seem unbelievable but it is without doubt that Apple was Job’s alter ego. Once taking charge of the position, he rapidly turned to Microsoft for assistance, ensuing in a $150 million investment contract that offered a psychological enhancement to corporations and customers regarding Apple (Stanton, 2001).

During the Macworld Expo in 1997, he surprised the world by announcing that Apple will be working with Microsoft, its onetime rival, to release Microsoft Office for Macs. Jobs went further by simplifying Apple’s product lines, decreasing wholesale and retail channels to regain more control and instituted cost saving measures such as stopping production of ineffectual Newton PDA and integrating other Mac software with Mac OS. Known as an innovative prodigy, Jobs’ forte was in marketing and developing communicative pathways with customers, suppliers and competitors. A trait forerunner Amelio sorely lacked.

To revamp Apple’s dull brand image, Jobs’s employed renowned advertising agencies to design a well integrated marketing communication resulting in the ingenious ‘Think different’ campaign. The campaign won many accolades worldwide and paved the way to a mega successful iMac launch (Dawson, 1999). In 2001, Apple introduced iPod portable digital audio player, which was phenomenally successful and the year of 2005 witnessed Jobs announcing the launch of Macs using Intel CPUs. The growth of Apple was evident in its share price movements which went more than tenfold between 2003 and 2006. It is interesting to note the comment made by Dell CEO Michael Dell, nine years back, that if he ran Apple, he would close it down and pay back the shareholders (Dawson, 1999)

On the human resources side, Jobs built a community like and laidback atmosphere within Apple, similar to many other Silicon Valley enterprises. Thus many employees as a result, have a higher consciousness of organizational identify and membership, together with strong ritual significance. The creation of the Apple Career Resource Centre, which is located in a highly accessible and visible area in Palo Alto, California, is a proof. Here, Apple ensures all employees are able to advance their careers without the prying eyes of their bosses.

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There is a mix of internal and external career-research specialists so that companies learn from one another and an online ‘electronic campus’ computer network that combines all its operations. The career management process is kept separate from the performance appraisal.

Such centers are havens where the employee can go to work on self-assessment, receive counseling, and attend seminars, research career reference materials and most importantly, learn how to think about their careers strategically.

Leaving the rocky past behind, Apple surged ahead in the period of 2007 to 2011 aided with substantial diversification strategies. During Macworld Expo in 2007 Jobs announced to the world that Apple is no more focusing only on computers, by dropping the word Computer from the company’s name, ‘Apple Computer Inc’, to just Apple Inc. This was evidenced by the launch of iPhone, iTunes, App Store and in 2010, iPad. Apple’s shares crossed the 300$ mark in October 2010 and surpassed Microsoft in market capitalization.

Steve Jobs resigned in August 2011 marking the end of an era in the timeline of Apple Inc. and Tim Cook took over as the CEO. When Steve Jobs' life ended on Oct. 5 at age 56, the event marked the passing not only of an international icon, but also of a man people felt they knew well -- even if they had never met him. Jobs was beloved because his company made high-quality products that people used to extend their own personalities. Every device Apple made was designed to become a trusted friend to its user.

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Though he had no formal business education or training, Jobs was one of the savviest people ever to run an American company because he understood what customers wanted. He was able to take the highly technical task of aggregating digital files of all kinds and make them accessible in an intuitive, nontechnical way for Apple's customers. When thoughts and products in which Jobs truly believed were involved, he was stubborn and virtually immovable. Yet when he recognized a significant business trend or idea outside one of his companies, he was agile enough to incorporate it. It would be an oversight, nevertheless, to differentiate Jobs's tenure at Apple merely by the items the company launched. Those products were created because of the guidelines that Jobs put forward and he made sure that they were collectively practiced by others at Apple, more than ever as he reshaped the company subsequent to his 1997 return.

It's worth mentioning that many of Apple's biggest product launches were during Jobs's term such as the iPod and the iPad, in particular were developed in the period of recessions, when consumers hypothetically were less prone to spend money on expensive electronic products.

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So, what is in Store for Apple’s Future? Apple was led by an array of CEOs with varied strategic approach which might have influenced the identity of Apple Inc. A McKinsey Quarterly report states that: to do well in the Consumer IT industry, companies must take product-based strategies, besides risk-management or marketing based strategies (Heel et al, 1997). From the analysis of Apple’s history, CEOs, especially Jobs have steered Apple’s narrow niche market (Mac OS and graphics designing software) into a broader focus in many other markets making good use of marketing based strategies. When it comes to turning around a company, many management gurus tend to agree that proactive control, cost reduction, risk control, financial management, consolidation, value adding, strategic repositioning and change management are the important points every forward-thinking CEO should consider. Apple’s CEOs have indeed tweaked the management change wheel.

The company nearly shattered at the time when Steve Jobs left the company. Will it happen again? Not likely. As Jobs made sure Apple would be almost impossible to beat, the company has over $100 billion cash. The DNA of Apple as designed by Jobs has everything it takes to keep working on their culture of execution and innovation. The company’s CEO Tim Cook has been successfully managing the company’s best production and supply chain operations. An alert and an outstanding leader and thinker, Cook is just doing one job: executing Jobs’ visualization and he has been doing that brilliantly so far. 


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