Strategic Leadership And Innovation At Apple Inc.
Management by Objectives and Goal Setting Interventions
Table of Contents
TOC o “1-3” h z u HYPERLINK l “_Toc332018910″1.Introduction: PAGEREF _Toc332018910 h 3
HYPERLINK l “_Toc332018911″2.Apple Strategic Leadership: PAGEREF _Toc332018911 h 3
HYPERLINK l “_Toc332018912″3.Core Competencies: PAGEREF _Toc332018912 h 4
HYPERLINK l “_Toc332018913″4.Strategic Alliance, Merger and Acquisition: PAGEREF _Toc332018913 h 5
HYPERLINK l “_Toc332018914″5.Diffusion of Innovation across the Value Chain: PAGEREF _Toc332018914 h 7
HYPERLINK l “_Toc332018915″5.1.Support Activities: PAGEREF _Toc332018915 h 8
HYPERLINK l “_Toc332018916″5.2.Primary Activities: PAGEREF _Toc332018916 h 9
HYPERLINK l “_Toc332018917″6.Conclusion: PAGEREF _Toc332018917 h 11
HYPERLINK l “_Toc332018918″7.Recommendations: PAGEREF _Toc332018918 h 12
HYPERLINK l “_Toc332018919″8.References PAGEREF _Toc332018919 h 14
Introduction:Apple Inc, which is committed to bringing the best personal computing, portable digital music, and mobile communication experience to consumers, students, educators business and government agencies through innovative hardware, software, peripherals, services and internet offering (Apple Inc, 2011), has accomplished unbelievable growth during the last ten years. The company has been actively capitalizing the differentiation advantage in the market as Apple products are trusted for their unmatched quality, innovation, unique designs and functions (Cutter, 2011). The firm that was once a computer chip manufacturer has captured the dot com revolution and has now emerged as digital hum as it capitalize the convergence of the personal computer, digital consumer electronics and mobile communication (Gershon, 2009). This report has been organized with the objective to critically summarize that how Apple Inc has accomplished such an unbelievable growth, by critically elaborating the strategic leadership and innovation of the organization. This objective will be realized using various strategic management frameworks including core competencies, strategic alliances, mergers and acquisition, and diffusion of innovation.
Apple Strategic Leadership:Apple Inc has been blessed with unmatched leadership as Steve Jobs, who has been termed as the most incredible business leader of 21st century guide the firm towards its long-term goals and objectives. Closer analysis of Jobs’ leadership style may reveals that the leadership style that Jobs were following could be regarded as transformational leadership (Hesseldahi, 2007). Apple that was near bankruptcy in 1997, emerged as the most growing corporation around the world in just 10 years. Jobs chalked out an organization culture for that encouraged members of the firm to take calculated risks in the pursuit of the firm’s mission (Apple Inc, 2011). Furthermore, Jobs inspired Apple’s members that instead of selling products the firm should be selling dreams (Young, 2008). Moreover, instead of selling hundred “me-too” products, Jobs encourage member of the firm to concentrate efforts on few products that satisfy the needs and wants of the target market but in a different manner. Steve Jobs focused was to focus on the core competencies that provide the firm with competitive advantage in the form of superior marketing, design capabilities, superior leadership, and proactive organizational culture (Gershon, 2009).
According to Lynch (2007) core competencies are the knowledge, the capabilities, and the attitude of an organization that help in gaining and sustaining competitive advantage and in turn leading working as a mean for superior performance. De Wit & Meyer (2004) are of the opinion that “…creating a sustainable competitive advantage in each business in which they operate is the central issue concerning business level strategy” (pp. 231). As organizations are increasingly operating in a rapidly changing environment, most of the firms in different sectors are consistently using the process of synthesis and reconfiguration to match the firm’s core competencies according to the changing market dynamics (David, 2006). The process enabled such organizations to better capitalize the opportunities and guard against threats. During the last ten years the business world has changed to an unbelievable extent as innovation in different sectors is continuing to shape opportunities in different sectors (Holt and Diggins, 2010). Undoubtedly, Apple Inc could be regarded as one of the firm that has benefited from gaining and sustaining the core competency of innovation (Young, 2008). Although, Apple Inc has different competencies including superior marketing, design capabilities, superior leadership, and proactive organizational culture, the fact is that the innovation emerged as the leading core competency of Apple Inc (Apple Inc, 2011). The firm has created and sustaining synergies as a result of its innovation which has enabled the business enterprise. The firm has focused on innovative technologies which are integrated with Apple’s superior design capabilities (Linden, Kenneth and Dedrick, 2009). Once the research and development and operation specialists at Apple did their job, it’s the marketing specialists at Apple who uses their superior capabilities to design innovative branding strategy along with creative marketing and advertising campaign (Young, 2008).
Strategic Alliance, Merger and Acquisition:In the pursuits of its mission and other long-term goals and objectives, organizations usually use a variety of strategies (De-Wit and Meyer, 2004). According to Frynas & Mellani (2010), “a strategic cooperative agreement between two or more firms to pursue a set of agreed upon strategic goals while remaining independent organizations” (PP.187). Broadly the growth strategies that an organization could use may be categorized as organic growth strategies and growth through strategic alliances, merger and acquisitions (Digman, 2003). Although, accomplishing growth through organic measures are the most desired, in some cases a firm could not realize growth using organic means as the market may enter the maturity stage or the price war being fought between the major competitors holding the market (De-Wit and Meyer, 2004). In such sorts of situations, an organization may opt for outside growth by forming strategic alliances, merger and acquisitions (Hitt, Ireland and Hoskisson, 2000). Although, Apple has been using the organic growth strategies, a part of those has been analyzed in the core competencies section and the rest will be covered in the third part of the report, nevertheless Apple Inc has been also using growth strategies through strategic alliances, merger and acquisitions (Choney, 2011). The term strategic alliance has been defined by Wilson, Gilligan and Pearson (2006) as “multifaceted, goal-oriented, long-term partnership between two companies for sharing risks and rewards” (362).
In case of strategic alliances, organizations forming the collaboration maintain their separate identity; however gain from the superior knowledge sharing and collaboration that helped them in better value creation and value delivery process (Griffen, 2007). On the other hand, in case of merger and acquisition strategies, the collaboration is much closer and long-term in nature as organizations pool their different resources and loss their individual identity (Holensen, 2007). In most of the cases, merger and acquisition strategies are used to create synergies and access market power that could not be realized, if the organizations involved carried out the functions individually (Johnson and Scholes, 2005).
Apple has been using the strategic alliance, merger and acquisition strategies for very long (Apple Inc, 2011). When the growth rate in the computer market slowed down and Apple realized its mistake of solo flight throughout 1980s, the firm entered into a consortium with IBM and Motorola in 1991 where the firm started integration with IBM besides a multimedia joint venture that in turn helped Apple to break the successful strategic alliance of Intel and Microsoft in the PC market (Cruikshank, 2009). Furthermore, as a result of successful collaboration with IBM, Apple Inc started its work on launching the fist object-oriented programming based operating system (Freeze, 2008). When Jobs rejoin the firm in 1997 as advisor and then as interim CEO, the organization teamed up with Portal Player for the designing the sound system for the iPod, In addition, the launch of iPod could have not been possible, had the organization did not have the strategic collaboration with Taxes Instruments (TI), Wolfsan, Sharp Electronics Corporation, and Linear Technologies (Apple Inc, 2011). For entering the digital music market, Apple on the one hand acquired Emagic, a music software firm and collaborated with Motorola for developing handsets which is fully integrated with iTunes (CDF, 2012).
Diffusion of Innovation across the Value Chain:Over the years, Apple has been very professional in ensuring the innovation across its value chain (Freeze, 2008). The firm took a lead over its rival by creating the Graphic User Interface (GUI), FireWire, Wireless networks. From the very beginning Apple’s approach has been to design an easy to use technology that could ease the life of its target market (Apple Inc, 2011). Although, the firm has followed this strategy since the launch of the firm, the firm took some very steps during 1980s and 1990s that affected Apple’s long-term outlook (Cruikshank, 2009). Nevertheless, when Jobs resumed working as advisor and then interim CEO in 1997, the company was brought back on track. Jobs resumed his on the simple mission “brining technology closer to the people” and undoubtedly Jobs succeeded in this mission as the different products that the firm launched since then were just unbelievable innovation (Apple Inc, 2011). However, this objective could have not been realised, had Jobs did not work on different dimensions of the firm value chain to create the desired synergy for its target market (Hesseldahi, 2007). Apple value chain and how the diffusion of innovation took place across the firm are elaborated in Figure 1 followed by detailed discussions:
Source: Johnson and Scholes (2005)
The support activities of Apple that has been contributing to Apple’s diffusion of innovation are elaborated in detail in the section to follow:
Jobs took some basic steps that in turn enabled the firm to regain its profitability. Furthermore, the strategies that the firm sorts during the turn of the century were directed towards educating, training and development (Apple Inc, 2011). The firm did extremely well in the “user friendly” software and gets reputation in the market as a leader in technology innovation (Holt and Diggins, 2010). The firm adopted different measures that in turn enabled the firm improve its efficiencies. For example, the cash conversion cycle of the firm decreased from 53 to 22 days which in turn allowed Apple to emerge as more efficient (Linden, Kenneth and Dedrick, 2009).
Human Resource Management:
The human resource strategy that Steve Jobs created for Apple was to attract and retain key talent from the job market. The human resource function has been organised within the organisation in such a manner that the firm is accruing various costs saving (Cruikshank, 2009). As a result of a shared vision, the HR within the organisation has been very successful in creating and fostering the desired commitment and motivation as employee strongly identify with Apple’s distinctiveness.
Technology management is the core area where Apple has been enjoying a competitive advantage over its rivals as in many aspect the firm has outclassed its competitors through the first mover advantage (Prahaled and Sawhney, 2010). The firm has superior research and development capabilities that in turn translate into high performance, versatile designing, sophisticated product capabilities and unbelievable peripheral devices (Apple Inc, 2011). Furthermore, the development cycle of the firm is far better than its competitors that in turn enable the firm to get many “fist” in the market. The innovation capabilities of the firm have resulted in products like iTunes, iPod, iPhone, iPad, MacBook Pro, iPhoto, iMovie, cloud etc. that has led its respective categories (Cruikshank, 2009).
Primary Activities:The primary activities of Apple that has been contributing to Apple’s diffusion of innovation are elaborated in detail in the section to follow:
As a result of its inbound logistics activities, Apple has been in a position to create and sustain superior innovation (Linden, Kenneth and Dedrick, 2009). This is because the firm has located its supply chain partners in different parts of the world. For example, for iPhone the research and development of the product took place in the US, the central processing unit (CPU) and video processing chip is sourced from Samsung, Singapore, various integrated circuits (ICs), connectors, stainless casing etc are outsourced from Primax Elextronics, Foxxcon International, Entry Industrial Connection, Cambridge Silicon, Unicorn Technology, Catcher Technology Taiwan. These different products are then shifted to the Shenzhen province of China where the final assembling of the product took place (Holt and Diggins, 2010).
Apple has been also using innovative practices at the procurement front and as the firm believes on the specialization it has been using its supply chain capabilities to produce unmatched offerings for its target market (Lee, 2002). The firm has been using the procurement functions strategically and has developed strategic relationships with different suppliers around the world (Barney, 2002). For example, Apply rely on Sony for battery, Watson for CODEC and DAC, Toshiba for disk drive, Taxes Instrument for Firewire, Samsung for touch screen, and Linear Technology for power management (Cruikshank, 2009). The use of these specialists that are located around the world enabled the firm to get the desired differentiation along with the overall competitive advantage over its rivals (Hesseldahi, 2007).
The firm has been truly benefiting from the latest technologies and has established some of the state of research and development, operation and assembling plants in different parts of the world (De-Wit and Meyer, 2004). For example, most of the assembling plants of the firm have been now located in China that have been developed taking into consideration the present and the future needs of the organisation. In addition, in order to meet the rising demand of the market, the firm has been outsourcing some of the operations to other organisation (Linden, Kenneth and Dedrick, 2009).
The marketing department of the firm has helped the firm in delivering innovative ideas and brand management (Apple Inc, 2011). The marketing department of the firm worked in close collaboration with the R&D and operation department of the firm and most of the products that the firm offered in the market are designed taking into consideration the segment that the marketing department wishes to target (Mintel, 2010). In addition, Apple has revolutionised the distribution function by using multi-retail strategy. The firm offers its products through its own stores located in different parts of the world, its online stores, its retail network, independent retailers, its supply chain partners, and various online retailers that in turn have enabled the firm to reach the different ends of the world (Mintel, 2010). As a result of adopting innovative marketing tools and techniques Apple has been able to create differentiation in the market and due to this reason the firm has been using a premium pricing strategy for its different products offered in the market (Whittington, 2001). In addition, due to exceptional customer services extended by the firm’s marketing department, Apple has topped the American Customer’s Satisfaction for the eighth year consecutively (Choney, 2011).
The customer services extended by Apple has been helping the firm not only in resolving customer’s ill-well, the fact is that the firm customer services has been helping the firm in developing long-term relationship with its target market (Gershon, 2009). In addition, the firm provides one year replacement warranty on all its products besides launching different programs to educate customers that how to operate its different products.
Conclusion:Apple Inc has been successfully capitalizing various strategic management tools that in turn have enabled the business concern to enjoy market leadership in different product categories. The success of the firm over the years is based on its openness to new ideas whereas it has been using employee’s creativity and innovation as mean for creating inspiring products that have truly revolutionized consumer life (Apple Inc, 2011). Apple Inc has been capitalizing its different core competencies that include superior marketing skills, design capabilities, superior leadership, and proactive organizational culture, and technological innovation. In addition, the firm has been strategically using the merger and acquisition strategies along with a strategic collaboration strategy for creating better synergies for its target market. Merger and acquisition strategies have enabled the firm not only to get an outside growth but also enabled Apple in getting the desired market power that has been vital for the firm’s maintenance of innovation in design and technology. Furthermore, Apple Inc understands its supply chain and how to use its supply chain activities for creating and maintaining its innovation leadership. The firm could have been outperformed by competitors, had the competitive edge that the firm has been enjoyed by the organization was the result of a single activity within the organization. However, as the company has been using its every resource and every asset for delivering better innovation to its target market, the results are unmatched product offerings that enjoy market leadership in their respective categories.
Most of the products produced and marketed by Apple Inc enjoy a differentiation advantage in the market which in turn enabled the firm to charge superior prices for its products. However, in the years ahead as the competition in the market is becoming more intense, it is vital for the firm to maintain its strategic focus on innovation, from a different angles (Cruikshank, 2009). This is due to the fact that historically although most of the products manufactured and marketed by Apple has been able to offer unmatched innovation, the fact is consumer do pay the price for such innovation. As competition in the market is increasing, consumers may not extend the same level of commitment and zeal towards Apple products. Due to this reason the firm should work on certain grounds that could enable the business concern to maintain its strategic focus and continue leading the market with unmatched innovation.
Recommendations:In order to continue its edge in the market, Apple should continue using the differentiation advantage in the market which emerged from the technological innovation. However, in the years ahead as consumers are now having many more options in terms of products and brands, and the competition confronted the business organization is intensifying; the firm should change its focus (Barney, 2002). The differentiation strategy should be thus continued however the focus should be “cost focused differentiation” (Duddy and Kandampully, 1999). In turn this means that the firm should adopt strategies that could enable the business concern to get a strategic advantage though overall cost leadership as well as an overall differentiation advantage in the market (Whittington, 2001). Historically, Apple used the first strategy, differentiation while rarely focusing on the overall cost leadership, however in the years ahead the success of the company will much depend on how the firm get a competitive advantage in terms of cost and what portion of the cost savings are passed on to the target market in the form of low prices. The major reasons for this double barreled strategy is that Samsung, which is not only one of the major supplier of the firm, but is also one of the largest competitors of the firm has been beating the firm through its unmatched innovation and design capabilities along with its abilities to gain overall cost leadership (Keegan and Green, 2005). Samsung Galaxy Tab and Samsung Galaxy which is based Android operating system have been outperforming the Apple’s iPad and iPhone in terms of market share (CDF, 2012).
Furthermore, in the years ahead the firm should continue investing in its brands particularly in terms of marketing support extended to its different products (Pearce and Robinson, 2005). The marketing spent has been always one of the core issues at Apple, as its star products usually did not get the level of marketing support that in the need to maintain the level of communication and promotion (Linden, Kenneth and Dedrick, 2009). Although, till now most of the products marketed by the organization were designed, manufactured and marketed in a manner that consumer pull comes as a natural consequence. Nevertheless, this could hardly be the case as the firm now lags behind its major competitors in terms of innovation and it has few “first mover advantages” in the market. In turn, this means that the firm will be using more push than the pull strategy, which definitely requires extended marketing support. ReferencesApple Inc (2011) Annual Report, USA: Apple Inc
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