Blake Federinko. How to sustain a competitive advantage: Apple

Transcription

1 Blake Federinko How to sustain a competitive advantage: Apple

2 Blake Federinko 07/05/14 Prof. Avery How to Sustain a Competitive Advantage Today Apple is one of the wealthiest companies in the world. But how did they become so successful? What did they do differently? How can they maintain their success? These are all questions that Apple needs to address. However I will give my analysis on what I think Apple should do. Throughout this paper I will provide a SWOT analysis of the company, discuss Apple s internal/external environment, give my point of view on the selection of Tim Cook and the challenges he faces and how the company can adapt to competition. First I will briefly discuss my thoughts on Steve Jobs. To have any success you have to be able to take risk. If you don t, then you will not become as successful as you want to be. Steve Jobs was not afraid of taking risk. He started the company from his dad s garage and he also sold his car for startup capital. But most importantly he had a vision and he didn t let anyone in his way from achieving that vision. To be successful you have to have that mentality where no one can stop you, Steve Jobs once said, It s better to be a pirate then to join the Navy. To me this means that you should not follow the crowd, do what others won t. face today. Apple has always had its threats and weaknesses. I will do a SWOT analysis of what they Strengths Weaknesses 1. Brand Recognition 1. Cost of Product 2. Cash Reserves 2. Innovation

3 3.Marketing 3. High CEO Turnover 4. Innovating/Way of thinking 5. Work Culture 6. Brand Loyalty Opportunities Threats 1. New Products 1. Competition 2. Acquisitions 2. Patent Infringements 3. Taxes 3. Customer Knowledge 4. Wages 4. Increase in Technology 5. Technology As we have described in class a company should focus on their strengths. Apple is known for their innovated thinking. Recently Apple just acquired Beats audio. To me the acquisition was a way to keep shareholders happy. One of the things that made Apple a success was the ability to build their own product. With the increase in competition it is easy for a customer to terminate their brand loyalty. Apple has not come out with an innovative product in almost ten years. This has allowed lag time for their competition to catch up. I will give suggestions on what Apple can do later. Competition has become increasingly heavy in the technology sector. Apple not only has IBM as a competitor but companies such as Google, Dell, and Samsung. Apple has always had a high CEO turnover. When the board of Apple didn t share Steve s vision they elected the marketing director for Pepsi-Cola John Sculley as the CEO. When a company changes leaders the amount of times Apple did there is no efficient direction for the company.

4 Apple is still a financially strong company. They have a lot of assets and very little debt on their books compared to the industry standard. They don t invest as much in their R&D as other companies do. They think that this allows them to have a higher return. When Steve Jobs was around the company almost went bankrupt with the Macintosh idea. Like I mentioned before Steve Jobs was not afraid of taking risk, and most times than not the risk will pay off. In my opinion Apple should invest more in their R&D department. Steve Jobs once said, R&D is not about the product it is about the people. He believed that people who wanted to make a difference should and could at Apple. Apple has a very secretive internal environment. They have the most high end security in Silicon Valley. Employees are really not allowed to talk about their work outside of the office (appleinsider). Apple employees feel like they are something more. They are working on products that will change the world. It is normal for their employees to work hour work weeks. And most of the employees are fine with it, they love what they do. Steve Jobs was a brilliant person, but according to many sources he was not the best person to work with. If he was working on a project it would get done faster than anything else the company was working on. Steve Jobs was strictly business. Today what companies are doing is having an open campus feel. Companies like Google believe that this allows their employees to have creative ideas. There are different factors that affect Apple externally. One of the factors is technology. Technology is easier to understand to the consumer because of the internet and the amount of products that are in the market to choose from. Because of this, the consumer is more educated on what they want/need in a product. The second factor has to do with the economy as a whole. The consumer wants to get the best deal possible and Apple is a higher end product. This means that the majority of customers can t afford an Apple product. Another economic factor is that it

5 is not just the U.S. economy that Apple needs worry about but an economy on a global scale. There are also regulatory factors that Apple needs to keep up to date with. Regulations and laws are always changing, not just here in the U.S. but on a global scale. The last external factor is that social factors are always changing. People are always getting older and getting more eco friendly (xmind). Like I mentioned in the weaknesses of Apple they have had a high CEO turnover. After Steve Jobs died Tim Cook was named the CEO. Tim Cook has big shoes to fill. He is more of a numbers guy and not a person who thinks outside of the box. Steve was a guy who was always involved with the process of building a new product. If Tim Cook is going to be a successful CEO of Apple he needs to be a visionary. With any business I am a fundamentalist, I will always take the bottom up approach. One of the keys to a successful business is its employees. I would make sure that Tim Cook has the best employees for job at Apple. Keep the work environment competitive to other companies. Like I mentioned before Google has an open campus feel that offers free food and activities. Apple on the other hand does not offer those sorts of incentives. For example Steve Wozniak, one of the co-founders of Apple was not happy where the company s direction was headed so he quit. Apple can t afford to have good employees leave because of the amount of competition that is in their industry. Apple needs to change their view on how they treat their employees. Like I mentioned earlier, in my opinion, Apple has not come out with a product that has wowed us in about ten years, since the I pad. Steve Jobs was part of the team that designed the I Pad. To be a successful company you need to be an innovator and be creative. Apple needs to do something that hasn t been done before again. They seem to be too focused on the design of the

6 iphone. It seems like they come out with two new designs every year. The iphone reminds me of the Apple 2. The company relied on the Apple 2 because it was the only product making money. When competitors started making products like the Apple 2, Apple s stock took a dip. To me, history is starting to repeat itself except this time with the iphone. Apple needs to do something that will separate them from their competition and will allow them to get ahead. I would suggest they invest capital in their R&D department. This would be better for the company instead of acquisitions. In my opinion if a company does an acquisition it sends negative messages to the consumers/shareholders. It makes it seems like they can t come out with new products of their own. Acquisitions will also take away from the companies identity. It will send a negative image to consumers about your company calling it a monopoly. Apple should stick with software and their innovation because that is what made them the company they are today. Apple is getting really diverse in their portfolio. They have products ranging anywhere from headphones to computers. Apple should focus on just one product at a time and try and make that product the best. They are trying to keep up with their competitors when their competitors should be keeping up with them. When Apple brought Steve Jobs back as CEO he made them focus on just one product. One product is all that it takes to separate a company from its competitors. There is always room for growth in technology you just have to find out what the consumer wants. Steve Job once said that we shouldn t see what our competition is doing and make it better, we should look at our competition and ask ourselves what can we do differently. Tim Cook has a lot of challenges ahead. He has many majority shareholders of the company that are not happy with the way things are being run and the way their balance sheet looks. When a company like Apple has that much cash on their books it gives the impression that they are not

7 doing anything with it. Tim Cook also has a lot more competition to face then Steve did. Tim will need to figure out how Apple can differentiate their company even further from their competitors. There also been a lot of infringements on patents with Apple vs. Samsung. I would suggest to Tim just to handle the cases and move forward. Start with no one going after your assets and try and make the company great again. Apple is one of the most successful companies of all time. It goes to show that with an idea anyone can be successful as long as you put in the work. Unfortunately Apple has seen its share of down times. They have had a high CEO turnover which made the vision of the company inconsistent. They have had to deal with the death of the founder who made the company so successful. But it is not the good times that defines us, it is the bad. One of the keys to a successful person is how they handle adversity. Tim Cook can either be a great leader or he can be on the list of the old CEO s. I have provided my opinions on what the company should do, which is go back to the basics. Start with an idea and innovate it, stick with the strengths of the company. That is how they will build success.

8 Work Cited porate_culture Harvard Business Journal