1(c) Copyright 2011 Mortensen Consulting Group LLC

Session #5Strategic Management

Dr. Mark H. MortensenSession 211 and 212M-W PA 407

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You Will be Prepared for TodayIff You: Have read Chapter 3 Have read the Apple case study

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Key Points from Last Session Chapter 2

Board of Directors – purpose & responsibilities SOX effect on operations Current trends in corporate governance Importance of Executive Leadership, even in a

“learning organization.” Case Study Methodology

Purpose of a Case Study Outline of a Case Study Procedure for Doing a Case Study

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Chapter 3

Lecture & Discussion

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Apple Case Study

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Apple Case Study: Outline

Case Study Background – The nature of competitive advantages over time in highly competitive, innovative industries.

What should Apple do? Define the Central Issues Define the firm’s goals Identify the constraints Identify the alternatives Select the best alternative Develop an implementation plan

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Apple: Case Study Background(1): Apple History Competitive advantages in the 1980s made

Apple the most profitable PC company in the world (What were they?)

But “on a glide path to history” (What? Why?) Four successive CEOs (Sculley, Spindler,

Amelio and Jobs) sought to reposition Apple in the PC Industry and to create a sustainable competitive advantage.(What did they try? What succeeded? What did they decide not to do?)

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Competitive advantages in the 1980s that made Apple the most profitable PC company in the world

Ease of use Dominance in creative industries (design,

desktop publishing), as well as education Buyer loyalty Proprietary operating system Strong branding Excellent industrial design

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Why was Apple “on a glide path to history” Low market share, increasing competition

and change in the market to a commodities point of view for PCs put Apple’s differentiation strategy at risk.

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CEOs’ Strategies

Sculley – low-cost producer; “hit products” every 6-12 months; Mac Classic vs. IBM clones; Powerbook laptop; Newton PDA; Taligent with IBM for new OS; PowerPC chips from IBM

Spindler (1993-1996) – reinvigorate core markets; killed Intel chip; licensed Mac OS to clone makers; killed Taligent; layoffs

Amelio (1996-1997) – servers & other high-margin devices; cancelled nextgen Mac OS; ended licensing program; bought NeXT (Jobs)

Jobs – iMac; outsourced manufacturing; direct sales via website; image; industrial design

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Apple: Case Study Background(2):The Mac Business in the 21st Century

Technology & Innovation Cutting edge experience High-end Differentiated from Wintel machines Intel Chipset Overhauled Mac OS X in 2001 (UNIX) Proprietary Apple-developed applications

Distribution & Sales Retail stores

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Apple: Case Study Background(3):The Evolving PC Industry

The dynamics of the PC industry have radically changed in the last 20 years.

Buyers Rivalry among suppliers Barriers to entry Complements to the PC industry Supplier vs. Manufacturers balance of power Substitutes

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Apple: Case Study Background(4):Apple Beyond Macintosh

iPod iTunes Apple TV iPhone iPad

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Questions for next week – think about these and we will discuss Has Steve Jobs finally solved Apple’s

long-standing problemsa. With respect to the Macintosh business?

b. With respect to its broader strategic position?

Going forward, what should Steve Jobs do?

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Apple’s Long-Standing Problems

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Apple SWOT(s)

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Apple’s Goals

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Apple’s Constraints

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Apple’s Alternatives

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Apple’s Best Alternatives

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Apple’s Implementation Plan

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Reminder for Next Class

Nothing due. We will continue our discussion of

business ethics and have a review session for the upcoming quiz.