Apple Case Study

APPLE CASE

Apple is at present the leading organization in the consumer electronics industry, overcoming in market value both of its competitors, IBM and Microsoft.

Apple's performance in the stock market is a good mirror of its own success. In the last two years, its stock price almost doubled. If we look at the last 25 years, Apple's stock value went from around 3$ in 1985 to around 400$ in 2012. In the middle, many up and downs: the mid 90s and IBM supremacy and Apple's comeback with the "I" products from the end of the 90s and the beginning of the 2000s. And, in particular, starting from 2005-2006 (with the launch of the first -Phone), the company experienced an exponential growth (with a little hunch in the year 2009, in line with the word economy crisis), growing of almost 900% in 6 years. The market trusts Apple, it trusts it ability of innovation, of retaining and acquiring customers and of keeping high the value of the brand.

As everyone knows, Apple is a Cinderella story in the business world. Its founders, Steve Jobs and Steve Wozniak built their first machine in 1976 in a garage. To that first machine, one of the biggest revolution of the computer era followed just one year after and right out of the ends of the same two people: Apple II. It was the very first personal computer, born out of the idea of making informatics more accessible to ordinary people, by "simply" putting the electronic components into a box. To these, many things followed: they had applications developed, they developed the Macintosh and the familiar interface and so on and so forth. These two men had the merit of bringing the practice of using a computer to the mass.

On those basis, Apple got older through the decades, at some times flourishing and at some others succumbing to competition. However, as already mentioned, Apple's most amazing era is right now. The company has in fact managed to build a sustainable competitive advantage in the full sense of the term: it springs out of resources and capabilities that are rare, hard to replicate and hard to imitate. This advantage is in fact built on many elements. Some of them are easy to guess: financial resources, marketing capabilities, R&D investments and continual innovation, brand. Some others, which are in many ways at the basis of the ones I just mentioned, need some more thought. If we look at CA under a value chain point of view, to build one, companies can either do the same thing as competitors but better; or they can do different things than competitors. It seems to me that Apple's CA is based on its doing things differently. One is the lock on strategy of the complementary products: once a customer has an IPod and uses ITunes it is very easy he will choose iPad as a Tablet and a MacBook as a computer. This assures a positive domino effect rather than a cannibalization one among these products that could otherwise all look the same. On a more marketing note, it is interesting to notice how all this products come in families, how the launch of each new generation within the family is timed and somehow distant from the previous one and how the aim of the improvements seem to be to increase the level of "user-friendlyness". This is yet another element: the consumer focus. Apples customers are ordinary people rather than tech-savvy ones and they want "cool", easy to use products rather than product with exceedingly high performances. Apple knows well its target market and answers to its needs. All these elements (the lock on of iTunes, the complementary factor, the user friendly aspect, the target market) explain the success of Apple through the success of its products (iPod, iPad, MacBook, iPhone, iTouch...). Another interesting element of strategy is the double vertical integration (horizontal across products and vertical from the chip to retail) combined with the non-silo organizational structure. Apple in fact is the only CE company that organizes per product rather