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Steve Jobs: Founder of Apple Company

Essay by   •  January 11, 2011  •  Essay  •  3,662 Words (15 Pages)  •  2,749 Views

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ISSUES

STEVE JOBS:

Steve Jobs founded Apple Computers in 1976 in California along with his colleague Steve Wozniak. Apple I was the first personal computer. Since then the computer business has been growing rapidly and so has been the company. During his position as a CEO Jobs has played a major role in the company's success. The company performance has been a roller coaster ride associated with Jobs' presence and absence. There is a pressure to keep Jobs at the CEO's position due to the success stories he has written in the history of Apple. Once Jobs was forced to leave the company and the directors brought in other three CEOs one by one. They did apply different strategies to create the success that Jobs had. But it did not work out properly with some exceptions and company had to face certain difficulties. Then the directors decided to bring Jobs back at the position of CEO. However, there is too much dependence on the present CEO Steve Jobs. Although he is the founder of the company, he is not immortal.

LOW MARKET SHARE:

Apple is a very well known brand and it has quality products. Every now and then Apple brings out a new and unique product. But even after the innovative products and the popularity it enjoys, it has low share in the worldwide PC market (3% in 2007). Apple's competitor Dell has competitive advantage through its manufacturing, distribution and marketing. It's the industry leader in US (world market share is 14.9 %). Another of Apple's competitor, HP, worked its way through aggressive consumer marketing and by giving importance on product designing. This gave HP the highest market shareholder in 2007 (18.8%). Due to the pricing strategy of Apple's products and due to its low compatibility with products other than Apple's, it suffered low market share constantly.

EXTERNAL ENVIRONMENT

The industry has a fast growth. Everyday new and innovative products flood the markets. From mobile phones to laptops there is a new product advertised almost every week. The major players of the industry are Dell, HP, Apple, Acer and Lenovo. There is a high entry barrier due to the standardization of the PC components. If any new players wish to come into this business, they need to have a differentiated strategy form the existing companies. Also, a high learning curve exists which means the customers take time to get accustomed with the new product. The existing brand names make the entry barriers high.

Suppliers for this industry are powerful. There are only a handful of companies like Intel and Microsoft which manufactures microprocessor and operating systems (OS). These suppliers are hard to switch due to dominant production of such components. There is always a threat of forward integration by the suppliers since the products manufactured by these suppliers are highly sophisticated and the other components needed for the production of PCs are not so difficult to imitate. But there are many sources which do provide small PC components like memory chips, disk drives and keyboards.

Substitutes for most of the products are easily available at a lower price. Although buyers do look for quality and brand name, some of the components they need are purchased from these substitute providers at a low cost. For example if a consumer cannot afford to buy an Apple iphone then he/she has the option to buy any alternative low cost smart phone from some other company. There is high competition due to high industry growth. Manufacturers of these products try every possible strategy to attract the attention of customers through promotion and advertising. Apple fights with its highly innovative products whereas Dell and HP have better marketing and distribution strategies. According to the present conditions Apple does have a Gross margin of 35% which exceeds that of Dell's 19% and HP's 24%. In this extremely competitive environment, companies are highly responsive to any new product as they can imitate at low costs.

It is almost reaching a status of mature market with intense competition but it is still growing. There are companies which are coming up with low cost strategies to compete with the existing manufacturers and this had led to intense rivalry. Companies like Acer and HP acquired Compaq are already competing with Apple and other companies with notebooks on the basis of cost. Also there are a wide range of MP3 players available in the market which ranges from $30 to $499 and from 1 GB to 160GB. Also there are several websites which give access to downloading and listening music which becomes a high threat for products like itunes.

The type of consumers for this market can be categorized as home, small and medium sized business, corporate, education and government. Since buyers are mostly not concentrated they have less bargaining power for prices and models. Buyers do have a high switching cost which discourages them from buying a similar product from another supplier. But there are a number of substitutes available which makes buyers powerful to choose from the available options and also because they are very price sensitive. The customers always have an advantage of choosing the electronic good according to the need and taste. This industry has a vast customer base and companies have to be customer oriented and should innovate according to their demand. Apple targets customers who are "techno savvy", who look for something unique. They have a wide range of products like computers (Mac book), ipods and iphones which are highly differentiated. Customers desire to buy its products as they are "icons of the digital industry".

Exit barriers for this industry are high. There is a lot of capital requirement to establish a firm inside the electronics and PC industry. There is a chance of exit becoming almost impossible due to strategic interrelationships between these firms. Not all the products are made by the same firm. And so they have to depend on other firms in the industry for making a final product ready for the customers. So it is very difficult if one firm leaves, leaving the other dependent firms in dilemma. Technological changes in the industry are very fast. Everyday a new product or a new application or version for the existing product is available. Consumers are very demanding and it makes it necessary for the firms to compete with each other and become the first mover or the best as a second mover in bringing out a new innovation. The young generation in particular is very trendy and they love to show of the new things as a fashion statement. And so they expect companies to give them something which is different than what others have. It is both an opportunity and a threat when it

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