Good Example Of Case Study On Key Challenge Facing The Firm

Apple Inc. was facing a major challenge of gaining a reputable market share as a result of stiff competition by major home computer manufacturers. This was reflected in the constant reduction in sales and total returns that the company got from the sales of the various innovative products. The challenge was alleviated by the management’s lack of focus on the original slogan of ‘thinking differently’ and instead focused more on competing with major rivals such as IBM through production of more products to increase sales. The subsequent result was that the company forgot the innovative objective of making interesting products that will make the customers appreciate being followers of Apple Inc. Despite the effort of Steve Jobs to return the company in the right track after assuming the role of the company’s chief executive officer, the challenge was yet to resurface after his resignation in September 2011, where according to his remarks, he could notice that the management had started losing the rebellious strategy of thinking differently and instead they had started reasoning like their competitors. This is a challenge as the idea of product differentiation had inspired Apples’ innovative ideas and if the slogan is lost, the company could end up losing the current market share, thus resulting to massive losses.

External analysis

The competitive analysis of the computer industry is highly competitive. Based on the Porter’s five forces analysis, the industry has low entry barriers as all that is required is the ability to invent, innovate or imitate a product and cope with the competition. The situation of the industry had exposed Apple INC. into a stiff competition since its inception with the oldest competitor being IBM. There is a stiff rivalry between the key companies in the United States market including IBM, Microsoft, Intel and other major companies in Japan and China. The industry provides an attractive environment for the entry of new companies. The major innovation by the competitors that had affected the market leadership of Apple was the expertise of computer hardware manufacturing by IBM, expertise of memory and processors by Intel and the success of Microsoft’s DOS operating system. Companies have also constantly imitated the products of the competitor with the perfect example being the ability of competitors easily imitating the production of Smartphone and tablets with almost similar traits. This makes the threat of substitute products to be really high in the industry. For instance, Apple’s iPad had close substitute of tablets and mini pads that were of relatively lower price. The bargaining power of buyers is also high due to the variety of computers to choose from ranging from personal computers, phones and tablets with almost similar traits, thus making it difficult to make decision in making choices.

Internal analysis

The company has established their product image and positioned itself as an innovative company capable of producing the best technologically enabled gadget to suit everyday’s personal needs of the consumers. The main capability that drives the company is strive for innovation aimed at changing the world of technology. This is evident by the production of a series of products that had captured the American market in a faster rate and wider coverage. The company’s successfully innovated products such as iPod, iPhone, and iPad has captured the market especially due to the unique features that are not found in most of the competitors’ gadgets. In addition, the Mac operating system gives the company an opportunity to compete with major software companies such as Microsoft. In addition, the company has a team of competent and innovative employee who are constantly involved in bringing change through innovative ideas. Most of Apple’s management team members have a positive reputation in terms of education background and work experience.

Mutually exclusive alternatives that solve the problem

The first recommendation that could help Apple get on track is reimbursing on the initial culture of product differentiation. As Steve Jobs stated, differentiation makes innovators think differently and develop the ability to be different from the competitors. Differentiation could help Apple to reestablish the market share that has not been discovered by the competitors through innovating products that have not been developed elsewhere. The second opinion would be t adopt the pricing strategy whereby the company prices their products in a relatively lower prices than that of the competitors’ substitute products. Coupled with successful marketing campaign, price wars will enable the company to increase sales of their products and increase the current market share.

Justification for the best alternative

Although the two alternatives could result to increased sale and a wider market share, the idea of reintroducing the initial organization culture of product differentiation is the best alternative that could help the company solve the existing challenge. This culture had worked during Job’s reign and brought success in the company as the culture of ‘thinking differently’ had enhanced innovation of unique products that made the company increase the sales as well as increase the prices of the company shares in the stock exchange. Adopting the pricing wars could result to the company losing its initial focus of innovation as well as result to major a challenge of losses as low prices does not correspond to the quality of the products in addition to the fact that competitors could also lower their prices even further, thus frustrating the company.