Assignment: Enterprise and Entrepreneurial Management

SID: 0919213/1

Table of Contents

Executive summary....................................................................................................................................... 1
Company description.............................................................................................................................................. 1

Development process................................................................................................................................... 2
Idea generation........................................................................................................................................................ 2
Technology and product development............................................................................................................. 2
Technology commercialisation........................................................................................................................... 2

Environmental factors.................................................................................................................................. 3
PEST analysis:........................................................................................................................................................... 3
SWOT analysis:......................................................................................................................................................... 4
Strengths and Weaknesses................................................................................................................................................... 4
Opportunities and Threats.................................................................................................................................................... 5

Leadership and management..................................................................................................................... 6

Conclusions and recommendations......................................................................................................... 7

Reference.......................................................................................................................................................... 8

1
Assignment: Enterprise and Entrepreneurial Management
SID: 0919213/1

Executive summary

This report was commissioned to analyze the key factors relating to the success of an
Entrepreneurial Venture or a company of choice, in this case this report will be focused on
Apple Inc. This research draws attention to the importance of good leadership as one of the
main reasons for the big success of this company, as it has become one of the most
important in Information Technology and consumer electronics. Through this report, the
important stages involved in the company’s development process are going to be discussed
as well as the impact that the external business environment has had during the process.
Also, the influence of the individuals regarding decision-making and management is going to
be analyzed and criticized.

Development process
This development process will be focused on Apple’s early years, since the creation of their
first personal computer, until its commercialisation.

Idea generation

The birth of the Personal Computer

Even though computers existed a long time before than Apple, at the time these
computers were large mainframes that usually were stored in huge computer rooms,
the giant IBM manufactured these computers. The idea of personal computing starts
in the 1970s claimed that mere mortals, not just large corporations or institutions,
should be able to use computers. In 1974 when a Mountain-View based Intel
developed the world’s first microprocessor, the 8080, such a piece of technology
created a great interest among all sorts of hobbyists. These pieces of engineering
were not able to do much until Microsoft came up with the first BASIC interpreted for
Intel’s processor.
Assignment: Enterprise and Entrepreneurial Management
SID: 0919213/1

Bearing in mind the concept of personal computer, Wozniak, an electronics hacker and with
his old friend Steve Jobs decided to work on that direction. Jobs pursued the goal of that
personal computer should do real work; one computer that anyone could use without having
to undergo any master’s degree in command line programming. Apple’s history starts in
Steve Wozniack’s parents garage, likewise many other high tech companies in the USA.

Technology and product development

This first prototype was called the Apple I and entirely hand built by Steve Wozniak (Evans,
2006), once it was created, funds needed to be raised in order to go further in technology
research as well as product development (Moissecot, 2010). The main source of funding
came from Apple’s first steps in business in 1976, when Jobs spotted a local electronics store
and asked the owner whether he would be interested in buying the prototype they built, which
was indeed interested and ordered 50 units (Moissecot, 2010). In order to build the next
computers, they bought the needed parts to a local computer store with the cash made from
their first order, this is how Apple began.

Technology commercialisation

First Apple external funds came in 1977 from the ventured capitalist Mike Markkula
(Moissecot, 2010), which was a former executive at Intel. The next Apple’s target was to
launch Apple II and both funds and guidance provided by Markkula, were essential for the
future of the company.

The Apple II became one of the most popular computers in history and one of the firsts with a
color display. It also was probably the first user-friendly system as it was ready to run right
out of the box. However, what really made Apple II sales take-off, was the new spreadsheet
program VisiCalc, meaning that this computer could also be used by companies in order to
Assignment: Enterprise and Entrepreneurial Management
SID: 0919213/1

help accountants to get work done in several minutes, where previously they had to spend
several hours or even days.

Nowadays Apple Inc, or formerly Apple Computer Inc., is an American multinational

corporation focused on designing and manufacturing consumer electronics, personal
computers, server solutions as well as closely related software products. Also the company
operates an online media store that handles up to the 70% of worldwide online music sells
(Reuters, 2007). The company runs about 200 retail stores known as “Apple Stores” based in
5 countries and an online store where software and hardware products can be purchased,
this website can be found at www.apple.com.

Marketing target

The main characteristics of the people who Apple is currently marketing are the following:

 People who considered as the premium end customers and thus with middle-upper
incomes. This subset of the market is willing to pay an extra cost in exchange of a
better user experience.
 Technology fans as they will use the platform in order to interact with many other
devices such as digital cameras, iPod, iPhone, etc.
 Apple also has a niche market in music enthusiasts and fan boys.
 Lastly, there is another niche market in professionals in design, animation and media
in general.

These marketing targets are likely to be increasing as the Internet and Technology is
becoming more familiar in our homes also the society is turning into computer savvy and
more dependant on technology and the Internet in particular (Omnibus Survey, 2010).
Assignment: Enterprise and Entrepreneurial Management
SID: 0919213/1

Households with access to the Internet, UK. Source: statistics.gov.uk (Omnibus Survey, 2010)

Environmental factors
The impact of the current environmental factors will assessed through the following PEST
and SWOT analysis.

PEST analysis:
A Political, Economical, Socio-cultural and Technological analysis (PEST) will be performed
in order to state the importance of Apple’s environment before beginning its market process.
These macro-environment factors such as Political (and legal) forces, economic forces,
cultural forces and technological forces are known as PEST factors.

Political factors

 Free trade agreements offer the possibility to expand the company globally.
Assignment: Enterprise and Entrepreneurial Management
SID: 0919213/1

 The countries where Apple operates can have different legislation that may affect or
benefit the company. Apple should be aware of this factor for future expansions.
 Apple has to comply with every country environmental policy regarding components
material and recycling.
 Although Patent infringement is an issue that Apple might face as their software relies
on third-party companies (Cheng, 2009), the company needs to be aware that other
companies also might have been violating its patents, incurring lawsuits.

Economical factors

 Recession and financial crisis, has affected the industry slowing the global economy
and having an impact on the consumer electronics industry. However, the latest signs
of improvement will favor this trend to change positively.
 Apple’s pricing makes difficult its diffusion into the educational system of many
countries due to the budget cuts that these institutions are facing caused by the poor
economic conditions. However, the company is making an effort in offering
advantages for students, professors and institutions (Apple Inc, 2010).

Sociological and Cultural factors

 Apple’s needs to be adapted to other cultures such as the Chinese market which has
less than 1% in personal computer shipments (Chao, et.al, 2009). The vast differences
between societies and the disparity of income per capita are major hurdles to
overcome.
 Although the society has become more dependent on the Internet and computers, it
has also become computer literate and this trend is likely to be reinforced in the future.
This also means more opportunities for Apple because of the expansion of the market
for the coming years.
Assignment: Enterprise and Entrepreneurial Management
SID: 0919213/1

Technological Forces

 As has been mentioned, the society appreciates the technology and all the changes
for its improvement. Apple is a model of excellence in innovation and many people
around the world follow their product launches.
 The creation of new products with the purpose of filling the gaps in the market help the
company to create new trends and find new market niches, also creates a new
necessity which needs to be fulfilled by this market. A good example of one of this new
category of products is the Apple iPad (Apple Inc. 2010), a breakthrough Internet and
digital media device, which’s aim, is to fill the gap left behind by the laptop and the
Smartphone.
 The Internet has become more available and its usage is growing day by day in many
countries, this means better deals and opportunities for the industry. As an example,
the item before mentioned Apple’s iPad can become the replacement for the
traditional newspaper, this situation may lead to new deals with publishers as well as
with the eBook publishing industry (Li, 2010).

SWOT analysis:
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. This tool is very
important because it is widely used to highlight where a company or organization is and also
it shows where it could be in the future. Examines internal factors, strengths and weaknesses
of a company, and external factors, opportunities and threats that the company is facing. The
process can give the picture of Apple’s business situation and operating environment,
becoming a powerful strategic tool. This SWOT will give a clear picture of the business
environment Apple is operating in at the present time. The analysis is detailed next:

Strengths

 Ease of use
 Good position in the personal computer market
Assignment: Enterprise and Entrepreneurial Management
SID: 0919213/1

 Increasingly market share – Due to the ease of use and new products, Apple market
share is growing every month. (Hughes, 2010)

Preliminary U.S. PC Vendor Unit Shipment Estimates for 1Q10 (Thousands of Units) | Source: Gartner (Hughes, 2010)

 Unique product design (Edible, 2010)

 Technical savvy products - Stable and controlled platform as they control the operative
system running on their hardware
 Leader in innovation
 Great reputation in the I.T industry
 Strong customer loyalty – The main reason that Apple is able to maintain its strength
in the market is due to their loyal customers, almost fanatical: Apple Fan boy/girl
culture.
 Strategic alliances (Apple Inc, 2004)
 Steve Jobs – Apple’s CEO is one of the most important assets of the company and his
influence has been key to its success (Taylor, 2009)
 Great communication strategy – “Get a Mac” ad campaign.

Weaknesses

 High prices
 Market share – Although its market share in the personal computer market is growing,
its cost makes difficult to access in markets where budgets are tight.
Assignment: Enterprise and Entrepreneurial Management
SID: 0919213/1

 The ease of use consequence is that some users refer to Apple products as a mere
toy.
 Too many markets may lead to distribution and managing issues.
 Absence of economic line of products like laptops and desktops.

Apple has been working towards the optimization of the value, rarity, inimitability and
organization (VRIO) of their business activity as a competitive advantage against their rivals.

Opportunities

 Growing industry – The society is becoming more technologically dependant, more

areas need to be explored following the same philosophy that make Apple products
unique.
 Server market – Apple is just offering one product designed to provide service to
clients (Hughes, 2006) In an increasingly I.T dependent industry, the server market is
an area that needs to be exploited by Apple as its share in the market is still small
compared to its competitors.
 ITunes with Digital Rights Management (DRM) free, as the effort of controlling digital
information such as music, videos, movies, etc., has been proven as a failure.
(Doctorow, 2007).

Threats

 The competition in this industry is very intense; Competitors like Microsoft are using
aggressive ad campaigns to maintain their share on the market. (Protalinsky, 2009)
 Due to the global economic situation, high-priced items are less likely to be purchased.
 Budget cuts in education are an important factor to be faced by Apple regarding this
sector.
Assignment: Enterprise and Entrepreneurial Management
SID: 0919213/1

Leadership and management

One of the main factors that has lead Apple to its success in the consumer electronics
industry is undoubtedly its current CEO, Steve Jobs. He co-founded Apple in 1976 and
played a key role in the development of the personal computer industry. After leaving the
company due to the loose of power within the board directors (Vivek, 2009), he co-founded
NeXT Software, inc. where he was CEO until 1997, afterwards, NeXT was acquired by Apple
and thus meant the return of Jobs to Apple where has been CEO since 1997. Also he
acquired Pixar Animation Studios on 1986 where he was CEO until 2006 (Pixar, 2009); date
since he became a member of the board of The Walt Disney Company, following the
acquisition of Pixar by Disney. Likewise, he also has been very influential towards the
success of this company.

Apart form his success in business; Steve Jobs is also well known for his particular
management style. Jobs claims that Apple employs up to 25,000 people and about 10,0000
are employed the Apple Stores (Jobs, 2008), among the remaining 15,000 employees
working in Apple's headquarters in Cupertino, he has selected the top 100 to work on a daily
basis. Jobs takes advantage of their knowledge and expertise to discus, explore and
brainstorm new ideas or possible products in order to spot the next Apple’s breakthrough.
Nevertheless, Job’s management style is known as micromanaging meaning he relies on
permanent observation and control of his subordinates. Therefore, every product developed
by Apple has been approved by Jobs’ specific standards before going to the market. (Stona,
2009).

However Jobs’ approach to business and leadership has been referred as controversial,
writer Leander Kahney states "Jobs' fabled attitude toward parking reflects his approach to
business: For him, the regular rules do not apply." (Kahney, 2009), referring to Mr. Jobs
parking habits regarding the use of the handicapped parking spaces when the parking lot at
Cupertino’s headquarters is full. Some of the implications of Jobs’ approach concerning the
company’s leads to unnatural situations, for example, the high level of secrecy for every
Assignment: Enterprise and Entrepreneurial Management
SID: 0919213/1

single development stage of a product, means that Apple employees are usually as surprised
about new product launches as everybody else; besides, Apple’s employees have to pass
through a labyrinth of metal detector, typing security codes again and again to get to their
own offices, where video surveillance cameras permanently monitor them.

Conclusions and recommendations

This section aims to analyse the importance of the reasoning and decision-making of the key
people in Apple towards its success through the history of Apple. However, some
controversial decisions regarding their products and policies will also be mentioned.

Job’s ability to find talent its remarkable, Apple does not rely on any recruiting agency,
however, the company perform the hiring process in house which requires a vast amount of
time. Steve Jobs himself has participated in the hiring of more than 5,000 people, although
this is another sign of micromanagement, Job’s utilizes his natural capacity to find talent
relying on the feeling perceived from the interviewee, as he mentions, that no one can get to
know someone in one-hour interview (Jobs, 2008). He tries to find out whether a person is
really interested in working for the company asking questions like: “Why are you here?” From
the interviewee answers, he evaluates whether an specific candidate meets what the
company is really looking for.

As previously mentioned in the SWOT analysis, one of Apple’s strengths is their exceptional
communication strategy. Their ad campaign known as “Get a Mac” is one of the most
successful advertisement campaigns. Apple CEO Steve Jobs, introduced the campaign to
the company shareholders, just a week before the campaign started. This set of adverts
show a smart dressed, serious, middle-aged man impersonating a PC and a more laid-back
young man dressed in casual clothes. This campaign is clear and minimalist and tries to fight
Microsoft products, specially its operating system Windows, using irony and ridicule. It has
been proven that this kind of campaign are very effective as a marketing strategy and it
helped to raise awareness about Mac computers being a better alternative to a PC also it
Assignment: Enterprise and Entrepreneurial Management
SID: 0919213/1

aided to rebrand Mac computers. Furthermore, Apple has gained enormous ground in the
desktop market; Microsoft Windows Vista was one of the main reasons due to its flaws and
Leopard refined operative system occasioned the switching for many long-term Windows
users to Mac. Another factor that depicts this campaign is that Apple products may seem to
be overpriced compared to their PC counterparts; however, this strategy helps to underline
the sentiment that the customer will get what he is paying for.

Another decision worth to be mentioned is the introduction of the VisiCalc spreadsheet

software built-in the Apple II computer. It involved its acceptance and spread in many
companies as their computer was rapidly identified as a powerful accounting tool. This
decision caused a great impact on technology industry as well as on every day life, more
than 50.000 were sold in 2.5 years.

Some controversial decisions made by Steve Jobs, can also be taken into account. These
decisions are regarding Apple’s persistence on non-conforming to basic standards like HDMI,
slow adoption of Blu-Ray. Furthermore, one of most arguable is regarding batteries
replacement, as the end user, is unable to replace the batteries of most of Apple’s products,
this situation has created annoyance and irritation on its users. However, the intention
regarding this decision appears to be the creation of another source of cash as battery
replacement needs to be done by one of the technicians of any Apple Store.

Additionally this research would suggest that due to the vast amount of resources and effort
put into last company products, Apple might experience a lack of attention to quality control.
The recent product launches such as the iPhone and the iPad caused that Apple desktop line
is no longer their core business, leading the change of focus towards consumer devices at
the expense of their computers. As an example, last operative system update, Mac OS X
Snow Leopard, has come with several improvements and refinements along with major
architectural enhancements; however, these features are not something many of the Mac
users can take advantage of, as many applications are still un-optimized for it.
Assignment: Enterprise and Entrepreneurial Management
SID: 0919213/1

Reference
 Apple Inc., 2004. HP and Apple Partner to Deliver Digital Music Player and iTunes to HP
Customers [Online] Available at: http://www.apple.com/pr/library/2004/jan/08hp.html
[Accessed 11 April 2010].
 Apple Inc, 2006, Apple Press Info Bios — Steve Jobs [Online]
http://www.apple.com/pr/bios/jobs.html. [Accessed 21 April 2010]
 Apple Inc, 2010, Apple education pricing [Online] http://www.apple.com/education/how-to-
buy/ [Accessed 13 April 2010]
 Apple Inc, 2010, Apple iPad [Online] http://www.apple.com/ipad/ [Accessed 18 April 2010]
 Armstrong, Michael, 2008. How to manage people. 1st ed. London: Kogan Page, Limited
 Chao, Loretta., Ye, Juliet and Iwatani, Yukari, 2009, Apple, Facing Competition, Readies
iPhone for Launch in Giant China Market [Online]
http://online.wsj.com/article/SB125129375627560585.html [Accessed 17 April 2010]
 Cheng, Jacqui, 2009, Apple found guilty of willful patent infringement [Online] Available at:
http://arstechnica.com/apple/news/2009/04/apple-found-guilty-of-willful-patent-
infringement.ars [Accessed 13 April 2010]
 Doctorow, Corey, 2004, Digital Rights Management: A failure in the developed world, a
danger to the developing world [Online] Available at: http://www.eff.org/wp/digital-rights-
management-failure-developed-world-danger-developing-world [Accessed 12 April 2010]
 Edible Apple, 2010. Apple’s success is rooted in their attention to detail [Online] Available
at: http://www.edibleapple.com/apples-success-is-rooted-in-their-attention-to-detail/
[Accessed 10 April 2010].
 Evans, Eddie, 2006, Co-founder tells his side of Apple story [Online]
http://www.ioltechnology.co.za/article_page.php?iSectionId=2892&iArticleId=3456594
[Accessed 25 April 2010]
 Hughes, Neil, 2010. Apple sells estimated 1.4M Macs in US to capture 8% market share
[Online] Available at:
http://www.appleinsider.com/articles/10/04/14/apple_sells_estimated_1_4m_macs_in_us_
to_capture_8_market_share.html [Accessed 11 April 2010].
Assignment: Enterprise and Entrepreneurial Management
SID: 0919213/1

 Jobs, Steve, 2008, Steve Jobs speaks out [Online]

http://money.cnn.com/galleries/2008/fortune/0803/gallery.jobsqna.fortune/7.html
[Accessed 2 April 2010]
 Kahney, Leander, 2008, How Apple Got Everything Right By Doing Everything Wrong
[Online] http://www.wired.com/techbiz/it/magazine/16-04/bz_apple?
currentPage=all#ixzz0nEtfF3UH [Accessed 23 April 2010]
 Li, Kenneth, 2010, Publishers warn of hurdles to iPad deal [Online]
http://www.ft.com/cms/s/0/deee2a90-1a9a-11df-bef7-00144feab49a.html [Accessed 19
April 2010]
 Moissecot, Roman, 2010, Steve Jobs Bio, [Online]
http://www.allaboutstevejobs.com/bio/bio.html [Accessed 26 April 2010]
 National Statistics Omnibus Survey, 2010, 70% of households had access in 2009
[Online] http://www.statistics.gov.uk/cci/nugget.asp?id=8 [Accessed 15 April 2010]
 Pixar, 2009, Pixar History [Online] http://www.pixar.com/companyinfo/history/1986.html
[Accessed 26 April 2010]
 Protalinsky, Emil, 2009. I'm a PC and Windows 7 was my idea [Online] Available at:
http://arstechnica.com/microsoft/news/2009/10/im-a-pc-and-windows-7-was-my-idea.ars
[Accessed 12 April 2010]
 Reuters Billboard, 2007, Digital developments could be tipping point for MP3 [Online]
http://www.reuters.com/article/idUSN0132743320071203 [Accessed 24 April 2010]
 Scott Shane, Edwin A. Locke, Christopher J. Collins, 2003, Entrepreneurial motivation
[Online] http://faculty.utep.edu/Portals/167/52%20Entrepreneurial%20Motivation.pdf
[Accessed 16 April 2010]
 Stona, Brad, 2009, Apple’s Obsession With Secrecy Grows Stronger [Online]
http://www.nytimes.com/2009/06/23/technology/23apple.html [Accessed 22 April 2010]
 Taylor, William, 2009, Decoding Steve Jobs: Trust the Art, Not the Artist [Online]
http://blogs.hbr.org/taylor/2009/06/decoding_steve_jobs_trust_the.html [Accessed 22 April
2010]
Assignment: Enterprise and Entrepreneurial Management
SID: 0919213/1

 Vertygo Team, 2008, Apple Communication Strategy [Online]

http://www.vertygoteam.com/apple/apple_communication.php [Accessed 26 April 2010]
 Vivek, Kaul, 2009, What Steve Jobs did when he was fired from Apple [Online]
http://www.dnaindia.com/money/report_what-steve-jobs-did-when-he-was-fired-from-
apple_1254757. [Accessed 20 April 2010]