The Cutting Edge: Apple

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Apple has become the most successful company in the world (Elgan). In May 2016, Apple’s market capitalization was $586 billion (Schaefer and Murphy). As a computer hardware manufacturer, it appears as number 8 on the Forbes’ World’s Biggest Public Companies list. The next hardware manufacturer to even come close to Apple’s standing is Hewlett Packard Enterprise, which is listed as number 166. Microsoft, Apple’s long standing fierce competitor is listed at number 23. So how did Apple advance to this preeminent position on the world stage? On Tuesday, February 10, 2015, Apple became the first company in the United States to be valued at more than $700 billion (Krantz). It was, at that time, almost twice as much as its nearest American competitor for the top spot, Exxon Mobil, which was $385.4 billion, during that period. When analyzed from the perspective of most valuable brand in the world, though, Apple is number 1 (Elgan), with the likes of Google, Microsoft, Coca-Cola and Facebook trailing close behind ("The World's Most Valuable”).

Co-Founders: Steve Jobs and Steven Wozniak

Steve Jobs co-founded Apple along with Steve Wozniak in 1976 when he was just 21 years old (“Steve Jobs”). He had dropped out of college and continued on a path, trying to find his way, until he and his older friend, who he had met while in high school, with whom he shared a love of electronics, decided to establish their own business. Apple Computer was started in the Jobs family garage, an amazing compliment to the idea of starting businesses at home. Wozniak invested in the company by selling his cherished scientific calculator, while Jobs sold his Volkswagen bus. Initially, Wozniak created the products and Jobs was responsible for the marketing. Their vision focused on making computers accessible to everyone, by making them affordable, smaller and intuitive. The company grew quickly after its first year, and by 1980, the organization went public, with a market value of $1.2 billion on the close of the bell on the first day. Jobs then hired John Sculley, former Pepsi Cola marketing guru, to become the company CEO. It is probably one of the biggest life decisions he later came to regret (“Steve Jobs”).

The company suffered some design glitches and found that IBM finally exceeded them in sales (“Steve Jobs”). IBM dominated Apple in the business environment. Initially, Steve and Sculley were on the same page regarding marketing strategy. However, in 1984, when Apple Macintosh sales suffered after its release, Sculley and Jobs relationship changed for the worse, as they continued to interact in conflict (“John Sculley”). Sculley felt that Jobs was bad for the company and with the backing of the board of directors marginalized Jobs’ role. Jobs made his exit from Apple in 1985, as did Steve Wozniak. Under Sculley’s direction, Apple flourished for the next several years. Sculley was credited with increasing annual sales from $800 million to $8 billion over the course of his ten year term. Despite the company’s success, several missteps brought about Sculley’s downfall. In 1993, he was removed from his role as CEO, resigning a few months later (“John Sculley”).

Apple finally came to its senses, purchasing NeXT, Steve Jobs latest creative business venture in 1996 (“Steve Jobs”). Jobs became CEO of Apple once again, in 1997. He was credited with revitalizing Apple, bringing the company back to the attention and appreciation of consumers worldwide. Most of Apple’s most successful and enduring products were created during his second reign. The iPod series was launched in 2001 (Edwards). The iPod was followed up by the iconic iPhone in 2007 (Price). iTunes evolved in 2008 and is the second largest digital retailer, eclipsed only by Walmart. In 2010, Apple launched the iPad, another technology hero.

Tim Cook, the former chief operating officer, took over the role of CEO in 2011 when Steve Jobs died of pancreatic cancer (“Tim Cook”). As the COO, Cook was responsible for worldwide sales and operations, the Macintosh division and supply chain strategy. When Cook started in 1998, things were looking quite bleak for the organization fiscally, within less than a year of his onboarding, the company began turning profits again.  

Balanced Scorecard: How Apple Delivers its Vision to its Employees

The balanced scorecard is a system used by companies to aid in strategic planning and management to translate the organization’s vision and strategies into business activities that employees can grasp and implement ("Balanced Scorecard Basics"). Once Apple began the process of utilizing the balanced scorecard, the company transformed from a computer manufacturer into a world-class creator of personal technology devices its aficionados can simply not do without. First, the company decided to focus on five performance indicators, instead of their former focal points of gross margin, return on equity, and market share (Wahyuningsih). The areas that Apple decided to concentrate on included shareholder value, core competencies, customer satisfaction, market share and employee commitment and alignment. This was a major shift for the company, and the consequences were major, as well. In the area of shareholder value, Apple infuses this performance indicator in all their key business areas, like product design, manufacturing, operations and sales. Each business unit is assessed and appraised against this criteria, including potential business ventures. The ultimate goal of implementing this particular performance indicator is ensuring the growth of the company over time. Core competencies is another performance indicator Apple evaluates (Wahyuningsih). Although appraisal of unique solutions offered to develop employee core competencies is viewed as difficult, the organization will employ quantitative measurements to see if their actions are having the impact that they are seeking. Customer satisfaction is a new target for Apple. They transitioned from focusing on their products to focusing on their customers’ wishes. Modifying a slogan from Ford Motor Company - the customer is job one. The company decided to create customer surveys that tap the pulse of their customers in the precise manner that makes a difference in the company’s success. Market share is another area of focus for Apple. As the organizations’ market share grows profits increase and software developer influence expands. The balanced scorecard helps the company focus on the components that aid the organization to accomplish its goals. Employee commitment and alignment is another key performance indicator for the company. Apple structures thorough surveys of its employees every twenty four months, in addition to random surveys within this time frame. The objective is to ensure that employees understands the overall strategy of the company and how they as individuals contribute to that strategy everyday (Wahyuningsih). The balanced scorecard ensures that Apple is on top of their five pillars of performance, so that the company can achieve its overall goals.

A Major Supply Chain Shift

In 2011, Cook changed the supply chain dynamic which had been in existence for years (Dou). Foxconn Technology Group, the world’s biggest electronic contract manufacturer, has always been the company responsible for the manufacture of Apple’s devices (Rapoza). In 2011, however, Apple shifted its exclusive loyalty to Foxconn toward a much smaller company, Pegatron Corp. (Dou). The upstart now assembles lower cost iPhones and iPad minis. There are a number of reasons Apple has made the shift. Risk diversification was one major reason. In addition, Apple is increasing its product lines in the face of severe competition from Samsung and other companies. Cost reduction is another motivating factor that has inspired the shift, since Foxconn has had to increase its prices, due to highly publicized worker suicides and company accidents, which have required them to change their business practices, thus increasing costs. Suicides at the Foxconn factory were at their highest in 2010, with 18 attempted suicides and 14 actual deaths (Heffernan). In 2011, four employees fell to their deaths; 2012, the number decreased to one; and in 2013, there were three suicides. Foxconn is not the only company subject to accidents though, in 2011, Pegatron had a factory explosion (Dou). Yet the smaller company has not come under as much scrutiny as its rival. In addition, Foxconn has been getting a little sloppy in how it has been handling certain requirements demanded by Apple, like when it changes its component sources (Dou). Apple has high standards and demanding requirements for its supply chain partners ("Apple Supplier Code of Conduct").

Why is Apple More Successful than any Other Company?

Aside from being designated the most valuable brand in the world ("The World's Most Valuable Brands"), Apple makes more money than other companies, too (Elgan). With disclosed revenue of $74.6 billion and profits of $18 billion in one quarter alone, the company has reported the highest quarterly earning ever. The product most responsible for their status is the iPhone. Many smart phone companies have lost money, others have barely broken even, and profits are marginal, Apple earned 93 percent of profits in its fourth quarter in 2014. Unlike most companies, one of Apple’s big problems is that it does not spend enough money. Reports indicate that Apple had a cash store of $178 billion, enough to buy all the car companies in the U. S. with billions of dollars left to spare. The company keeps this bloat in Ireland. If Apple were to give the money to investors, or actually invest the money in some way, the company would be responsible for paying an inordinate amount of taxes, an anathema to the company. In its war with rivals, Apple has won all except its earlier war with Microsoft. The organization has successfully beat out IBM, Google and Samsung, and has recently trumped Microsoft, since it is valued much higher than Google and Microsoft combined. In the Apple v Samsung war, the scorecard is “Apple 93 [and] Samsung 9” (Elgan) in terms of smart phone percentage of profits.

Apple is also building an amazing 100% solar powered second campus for its headquarters (Elgan). Dubbed the spaceship, the building looks like a big round doughnut. All of the glass is curved. The facility will also contain an underground theatre, where Apple will now be able to host its product launches, without tipping off the world in advance, when it rents out the Moscone Center in San Francisco (Elgan).

An amazing gift the company is giving to its customers is called Activation Lock (Elgan). The feature gives iPhone owners the ability to find their iPhone if it is lost by looking on a map that identifies the smart phone’s location, to lock their phone if the owner thinks there is a problem and to totally wipe their phone clean, in the event the phone is lost or stolen. “A new version supplied with Apple's iOS 7 operating system includes an activation lock, which keeps the phone from being unlocked, wiped or erased by a third party without the input of a passcode” (Williams). It is reported that iPhone thefts are down by forty percent in San Francisco, twenty five percent in New York and fifty percent in London. Thus, Apple technology is reducing smart phone crime, a social problem of the times, by way of the very problem technology itself. Kind of amazing! Apple’s dominance in the industry is, at least in part, due to the number of app it offers its customers. Apple and Google reign supreme in attracting app developers to make their products more valuable by offering a substantial depth of supplementary app options. In addition, Apple is making its apps easier to find and buy through the creation of App Pins on Pinterest, which allow app retailers to sell their apps directly from their Pinterest boards (Elgan). 

Apple is an amazing company that focuses on the needs and wants of its customers. As long as the company continues to do that, Apple will remain the darling in the industry and in the world.

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