The Transformation of Apple's Business Model

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Case Details:

Case Code : BSTR212
Case Length : 21 Pages
Pages Period : 1996-2006
Organization : Voltas Ltd
Pub Date : 2006
Teaching Note :Not Available
Countries : India
Industry : Diversified

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Apple - Changing Leadership

Immediately after Jobs left, Sculley started working on reducing overheads, controlling costs and rationalizing product lines in Apple. Sculley planned to use Apple's capabilities in graphics and design to make the company a leader in desktop publishing. Apple's revenues increased to US$ 5.6 billion by 1990 and its worldwide market share reached 8%.

Due to superior capabilities of subsequent products like Macintosh Plus (launched in 1986), Macintosh II (launched in 1987), Macintosh SE 30 (launched in 1989) Apple could charge premium prices. Due to the Mac's superior capabilities, premium prices could be charged for it. The problem was that with IBM slashing prices aggressively, Apple's products appeared overpriced. Apple did not want to reduce prices as it firmly believed that its products were of high quality. However, by October 1990, Apple came out with Mac Classic, a computer priced at US$ 999. In 1989, Apple introduced a portable Mac, which was not well received in the market, and in 1991 it came up with better version of the same in association with Sony...

Jobs Becomes CEO

The Board of Directors of Apple replaced Amelio with Jobs, who assumed the role of interim CEO in September 1997. At this juncture, Yoffie commented, 'There were no hit products, and it became a dull company. They were just doing the same thing, making incremental improvements.

Now everybody is waiting with bated breath for what Steve Jobs is going to do next, and the hope is, it's going to be something great, insanely great. And sometimes it is, and sometimes it's not." After returning to Apple, Jobs formed a core group of seven executives, five of whom were from NeXT.

To revamp the board, Jobs brought in Larry Ellison, the CEO of Oracle, Bill Campbell, CEO of Intuit and Jerry York, the former CFO of IBM. Only two of the directors under Amelio's leadership were on the board.

At that time, Apple had more than 15 product lines and was losing focus on its core businesses...

Excerpts Contd... >>


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