1. 1 (c) Copyright 2011 Mortensen Consulting Group LLC Session #5 Strategic Management Dr. Mark H. Mortensen Session 211 and 212 M-W PA 407

2. Mortensen Consulting Group LLC 2 You Will be Prepared for Today Iff You: Have read Chapter 3 Have read the Apple case study

3. Mortensen Consulting Group LLC 3 Key Points from Last Session Chapter 2  Board of Directors – purpose & responsibilities  SOX effect on operations  Current trends in corporate governance  Importance of Executive Leadership, even in a “learning organization.” Case Study Methodology  Purpose of a Case Study  Outline of a Case Study  Procedure for Doing a Case Study

4. Mortensen Consulting Group LLC 4 Chapter 3 Lecture & Discussion

5. Mortensen Consulting Group LLC 5 Apple Case Study

6. Mortensen Consulting Group LLC 6 Apple Case Study: Outline Case Study Background – The nature of competitive advantages over time in highly competitive, innovative industries. What should Apple do?  Define the Central Issues  Define the firm’s goals  Identify the constraints  Identify the alternatives  Select the best alternative  Develop an implementation plan

7. Mortensen Consulting Group LLC 7 Apple: Case Study Background(1): Apple History Competitive advantages in the 1980s made Apple the most profitable PC company in the world (What were they?) But “on a glide path to history” (What? Why?) Four successive CEOs (Sculley, Spindler, Amelio and Jobs) sought to reposition Apple in the PC Industry and to create a sustainable competitive advantage. (What did they try? What succeeded? What did they decide not to do?)

8. Mortensen Consulting Group LLC 8 Competitive advantages in the 1980s that made Apple the most profitable PC company in the world Ease of use Dominance in creative industries (design, desktop publishing), as well as education Buyer loyalty Proprietary operating system Strong branding Excellent industrial design

9. Mortensen Consulting Group LLC 9 Why was Apple “on a glide path to history” Low market share, increasing competition and change in the market to a commodities point of view for PCs put Apple’s differentiation strategy at risk.

10. Mortensen Consulting Group LLC 10 CEOs’ Strategies Sculley – low-cost producer; “hit products” every 6-12 months; Mac Classic vs. IBM clones; Powerbook laptop; Newton PDA; Taligent with IBM for new OS; PowerPC chips from IBM Spindler (1993-1996) – reinvigorate core markets; killed Intel chip; licensed Mac OS to clone makers; killed Taligent; layoffs Amelio (1996-1997) – servers & other high-margin devices; cancelled nextgen Mac OS; ended licensing program; bought NeXT (Jobs) Jobs – iMac; outsourced manufacturing; direct sales via website; image; industrial design

11. Mortensen Consulting Group LLC 11 Apple: Case Study Background(2): The Mac Business in the 21 st Century Technology & Innovation  Cutting edge experience  High-end  Differentiated from Wintel machines  Intel Chipset  Overhauled Mac OS X in 2001 (UNIX)  Proprietary Apple-developed applications Distribution & Sales  Retail stores

12. Mortensen Consulting Group LLC 12 Apple: Case Study Background(3): The Evolving PC Industry The dynamics of the PC industry have radically changed in the last 20 years. Buyers Rivalry among suppliers Barriers to entry Complements to the PC industry Supplier vs. Manufacturers balance of power Substitutes

13. Mortensen Consulting Group LLC 13 Apple: Case Study Background(4): Apple Beyond Macintosh iPod iTunes Apple TV iPhone iPad

14. Mortensen Consulting Group LLC 14 Questions for next week – think about these and we will discuss Has Steve Jobs finally solved Apple’s long-standing problems a. With respect to the Macintosh business? b. With respect to its broader strategic position?  Going forward, what should Steve Jobs do?

15. Mortensen Consulting Group LLC 15 Apple’s Long-Standing Problems

16. Mortensen Consulting Group LLC 16 Apple SWOT(s)

17. Mortensen Consulting Group LLC 17 Apple’s Goals

18. Mortensen Consulting Group LLC 18 Apple’s Constraints

19. Mortensen Consulting Group LLC 19 Apple’s Alternatives

20. Mortensen Consulting Group LLC 20 Apple’s Best Alternatives

21. Mortensen Consulting Group LLC 21 Apple’s Implementation Plan

22. Mortensen Consulting Group LLC 22 Reminder for Next Class Nothing due. We will continue our discussion of business ethics and have a review session for the upcoming quiz.