Apple Inc. in 2015

BUS 605
Questions for Case Analysis Assignment – Apple Inc. in 2015
Directions
Read the Apple Inc. in 2015 case carefully before answering the questions below. Also read each question carefully in order to understand exactly what you are being asked to do. Remember that the purpose of a case assignment is to help me assess whether you have understood and can apply the concepts and techniques covered in this course. Make sure that your answers are based on the application of appropriate theoretical concepts and techniques discussed in class rather than on a gut-feeling that you might have. I expect you to justify your answers through the use of appropriate concepts and techniques. This indicates that you are becoming proficient in the strategic leadership skills covered in this course.Note: The questions below should be answered based solely on the information provided in the Apple Inc. in 2015 case. Do not use information from other sources such as the internet, business magazines, or analyst reports.

Case Questions
1.    Perform an industry analysis of the smart-phone industry. Do you believe Apple was effective in neutralizing the threats and capitalizing on the opportunities posed by the forces in the smart-phone industry? If yes, explain how. If not, explain why not.

2.    What kind of competitive advantage and business strategy did Apple pursue for its iPhone business? What value chain activities were used to achieve this competitive advantage? Was it tailored to deliver the competitive advantage that Apple sought?

3.    Do you believe Apple’s business strategy for the iPhone was effective? Explain why or why not. Does the iPhone have a sustainable competitive advantage?

Apple Inc. 1n 2015

On March 9, 2015, Apple’s CEO, Tim Cook, announced the Apple Watch, his first major strategic
initiative following the tragic death of Steve Jobs, his mentor and predecessor. Jobs, of course was a
legend: he had changed Apple from a company on the verge of bankruptcy to one of the largest and
most profitable companies in the world. Four years later, Cook was trying to demonstrate that he
could not only sustain Apple’s achievements in computers, MP3 players, phones, and tablets, but he
could also take Apple to the next level.

By almost any measure, Apple’s performance in the prior decade had been stellar. As 2015
opened, Cook had reason to celebrate his own accomplishments. In the final quarter of 2014, Apple
posted record profits of $18 billion, the largest quarterly profits in corporate history (see Exhibit 1).
Spurred by the release of the iPhone 6, the iPhone shattered sales records, selling 74.5 million units in
the 2014 holiday quarter. Sales grew particularly robustly in China, the world’s largest smartphone
market.

The company’s momentum and stock performance was undeniable (see Exhibit 2). But there were
also challenges in 2015. Smartphone competition was intense, especially in China, where new low
cost competitors such as Xiaomi were taking the market by storm. iPod sales had been falling for
seven straight years. Even though Macintosh sales had grown faster than the industry in recent years,
Apple’s share of worldwide PCs remained in single digits. Worse, the iPad had suffered a significant
decline in sales, down 22% from Q4, 2013. With the iPod and iPad slipping, the Mac remaining
relatively small, Apple was increasingly dependent on the iPhone, which accounted for 69% of its
revenue.1

The announcement of the Apple Watch led many to ponder if Cook would successfully transition
Apple to ”his” company, or whether Apple would still live off of Steve Jobs’s legacy? Would the
Apple Watch be another homerun, similar to the iPhone, or would it become another niche product,
like Apple TV? Cook had big shoes to fill, and he had to wonder: had he made the right strategic
moves to deliver on Apple’s daunting ambitions?

Professor David B. Yoffie and Research Associate Eric Baldwin prepared this case. This case derives from earlier cases, including: ”Apple Inc.,
2008,” HBS No. 708-480, by Professor David B. Yoffie and Research Associate Michael Slind, ”Apple Computer, 2006,” HBS No. 706-496 by
Professor David B. Yoffie and Research Associate Michael Slind, ”Apple Inc. in 2010,” HBS No. 710-467 by Professor David B. Yoffie and
Research Associate Renee Kim, and “Apple Inc. in 2012,” HBS No. 712-490, by Professor David B. Yoffie and Research Associate Penelope
Rossano. This case was developed from published sources. Funding for the development of this case was provided by Harvard Business School
and not by the company. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements,
sources of primary data, or illustrations of effective or ineffective management.

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This document is authorized for use only by Ansaf Jeelany in Leading Organizations and People-Fall 2015 taught by Jose Proenca, Widener University from July 2015 to January 2016.