Business and Management
Due: Friday 14th March 2014
This essay will be based in and around the a company that has experienced strategic drift, it will include a history of the company, the original direction of the company, when the drift started and who was responsible, how this effected the sales of the company, how the company overcame the problem and finally how important the management were in implementing the change. The company chosen here was Apple, who in the 1980’s and early 1990’s experienced drift after the termination of Steve Jobs as CEO of the company.
Main Body (research)
Even though the Mac cost $2,500 it was still over $1,000 more than its closest rival (IBM). In terms of the Product Life Cycle (Appendix 4), The Macintosh spent too much time in the Development Stage and for the most part skipped too to the Maturity stage as there was no growth for the product, this quickly led to the Decline stage. Once in this stage the Macintosh became what is known in the BCG Matrix (Appendix 5) as a “Problem Child or Question Marks”, this means that is has a low market share of a high growth market, e.g. the personal computer market was booming but IMB had a higher percentage of the market than Apple.
A PESTLE and SWOT analysis for this time have been developed and included attached in Appendix 1 and 2, also included is a SWOT analysis of Apple in their current state to show the change in strategy and how this made the company more secure (Appendix 3)
The poor sales lead to disagreements between John Scully (then CEO) and Steve Jobs (owner), Scully believed in marketing and trying to make as much as possible from the AppleII where as Steve believed in ploughing more money into the Macintosh (including dropping the price), this again shows that the Macintosh was indeed a “Problem Child” in terms of the BCG Matrix. The reason behind the strategic drift in this case is that Steve Jobs wanted to continue working on the Macintosh project (which as mentioned was becoming a money pit unlikely to make a profit) instead of moving ahead in line with rival companies to develop something new and up-to-date. This ultimately led to Steve Jobs being “asked” to leave Apple Inc in 1985.
For years apple tried to keep up with IBM (now with windows 3.0) and its various other rivals in the industry and for a small part they made progress in the Desktop Publishing area but for the most part apple was now being recognized as “one of the worst-managed companies in the industry”. Apple tried partnering with IBM and Motorola for a project known as the AIM Alliance, this caused IBM to offer to purchase Apple but they ultimately refused, evidently Apple were also apparently “hours away” from being bought over by Sun Microsystems. Apple tried to release a low-end version of the Mac known as the Performa line but this again was poorly received due to poor marketing and poor retail presentation, this was clearly a massive problem for Apple in the 90’s. Other problems Apple faced was licensing MAC OS and Mac ROMs to 3rd parties to manufacture “clones”, an attempt to penetrate deeper into the market and drum up some much needed revenue for Apple.
Market share percentages have been provided in Appendix 6 from the year 1975 until 2000, this includes Mac sales and Apple II sales vs PC (IBM & Clones) sales.
Fast forward to 1997 and Steve Jobs return, Jobs immediately stopped the licensing to 3rd parties and starts looking at ways to revive his company. It could be argued that Jobs implemented Kurt Lewin’s Change Model, this model contains 3 phases...