case study on customer relationship management conflicts in apple

7/27/2019 Case Study on Customer Relationship Management Conflicts in Apple

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CASE STUDY ON CUSTOMER RELATIONSHIP

MANAGEMENT CONFLICTS IN APPLE

Apple Inc., formerly Apple Computer, Inc., is an American multinational corporation

headquartered inCupertino,California[2]that designs, develops, and sellsconsumer electronics,

computer software and personal computers. Its best-known hardware products are theMacline

of computers, the iPodmusic player, the iPhonesmartphone, and the iPad tablet computer. Its

consumer software includes theOS XandiOSoperating systems, theiTunesmedia browser, the

Safariweb browser, and the iLifeandiWorkcreativity and production suites.

The company was founded on April 1, 1976, and incorporated as Apple Computer, Inc. on

January 3, 1977.[6] The word "Computer" was removed from its name on January 9, 2007,

reflecting its shifted focus towards consumer electronics after the introduction of the

iPhone.[7][8][9]

Apple is theworld's second-largest information technology companyby revenue afterSamsung

Electronics, and the world's third-largest mobile phone maker after Samsung and Nokia.[10]

Fortunemagazine named Apple the most admired company in the United States in 2008, and in

the world from 2008 to 2012.[11][12][13][14][15]However, the company has receivedcriticismfor its

contractors' labor practices, and for Apple's own environmental and business practices.[16][17][18]
http://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/Cupertino,_Californiahttp://en.wikipedia.org/wiki/Cupertino,_Californiahttp://en.wikipedia.org/wiki/Cupertino,_Californiahttp://en.wikipedia.org/wiki/Californiahttp://en.wikipedia.org/wiki/Californiahttp://en.wikipedia.org/wiki/Californiahttp://en.wikipedia.org/wiki/Californiahttp://en.wikipedia.org/wiki/Consumer_electronicshttp://en.wikipedia.org/wiki/Consumer_electronicshttp://en.wikipedia.org/wiki/Consumer_electronicshttp://en.wikipedia.org/wiki/Macintoshhttp://en.wikipedia.org/wiki/Macintoshhttp://en.wikipedia.org/wiki/Macintoshhttp://en.wikipedia.org/wiki/IPodhttp://en.wikipedia.org/wiki/IPodhttp://en.wikipedia.org/wiki/IPhonehttp://en.wikipedia.org/wiki/IPhonehttp://en.wikipedia.org/wiki/Smartphonehttp://en.wikipedia.org/wiki/Smartphonehttp://en.wikipedia.org/wiki/IPadhttp://en.wikipedia.org/wiki/IPadhttp://en.wikipedia.org/wiki/IPadhttp://en.wikipedia.org/wiki/Tablet_computerhttp://en.wikipedia.org/wiki/Tablet_computerhttp://en.wikipedia.org/wiki/OS_Xhttp://en.wikipedia.org/wiki/OS_Xhttp://en.wikipedia.org/wiki/OS_Xhttp://en.wikipedia.org/wiki/IOShttp://en.wikipedia.org/wiki/IOShttp://en.wikipedia.org/wiki/Operating_systemhttp://en.wikipedia.org/wiki/Operating_systemhttp://en.wikipedia.org/wiki/Operating_systemhttp://en.wikipedia.org/wiki/ITuneshttp://en.wikipedia.org/wiki/ITuneshttp://en.wikipedia.org/wiki/ITuneshttp://en.wikipedia.org/wiki/Safari_%28web_browser%29http://en.wikipedia.org/wiki/Safari_%28web_browser%29http://en.wikipedia.org/wiki/ILifehttp://en.wikipedia.org/wiki/ILifehttp://en.wikipedia.org/wiki/IWorkhttp://en.wikipedia.org/wiki/IWorkhttp://en.wikipedia.org/wiki/IWorkhttp://en.wikipedia.org/wiki/Apple_Inc.#cite_note-orgincpr-6http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-orgincpr-6http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-orgincpr-6http://en.wikipedia.org/wiki/Consumer_electronicshttp://en.wikipedia.org/wiki/Consumer_electronicshttp://en.wikipedia.org/wiki/Apple_Inc.#cite_note-7http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-7http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-9http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-9http://en.wikipedia.org/wiki/List_of_the_largest_information_technology_companieshttp://en.wikipedia.org/wiki/List_of_the_largest_information_technology_companieshttp://en.wikipedia.org/wiki/List_of_the_largest_information_technology_companieshttp://en.wikipedia.org/wiki/Samsung_Electronicshttp://en.wikipedia.org/wiki/Samsung_Electronicshttp://en.wikipedia.org/wiki/Samsung_Electronicshttp://en.wikipedia.org/wiki/Samsung_Electronicshttp://en.wikipedia.org/wiki/Mobile_phone#Manufacturershttp://en.wikipedia.org/wiki/Mobile_phone#Manufacturershttp://en.wikipedia.org/wiki/Samsung_Telecommunicationshttp://en.wikipedia.org/wiki/Samsung_Telecommunicationshttp://en.wikipedia.org/wiki/Nokiahttp://en.wikipedia.org/wiki/Apple_Inc.#cite_note-10http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-10http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-10http://en.wikipedia.org/wiki/Fortune_%28magazine%29http://en.wikipedia.org/wiki/Fortune_%28magazine%29http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-11http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-11http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-13http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-15http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-15http://en.wikipedia.org/wiki/Criticism_of_Apple_Inc.http://en.wikipedia.org/wiki/Criticism_of_Apple_Inc.http://en.wikipedia.org/wiki/Criticism_of_Apple_Inc.http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-wpsweatshop-16http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-wpsweatshop-16http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-studentsforced-18http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-studentsforced-18http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-studentsforced-18http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-wpsweatshop-16http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-wpsweatshop-16http://en.wikipedia.org/wiki/Criticism_of_Apple_Inc.http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-15http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-13http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-13http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-11http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-11http://en.wikipedia.org/wiki/Fortune_%28magazine%29http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-10http://en.wikipedia.org/wiki/Nokiahttp://en.wikipedia.org/wiki/Samsung_Telecommunicationshttp://en.wikipedia.org/wiki/Mobile_phone#Manufacturershttp://en.wikipedia.org/wiki/Samsung_Electronicshttp://en.wikipedia.org/wiki/Samsung_Electronicshttp://en.wikipedia.org/wiki/List_of_the_largest_information_technology_companieshttp://en.wikipedia.org/wiki/Apple_Inc.#cite_note-9http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-7http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-7http://en.wikipedia.org/wiki/Consumer_electronicshttp://en.wikipedia.org/wiki/Apple_Inc.#cite_note-orgincpr-6http://en.wikipedia.org/wiki/IWorkhttp://en.wikipedia.org/wiki/ILifehttp://en.wikipedia.org/wiki/Safari_%28web_browser%29http://en.wikipedia.org/wiki/ITuneshttp://en.wikipedia.org/wiki/Operating_systemhttp://en.wikipedia.org/wiki/IOShttp://en.wikipedia.org/wiki/OS_Xhttp://en.wikipedia.org/wiki/Tablet_computerhttp://en.wikipedia.org/wiki/IPadhttp://en.wikipedia.org/wiki/Smartphonehttp://en.wikipedia.org/wiki/IPhonehttp://en.wikipedia.org/wiki/IPodhttp://en.wikipedia.org/wiki/Macintoshhttp://en.wikipedia.org/wiki/Consumer_electronicshttp://en.wikipedia.org/wiki/Californiahttp://en.wikipedia.org/wiki/Californiahttp://en.wikipedia.org/wiki/Cupertino,_Californiahttp://en.wikipedia.org/wiki/Multinational_corporation


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Case Analysis: Apple Inc., 2008 Sairam Iyer XLRI GMP 034 11/6/2008 2. 1) Competitive Advantages: -Design and innovation oriented -Greater horizontal and

vertical Integration -Designing from scratch to finish bundled with applications and

peripherals. -Plug and Play solutions -R&D oriented -An everything ready device Firm

Infrastructure HRM Technology Development PROCUREMENT Inbound Outbound

Operations Marketing/Sales Service Logistics Logistics Alliances with Design &

Horizontal & Plug and play I-tunes gives a major suppliers Innovation vertical solutions

major edge Integration Linkages with Technology Complete bundle Operating system

independent Driven of applications more secure, and software vendors less prone to virus

attacks Collaborating I-podI-tunes Apples retail with other combo gives experience,

new leaders. brand awareness mac consumers a push. bought more. Apple has been able

to command a premium in the market and gain above average returns owing to its

innovation and differentiation of technologically superior products. This learning and

innovation in its products has led apple to leverage its expertise in the i-pod,i-phone, i-

tunes, i-works suite of products. Over due course of time Apple has been able to perfect

the chain of activities in Innovation and design leading to a fit between the activities

which is difficult to imitate and hence offers them an edge over competitors. Diffusing

products New products: Ideation Designing/funding Product Creation across company

3. 2) Analysis of the PC Industry based on Porters 5 Forces. Low 5-Forces Threat of newEntrants Current Bargaining Bargaining Low Competition: Power of Power of High Very

Intense Suppliers Customers Threat of Substitute products Very High. -Current Rivalry:

Very intense and fierce and the PC industry also has very low switching costs. This

makes current rivalry very high. Apple faces stiff competition from Dell, HP, IBM etc. -

Threat of new Entrants: Since there are considerable investments to be made for setting

up this industry, new entrants would be reluctant. Though there is scope for White-box

PCs having a share of 36% world -wide in 2006, but since the existing companies have

created strong branding awareness, this threat would be low. -Bargaining power of

Suppliers: Two types of suppliers- microprocessors and OS: very few suppliers but

memory chips, keyboards, disk drives: many suppliers. Suppliers will adjust pricing and

quality to make their products more attractive so competition is high leaving them in a

low supplier power position. -Bargaining power of buyers: Switching costs are low. This


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situation places the buyer power in a strong position that can only be countered by

companies with strong product differentiation that would increase the switching costs

4. -Threat of substitute products: The more differentiation of product the less likely theswitch to a substitute will occur. If prices are higher then the company with the higher

price has to provide justification for the increase. Apple's operating system differentiation

can command higher pricing when it is presented to the creative designer community but

not to the individual computer buyer unless they are specifically looking for such

enhanced graphic capabilities. Overall the PC Industry is a very competition intense

sector and with technology undergoing paradigm shifts, coping with these changes can

make life difficult for the players in the sector. These dynamics do not look favourable

for Apple, but at the same time Apple has been able to manage to retain its

technologically savvy and designer approach to come out of this quagmire. Apple could

convert some of these problematic features into opportunities by looking at its SWOT

analysis which is discussed further. 3) Apples difficulty in the PC industry. -Strengths -

Brand awareness/ Halo effect from the i-pod to the PC -Product differentiation- The

system continues to be strength for the company since its closed operating system is not

subject to the computer viruses and hacking that affects the Microsoft Windows operating

system. -Complete package of hardware and software-enabling plug and play and

aesthetics by designing unusual shapes for its computer chassis. -Weaknesses -Heavy

Investment in Research- As compared to other players this forms a major cost for Apple.

-Not a lean operations management- Unlike Dell, where the forecasting is accurate and

inventory costs are minimal, Apple has to bear the cost of components and parts that it

purchases before-hand. -Not completely independent- Apple is reliant on Motorola and

IBM for processor chips so if these companies run short or increase the price on the chips

Apple must either absorb the cost or pass it along to consumers. Either of the two

scenarios is can make Apple vulnerable. -Opportunities -Taking Microsoft head-on with

its image- Apple has always come up with innovative ways to ridicule and expose the

shortcomings of the Microsoft OS- Reference:

http://in.youtube.com/watch?v=FxOIebkmrqs. Apple should finally take the plunge and

go all out with its brand image to attack Microsoft. -Taking advantage of the MAC OS-


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Since the Mac OS is seen as a safe, reliable and secure system, apple should leverage the

differences over competing OS. The latest launch

5. of its Leopard-OS received rave reviews with sales totalling 4 million copies, andcreating 20% of the Mac installed base. -The i-pod-i-tunes combo- The halo effect of the

i-pod needs to be capitalised to the maximum extent. The difficulty Apple started off as a

straight out of the box machine which was easy and simple to use. When IBM-PC entered

the market in 1981, Apple was confident of its position owing to its proprietary designs

and graphics. But this closed system was their undoing, as the IBM- PC started to

spawn clones, who started to collaborate. With windows 3.0 the ease of the apple

products was questioned, and apple was also burdened with maintaining high costs

required for research for premium computers. In 1991 alliances were being forged IBM,

which did not materialise later. Shifting manufacturing costs were also not enough to

sustain profitability. The frequent changes in strategies were responsible for some of the

problems that Apple found itself in. What Apple needed to realise was that it was actually

operating in a Niche market of premium and high end PCs and it was earning handsome

profits per unit sold, but its penetration was an issue. Closed system of the Apple Mac,

Frequent changes of strategies and application software not easily leaders at the helm

available. Reasons for facing difficulties Niche market operator, less Premium segment,

research penetration oriented, hence costly

6. 4) Apples Mac business: In his second stint with Apple as CEO Steve jobs had his taskcut out. He had to turn around CEO, teve the Apple mac business and he undertook

multiple steps to achieve it. -Agreement with Microsoft to invest $150 Million in Apple

Agreement -Macintosh licensing program was abolished, thus restricting clones and

cannibalizing Macintosh restricting -Consolidated product range from 15 to 3

Consolidated -Launched the iMac, plug and play with multiple colours Launched -

outsourcing and restructuring, while expanding to national chains outsourcing -Direct

selling through website and streamlining operations Direct -Pared down inventory and

increased spending on R&D ed -Re-energized apples image as a hip brand energized

Notebook Products Launched: Macbook 1099 1099-1499 USD Macbook Pro 1999

1999-2799 USD Macbook Air 1799 1799-2598 USD Technology and Innovation: -

Integrated with the Intel platform Integrated -Mac users able to operate both windows


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and Mac based applications Mac -Leopard OS launched -Built independent applications

(iLife suite) Built -Web browser Safari -MS-Office suite for MAc Office Distribution and

Sales: -Retail stores opened

7. -Collaboration with Best buy -i-Pod halo effect benefitted sales Owing to all thesemeasures, the Mac sales grew thrice as fast as the overall PC market, which increased by

about 14% in 2007. Apple had become the third-largest PC maker within the US market

with a market share of 8.5%. But to continue the robust trend of the Mac growth saga,

Apple will need to look outward. Since the US market is not growing at a great pace,

Apple will have to look at the emerging asian markets and tap its potential. 5) Sustainable

competitive advantage: Exploitation Launch Counterattack As Apple is operating in a

Fast-cycle market in which the firms capabilities that contribute to competitive advantage

arent shielded from imitation and where imitation is often rapid and inexpensive, its

strategic decisions need to be undertaken quickly and in an effective manner. The i-pod-

itunes business has been a spectacular success for Apple. The Razor/Blade strategy in

Apples case is even more profitable unlike in the case of a printer-toner relation, as in

Apples case its a reverse Razor/Blade, and the returns will be even higher for Apple, as it

is the devices like the i- pod, i-phone which would require replacement. Apple has always

differentiated itself on its innovation and design, and the same is the case for the i- phone

i-tune combination. But this is not a competitive advantage which will last for long, and

hence Apple will have to adapt and offer new services to keep itself one-up from the

competition. Steve Jobs has perfected the art of coming up with a innovative product to

keep this advantage from falling over. It is difficult for firms competing in fast-cycle

markets to maintain a competitive advantage. However, Innovation plays a dominant role

in the competitive dynamics in fast cycle markets, and here is where Apple is able to

leverage its skills.

8. Threats and Competitors: DRM free copies- Amazon Creative, Threats/CompetitionMS-Zune Samsung, Sony Objection from music labels 6) I-Phone: Initial Strategy Phone:

Rationale to launch i-Phone: To integrate the i Pod with a mobile phone service and to

Phone: i-Pod reinvent the phone as a multifunction communication device. Version1

8GB $399, 16GB $499 AT&T plan $59.99 Service revenue sharing model No third

party distribution Edge network 2-2.5G Battery life affected by 3G 19.5% share


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during first quarter Gray markets in China russia- a concern - Los of service-share

revenue

9. Version 2 8GB $199 16GB $299 AT&T plan $69.99 Fixed premium model Bestbuy retail channel 3G bandwidth Google, youtube partnership i-tunes integration

New application packages Launched in 22 markets The initial launch of the i-phone at a

high price band and with exclusivity around it was a good move by Apple. The aura of

exclusivity built a tremendous hype and expectation over the launch of the product. The

early adopters (Fad) were ready to shell out the price which was definitely on the higher

side. Apple capitalised on this and was thus able to offer better prices in its second

version. Reasons for changing its strategy: -Availability of 3G bandwidth and battery life

upgradation -Revenue-sharing model was not generating profit -Price band was on the

higher side, and the early adopters were not interested -Retail channels were a better

option than single distribution channel -Exclusivity to carriers was affecting the growth -

Design improvements -By launching i-phone officially in 22 markets and making it

available in 70 markets including most of the countries which had a gray market

presence, Apple is trying to safe-guard its interests.

10. 7) Strategies for India: The demographics of India can be a major factor for apple tosucceed in India. The cost premium attached to apple products could play a hindrance,

and hence Apple would have to devise a cost leadership strategy while maintaining the

product differentiation. Apple would need to devise a Supply chain initiative to maintain

its operation. The following segments could be targeted by Apple. - There is a huge

demand for better processing powers in Business analytics and Market research firms in

India. Apple could target these companies, by demonstrating its technical expertise over

Microsoft. - By leveraging its expertise in the education segment K-12, Apple could enter

into tie-ups with major educational institutes in India. This would lead to mass awareness

of its products, other than the i-pod. - Animation is another segment which is picking up

in India, Apple along with its association with Pixar could become a huge hit in India, if

it plans to launch its own animation centre of excellence, and thus promoting the brand

Apple.

case study on customer relationship management conflicts in apple

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