Running head: WEEK ONE APPLE CASE STUDY

Week One Apple Case Study

Nicole Braun
BU 630-7
May 8, 2016
Dr. Kim R. Marshall

WEEK ONE APPLE CASE STUDY

Week One Apple Case Study

Apple Inc. was founded by Steve Jobs, Ronald Wayne, and Steve Wozniak on April 1,
1976, in the Jobs family garage. Soon after its formation Ronald Wayne sold his shares of Apple
for $800. The first Apple computer was built by Steve Wozniak, and it was sold as a do-ityourself kit that did not include a case, and cost $666 (Time, n.d.). Steve Jobs introduced the first
Macintosh in 1984 which was priced at $2,495. According to Time Magazine, the Macintosh
was the first affordable computer to offer a graphical user interface, replacing fusty text-based
operating systems with an intuitive layout of folders and icons (Time, n.d.). This was only the
beginning for the once garage based business and eventually this business would surpass many
technology-based companies to become a trendsetter. Their success is largely due to how their
business operations are managed. Operations management (OM) looks at the different processes
organizations use to produce and distribute their product.
Apples Operation Management
Apples OM consists of using the ten decisions of operations management to help the
organization guarantee that all areas of Apple are being run efficiently. Christine Rowland of the
Panmore Institute says In operations management, the ten decisions relate to such aspects as
product design, quality management, process and capacity design, and location strategy, as well
as inventory management, among others (Rowland). Apple makes sure to implement these ten
decisions in both the product design and the product development departments, their supply
chain department, the marketing and sales department, and various other departments throughout
the organization. Apple has used these ten decisions to become the leaders of their industry.
Decisions on Goods and Services Design

WEEK ONE APPLE CASE STUDY

Whether Apple is deciding improvements on previous goods and services, or they are
designing a new product for the market, Apple solicits advice from various members of
management throughout the company. When Apple tries to develop and produce a new version
of their Mac computer decisions are made jointly by the Senior Vice President of Mac Hardware
Engineering, the Vice President in charge of software engineering, and the Senior Vice President
of Operations (Rowland, 2015). It is collaboration like this that has allowed Apple to produce
some original products that capture the market as soon as they become available.
Product Differentiation
After the creation of the Apple I and the first Macintosh, Apple has branched out to other
endeavors. With Steve Jobs product matrix, they were able to corner the market on desktops (G3
and iMac) and portable computers (Powerbook and iBook) in both the professional and
consumer segments. In 2001, Apple introduced iTunes, which led to the creation of iPods.
Product innovation did not stop there. Soon came the first iPhone, the iPad, and in 2015 Apple
introduced a smartwatch. Apple has come a long way from the first do-it-yourself computer that
was built in a garage.
Product Differentiation Problem Solving
According to the MBA Knowledge Base:
A company attempts to make its strategy a sustained competitive advantage. For this to
occur, a product differentiation strategy that is economically valuable must also be rare,
difficult to imitate, and the company must have the organization to exploit this. If there
are fewer firms differentiating than the number required for perfect competition
dynamics, the strategy is rare. If there is no direct, easy duplication and there are no easy
substitutes, the strategy is difficult to imitate. (MBA Knowledge Base, n.d.)

WEEK ONE APPLE CASE STUDY

When an organization is highly innovative, like Apple, and they use the product differentiation
strategy, they face organizing dilemmas. In Apples case, the four organizing dilemmas they
faced are in the following chart:

Figure 1. Organizing dilemmas. This figure illustrates how Apple categorizes their four
organizing dilemmas when using a product differentiation strategy.
Managing Quality
The operations management decisions when managing quality is handled by eight of
Apples Senior Vice Presidents as well as the Senior Vice President for operations. They are
tasked with ensuring that the organization is in compliance with Apples set standards. Christine
Rowland says Apple is known for high-quality standards that permeate different areas of the
business, including product design and development, retail, marketing, online sales, industrial
design, and human resource management (Rowland, 2015). Because of these high standards,
Apple uses a holistic approach to quality management.
Location, Layout, and Strategy
Apple is selective about who is carrying their products, but the Apple Stores themselves
can be found in many city malls around the world. This helps to maximize brand exposure. The
Apple Store layout is meant to focus on customer expectations with little to no decorations to

WEEK ONE APPLE CASE STUDY

emphasize the products. At Apples non-store locations, corporate layouts help enhance
creativity, and to make the workstations more productive. With its 450 stores that can be found in
16 different countries, they have become one of the most lucrative companies in the world.
Supply Chain and Inventory
Christine Rowland states Apples supply chain is among the most efficient and
streamlined in the world (Rowland, 2015). To help ensure that this area remains effective, this
organization automation of processes and routine monitoring of the companys suppliers. Apple
suppliers are required to abide by the Apple Supplier Code of Conduct. Using automation has
helped to strengthen Apples supply chain management.
Once Apple creates one of their products, they use a serialized method to keep track of
their inventory. This method also helps in the control of the inventory as well. Apple has adopted
the first in, first out method for their inventory. This means that the organization sells all of their
older models before they release the new models are distributed. Managers of the Apple Stores
are responsible for inventory control for that particular store as well as ordering new product.
Productivity
Apples OM keeps a close eye on productivity. Each area has different benchmarks and
standards because of the companys massive size and diversity of the activities. This organization
uses various methods to measure how productive each area of Apple is. For example, Apple
Stores productivity is measured by revenues per square foot, the productivity of Apples supply
chain is measured by product units per Time, and the productivity of Apple employees that
develop product is measured by milestone per Time (Rowland, 2015).
Human Resources

WEEK ONE APPLE CASE STUDY

One of the most important areas of every organization is its human resources (HR).
Without the people, the work cannot be done. Previously, Apples human resources strategies
followed Steve Jobs lead and stressed the importance of employee excellence. This began to
lower employee morale, so Apple has begun changing its HR strategies. Thanks to Tim Cook,
Apple has become a more sociable workplace. This strategy has improved morale, and
employees are more productive than ever. Even with the new HR strategies in effect, Apple does
still face a big problem, and that problem is losing its design engineers. John Gruber, an Apple
feature writer, says The problem isn't that Apple is bleeding talent, the problem is that they
could. It would be devastating to the company" (Yarow, 2013),
Conclusion
What started as a garage-based business has grown into a multi-billion dollar corporation.
Two mens dreams to create innovative technology has resulted in hundreds of different product
types. This success is because of how this corporation has managed its operations. Apple Inc.
uses the ten decisions of operations management to ensure that their organization is being run
both effectively and efficiently. These decisions include designing goods and services, managing
quality, location strategy, designing an effective layout, supply chain and inventory management,
productivity, and human resource management. By maximizing management decisions in these
key areas, Apple can continue to develop innovative products that consumers cannot seem to get
enough of.

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References

MBA Knowledge Base. (n.d.). Case study on Apple's business strategies. Retrieved from
http://www.mbaknol.com/management-case-studies/case-study-on-apples-businessstrategies/
Rowland, C. (2015, September 9). Apple Inc. operations management: ten decisions,
productivity. Retrieved from http://panmore.com/apple-inc-operations-management-tendecisions-areas-productivity
Time Magazine. (n.d.). In the beginning - the Apple revolution: ten key moments. Retrieved
from
http://content.Time.com/Time/specials/packages/article/0,28804,1873486_1873491_187
3530,00.html
Yarow, J. (2013, March 9). The single biggest problem that Apple faces, and almost nobody is
talking about it. Retrieved from http://www.businessinsider.com/apple-biggest-problemaccording-to-gruber-2013-3