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Read Mini Case 6 Apple: What’s Next? And answer the questions following the casestudy.Apple: What’s next?IN EARLY 2015, Apple’s stock market valuation reached $775 billion; making it the mostvaluable public company of all time.1 this made Apple twice as large as Exxon, the numbertwo. Not even 20 years earlier, Apple would likely have gone bankrupt if archival Microsoft(which enjoyed the same position with a valuation of $615 billion in December 1999) had notinvested $150 million in Apple. How did Apple become so successful?Apple became the world’s most successful company based on a powerful competitivestrategy. That strategy, conceptualized by co-founder Steve Jobs, combines innovation inproducts, services, and business models. From near-bankruptcy in 1997, Apple’srevitalization really took off in 2001 when it introduced the iPod, a portable digital musicplayer, the same year it opened its first retail stores. Apple’s stores now earn the highest salesper square foot of any retail outlets, including luxury stores such as Tiffany & Co. jewelleryor LVMH, purveyor of fine handbags and other luxury goods.In 2003, Apple soared even higher when it opened the online store iTunes. Apple didn’tstop there. In 2007, the company revolutionized the smartphone marketWith the introduction of the iPhone. Just three years later, Apple created the tablet computerindustry by introducing the iPad, thus beginning to reshape the publishing and mediaindustries. Further, for each of its iPod, iPhone, and iPad lines of businesses, Apple followedup with incremental product innovations extending each product category. By combiningtremendous brain power, intellectual property, and iconic brand value, Apple has enjoyeddramatic increases in revenues.A Good StrategyWhy was Apple so successful? Why did Microsoft’s once superior market valuationevaporate? Why did Apple’s competitors such as Sony, Dell, Hewlett-Packard (HP), Nokia,and BlackBerry struggle or go out of business? The short answer is: Apple had a goodstrategy. But this begs the question: What is a good strategyA good strategy is more than a mere goal or a company slogan. A good strategy defines thecompetitive challenges facing an organization through a critical and honest assessment of thestatus quo. A good strategy also provides an overarching approach (policy) on how to dealwith the competitive challenges identified. Last, a good strategy requires effective
Implementation through a coherent set of actions. A good strategy, therefore, consists of threeelements:1. A diagnosis of the competitive challenge.2. A guiding policy to address the competitive challenge.3. A set of coherent actions to implement the firm’s guiding policy.THE COMPETITIVE CHALLENGE.First, consider the diagnosis of the competitive challenge. Above, we briefly trace Apple’srenewal from the year 2001, when it hit upon the product and business-model innovations ofthe iPod/iTunes combination. Prior to that, Apple was merely a niche player in the desktopcomputing industry and struggling financially. Steve Jobs turned the sinking company around