Operations Strategy @ Apple Inc.

Birth of a Tech Giant – Apple Inc.

1976

Steve Jobs & Steve

Wozniak

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Product Evolution@ Apple Inc.

iMac MacBook iPad

2001 2006 2007 2010 2015

1998

iPod iPhone Apple

Watch

3
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Global Presence of Apple

Accelerometer from Gyroscope from

Germany Switzerland LCD, Camera, Compass
from Japan
Design, Glass screen,
Wifi Chip, Audio Chips
from USA. Battery from China

Supplier Locations

Assembly Locations

Warehousing Locations

Retail Store Locations

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 Journey is not that smooth!!!

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Stagnant Sales of Apple Products
iPhone unit sales , in thousands

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Apple Share Price Downfall

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Challenges Ahead for Apple
• Technology challenge

• Competition challenge

• Economy challenge

• Losing market share in Premium segment

• Trade War

• Leadership challenge

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Failure of Operation strategy

Latency
• People waited impatiently for the
company to release a new MacBook Pro

Old OS
• That new MacBook Pro, which arrived in
October 2016, stabilized things for Apple,
and it saw a meager .8% decline over the
Dependability
same period in 2015. But Apple had
already lost to Windows-based PCs
earlier in the year.
Flexibility

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Loosing Competitive Advantage (PC Market)
ASPECT OTHERS APPLE

Channel Direct shipping / Reselling to customer Through apple stores

Strategic partnerships to enable high Negotiations, discounts for high
Logistics
service levels volumes
Almost Nil Huge inventories, esp. to support
Inventory • An extension of just-in-time demand during product launches
manufacturing
Each consignment can be tracked Electronic tags attached to some
separately through the courier service devices in the lot for tracking
Tracking
purpose, to avoid leakages

Direct sales helps Dell understand In store sales are meant to deliver
customer needs purchase experience

Customer Engagement • Detect demand trends • Personal interaction

• Detect faults and deliver fast • Touch-feel the products before
response purchase

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Loosing Competitive Advantage (PC Market)
ASPECT DELL APPLE
Just-in-time manufacturing Outsourced manufacturing operations
 Assembly plants  Scale economy & Only major components
Process
are purchased
 Components purchased from suppliers

Partnership with key suppliers Suppliers at arm’s length

 No attempt of backward integration  Best quotes taken and justification required
 Rather creating a virtual integration with suppliers as well as  High negotiating power because of high
Supply customers volume, deep discounts
 Piggy-riding the brand of component suppliers  High control on each supplier
 Few vendors but long-term relationship, enables just-in-time

Direct sales enables Dell to accurately forecast the demand for its Apple also uses advanced forecasting techniques
products and is able to estimate the demand at each store
 Dell’s sales representatives talk with its major customers and  Production plans are adjusted accordingly
help them access their computing requirements  Accurate forecasts are important as risk of
Forecasting
 Accurate forecasts are important for sustaining zero-inventory inventory going obsolete is quite high
and lean manufacturing practices because of frequent product launch

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Samsung and Apple’s Love - Hate Supply Chain Relationship

https://heizerrenderom.wordpress.com/2017/10/05/om-in-the-news-samsung-and-apples-love-hate-supply-chain-relationship/

7/12/2019 Operational Strategy – Apple 12

SAMSUNG COMPETITIVE ADVANTAGE

Vertical integration and a flood of

products

Samsung makes $110 from each Proficient in semi-conductor

$1,000 iPhone X that Apple sells circuits

Prowess in memory chips Expertise of AMOLED display

Apple Value Chain

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Business Model&Operation Model

Business Strategy

Business Model
Functional Strategies

Sets the overall

purpose and
objective for
Marketing Operations Finance Technology
Strategy Strategy Strategy Strategy
Operating Model

Operational Operational Operational Operational Defines how the

Marketing Operations Finance Technology Business model
will be achieved
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Operations Strategy Matrix @ Apple

Resource Usage

Quality
Speed
Performance Dependa Market
Objectives bility Competitiveness
Flexibility
Cost
Supply Development &
Capacity Network Process Technology Organisation
Decision Areas

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 STRATEGIC RECONCILATION

Tangible&
Customer
Intangible
Needs
Resources

Operations
Operations strategy Performance Market
capabilities decision objectives Positioning
areas

Operations Competito
processes rs actions

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Decision Area of Operations Strategy

Product &
Service
Improvement Development
Strategy Strategy
Process
Technology
Purchase & Strategy
Supply
Capacity Strategy
Strategy

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 Purchase and Supply Strategy

“Apple is known for his strategy of getting suppliers to compete with each-
other and reduce the numbers of suppliers considerably”

-CEO, Tim Cook (2015)

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Sourcing Strategy @ Apple

•Order to Stock • Chosen players across

the globe for individual
• Apple does not practice components of
Just-in-Time principle • Material purchase products
in inbound logistics which typically cover its
requirements for
periods up to 150 days.

•No JIT High Bargaining

power

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Operational Strategy @ Apple

Second Tier First Tier First Tier Second Tier

Suppliers Suppliers Customer Customer

Supplier-
1

Supplier- Customer- Customer-

Supplier-
1 1 1
2

Supplier-
Supplier- Customer- Customer-
3 2 2 2

Supplier-
4
Assembling Whole Sale End
Units & Retail Customer
Raw material
supplier

Flow of Products/Services
7/28/2019 Operational Strategy – Apple Flow of information
21
Retail & Distribution Strategy @ Apple

• Apple is vertically integrated retailer. Displays

only its product.
• Third party reseller price is also same hence
people take advantage of retail experience
and high level service.
• Apple products are still beyond reach of many
consumers who use credible android phones.

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Retail & Distribution Strategy @ Apple

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Ecosystem

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Why apple store?

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 Process Technology Strategy

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 PROCESS REPETITIVE FOCUS
FOCUS

PRODUCT FOCUS MASS CUSTOMISATION

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 Improvement Strategy

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Improvement Strategy

Make Your Innovation Form the Basis of

Strategy and Business Improvements and New
Strategy Symbiotic Development Programs
Around Customer Insights

Engineer a Culture that

Supports Innovation Place an Emphasis on Project
Selection

Get Leadership Highly

Involved in R&D Decision
Disruptive Customer
Making
Experiences

https://innov8rs.co/news/the-six-values-of-high-performance-innovators/
 Product and Service Development
Strategy

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 Strategic Importance of Product and service
Development
Shortened life
Means of building Rapid Technology Increased
cycle
capabilities Change Competitiveness

Product And
Operation Resources Service Market Requirements
Development

Involves all parts Fragmented

of the business Market

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Henderson Clark Model For Apple

High Impact on
Architectural knowledge

Architectural Radical Innovation

Innovation

Low Impact on High Impact on

Component knowledge Component
knowledge

Incremental Modular Innovation

Innovation

Low Impact on Architectural

knowledge

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Strategical Impact at Apple

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Recommendation : Change in
Manufacturing Strategy
• Apple Inc. is designing and producing its own device
• MicroLED screens – Slimmer, Brighter, Less Power Consuming
• MicroLED screens use different light-emitting compounds than the current
OLED displays and promise to make
• Controlling MicroLED technology would help Apple stand out in a maturing
smartphone market and outgun rivals like Samsung that have been able to
tout superior screens.
• engineers managed to manufacture fully functional MicroLED screens for
future Apple Watches; the company aims to make the new technology
available first in its wearable computers.

https://www.hindustantimes.com/tech/apple-is-developing-its-own-oled-panels-to-reduce-dependence-on-
samsung/story-4UBvX2OWiozpG4qxcG9n6L.html
 Recommendation : Change in
Manufacturing Strategy
• Apple Inc. is designing and producing its own device
• MicroLED screens – Slimmer, Brighter, Less Power Consuming
• MicroLED screens use different light-emitting compounds than the current
OLED displays
• Controlling MicroLED technology would help Apple stand out in a maturing
smartphone market and outgun rivals like Samsung that have been able to
tout superior screens
• Engineers managed to manufacture fully functional MicroLED screens for
future Apple Watches; the company aims to make the new technology
available first in its wearable computers

https://www.hindustantimes.com/tech/apple-is-developing-its-own-oled-panels-to-reduce-dependence-on-samsung/story-
4UBvX2OWiozpG4qxcG9n6L.html
Recommendations

• Manufacture in India.
• Keep iPhone prices low.
• Apple Services Push (like Apple Map).

• Connected Car.
• Apple has room to grow in other Devices.

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