Case Study on "How a Company Comes Back From Being in Declines aApple Computer"

Case Study 12 pages (3512 words) Sources: 15 Style: APA

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Apple

How a company comes back from being in declines -- a case study of Apple Computer

The ability of a company to recover from decline has long been a topic of discussion in the sphere of organizational behavior. This is viewed as a topic of interest because every company experiences declines and recoveries.

However many companies that experience declines never recover because they are not equipped with the necessary tools. As such this particular topic is important because it allows managers to examine the strategies of a company that has been able to recover from significant decline.

Business decline and business failure are fears tat every company has at one time or another. While it is inevitable that a business will experience some decline during certain years, it is possible for companies to prepare for such decline so that they do not lead to the total ruin of the company. Companies must also know that business decline could serve as a catalyst for unprecedented growth and profitability. The best way to inform companies of the alternatives that they can seek when faced with business decline, is to evaluate a company that has experienced decline and recovered from the decline.

For the purposes of this discussion we will focus on Apple Computer Company and the strategy that the company utilized to recover after a significant decline. This particular company was chosen because of what it has come to symbolize in American culture in recent years with the advent of some extremely innovative products that are new on the market. This company was also chosen because of the monumental profitability that the company has realized in the wake of the released of the aforementioned products. Let us begin our discussion with a review of the literature concerning business decline.

Literature review on companies coming back from decline

From a historical perspective there have been many companies that have experienced declines. However very few businesses have been able to recover from almost certain financial ruin. This has been an issue in various industries. Business failure is a fear that many entrepreneurs have at all times. The fear exists when the business ids being developed, once the business has begun to operate and even years down the line. The fear of business failure is one of the reasons that businesses and investors alike got to great lengths to develop business plans and develop strategies to combat declines that may occur.

According to an article entitled "business decline" the idea of a business in decline is often wrongly associated with a business that was once profitable. However the article points out that most often business decline is a sign of inert managerial ideas, inability to focus on the needs of customers, poor organizational design, and incessant unwillingness to change (Carlson 2006). The author also asserts that in most cases business decline occurs as a result of high price elasticity of demand, lack of innovation, reduced or negative profits, and declining selling prices, small amounts of renewable investment, industry congestion and unappealing entry (Carlson 2006).

The author asserts that when decline is evaluated from a strategic standpoint that is a limited amount of differentiation and growth among competitors and as such there is no significance in advertising, distribution and access to advertising gradually becomes a foundation for competitive advantage, the entire industry is unable to eliminate the congestion so many companies are confronted with cash flow problems, and the rate at which companies leave the industry decreases as a result of fixed and sunk costs that are substantial (Carlson 2006).

The article explains further that the majority of decline occurs as a result of external events that are actually outside the control of all companies within an industry (Carlson 2006). Whatever the cause of the decline, they can be difficult to forecast and even more difficult to overcome (Carlson 2006). However, the author asserts that decline can also serve as an opportunity and there are a variety of strategies that can be implemented to discourage the negative effects of a decline and generate new wealth (Carlson 2006).

Although many companies are likes to experience a decline, there are also strategies that can assist companies as they work through a difficult time. For instance, the article asserts that the most common is a strategy of dominance and leadership.

Under these circumstances the business would aggressively increase market share to gain a dominant position in the market place with the objective of price control. Dominance is aided by weakened rivals with no commitment to the industry seeking exit; this exit can be aided by the dominance seeker in the form of acquisitions to further facilitate dominance. If other firms are trying to pursue dominance there can be destructive and costly competition. The opportunity costs of the decision must play a critical role in the senior management group choosing dominance as the ideal decline strategy (Carlson 2006)."

There are many other strategies that the article names. All of which are geared toward ensuring that decline does not lead to disaster as it relates to businesses and their ability to recover.

At the current time companies such as Ford and General Motors are being faced with substantial financial problems. These car manufacturers have been negatively impacted by poor sells that the increased popularity of other car manufacturers such as Toyota. In addition, Ford pays out large employee benefits and pension plans for employees.

For the Ford Company a recovery is of the utmost concern because the stakes are so high if the company does not recover. The company has already been forced to close several of its plants. Some of these plants had been in operation for many years. The employees of these plants were offered buyouts, training in a new field and some were able to transfer to other plants. These steps were taken with the belief that the company will be able to recover from the losses experienced in recent years.

For companies on the brink of collapsing it is vitally important that they have the strategies that will enable them to recover and experience profitability again. The risks in not doing so could be the displacement of thousands of employees and economic problems for society as a whole if several companies go out of business simultaneously.

Indeed, ensuring that a business can recover in the wake of a decline is an important subject for a number of reasons. One of the primary reasons is to preserve jobs for workers. In general that higher the employment rate the higher the quality of life will be in a location. In addition companies go into business to be profitable and to serve the needs of customers. Companies need a clear understanding of how to work through any declines that may occur so that business failure can be averted.

Case study

History of Apple Computer

Apple Computer INC was created in April of 1976 when two young men from California Steve Jobs, 21, and 16-year-old Steve Wozniak created the company (Thirty years of apple). The company's first public recognition came in San Francisco at the Homebrew Computer Club. Both Jobs and Wozniak were members of the club for individuals that liked to create gadgets (Thirty years of apple). It was through this club that Woziak was convinced that he would be able to sell the gadget that he designed (Thirty years of apple). This gadget was the Apple I computer (Thirty years of apple).

Although the two young men did not have any capital to produce and distribute the gadget, they showed great entrepreneurial spirit from the very beginning (Thirty years of apple). They were able to produce the gadget by getting a local store to buy 50 of their computers and then getting the electrical company to give then 30 days of credit on the parts to build the machines (Thirty years of apple). In doing this the company was able to start producing product without any investors (Thirty years of apple).

One of the major devices to come form the company was the creation and introduction of the mouse, the desktop and WIMPS (windows, icons, menu and pointer systems), which are still utilized today (Thirty years of apple). The mouse was an important invention because for the first time no commands had to be memorized and ordinary users had unprecedented access to computers (Thirty years of apple). This has been referred to as "GUI or graphical-user interface. But the real point was that it was intuitive. It gave everyone access to a world previously closed to all but an elite few (Thirty years of apple)."

The pair made some money from the Apple I, but to manufacture the type of computers they wanted to create the men needed a significant amount of capital (Thirty years of apple). Jobs wanted to sell the company to Commodore the plan did not succeed but Mike Markkula saw Apple's potential and invested in the business (Thirty years of apple).

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