This blog post is based on the following article: “How Apple became so successful that its Total Revenue is Bigger than the GDP of Some Countries”
Apple has become not only a tech giant but also one of the most successful companies in the world, its projected revenue surpasses the GDP of certain countries including Hong Kong and Egypt (Refer to Figure 1). However, this success was not always on the horizon for Apple (Griffin, 2015).
Figure 1:
Source: World GDP Ranking 2016. (2016). Retrieved from Knoema: https://knoema.com/nwnfkne/world-gdp-ranking-2016-data-and-charts-forecast
In 1997, this current day prosperous company was on the verge of filing for chapter 13 bankruptcy, until some major restructuring took place. According to Steve Jobs, the co-founder, and CEO of Apple, the company had failed to innovate, keeping it at a stagnant point. That resulted to Microsoft investing 150 million USD which provided a much-needed cash flow for Apple (Shontell, 2010). A question that arises is: How did Apple’s planning not forecast the poor performance of the company?
Businesses use various models to understand the industry they are part of and gain a strategic edge, such a model is the Business Model Canvas and Macro Environment (Refer to Figure 2). This model lays out the core parts of a firm through the business model and presents the way in which external forces can affect the individual sections. Apple’s core issue as identified by Steve Jobs was the lack of innovation. The tech industry is a quickly changing industry with many competitors. While the industry itself does not have a lot of substitutes, there is a large variety of choice for the consumer within the industry. Apple miscalculated the power of industry forces. Once the competitors reached the technological stage of Apple products, consumers started to switch, decreasing Apple’s audience in the Business Model Canvas and taking parts of its revenue. Consequently, lack of innovation in combination with powerful industry forces led Apple to a step just before bankruptcy.
Figure 2: Business Model and Macro Environment
Source: Amarsy, N. (2015, Ocotber 15). How To Scan Your Business Model Environment For DisruptiveThreatsAndOpportunities.RetrievedfromStrategyzer
Apple’s success story, after recovering from the economic downfall reflects the importance of planning and the way in which it builds an understanding of the environment the company is in. Despite the fact that the absence of innovation was a key aspect of Apple’s downfall, I believe that the degree of the issue could have been minimized or avoided through a better understanding of the industry. Being able to forecast the effects of certain actions allows companies to restructure and approach a situation differently. A powerful tool that I recommend can be used in that situation is PRINCE2 Project Management as it allows businesses to identify the benefits and the costs of a new product and thus determine whether it is worthwhile to invest in it. Nevertheless, it is important to recognize that this perspective is only one reason for Apple’s failure in 1997.
A question to now consider is: “For How long will Apple understand its industry and remain on top? “
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Works Cited
Amarsy, N. (2015, Ocotber 15). How To Scan Your Business Model Environment For DisruptiveThreatsAndOpportunities.RetrievedfromStrategyzer
Griffin, A. (2015, January 28). How Apple Became so Successful that its Total Revenue is Bigger than the GDP of Some Countries. Retrieved from Independent: http://www.independent.co.uk/news/business/analysis-and-features/how-apple-become- so-successful-that-its-total-revenue-is-bigger-than-the-gdp-of-some-countries- 10007454.html
Shontell, A. (2010, October 26). The Greatest Comeback Story Of All Time. Retrieved from Business Insider: http://www.businessinsider.com/apple-comeback-story-2010-10?op=1
World GDP Ranking 2016. (2016). Retrieved from Knoema: https://knoema.com/nwnfkne/world- gdp-ranking-2016-data-and-charts-forecast
