Apple Computers Corporate Strategy

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					 14        The Epoch Times
           Special Edition - August 2007                                              BUSINESS                                                             

Making Inroads     Airline switch ‘hard to understand’
Into Latin America
Heide B. Malhotra                      government.
Epoch Times Washington D.C. Staff         “Overall, the funding available
                                       to Latin America’s private sector
WASHINGTON—Latin American              is very low,” suggests McKinsey.
investors and companies—burned         Latin American banks have fallen
during the mid-to-late 1990s           far behind Asian banks which lend
financial crisis—retain a deep         at least three times more to local
mistrust of lending institutions.      firms, encouraging businesses to
Latin American corporations            grow.
often transfer their cash to foreign      Small and mid-size companies         TAKING FLIGHT: An Aer Lingus jet. The company has announced it is no longer flying to Shannon airport in the west
shores, buying land, buildings         face the most difficulties in finding   of Ireland. The flights will be replaced with a service to Belfast in Northern Ireland. Adrian Dennis/AFP/Getty Images
and other tangible property and        reasonably priced loans and often
commodities.                           remain unable to expand. Most           Rita O’Connor
   “While these assets [tangible       firms have to rely on funds from        Epoch Times Ireland Staff                 “The common sentiment being            the west of Ireland.
properties] are a rational choice,     their own operations for new                                                    expressed today by public repre-           Brassil’s comments were echoed

such investments divert savings        business ventures, modernization,             erlingus chief executive          sentatives and business leaders          by Christina Carey of Impact, who
from local banks and equity and        expansion or when replacing old               Dermot Mannion was                in the region is that Aerlingus is       represent cabin crew. Speaking on
bond markets, thus stunting their      equipment. This limits innova-                heckled by workers as he          not committed to maintaining let         RTE radio Ms Carey said that any
(South America’s) development,”        tion, employment opportunities,         announced the end of the airlines       alone developing existing opera-         expansion of Aerlingus should not
according to McKinsey Quarterly,       as well as consumer wealth.             service between Shannon and             tions at Shannon airport”, he            be at the expense of workers at
a white paper report from                 Smaller and mid-sized firms          Heathrow.                               said.                                    Shannon.
McKinsey & Co., in a recent article    have scant borrowing opportuni-           The chief executive announced           An immediate review of the               Impact are currently seeking
titled “Fulfilling the Potential       ties due to reluctance by lenders       the change during a press con-          decision has been called for by          an emergency meeting with
of Latin America’s Financial           and often exorbitant interest           ference on Tuesday, a decision          Shannon Development chairman             Aerlingus to discuss the switch.
Systems.”                              rates. The largest Latin American       that could effect business in the       John Brassil. Brassil has said             The Shannon free zone employs
   On the other hand, many local       firms stay away from local banks        region.                                 that the decision constitutes a          over seven thousand people and
Latin American banks have an           and have aggressively taken               The decision, according to            fundamental breach of trust by           generates exports of over 2.5
aversion to lending to private         advantage of foreign borrowing          Minister of state and Clare TD          Aerlingus in respect of Shannon          million euro annually, connec-
firms or individuals.                  opportunities.                          Tony Killeen was difficult to           and that the air service was crucial     tivity with the Heathrow hub is
   According to McKinsey, between                                              understand.                             for the continued development of         essential.
23 and 26 percent of the assets        Foreign Banks Take
in Venezuelan and Colombian            Advantage                               the leading local banks,” claims        auto loans and corporate bonds.          country.
banks are invested in government                                               McKinsey in a July article “A New         Global players have acquired             “Institutions such as Citigroup,
bonds. In Mexico, Argentina and        Leading global banks have               Era for Latin American Banks.”          marketing tactics that let them          which has been fine-tuning
Brazil, banks lend more than 50        jumped into the fore and are              Competition is heating up.            move easily from one country to          its organizational model for
percent of their funds to govern-      buying into Latin America’s             Foreign banks moving into the           the other, wherever opportunities        decades, have turned this
ments. The most recent lending         banks. “The multinationals,             market bring with them a different      present themselves. Local players        capability into a significant com-
trends were not available to the       having taken notice of the new          lending mentality than local            are facing a distinct disadvantage       petitive advantage,” according to
McKinsey team. An exception is         opportunities, are increasing their     lenders. These banks are willing to     and might be gobbled up by the           the article.
Chile, where banks lend less than      investments across the region in        lend on longer terms and aggres-        global banks who might use
2 percent of their funds to their      hopes of taking market share from       sively market real estate loans,        them as a stepping stone into the

Apple’s success is a lesson in corporate strategy
Heide B. Malhotra                      returns. At the end of 2002, its        well with Harvard students and          suggested that Apple restructure         electronics manufacturer, Apple
Epoch Times Washington, D.C. Staff     stock hovered around $14 a share.       generated deep discussions.             from a computer manufacturer             ditched the word “Computer”
                                       It jumped to around $65 a share         When Apple was in the dumps,            to a consumer electronics firm.          from its official name.

       pple Inc. is riding high.       by the end of 2004. At the end of       everyone said that they saw it          He proposed to use Macintosh
       In the last quarter, it         2006, Apple was trading at $85          coming, but when it was doing           computer sales as a cash cow and         Customer Voices
       shipped almost 1.8 million      a share, eventually moving up to        well, students were confounded          build up the other products.
Macintosh computers, sold 9.8          more than $120 by May of this           when Yoffie pointed to problems           Another suggestion was to              Apple’s products are some of
million iPod music players and         year.                                   in the making.                          once again start licensing the           the most sought-after, and its
its iPhone—a revolutionary new                                                    “Student opinion of Apple tends      Macintosh operating system (OS),         retail stores are often crowded
product that went on sale in June      Taking the Hint                         to be excessively positive or exces-    which was stopped after Jobs took        with customers. When the latest
after an almost hysterical media                                               sively negative, depending on           over the CEO position. A window          product, the iPhone, hit the market
blitz—is expected to reach sales       Harvard Business School has             the company’s current fortunes,”        had opened into the software             on June 29, media reported long
of more than 1 million within the      followed Apple’s fortunes and           suggested Yoffie.                       market, with Microsoft products          lines in front of Apple stores of
next three months, according to a      misfortunes since 1992 and                 The case study’s latest version,     becoming pricy for consumers.            consumers waiting to buy the
recent Apple press release.            included the company as a case          “Apple Computer, 2006,”                   Lastly, Yoffie suggested out           phone. The lines had formed a few
   Apple also claims that it has       study in its MBA curriculum.            discusses in details the strategies     of self-interest (he held board          days before the event and people
sold more than three billion           The case has been revamped five         used by former Apple CEOs, the          membership in chipmaker Intel)           had brought mattresses and food,
songs—downloaded from its              times, including a video lecture        reasons behind the strategies and       to throw in the towel on its own         just so they would be one of the
iTunes music software—and has          from John Sculley, former Apple         why a given strategy was ineffec-       OS, license Microsoft Windows            first to get the iPhone.
five million songs, 550 television     CEO (1985 – 1993), going over           tive.                                   and become a big-time computer              “Apple brings several things
shows and 500 movie titles for         blunders he should have avoided.           “The company always looks a          manufacturer.                            [to the market]: really sleek
purchase, more than those offered        “This is a case where you can         little different, yet many of the         Jobs, who assumed the CEO              cool hardware, great software
by and Target.              focus on strategic success as well      core issues that pose challenges        position in 1997, must have              and a cool hip image,” said Eric
   “We are thrilled to report the      as strategic failure,” said Harvard     for it remain constant,” indicated      followed the Harvard discussions         Clemens, professor at the Univer-
highest June quarter revenue and       Professor David B. Yoffie, in the       Yoffie.                                 closely. Apple went innovative           sity of Pennsylvania’s Wharton
profit in Apple’s history, along       article “HBS Cases: The Evolution          Yoffie suggested three different     under his leadership, as it intro-       Business School in a recent
with the highest quarterly Mac         of Apple,” published last month.        strategies in the 2004 “Where           duced the iMac, iPod, and iTunes.        Wharton publication.
sales ever,” said CEO Steve Jobs       He continued, “There aren’t many        Does Apple Go from Here?”               The OS X operating system and               Additionally, Apple is the
in a recent press release.             instances where you have both           article. The most drastic change        iPhone appeared and sourcing             current front-runner as a “tech-
   Alongside the company’s resur-      sides so nicely paired [the ups and     was to “build their business off of     chips from Intel panned out.             nology leader of the digital living
gence, Apple’s stock (NASDAQ:          downs of a company].”                   the digital home, the iPod, iTunes,     At the same time, to emphasize           room,” Clemens added.
AAPL) has also enjoyed high              The Apple case study resonated        iPhoto, etc.,” said Yoffie. He also     the new direction as a consumer

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