Читать книгу Defensive Strategy – Apple's Overlooked Key to Success - Sharam Sadeghi - Страница 5

In times, in which economic growth slows down, resources become scarce, costs of energy explode, technological resources proliferate, consumers’ behavior changes, and desire for mobility in all aspects increases, companies become increasingly challenged to protect their growth expectations and profitability in an intensely competitive environment. As a result, organizations aim to maintain their profitability at the expense of competing rivals in the same market place, offering similar products and services. This attempt requires the organizations to shift their focus towards market share gains rather than approaching market growth gains^[1] – a step, which often includes sacrificing profitability at the end. In this gameplay, usually the market leader is the one to expect direct attacks from either existing competitors in the same category, or new entrants that improved their distinctiveness and relative competitive advantage to the incumbent. Responding to such threats is called defensive strategy, helping the incumbent to protect and maintain its market position.

As the Walkman generation, we have been witness to how an iconic and innovative brand, as Sony originally was perceived, has dramatically lost its leading position in almost all business areas it dominated from the 1980s, until mid-1990s. One could have assumed that Sony, with its unique structure as a conglomerate, holding an entertainment business (music, movies, games), a consumer electronics business, including mobile phones, and other services (financial services etc.) under one roof, has the invincible position to concentrate the synergies and offer integrated and innovative products and services from a single source, leaving other competitors far behind. The reality at hand is, that the company that once defined Japan’s technological prowess is now in fight; it is in fight to remain alive: Mr Kazu Hirai, the new CEO as of April 2012, and successor to Howard Stringer, has a truly tough starting position to strive for substantial change, while respecting the company’s heritage. For its closing fiscal year of 2011/12, Sony has (again) announced a record net loss of $5.7 billion. Since the beginning of the year 2012, the company’s share price has dropped by 12 percent in May of the same year, which is equivalent to a market value of $15 billion, or just three percent of Apple’s value.^[2]

What happened to the rising star?

It appears that Sony failed to respond effectively, or even missed to foresee the changing environment, while strong competitors entered the same field, armed with disruptive technologies, innovative products, well thought-through value chains, and lastly marketing strategies letting the erstwhile desired brand of the “It’s a Sony!” generation appear old-fashioned, less innovative and not worth paying the premium price for, today. One by one, Sony lost its leading position in almost every category it competed in, be it hardware, software or content: The company had to see Samsung taking the lead in the TV business, while Apple took over the pole position with its digital content fortress and undefeated ecosystem in the music and mobile devices category. In the segment of game consoles, the company has surprisingly lost ground to Nintendo and Microsoft, but, could meanwhile recover through price cuts of its Playstation3 by sacrificing profit at the same time.^[3] In the mobile and smartphone business, the company decided, in October 2011, to try a re-start and to leave the joint venture with Ericsson, and focus on the smartphone business only.^[4]

The objective of this work is to examine, why having a defense system in place, for immediate and appropriate response, is crucial for successful companies to sustain their profitability and position in the market at the same time. We will further analyze why leading incumbents fail to respond to offensive threats and lose their right to exist. Moreover, we will discuss the defensive strategies and tactics a company might utilize, when under attack. To visualize the need for and the effectiveness of successful defensive strategies, we will start with Apple as the best practice example.

Why Apple?

The company from Cupertino gets a lot of credit for being an innovative and cool brand. The purity in design, seamless interaction between hardware and software, as well as, the unique user-experience are usually its top-three key success factors highlighted. But, while that might be true, it is not the real secret behind its success: The underestimated and often overlooked truth lies in the way of how Apple protects its innovations. Along the example, we will focus on its iPod and iTunes business and discuss how Apple obtained the lead in both, the digital music market, and digital media player segment at the same time. Furthermore, we will analyze the tactics of how the Cupertino-based company has succeeded in retaining its leading position in both segments, which helped Apple on its way to become the business world’s most valuable brand of today.