1. Chapter 5: Industry evolution and strategic change Apple, inc
By: Paulo Santos, Aguinaldo Sebastiao, Ryan Gaddy,Carlos Becerra

2. Management Greatest Challenge
Adaptation to the environment and to the changes occuring in the environment.
Change result: external forces and competition
Change can be more or less unpredictable depending on the industry:
Telecommunications- very unpredictable; food processing more stable and predictable

3. Patterns of Change The chapter presents:
Industry patterns of change that can help us predict how industries are likely to evolve over time
Sources of resistance to change and how to overcome them

4. The evolution of PCs 1970- PC were programend by owners
1977- Pre-assembled, operating system and software launched by Apple and other companies
1981- IBM enter the market with an open system; increased competition
Apple adapted a closed system focused on innovation (IPad, Iphone) pioneered the new era of the industry
PC sales declined by 16 %, and producers had to rethink their strategies

5. The Industry life cycle
Industry Life Cycle: The supply side of product life cycle
Four phases: Introduction, growth, maturity, and decline
More generation of a product leads to longer industry life cycle
Forces driving industry evolution:
Demand growth,
Production and the diffusion of knowledge

6. Demand Growth
Introduction stage: sales are small, because the industry products are little known and customers are few.
Growth stage: accelerating market penetration due to technical improvement and efficiency
Maturity stage: market saturation.
Decline stage: new industry producing technologically superior substitute products.

7. The production and diffusion of Knowledge
New knowledge in the form of innovation is responsible for an industry birth.
Growth- characterized by emergency of dominant designs and technical standards (network effect)
Maturity- Process improvement, design modification and scale economics
Industries supplying basic needs have almost never enter decline ( never become outdated)
Industries are likely to be at different stages of lifecycle in different countries

8. Implications Of the lifecycle for competition and strategy
Changes in demand growth and technology over the cycle have implications for industry structure, competition and the sources of competitive advantage.
The Introduction Phase: Few companies and limited to early adopters and product innovation.
Example: Apple, few years ago, in the computer‘s industry.
2. Growth Phase: the growth of the demand in the markets and the emergence of dominant design.
Example: The American Locations, revenue for the third quarter of 2018 around 24.4 billion.
3. The maturity Phase: the key factors to maintaining competitive advantages:
Example: Apple,leading the market jointly with HP, Dell and others.

9. 4.The Decline Phase: leaving space for innovation in the market.

10. The key factors for declining phase:
Excess capacity
Lack of capacity
A declining number of competitors
High average age of both physical and Human Resources
Aggressive price competition

11. Why is change so difficult?
Organizational Routines: The more highly developed are an organization’s routines, the more difficult it is to develop new routines.
Social and Political Structures: Change represents threat to the power of those in positions of authority.
Conformity: Locks organizations into common structures and strategies that make it difficult for them to adapt to change.
Limit search:Organizations tend to limit search to areas close to their existing activities.

12. Coping with technological change
Competence-Enhancing and competence-destroying technical change
Preserve the capabilities of the firm
Obsolete the resources and capabilities of established firms
Architectural and component innovation: Key factor to established firms in adapting to technological change…
Disruptive technologies: the innovation of new different attributes than the existing technology
EXAMPLE: APPLE when entered in the marked.

13. Managing Strategic Change
Traditionally a distinct area of management
Draws upon theories of psychology and sociology
Top-down change

14. Dual Strategies and Ambidexterity
Juggling act. Exploitation and Exploratory
Structural Ambidexterity (Xerox’s Palo Alto Research Center) (Apple Industrial Design Team)
Contextual Ambidexterity (Whirlpool)

15. Apple Industrial Design Studio
Team of 20 industrial engineers
Led by British designer Jony Ive
Started in a separate building across the street from Apple HQ
Compare to 1000’s of engineers at Samsung

16. Tools of Strategic Change Management
Creating perceptions of Crisis (Jack Welch of GE)
Establishing stretch targets
Creating organizational Initiatives (motivating employees - slogans)
Reorganization and new blood

17. Dynamic Capabilities The ability of a firm to adapt to change.
Construction example (equipment rental)

18. Using Scenarios to Prepare for the Future
Any decent corporation

19. Shaking the Foundation
Shaping the Future
The key to organizational change is not to adapt to external change but to create the future.
Shaking the Foundation
Old Brick
New Brick
Top Management is responsible for setting strategy
Everyone is responsible for setting strategy
Getting better, getting faster is the way to win.
Rule-busting innovation is the way to win
Innovation equals new products and new technology
Innovation equals entirely new business concepts

20. Apple

21. Developing New Capabilities
Processes
Task performance is efficient, repeatable and reliable.
Structure
The people and the processes that contribute to an organizational capability need to be located within the same organizational unit if they are to achieve the coordination needed to ensure a high performance capability.
Motivation
“My job is not to be easy on people. My job is to take these great people we have and to push them and make them even better.” - Steve Jobs
Organizational Alignment
Excellent capabilities require the components of capability to fix with one another.