The changing fortunes at Apple The most striking change has been in operations. When Jobs took over, Apple ended each quarter with some 70 days’ worth of finished products sloshing around its factories and warehouses, a $500 million-plus drag on profits that was the worst in the industry. Jobs quickly streamlined. He outsourced manufacturing of half of Apple’s products to contractors who could do it far more efficiently, say analysts. That got inventory down to about a month by early 1998. Jobs still wasn’t satisfied. He hired former Compaq (CPQ) procurement executive Timothy D. Cook to meet a higher goal: to get more efficient than Dell, the industry’s best. It was a daunting challenge. Cook recalls drawing a flowchart of Apple’s operations, with all the linkages from suppliers to manufacturing to distributors, that ‘looked like a printed circuit board’ And not a very fast one. Because many of the transactions between suppliers weren’t processed in real time, it could take days for a parts order to be delivered to a factory. And Cook knew he would be facing an inventory management nightmare when Jobs unveiled five different colors of iMacs. Cook wasted no time. In his first month on the job, he outsourced production of the printed circuit cards inside Macs, easing the complexity of the manufacturing job. He closed more than 10 warehouses for finished products, making do with nine regional sites. With fewer places for stuff to sit, the less stuff there would be, he reasoned. ‘If you have closets, you’ll fill them up’, says Cook. Simplicity was the key. Cook trimmed Apple’s list of key suppliers from more than 100 to just 24. That further eased the job of keeping track of all the parts used in Apple’s products. And since it meant more business for each supplier, Apple wielded more influence with each – and better prices. Finally, his team scrapped an off-the-shelf software program for managing manufacturing and inventories that had been limping along. Instead, Apple devised its own build-to-order system for handling online purchases. It has worked beautifully. Pundits snickered when Jobs predicted Dell-like online efficiency at a 1997 event. ‘We’re coming after you, buddy’, Jobs said, referring to founder Michael Dell. Today, Apple’s online store is shipping 75% of orders on the day they’re placed, up from 5% for the Apple of old. ‘That’s as good as or better than Dell or Gateway’, says Salomon Smith Barney analyst Gardner. But Cook’s biggest claim to fame is getting the inventory of parts down to less than a day – obliterating the record in an industry where weeks or even months is the norm. One reason: Apple has persuaded key suppliers to set up shop close to Apple facilities, for just-in-time delivery. Another benefit of the new system: The entire production process has dropped from almost four months to just two, so Apple can more quickly move to the latest, fastest parts. Research what happened in this particular situation to bring this situation to the present.

Step 2: Respond to the following questions: From the above case, describe how inventory management has been used for strategic advantage. What were (at minimum 3) relevant parts, products, or processes involved in this case study? What recommendations do you have regarding overcoming potential challenges and helping future growth? What is the final solution? What does the future look like in terms of globalization and this case study? What were (at minimum 3) relevant parts, products, or processes involved in this case study? What recommendations do you have regarding overcoming potential challenges and helping future growth? What is the final solution? What does the future look like in terms of globalization and this case study?

Texas Instruments
Background
In 1982, Texas Instruments (TI) began to expand its product line beyond hand-held calculators to handheld learning aid products (LAPs) for the children’s market. Over the next decade, TI launched LAPs
designed to teach children simple math problems (Little Professor), spelling (Speak & Spell), and shapes
and sounds (Teddy Touch & Tell).
By the mid-1990’s, TI found increased competition in the LAP market. New competitors entered the
hand-held LAP market, such as VTech who produced products such as the Little Smart Alphabet Desk
(for learning the alphabet) and Small Talk (for learning shapes, and words). Substantial competition was
also emerging from computer software companies, such as Broderbund and Learning Company, which
became famous for educational software such as “Reader Rabbit” and “Playroom” for the children’s
market.
Further developments in the laptop and tablet market have added to competition in the LAP market. By
2010, prices for computer tablets had decreased to the point where they were viable to serve as learning
aids for children.

Magic Reading Desk
In 2010, TI introduced a new LAP called the Magic Reading Desk. The unit looked like a simplified
laptop computer, with five large easy-to-use cursor keys and two round response buttons. Ten different
learning games could be inserted into the LAP, all intended to develop pre-reading and reading skills in
children aged 3–7. The Magic Reading Desk was more versatile than competing hand-held LAPs
because different games could be inserted. It also provided an advantage over educational software
reading products because a personal computer was not necessary for its use. Compared to tablets, the
Magic Reading Desk was less complicated to use, more durable, and less costly (with a retail price of
$31.99). TI sold the Magic Reading Desk to major retail stores and chains through the TI sales force.

Expanding Sales to the Educational Market
TI management believes that it has an opportunity to expand sales of the Magic Reading Desk from
consumer markets to educational institutions such as schools and daycare facilities. The Magic Reading
Desk is very easy to use, durable, reliable, and needs only rechargeable batteries for its upkeep. TI could
distribute the product through specialized audio-visual dealers that deal with educational markets,
though their suggested margin of 30% off retail would require TI to sell the Magic Reading Desk at a
higher price than regular retail markets in order to remain reasonably profitable. TI management is
projecting a price of $49.99 for the educational market.
A remaining issue is how the Magic Reading Desk should be branded for the educational market:
4a. One option is to use the same name, Magic Reading Desk, used in the consumer retail market.
Packaging in the consumer retail market includes the brand “Texas Instruments” in small script
across the top of the package; thus, the Texas Instrument name appears as an endorser.
b. A second option is to use a new name for the product, such as Reading Tutor, and omit any
reference to Texas Instruments as an endorser.
c. A third option is to combine a new name, such as Reading Tutor, as a subbrand with the Texas
Instrument name—e.g., Texas Instrument Reading Tutor.

Questions
1. Consider the three branding options. Using your knowledge of brand architecture, how would
you label each of these options—branded house, house of brands, subbrands, or endorsed
brands? Explain why you are assigning these labels to each option
2. Consider the three branding options for expanding sales into the educational market. Which
branding option do you recommend for the educational market—and why? In your answer, be
sure to evaluate the advantages and disadvantages of all three branding options for the
educational market.