Apple Incorporation

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Apple Incorporation

  1. 1. APPLE INCORPORATIONIndustryComputer Hardware & Software, Consumer ElectronicsINTRODUCTION "Man is the creator of change in this world. As such he should be above systems and structures, and not subordinate to them."Apple lives this vision through the technologies it develops for consumers andcorporations. It strives to make its customers masters of the products they havebought. Apple doesnt simply make a statement. It lives it by ensuring that itsemployees understand the vision and strive to reach it. It has put systems in place toenable smooth customer interaction. It has put objectives in place to continuouslymove forward; implemented strategies to fulfill these objectives; and ensured thatthe right marketing, financial and operational structures are in place to apply thestrategies. Apple Inc. (previously Apple Computer, Inc.) is an Americanmultinational corporation that designs and markets consumer electronics, computersoftware, and personal computers. The companys best-known hardware productsinclude the Macintosh line of computers, the iPod, the iPhone and the iPad. Applesoftware includes the Mac OS X operating system; the iTunes media browser; theiLife suite of multimedia and creativity software; the iWork suite of productivitysoftware; Aperture, a professional photography package; Final Cut Studio, a suite ofprofessional audio and film-industry software products; Logic Studio, a suite ofmusic production tools; and iOS, a mobile operating system. As of now, the companyoperates 301 retail stores in ten countries, and an online store where hardware andsoftware products are sold. Till date, Apple is one of the largest companies in theworld and the most valuable technology company in the world, having surpassedMicrosoft.
  2. 2. Established on April 1, 1976 in Cupertino, California, and incorporated January3, 1977,the company was previously named Apple Computer, Inc., for its first 30years, but removed the word "Computer" on January 9, 2007,to reflect thecompanys ongoing expansion into the consumer electronics market in addition to itstraditional focus on personal computers. As of September 2010, Apple had 46,600full time employees and 2,800 temporary full time employees worldwide and hadworldwide annual sales of $65.23 billion. For reasons as various as its philosophy of comprehensive aesthetic design toits distinctive advertising campaigns, Apple has established a unique reputation inthe consumer electronics industry. This includes a customer base that is devoted tothe company and its brand, particularly in the United States. The company has alsoreceived widespread criticism for its contractors labour, environmental, andbusiness practices.Apple’s historyHistory 1976-1978 • Wozniak and Jobs form the Apple Computer Company on April Fools Day. • Wozniak and Jobs finish work on a preassembled computer circuit board. It has no keyboard, case, sound or graphics. They call it the Apple® I. • The Apple I board is released for sale to hobbyists and electronics enthusiasts at the price of $666.66. • Apples first formal business plan sets a goal for sales to grow to $500 million in ten years. As it turns out, the company will pass that mark in half the time. • Apple I computer boards are sold through 10 retail stores in the U.S. • Apple moves from Jobs garage to a building on Stevens Creek Boulevard in Cupertino, California.
  3. 3. • The new Apple® II is unveiled at the first West Coast Computer Fair. It is the first personal computer able to generate color graphics and includes a keyboard, power supply and attractive case. • The Apple logo as seen today is designed by Rob Janoff, art director for Regis McKenna Advertising. • Regis McKenna Advertising launches its first ad campaign for Apple. Although advertising is initially aimed at electronics enthusiasts, Apple will soon become the first company to advertise personal computers in consumer magazines. • Monthly orders reach a $1 million annual sales rate.History 1978 • Apple introduces various interface cards for connecting to most printers. • Apples Disk II® is introduced at the Consumer Electronics Show. It is the easiest to use, lowest priced, and fastest mini-floppy disk drive ever offered by a computer manufacturer. It will make possible the development of serious software. Production at first is handled by just two employees, turning out 30 drives a day. • In only its second year, Apple is one of the fastest growing companies in America. Sales have increased, and its dealer network has grown to over 300.History 1979-1981 • Apples first printer, the Silentype®, is introduced. • Apple opens a manufacturing plant in Carrollton, TX. Apple facilities now occupy more than half a million square feet of floor space in the U.S. and Europe. • Apple goes public. Morgan Stanley and Co. and Hambrecht & Quist underwrite an initial public offering of 4.6 million shares of Apple common stock at a price of $22 per share. Every share is bought within minutes of the
  4. 4. offering, making this the largest public offering since Ford went public in 1956. • Apples distribution network is the largest in the industry-800 independent retailers in the U.S. and Canada, plus 1,000 outlets abroad. • Apples first mass storage system, the 5MB ProFile(tm) hard disk is introduced, priced at $3,499. • Apple becomes a household name. Surveys show that public awareness rose from 10 percent to 80 percent in 1981.History 1982-1985 • Apple Dot Matrix printer introduced for $2,195. • Apple becomes the first personal computer company to reach $1 billion annual sales rate. It throws a "Billion Dollar Party" for employees.History 1986-1990 • Apple announces plans to create an independent software company, to be known later as Claris. • For the first time, Apple uses its HyperCard technology to distribute a 1987 HyperCard supplement on diskette for Macintosh personal computers. • Apple files suit against Microsoft and Hewlett-Packard to protect its Macintosh audio visual display. The lawsuit is seen as having industry wide implications regarding copyright laws. • Apple reports first billion dollar quarter in its history as net income rises 108 percent. • Apple reports net sales of $4.07 billion and net income of $400.3 million for fiscal year 1988. • Apple acquires Coral Software Corp., which markets programming languages and artificial intelligence tools for Macintosh computers.
  5. 5. • Apple introduces 32-Bit QuickDraw(tm) that allows Macintosh personal computers to process and display photo-quality documents, images and visualizations with exceptional color clarity. • Apple donates $2 million in computers to 23 schools to help at-risk students. • Fiscal 1990 revenues surpass $5.5 billion.History 1991-1995 • Apple announces it will restructure the company over the next 12 months to reduce operating expenses. Apples workforce is reduced approximately 10 percent. • Apple and IBM sign a letter of intent to cooperate on major technology initiatives for the 1990s. • Apple, IBM, and Motorola finalize milestone technology alliance. • Apple announces a new Token Ring 4/16 NB Card, for the Macintosh product line. It is the first product to emerge from Apple and IBM alliance. • Apple and Kodak announce that they are working together to integrate support for Photo CD images into future versions of QuickTime. • The U.S. Environmental Protection Agency officially releases the Energy Star emblem for display with energy-efficient computers and peripherals. Apple has more than 20 products that meet the EPAs the technical requirements. • Apples Macintosh celebrates 10th birthday!Apple in 2005As of January 2005 Apple has introduced the Mini Mac and the iPod Shuffle.MINI MACThe Apple Mini Mac is a compact desktop computer. It is 2 inches tall and weights2.9lbs. It is 2 inches tall and weights 2.9lbs. The Mini Mac starts at $499 and comes
  6. 6. standard with iChat AV desktop video conferencing, Mail,Address Book, QuickTime®, iSync, and a DVD Player.IPOD SHUFFLEThe iPod shuffle is a smaller version of the original iPod. Itis much smaller and lighter and can double as a portable USB flash drive with up to1GB of storage space to back up personal files and exchange them betweencomputers. For $99 you can purchase the 512MB holding up to 120 songs or the 1GBholding up to 240 songs for just $149.MAC OS X TIGER On April 29, 2005, the Mac OS XTiger is released. This is an advanced operating systemthat requires a Macintosh computer with a PowerPC.VISION STATEMENT (PROPOSED)To become the worldwide leader in computer and mp3 player sales.Mission Statement (ACTUAL)Apple ignited the personal computer revolution in the 1970s with the Apple II andreinvented the personal computer in the 1980s with the Macintosh. Apple iscommitted to bringing the best personal computing experience to students,educators, creative professionals and consumers around the world through itsinnovative hardware, software and Internet offerings.Mission Statement (Proposed) The Apple commitment to excellence is its mission to provide computers andservice for people that meet the highest standards of value and reliability. Apple isone of leaders in the computer industry and makes the best-selling computers in the
  7. 7. world. Apple provides the highest level of quality and valuefor our customers. Those are timeless fundamentals. We alsoapply innovative technology to our core business todifferentiate ourselves and make our products irresistible toour customers, beneficial to society, and profitable to ourcompany. We strive to provide additional opportunities forgrowth and enrichment of company personnel while maintaining a workenvironment for all employees that encourages personal commitment andparticipation in support of achieving excellence.PRODUCTSMac and accessories Mac mini, consumer sub-desktop computer and server introduced in 2005 iMac, consumer all-in-one desktop computer introduced in 1998 Mac Pro, workstation-class desktop computer introduced in 2006, replacing the Power Macintosh Mac Book, consumer notebook introduced in 2006, replacing the iBook Mac Book Air, ultra-thin, ultra-portable notebook introduced in 2008 Mac Book Pro, professional notebook introduced in 2006, replacing the PowerBook X serve, rack mounted serverApple also sells a variety of computer accessories for Mac computers including theAirPort wireless networking products, Time Capsule, Cinema Display, Magic Mouse, Magic Trackpad, Wireless Keyboard, the Apple Battery Charger and the Apple USB Modem. iPad Apple has introduced their much-anticipated media tablet, the iPad running a modified version of iOS. It offers multi-touch interaction with multimedia formats
  8. 8. including newspapers, magazines, ebooks,textbooks, photos, movies, TV shows videos, music,word processing documents, spreadsheets, videogames, and most existing iPhone apps. It alsoincludes a mobile version of Safari for internetbrowsing, as well as access to the App Store, iTunesLibrary, iBooks Store, contacts, and notepad.Content is downloadable via Wi-Fi and optional 3G service or synced through theusers computer.IPodThe current iPod family, featuring the iPod Shuffle, iPod Nano, iPod Classic, andiPod Touch On October 23, 2001, Apple introduced the iPod digital music player.Apple has partnered with Nike to offer the Nike+iPod Sports Kit enabling runners tosynchronize and monitor their runs with iTunes and the Nike+ website. Applecurrently sells four variants of the iPod. iPod Classic portable media player first introduced in 2001, currently available in a 160 GB model. iPod Nano, portable media player first introduced in 2005, currently available in 8 and 16 GB models. The newest generation has a FM radio, a pedometer, and a new multi-touch interface that replaced the traditional iPod click wheel. iPod Shuffle, digital audio player first introduced in 2005, currently available in 2 and 4 GB models. iPod Touch, portable media player that runs iOS,IPHONEAt the Macworld Conference & Expo in January 2007, Steve Jobs revealed the longanticipated iPhone, a convergence of an Internet-enabled smartphone and iPod. TheiPhone first became available on June 29, 2007 for $499 (4 GB) and $599 (8 GB)with an AT&T contract. On February 5, 2008, Apple updated the original iPhone tohave 16 GB of memory, in addition to the 8 GB and 4 GB models. On June 9, 2008,at WWDC 2008, Steve Jobs announced that the iPhone 3G would be available on
  9. 9. July 11, 2008 at a price cut to $199 for the 8 GB version, and $299 for the 16 GBversion. In 2010, the iPhone 4 was announced, which Apple says is its "biggest leapweve taken" since the original iPhone. The phone includes an all-new design,960x640 display,Apple TVThe Apple TV, in its most recent revision, At the Macworld conference, Jobsdemonstrated the Apple TV, (previously known as the iTV), a set-top video deviceintended to bridge the sale of content from iTunes with high-definition televisions.The device links up to a users TV and syncs, either via Wi-Fi or a wired network,with one computers iTunes library and streams from an additional four. The AppleTV originally incorporated a 40 GB hard drive for storage, includes outputs forHDMI and component video, and plays video at a maximum resolution of 720p. OnMay 31, 2007 a 160 GB drive was released alongside the existing 40 GB model andon, Apple discontinued the original 40 GB Apple TV and now continues to produceand sell the 160 GB Apple TV. Apple also reduced the price of the device to $99.SOFTWAREsApple develops its own operating system to run on Macs, Mac OS X, the latestversion being Mac OS X v10.6 Snow Leopard. Apple also independently developscomputer software titles for its Mac OS X operating system. Much of the softwareApple develops is bundled with its computers. An example of this is the consumeroriented iLife software package that bundles are iDVD, iMovie, iPhoto, iTunes,GarageBand, and iWeb. For presentation, page layout and word processing, iWork isavailable, which includes Keynote, Pages, and Numbers. iTunes, QuickTime mediaplayer, Safari web browser, and Software Update are available as free downloads forboth Mac OS X and Windows. Apple also offers a range of professional softwaretitles. Their range of server software includes the operating system Mac OS X Server;Apple Remote Desktop, a remote systems management application; WebObjects,Java EE Web application server; and Xsan, a Storage Area Network file system. Forthe professional creative market, there is Aperture for professional RAW-formatphoto processing; Final Cut Studio, a video production suite; Logic, a comprehensivemusic toolkit and Shake, an advanced effects composition program.
  10. 10. ServicesApple Store for Education- Get discounts at the Apple Store for Education,24 hours a day.Apple Government Stores- Powerful solutions at special prices forgovernment agencies and employees.Apple Store for Business- Find a variety of recommendations to meet yourbusiness needs.International Apple Stores- Buy directly from a worldwide Apple OnlineStore near you.ITunes storesThrough online music store iTunes apple providedits online service as iTunes is a free application forMac or PC. It organizes and plays digital music andvideo on computer. It keeps all the content in sync.And it’s a store on computer, iPod touch, iPhone,iPad, and Apple TV that has everything one need to beentertained. Anywhere. Anytim Everything one love — music, movies, HD TV shows,apps, games, podcasts, audiobooks, and tuneful ways to connect with artists andfriends — is all on the world’s #1 music store.APPLE PHOTO SERVICEApple photo service to get digital pictures MOBILE ME MobileMe (formerly .Mac and iTools) is a subscription-based collection of online services and software offered by Apple Inc.
  11. 11. Originally launched on January 5, 2000, as iTools, a free collection of Internet-basedservices for users of Mac OS 9, Apple relaunched it as .Mac on July 17, 2002, when itbecame a paid subscription service primarily designed for users of Mac OS X.Find My iPhoneMobileMe allows users to track the location of their iPhone, iPod Touch or iPad viathe web portal at me.com.StorageMobileMe has two different plans. The Individual plan includes 20 GB of email andfile storage and 200 GB of monthly data transfer. The Family Pack includes 40 GB ofstorage split among one 20 GB individual and four 5 GB sub-accounts, each sub-account having its own email address, online storage and being able to use all theMobileMe features. Members can buy additional storage in 20 GB or 40 GBallocations, although sub-account storage cannot be upgraded.Address book and calendarMobileMe maintains a synchronized address book and calendar feature using Pushfunctions. If a user makes a change to a contact or event on one device it will beautomatically synced to the MobileMe servers and, by extension, all the users otherdevices. Supported devices include the iPhone, Address Book and iCal on Mac OS X,or Microsoft Outlook 2003 or later on Microsoft Windows.MobileMe GalleryMobileMe has a public photo and video gallery feature. Photos and videos can beuploaded in the web browser at me.com, synced by iPhoto or Aperture on MacOS Xor uploaded from the iPhone and iPod touch. Users can also upload movies fromwithin applications available on the Mac, including iPhoto and iMovie. MobileMealso provides the user with an e-mail address that is used only for uploading photosand videos. All uploads by viewers of the gallery (either by the iPhone or iPod touch,me.com, or sent by the dedicated e-mail address), will be synced back to iPhoto or
  12. 12. Aperture. Galleries can be made public or hidden, or can bepassword protected - but only through iPhoto or iMovie onMacOS X.iDiskMobileMe features iDisk, an online storage repositoryaccessible via a web browser at me.com, Finder on Mac OS X, various Apps for theiOS, or as a remote disk in Microsoft Windows. It also allows sharing of files byselecting a given file using me.com/idisk or the iDisk iPhone app, and then clicking aShare button that will generate a unique link to this file, protected by password, thatcan be then shared by email. Another way to use iDisk to share several files easily isby placing them in the iDisk Public Folder, which can also be password protected.[8]iWeb PublishUsers of Mac OS X v10.5 or later can use the iLife 08 or iLife 09 or iLife 11application iWeb to publish websites hosted on their MobileMe account, either to adomain name that they control or to a page on the me.com website. Users withoutiWeb can also publish websites by placing files to the Web/Sites folder in iDisk.However, the web host doesnt support any server side language such as PHP.Web applicationsMobileMe uses Ajax and Dynamic HTML to simulate the look and feel of desktopapplications within the users web browser. Applications on me.com include Mail,Contacts, Calendar, Gallery, Find My iPhone and iDisk access, plus an Accountsection. Most of the me.com web applications arebuilt on top of the open source SproutCoreJavascript framework. Users can also configurefeatures such as e-mail aliases or domain names forthe iWeb Publish feature.Supported browsers for me.com are Safari 3.1 orlater (Mac OS X and Windows), Firefox 3.5 or later
  13. 13. (Mac OS X and Windows), and Internet Explorer8 (Windows). Internet Explorer 7 (Windows),Safari 3.0, and Firefox 3.0 will run the webapplications, but are not fully supported.MobileMe is accessible from Linux using Firefox3 despite a warning that will be presented to theuser upon entry. Success has also been reportedusing the Konqueror browser on Linux, howeverthis has not been confirmed by Apple.iChat/AIMMobileMe users can connect to the AIM service with their @mac.com or @me.comaccounts. MobileMe connections are secured by SSL encryption.In addition, iChat users using a MobileMe account can encrypt their chats with otherMobileMe members using iChat.PC synchronizationUsers who wish to sync their MobileMe data with a PC must download and installMobileMe Control Panel. To install, the user must first download and install thelatest version of iTunes, and then install MobileMe Control Panel. After installation,the user signs into the control panel using their username and password, and cancontrol sync settings for contacts, calendars and bookmarks, and iDisk settings suchas public folder access, in a similar manner to the MobileMe preference panel builtinto Mac OS X.
  14. 14. MobileMe Mail BetaMobileMe Mail Beta was released on May 13, 2010. MobileMe Mail Beta includesmany new features such as photo inserting, font changing, wide screen views andmuch more. It was released as a final version on June 18, 2010.MobileMe Calendar BetaMobileMe Calendar Beta was released on July 6, 2010. MobileMe Calendar Betaincludes a new web application at me.com with redesigned day, week, and monthviews, as well as a new list view to make scanning events easier. Performances havealso been increased. It also features new sharing options that allow invited users toedit a shared calendar. It supports invitation through RSVPs, which sends an emailto invited persons, then they answer by clicking a simple link (they dont have to beMobileMe members). It also supports CalDAV standard for compatibility withmultiple devices.LOCATION-BASED SERVICESTo provide location-based services on Apple products, Apple and our partners andlicensees may collect, use, and share precise location data, including the real-timegeographic location of your Apple computer or device. This location data is collectedanonymously in a form that does not personally identify you and is used by Apple and our partners and licensees to provide and improve location- based products and services. For example, we may share geographic location with application providers when you opt in to their location services.
  15. 15. INDUSTRY ANALYSISExternal analysis using Porter‟s five forces modelThe industry has a fast growth. Everyday new and innovative products flood themarkets. From mobile phones to laptops there is a new product advertised almostevery week. The major players of the industry are Dell, HP, Apple, Acer and Lenovo.There is a high entry barrier due to the standardization of the PC components. Ifany new players wish to come into this business, they need to have a differentiatedstrategy form the existing companies. Also, a high learning curve exists whichmeans the customers take time to get accustomed with the new product. The existingbrand names make the entry barriers high.Bargaining power of suppliers:Suppliers for this industry are powerful. There are only a handful of companies likeIntel and Microsoft which manufactures microprocessor and operating systems (OS).
  16. 16. These suppliers are hard to switch due to dominant production of such components.There is always a threat of forward integration by the suppliers since the productsmanufactured by these suppliers are highly sophisticated and the other componentsneeded for the production of PCs are not so difficult to imitate. But there are manysources which do provide small PC components like memory chips, disk drives andkeyboards.Threat of substitutes:Substitutes for most of the products are easily available at a lower price. Althoughbuyers do look for quality and brand name, some of the components they need arepurchased from these substitute providers at a low cost. For example if a consumercannot afford to buy an Apple iPod then he/she has the option to buy any alternativelow cost CD player or recorder from some other company. There is high competitiondue to high industry growth. Manufacturers of these products try every possiblestrategy to attract the attention of customers through promotion and advertising.Apple fights with its highly innovative products whereas Dell and HP have bettermarketing and distribution strategies.Rivalry:It is almost reaching a status of mature market with intense competition but it is stillgrowing. There are companies which are coming up with low cost strategies tocompete with the existing manufacturers and this had led to intense rivalry.Companies like Lenovo and HP are already competing with Apple and othercompanies with notebooks on the basis of cost. Also there are a wide range of MP3players available in the market which ranges from $30 to $499 and from 1 GB to160GB. Also there are several websites which give access to downloading andlistening music which becomes a high threat for products like iTunes.Bargaining power of customers:The type of consumers for this market can be categorized as home, small andmedium sized business, corporate, education and government. Since buyers aremostly not concentrated they have less bargaining power for prices and models.Buyers do have a high switching cost which discourages them from buying asimilar product from another supplier. But there are a number of substitutes
  17. 17. available which makes buyers powerful to choose from the available options and alsobecause they are very price sensitive. The customers always have an advantage ofchoosing the electronic good according to the need and taste. This industry has a vastcustomer base and companies have to be customer oriented and should innovateaccording to their demand. Apple targets customers who are “techno savvy”, wholook for something unique. They have a wide range of products like computers (Macbook), iPods and iTunes which are highly differentiated. Customers desire to buy itsproducts as they are ―icons of the digital industry‖.Threat of new entrants:Exit barriers for this industry are high. There is a lot of capital requirement toestablish a firm inside the electronics and PC industry. There is a chance of exitbecoming almost impossible due to strategic interrelationships between these firms.The firms depend on other firms in the industry for making a final product ready forthe customers. That is the reason why there are low entrants.SWOT ANALYSISStrengths: Branding (Well established Brand) Innovation Differentiated product Ease of Use (plug & play solutions) Technically Elegant Products Superior Quality Marketing and Distinctive Advertising Customer loyaltyWeaknesses: High Priced Proprietary system
  18. 18. No Customization Lack of Compatibility CannibalizationOpportunities: Fast growing Industry (Customer Electronics Industry) Technological Innovations Extend new products to loyal customers High Potential music phone market Strategic Alliances with peripheral component manufacturersThreats: Extensive Competition Substitute Products Low prices of Competitors Technical Advancements
  19. 19. VALUE CHAIN ANALYSIS
  20. 20. Apple has been able to perfect the chain of activities in innovation. Apple starts fromits new ideas of product design, designs it through its own resources and funding,then manufactures it and finally markets it wholeheartedly.Technology and Product DesignThis Component is the true core of Apple’s Capability. Apple contributes around 5-9% of its sales in R&D. From being the first platform to run an electronicspreadsheet (VisiCalc on the Apple II Plus) to the first to establish a ―digital lifestyle‖hub (the Macintosh product lines), Apple’s history is rich with cutting-edgetechnology development. The Apple operating system is universally regarded as morestable and reliable than Windows. The learning and innovation in technology in itsproducts has led Apple to leverage its expertise in iPod, iTunes and iLife suite ofproducts.SuppliersIt is really the strongest advantage for a company to be independently manufacturingfrom scratch to finished product with application and peripherals .Apple produces itsown disk drives, monitors, computer’s chassis and unique chips. The company neverbackward integrated in Microprocessors. In 1990s it was supplied by Motorola.Later on Apple switched to IBM and then finally to Intel (2005) for its Core Duomicroprocessors.ProductionThe bundled packages of Apple-developed hardware and software became thecornerstone for its own production process though there were situations whenthe company outsourced the production of iMacs to Foxconn electronics. Appleachieved unparalleled performance via 64-bit architecture, integrated distinctivestyling with the multi-colored translucent iMac cases, and redefined intuitiveoperation with the iPod. The research and development oriented products give anextraordinary performance and products like Mac which soon became an identity ofApple Inc.Distribution
  21. 21. Earlier Apple used small outlets to deal with its customers. Later in 1997, Steve jobrevamped the distribution system by eliminating relationships with thousands ofsmall outlets and expanding in National’s presence. For the first time it also awebsite to directly deal with it customers. By 2001, the online store accounted for40% of the company’s sales. In 2001, company opened its own retail store inVirginia. The company now owns 135 and above stores all over the world.Marketing and AdvertisingDistinctive marketing campaigns have been a strategy of Apple to attract customersand to spread the information among them. Television commercials, PrintAdvertisements, Posters in Public areas and wrap advertisement campaignshave been successful ways of outshining the new product. Apple continues to command a market premium for producing a ―better mousetrap‖ throughout its history. Apple hired TBWA Chiat/day, an advertising agency that designed the campaign of “Think Different” featuring “Albert Einstein”.Customer ServiceApple believes in keeping a place in customer’s heart, the customer loyalty is a greatstrength to the company. The credit for such a strong relationship between thecompany and its customers goes to company’s customer service and the nature ofproducts which fulfills the need of today’s stylish people. Apple created a virtuallove affair with their customer base by delivering technically superior products(iPods vs. other MP3 players, Macs vs. PCs, etc.), and aggressively pursuinghardware and software updates. Apple integrated their primary activities so wellthat it is transparent to the consumer where one activity begins and the other ends.A perfect example of this is Apple’s willingness to develop software to run WindowsXP on its new Intel-based iMac and then post it online free to iMac users. In suchan environment, customer service merely becomes the realization of receiving alittle more than expected.
  22. 22. COMPETITIVE ADVANTAGES Design & innovation oriented Greater horizontal & vertical integration R & D oriented Designing from scratch to finish bundled with applications & peripherals. Plug & play solutions An everything ready device FIRM INFRASTRUCTURE HUMAN RESOURCE MANAGEMENT TECHNOLOGY DEVELOPMENT PROCUREMENT
  23. 23. Apple has been able to command a premium in the market & gain above averagereturns owing to its innovation & differentiation of technologically superior products.This learning & innovation in its products has led apple to leverage its expertise inthe i-pod, i-phone, i-tunes, i-works suite of products. Over due course of time Applehas been able to perfect the chain of activities in innovation & design leading to a fitbetween the activities which is difficult to imitate & hence offers them an edge overcompetitors.STRATEGIESVertical & horizontal integrationThe company practiced horizontal & vertical integration. It designed its productsfrom scratch, using unique chips, disk drives, and monitors. It never backwardintegrated into microprocessors which were supplied exclusively by Motorola. Italso developed own Operating system and bundled it with Mac, own applicationsoftware and peripherals like printers.
  24. 24. Premium price strategyApple provided the complete desktop solutions for its customers,including hardware, software, and peripherals that allowed customers to „plug andplay‟. On the other hand, customers found it difficult to handle IBM’s PC.Customers were, hence, more attracted towards Apple, products. This easy to usestrategy allowed apple to sell its products at a premium price.Offensive strategyIn 1990’s Apple planned to compete head-to-head with low priced IBM clones tobecome a low cost producer of computers with mass market appeal. For this, Applelaunched Mac classic and one year later it again launched the Powerbooknotebook.Targeting price sensitive segmentsApple always offered premium price to its customer that could not be afforded bymiddle class customers. For the first time, in almost a decade, Apple launched MacMini to target price sensitive customers.Differentiation Strategy Unique Features and characteristics Commands Premium Price High Customer Service Superior Quality Prestige Rapid InnovationCompetitor Environment
  25. 25. High Competition Share of Dell and HP Microsoft and Intel-Leaders of Software CE Industry- Sony, Nokia, Samsung, Cisco,Motorola.Strategies for IndiaThe demographics of India can be a major factor for apple to succeed in India. Thecost premium attached to apple products could play a hindrance, and hence Applewould have to devise a cost leadership strategy while maintaining the productdifferentiation. Apple would need to devise a Supply chain initiative to maintain itsoperation. The following segments could be targeted by Apple. There is a huge demand for better processing powers in Business analytics and Market research firms in India. Apple could target these companies, by demonstrating its technical expertise over Microsoft. By leveraging its expertise in the education segment K-12, Apple could enter into tie-ups with major educational institutes in India. Animation is another segment which is picking up in India, Apple along with its association with Pixar could become a huge hit in India, if it plans to launch itsown animation centre of excellence, and thus promoting the brand Apple.
  26. 26. Strategic modelsBoston Consulting Group (BCG) MatrixHIGHLOW HIGH LOW (MARKET SHARE)Dogs - Dogs have low market share and a low growth rate and thus neither generatenor consume a large amount of cash. However, dogs are cash traps because of themoney tied up in a business that has little potential. Such businesses are candidatesfor divestiture. Apple dogs are: Apple TV Mac miniQuestion marks - Question marks are growing rapidly and thus consume largeamounts of cash, but because they have low market shares they do not generatemuch cash. The result is a large net cash consumption. A question mark (also knownas a "problem child") has the potential to gain market share and become a star, andeventually a cash cow when the market growth slows & Apple lies in this quadrantonly as its market growth is high but market share is relatively low.
  27. 27. Stars - Stars generate large amounts of cash because of their strong relative marketshare, but also consume large amounts of cash because of their high growth rate;therefore the cash in each direction approximately nets out. Apple stars are: IPods I phone Apple Mac bookCash cows - As leaders in a mature market, cash cows exhibit a return on assetsthat is greater than the market growth rate, and thus generate more cash than theyconsume. Such business units should be "milked", extracting the profits andinvesting as little cash as possible.SPACE MATRIX CONSERVATIVE AGGRESSIVE DEFENSIVE COMPETITIVEApple position is competitive because ofForward integration
  28. 28. Backward integrationHorizontal integrationMarket penetrationMarket developmentProduct developmentJoint ventureGrand strategy matrix Rapid market growth Ii iweak competitiveposition Strong Competitive position Iii slow market growthConcentric DiversificationHorizontal DiversificationRetrenchmentDivestitureLiquidationConglomerate Diversification
  29. 29. Ge multifactor business portfolio matrixIndustry is attractive for Apple because of Profitability Differentiation Customer loyaltyStrategic alliances Apple – Disney - To reduce losses of standalone iStore & Disney outlets - To improve the Disney store experience Apple-MicrosoftANALYSIS OF APPLE CASE WITH THE HELP OF MIKINSEYS 7-S MODEL
  30. 30. The 7s framework of Mckinsey is a vale base management (VSB) model thatdescribes how one can holistically and effectively organize a company. Together thesefactors determine the way in which corporations operates. 7-s of Mckinsy model is: Shared values Strategy Structure System Staff Style Skill 1) SHARED VALUES Apple established in year 1976 with perfect vision and mission. Its vision was ―to change the world through technology‖ and mission was –to bring an easy to use computer to every man, woman, and child. Today apple is committed to bring the best personal computing experience to student, educators, creative professionals and consumers around the world through its innovation, software, and internet offerings.
  31. 31. 2) STRATEGY strategy of Apple is to focused on its target customers (or market) that is niche market 3) STRUCTURE organization structure of Apple is functional by nature and it operates in different companies forming a network. 4) SYSTEM Apple recognize best of its employees .Apple has ―Apple fellowship program ―- awarding individual who made extra ordinary technical or leadership contribution to personal computing. 5) STAFF Total of 49,400 (2010) numbers of employees including team of effective managers, supervisors and CEO of company. 6) STYLE Apple has Achievement oriented leadership style. The path goal theory of Robert House says that a leader can affect the performance, satisfaction and motivation of a group by: - Offering rewards for achieving performance goals - Clarify paths towards their goals - Removing obstacles to performance. Apple has good leader, Steve Jobs that often walked around the office barefooteven after Apple was a fortune 500 company. 7) Skill
  32. 32. skill of any organization is its core competency and Apple has core competency in innovation and in its R&D department. Apple invests more in R&D department than any other company of the industry.Income Statement Q4 Q3 Q2 Q1 Period Ending Q1 FY11 FY10 FY10 FY10 FY10 Net Sales/Revenues 26.74 B 20.34 B 15.62 B 13.47 B 15.68 B Cost of Goods Sold 16.09 B 12.50 B 9.28 B 7.66 B 9.04 B (Excluding Depreciation) Depreciation, Depletion 329.00 273.00 216.00 209.00 356.00 M and Amortization M M M M Gross Income 10.30 B 7.51 B 6.07 B 5.59 B 6.43 B Selling, General & Admin 2.47 B 2.06 B 1.90 B 1.65 B 1.69 B Expenses 771.00 849.00 Other Operating Expense 5.95 B 551.00 M 3.16 B M M Operating Income 7.83 B 5.45 B 4.17 B 3.95 B 4.74 B Extraordinary Credit - 0.00 0.00 0.00 0.00 0.00 Pretax Extraordinary Charge - 24.00 14.00 0.00 0.00 50.00 M Pretax M M Pretax Equity in Earnings 0.00 0.00 0.00 0.00 0.00 Other Income/Expenses - 175.00 107.00 27.00 136.00 M 14.00 M Net M M M Pretax Income 7.96 B 5.46 B 4.29 B 4.03 B 4.76 B
  33. 33. Q4 Q3 Q2 Q1 Period Ending Q1 FY11 FY10 FY10 FY10 FY10 955.00Income Taxes 1.96 B 1.15 B 1.04 B 1.38 B MMinority Interest 0.00 0.00 0.00 0.00 0.00Equity in Earnings 0.00 0.00 0.00 0.00 0.00Discontinued Operations 0.00 0.00 0.00 0.00 0.00Net Income Before Extra 6.00 B 4.31 B 3.25 B 3.07 B 3.38 BItems/Preferred DivExtra Items & Gain (Loss) 0.00 0.00 0.00 0.00 0.00Sale of AssetsNet Income Before 6.00 B 4.31 B 3.25 B 3.07 B 3.38 BPreferred DividendsPreferred Dividend 0.00 0.00 0.00 0.00 0.00RequirementsNet Income Used to — — — — —Calculate Diluted EPSNet Income Used to — — — — —Calculate Basic EPSNet Income Available to 6.00 B 4.31 B 3.25 B 3.07 B 3.38 BCommon Period Ending FY2010 FY2009 FY2008 FY2007 FY2006Net Sales/Revenues 65.07 B 42.90 B 37.49 B 24.01 B 19.32 BCost of Goods Sold 38.47 B 24.95 B 23.80 B 15.54 B 13.49 B(Excluding Depreciation)Depreciation, Depletion 734.00 496.00 317.00 1.03 B 225.00 Mand Amortization M M MGross Income 25.57 B 17.22 B 13.20 B 8.15 B 5.60 BSelling, General & Admin 7.30 B 5.48 B 4.87 B 3.74 B 3.14 BExpensesOther Operating Expense 0.00 0.00 0.00 0.00 0.00
  34. 34. Q4 Q3 Q2 Q1 Period Ending Q1 FY11 FY10 FY10 FY10 FY10Operating Expenses - 551.00 930.00 911.00 M 1.63 B 1.40 BTotal M MOperating Income 18.27 B 11.74 B 8.33 B 4.41 B 2.45 BExtraordinary Credit - 1.00 M 3.00 M 0.00 0.00 0.00PretaxExtraordinary Charge - 175.00 97.00 M 0.00 0.00 0.00Pretax MNon-operating Interest 311.00 407.00 653.00 647.00 394.00 MIncome M M M MReserves Inc (Dec) 0.00 0.00 0.00 0.00 0.00Pretax Equity in Earnings 0.00 0.00 0.00 0.00 0.00Other Income/Expenses - 133.00 326.00 -48.00 -33.00 M -29.00 MNet M M MEarnings Before Interest 18.54 B 12.07 B 6.90 B 5.01 B 2.82 B& Taxes (EBIT)Interest Expenses On 0.00 0.00 0.00 0.00 0.00DebtInterest Capitalized 0.00 0.00 0.00 0.00 0.00Pretax Income 18.54 B 12.07 B 8.95 B 5.01 B 2.82 BIncome Taxes 4.53 B 3.83 B 2.83 B 1.51 B 829.00 MCurrent Domestic 2.80 B 2.45 B 2.16 B 1.33 B 675.00 MIncome TaxCurrent Foreign Income 282.00 345.00 275.00 103.00 101.00 MTax M M M MDeferred Domestic 473.00 1.56 B 1.08 B 94.00 M 70.00 MIncome Tax MDeferred Foreign Income -121.00 -35.00 M -75.00 M -16.00 M -17.00 MTax MIncome Tax Credits — — — — —
  35. 35. Q4 Q3 Q2 Q1 Period Ending Q1 FY11 FY10 FY10 FY10 FY10 Minority Interest 0.00 0.00 0.00 0.00 0.00 Equity in Earnings 0.00 0.00 0.00 0.00 0.00 After Tax Income 0.00 0.00 0.00 0.00 0.00 Expense Discontinued Operations 0.00 0.00 0.00 0.00 0.00 Net Income Before Extra 14.01 B 8.24 B 6.12 B 3.50 B 1.99 B Items/Preferred Div Extra Items & Gain 0.00 0.00 0.00 0.00 0.00 (Loss) Sale of Assets Net Income Before 14.01 B 8.24 B 6.12 B 3.50 B 1.99 B Preferred Dividends Preferred Dividend 0.00 0.00 0.00 0.00 0.00 Requirements Net Income Available to 14.01 B 8.24 B 6.12 B 3.50 B 1.99 B CommonCash Flow Q4 Q3 Q2 Q1 Period Ending Q1 FY11 FY10 FY10 FY10 FY10 Net Income 6.00 B 4.31 B 3.25 B 3.07 B 3.38 B Depreciation, Depletion & 209.00 168.00 106.00 74.00 356.00 M Amortization M M M M
  36. 36. Q4 Q3 Q2 Q1 Period Ending Q1 FY11 FY10 FY10 FY10 FY10 209.00 168.00 106.00 74.00Depreciation & Depletion 356.00 M M M M MAmortization of — — — — —Intangible AssetsExtraordinary Items & — — — — —Discontinued OperationsDeferred Taxes — — — — —Other Funds from — — — — —OperationsFunds from Operations 7.48 B 4.22 B 2.88 B 1.83 B 1.20 B -Increase or Decrease in 226.00 -302.00 -950.00 M 271.00 M 369.00Accounts Receivable M M MIncrease or Decrease in -121.00 -113.00 -33.00 166.00 M 113.00 MInventory M M MIncrease or Decrease in 956.00 -767.00 484.00 495.00Accounts Payable & 2.35 B M M M MAccrued LiabilitiesIncrease or Decrease in 0.00 0.00 0.00 0.00 0.00Income Taxes PayableIncrease or Decrease in 0.00 0.00 0.00 0.00 0.00Other AccrualsOther Assets and 452.00 885.00 518.00 729.00 M 1.49 BLiabilities - Net Change M M MFunds from/for Other 954.00 611.00 2.29 B 1.56 B 1.06 BOperating Activities M MNet Cash Flow Operating 9.77 B 5.78 B 3.94 B 2.79 B 1.81 BActivitiesCapital Expenditures 1.21 B 376.00 339.00 224.00 142.00
  37. 37. Q4 Q3 Q2 Q1 Period Ending Q1 FY11 FY10 FY10 FY10 FY10(Additions to Fixed M M M MAssets)Disposal of Fixed Assets 0.00 0.00 0.00 0.00 0.00Aquisitions — — — — —Increase in Investments 19.58 B 12.93 B 13.12 B 6.14 B 2.58 BDecrease/Sale of 10.13 B 9.42 B 4.89 B 2.89 B 1.59 BInvestmentsOther Uses - Investing — — — — — 15.00Other Sources - Investing 0.00 0.00 0.00 19.00 M MNet Cash Flow - Investing 10.73 B 3.96 B 8.64 B 3.46 B 1.23 BNet Proceeds from 374.00 179.00 101.00Sales/Issues of Common 208.00 M 77.00 M M M M& PreferredProceeds from Stock 0.00 0.00 0.00 0.00 0.00OptionsOther Proceeds from 374.00 179.00 101.00 208.00 M 77.00 MSale/Issues of Stock M M MPurchase of Common & 0.00 0.00 0.00 0.00 0.00Preferred StockCash Dividends Paid Total 0.00 0.00 0.00 0.00 0.00Long Term Borrowings 0.00 0.00 0.00 0.00 0.00Reduction in Long Term 0.00 0.00 0.00 0.00 0.00DebtIncrease/Decrease in 0.00 0.00 0.00 0.00 0.00Short Term BorrowingsOther Uses - Financing — — — — — 252.00 315.00 87.00Other Sources - Financing 454.00 M 19.00 M M M M
  38. 38. Q4 Q3 Q2 Q1 Period Ending Q1 FY11 FY10 FY10 FY10 FY10 523.00 485.00 188.00Net Cash Flow - Financing 429.00 M 62.00 M M M MEffect of Exchange Rate — — — — —on CashIncrease/Decrease in -190.00 767.00Cash and Short Term -527.00 M 2.35 B -4.64 B M MInvestments Period Ending FY2010 FY2009 FY2008 FY2007 FY2006Net Income/Starting 14.01 B 8.24 B 6.12 B 3.50 B 1.99 BLineOperating ActivitiesDepreciation, Depletion & 734.00 496.00 317.00 1.03 B 225.00 MAmortization M M M 606.00 387.00 249.00Depreciation & Depletion 1.03 B 180.00 M M M MAmortization of 212.00 128.00 109.00 68.00 M 45.00 MIntangible Assets M M MDeferred Income Taxes 853.00 768.00 830.00and Investment Tax 1.14 B 355.00 M M M Mcredity 853.00 768.00 830.00Deferred Income Taxes 1.14 B 355.00 M M M MIncome Tax Credit — — — — — 903.00 736.00 538.00 254.00Other Cash Flow 174.00 M M M M MFunds from Operations 17.38 B 8.97 B 7.55 B 4.14 B 2.44 BExtraordinary Items & 0.00 0.00 0.00 0.00 0.00Discontinued OperationsFunds from/for Other 1.21 B -586.00 2.04 B 1.32 B -221.00 M
  39. 39. Q4 Q3 Q2 Q1 Period Ending Q1 FY11 FY10 FY10 FY10 FY10Operating Activities MIncline (Decline) in -939.00 -785.00 -385.00 -4.86 B -357.00 MReceivables M M MIncline (Decline) in -596.00 -163.00 54.00 M -76.00 M -105.00 MInventories M MIncline (Decline) in 596.00 6.31 B 92.00 M 1.49 B 1.61 BAccounts Payable MIncline (Decline) in 0.00 0.00 0.00 0.00 —Income Taxes PayableIncline (Decline) in Other 0.00 0.00 0.00 0.00 0.00AccrualsIncline (Decline) in Other 361.00 207.00 292.00 2.40 B -1.37 BAssets or Liabilties M M MNet Cash Flow/Operating 18.60 B 10.16 B 9.60 B 5.47 B 2.22 BActivitiesCapital Expenditures(Additions to FixedAssets) 116.00 108.00 251.00Additions to Other Assets 69.00 M 0.00 M M MNet Assets from 638.00 220.00 0.00 0.00 0.00Acquisitions M MIncline (Decline) in 57.81 B 46.82 B 23.00 B 11.74 B 7.28 BInventoriesDecrease in Investments 46.72 B 30.68 B 16.24 B 9.42 B 8.31 BDisposal of Fixed Assets 0.00 0.00 0.00 0.00 40.00 M -49.00Other Uses - Investing 2.00 M 74.00 M 10.00 M 58.00 M MOther Sources - Investing 0.00 0.00 0.00 49.00 M 0.00
  40. 40. Q4 Q3 Q2 Q1 Period Ending Q1 FY11 FY10 FY10 FY10 FY10Net Cash Flow - Investing 13.85 B 17.43 B 8.19 B 3.25 B -357.00 MProceeds from Stock 475.00 483.00 365.00 0.00 318.00 MOptions M M MOther Proceeds from 912.00 0.00 0.00 0.00 0.00Sale/Issues of Stock MCom/Pfd Purchase, 124.00Retired, Converted, 0.00 82.00 M 3.00 M 355.00 M MRedeemedFinancing ActivitiesLong Term Borrowings 0.00 0.00 0.00 0.00 0.00Incline or Decline in 0.00 0.00 0.00 0.00 0.00Short Term BorrowingsReduction in Long Term 0.00 0.00 0.00 0.00 0.00DebtCash Dividends Paid 0.00 0.00 0.00 0.00 0.00TotalCommon Dividends 0.00 0.00 0.00 0.00 0.00(Cash)Preferred Dividends 0.00 0.00 0.00 0.00 0.00(Cash) 751.00 270.00 377.00Other Sources - Financing 757.00 M 361.00 M M M M 345.00 270.00 377.00Other Uses - Financing 757.00 M 361.00 M M M MNet Cash Flow - 663.00 739.00 1.26 B 1.12 B 324.00 MFinancing M MEffect of Exchange rate on 0.00 0.00 0.00 — —CashChanges in Cash and/or — — — — —
  41. 41. Q4 Q3 Q2 Q1 Period Ending Q1 FY11 FY10 FY10 FY10 FY10 Liquid Items COMPETITORS ANALYSISTOP COMPETITORSThe following companies are the major competitors of Apple Computer, Inc.: Ceridian Corporation Micro Electronics, Inc. NEC Corporation Unisys Corporation ViewSonic Corporation Seiko Epson Corporation PC Connection, Inc. Canesta, Inc. RM plc Adobe Systems Incorporated Casio Computer Co., Ltd. Dell Inc. Fujitsu Limited Gateway, Inc. Hewlett-Packard Company International Business Machines Corporation Micron Technology, Inc. Microsoft Corporation Novell Oki Electric Industry Company, Limited Oracle Corporation Samsung Electronics Co., Ltd.
  42. 42. Sony Corporation Sun Microsystems, Inc. Toshiba Corporation Silicon Graphics, Inc. Sybase, Inc. RealNetworks, Inc. BenQ Corporation Insight Enterprises, Inc.Apple is confronted by strong competition in all areas of its business. The market forthe design, manufacture, and sale of personal computers and related software andperipheral products is highly competitive. This market continues to be characterizedby rapid technological advances in both hardware and software development, whichhave substantially increased the capabilities and applications of these products, andhave resulted in the frequent introduction of new products and significant price,feature, and performance competition. Over the past several years, price competitionin the market for personal computers has been particularly intense. Apple’scompetitors who sell Windows-based personal computers have aggressively cutprices and lowered their product margins to gain market share in response toweakness in demand for personal computing products. Apple’s results of operationsand financial condition have been, and in the future may continue to be, adverselyaffected by these and other industry wide pricing pressures and downward pressureson gross margins.Industries Where Apple Inc. Competes Wireless Telephone Handsets Computer Hardware Computer Networking Equipment Wireless Networking Equipment Computer Peripherals Computer Input Devices & SpeakersIndustry Rivalry
  43. 43. The five main manufacturers namely IBM, Dell, HP, Apple, Compaq are incompetition to produce the least-expensive and most efficient machine. Japanesecompanies such as Fujitsu, Toshiba, NEC, and Sony also have large market shares.Some companies such as IBM and Apple focus more on innovation while others suchas Dell focus on distribution channel and service, which creates differentiation tosome extent. The technology paradox holds in the PC industry. High-tech companiessuch as PC makers thrive when they provide ever greater amount of advancedtechnology, while the price sharply falls. Since the quality of a PC is largelydetermined by the microprocessor and application system installed, the profitabilityand prosperity of the PC industry’s is dependent of the profitability and prosperity ofthese suppliers. As the PC has become a more commodity-like product, price-competition has becomes ever in the industry. The price of PCs has declined since1990’s. Cost-cutting is now critical for PC producers to cover the decreasing profitmargin. Low-cost production at Dell contributes its positive growth rate, while allother major firms are experiencing negative growth rates. Another important aspectof competitive advantage is globalization. Many PC makers in the US now earnaround 40% of their revenues in international markets. Although PC markets in theUS, Europe, and Japan have matured and the demand has slowed down, demand inAsia-Pacific (except for Japan) is expected to grow. The effects of intense competitionare beginning to be felt as companies exit via selling to other companies or simplyexiting the industry altogether. Regardless of the number of companies present, thecomputer industry will continue to expand and remain competitive for a number ofyears to come. Hence the threat to industry rivalry can be concluded to be strong.Apple`s major competitive advantages I. Apple combination of superior software, such as Aldus (Later Adobe) PageMaker and Microsoft Excel and Peripherals, Such as laser Printers, gave the Macintosh unmatched capabilities in desktop publishing. II. Apple developed its own proprietary operating system and application software and many peripherals including printer.III. Analysts generally considered Apples product to be more versatile than IBM.IV. Apple core software technology, such as multimedia, due to this Apple retains a big lead.
  44. 44. V. Apple controlled all its aspect of computer and Apple offer customer a complete solution, including hardware, software and peripheral that allowed customer to ―plug and play‖. VI. Apple devoted 9% of sale to research and development compared with 5% at Compaq and 1% at any other IBM clone manufacturers. VII. Apple launched a website to sell its products directly to consumer.VIII. While there is always a potential for new competitors to emerge, the personal computer industry is dominated by five main competitors: Dell, HP, Compaq, IBM, and Apple. The presence of dominant players deters the entry of new players to immediately enter this market and establish their brand.IX. A greater threat to the computer industry is the existence of a great number of amongst industry leaders. In such a competitive environment, these companies often pool costs together on the research and development field. This creates an increased competition between companies who are competing to build superior products based on the same information, and the larger companies often engage in buying out the smaller companies, increasing their competitive edge. X. Established mobile phone manufacturers can also be considered as a threat to the PC industry because they can easily shift to PC manufacturing given their technical expertise and channel establishment apart from brand image. The advent of modern software capabilities like online office, online operating system, cloud computing and online resources might push PC manufacturers where they need to just provide only the basic hardware and connectivity. The relative technology and know-how needed to make PCs is low. Due to increased standardization in operating system (by Microsoft) and Microprocessors (by Intel), it is easy for any new entrant to clone and manufacture PCs (called ―white boxes‖) with no established brand name. XI. Players like Dell today have shifted to negative working capital because of their strategy of build-to-order. This is an attractive option for new entrants. The presence of patents and copyrights in the microprocessor space actually deter new entrants as they need to invest in huge R&D. XII. Selling PCs directly to customers using Internet is also possible. However, existing large companies have established strong supply chains, distribution
  45. 45. channels, R&D, marketing, and customer support services to create moderate entry barriers.XIII. As the PC industry in most nations is close to the maturity stage, the number of entrants has slowed down and industry concentration increased. The results are lessened entry, which has led to a more concentrated industry.XIV. Hence the threat from new entrants to the PC industry is weak to moderate. OTHER POINTS OF THE CASE… CEO YEAR STRATEGY ADDOPTED RESULT Johan 1985-1993 Targeting each segment, Growth of Scrulley horizontal and vertical company,In1990’s (MBA, integration, plug and play, sales reach to $5.6 Marketer Joint venture of APPLE and billion By IBM, strategy according to training) competitor. Mike 1993-1995 Killed the plan of Scrulley, Loss of $69 million, Spindler licensed companies to make Mac Layoffs of employees (engineer) clones, no action on joint venture that has taken with IBM. cut down in salaries. Cilbert 1996-1997 Premium price differentiation Apple lost $i.6 billion, Amelio strategy, pay roll cuts, pushes share price shank,
  46. 46. (engineer) in higher market segment. share dropped 6%-3%Steve Jobs 1997-till Microsoft agreement to invest Increase in Mac date $150 million on Apple , cut revenue to 27%grew in down of product range, imac. units sold in year 2005 (internet based computers), 8% by 16%. Growth in increase in R&D, outsourcing, continue till now and distribution system, online iPods, iTunes, etc. has stores, retail stores. also generated large amount of revenue.Analysis of strategy adopted by apple in guidance of four different people(CEO)DRAWBACKS OF APPLE STRETEGY INCLUDE • Not attracting price conscious customers. • Risk of change in customer taste. • Low market share because of high price and low customization.ALTERNATIVES OF APPLE TO GROW ITS MARKET SHARE • Concentrating on low price customers, like it has launch Mac Min to compete with its competitor IBM. • So it should again launch Man Min or other similar concept for the lower price segment.Recommendations Strategy 1 • Open six computer retail stores (not just peripheral and accessories). Apple currently has stores opened throughout the United States with only peripheral and accessories for their computers. Adding the hardware should generate more hands-on awareness and use already established locations.  This will increase product accessibility for those who wish to view items other than just accessories and increase awareness of the originality of Apple’s products.
  47. 47.  2 percent increase over the next 2 years in sales representatives for the computer hardware. Strategy 2 • Contract music spokesperson to attract the upcoming generation who are attending high school and college. This will invoke a sense of style and linking apple with a distinctive and memorable top 10 hit. This will stay in the customer’s awareness and influence future purchase decisions.  Contracting one music spokesperson estimated $6 million. Strategy 3 • Add more features to current products for greater Wintel compatibility. Features such as iTune software compatible with windows based computers, Office programs loadable from PC installation disk (This would require a software agreement with Microsoft). In late October 2003 Apple released an iTune software package that is PC ready.  It will increase the United States market share at least 30 percent for the next 2-3 years.  $50 million is the estimated cost for Research and Development.CONCLUSION • Driving Apple’s growth strategy has been the desire for the company to increase its distribution and availability through the introduction of clones. Unfortunately, this strategy has not provided the company with a strategic fit with its major strength which is the company’s innovation. Apple’s reputation is that of reliability and quality and should look to exploit these characteristics. Its pure performance is partly attributed to this failing of not matching its strength with its strategy. • First and foremost, Apple is faced with the continuing challenge of growing user base, and analysts say they will be looking for an update on whether the companys ad campaign featuring Windows computer-users has had any effect on gaining new customers.
  48. 48. • Due to the pricing strategy of Apple’s products and due to its low compatibility with products other than Apple’s, it suffered low market share constantly.

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