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Apple 11.00 section


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Apple 11.00 section

  1. 1. Apple, Inc. Formulation Presentation March, 7 2008Mathew Lugo, Brooks Johnston, Jessica-Anne Stoudemire, Kerri Barringer, & Ben Ponds
  2. 2. Executive SummaryPresented by: Kerri Barringer
  3. 3. Apple ProfileProducts: Desktop Industry:computers, laptops,  Key Players:digital music players,  Dellsoftware  Hewlett-Packard  MicrosoftMarkets: High-end,technology-savvy  Keys to success:users  InnovationSize: $8.3 billion in  Quality support servicessales in 2004
  4. 4. Apple’s Mission & VisionMission: Apple is in the Vision:business of innovating,  To be a leadingmanufacturing, and innovator of newmarketing/selling technologies thatcomputer hardware and change the way peoplesoftware solutions, related go about their dailyperipherals, andcommunicationsequipment.
  5. 5. General Sector of the External Environment Presented by: Ben Ponds
  6. 6. Operating EnvironmentEconomic Factors  Intense growth – dependent on machines  Demand for product services & supportSocial Factors  Wireless communication  Powerful & portable devicesPolitical Factors  Copyrights protectionTechnological Factors  Strong rivalries among top competitors  Continuously changing productsEcological Factors  Pollution  Corporate Social ResponsibilitySummary  Product support services  Powerful & portable devices
  7. 7. Industry AnalysisPresented by: Matt Lugo
  8. 8. Porter’s Five Force’s Model1. Rivalry Among Existing Competitors Innovation; First to enter the market2. Substitute Products Competitors with similar products3. Powerful Suppliers Forward Integration4. Powerful Buyers Backward Integration5. Threat of Entry Advanced Knowledge Capital Requirement
  9. 9. Competitor Profile: Hewlett PackardHewlett-Packard Sector: TechnologyCompany provides Industry:Diversifiedvarious products, Computer Systemstechnologies, Products: Servers,software, solutions, Business Criticaland services Systems & Softwareworldwide.
  10. 10. Competitor Profile: DellEngage in the Sector: Technologydesign, development, Industry: Personalmanufacture, Computersmarketing, sale, and Products: Desktops,support of various Mobility Products,computer systems Software &and services peripheralsworldwide.
  11. 11. Competitor Profile: MicrosoftThe worlds #1 Sector: Technologysoftware company Industry: Applicationprovides a variety of Softwareproducts and Products: Videoservices, including game consoles,its Windows servers and storageoperating systems software, and digitaland Office software music players.suite.
  12. 12. Apple’s Position within theIndustryPersonal Computers Apple needs to focus Lack customer & on product product service differentiation to avoid Competitors dominate becoming a low- market margin commodity,Multi-Media especially in terms ofPeripherals digital music and Innovative; first to communications. enter the market
  13. 13. Value Chain AnalysisPresented by: Brooks Johnston
  14. 14. Value Chain AnalysisSupporting Activities: General Administration:  Identify new-product market opportunities & environmental threats, public image & corporate citizenship Human Resource Management  Recruit, train, motivate, challenge, and promote the most talented employees Procurement  Good relationship with suppliers,
  15. 15. Value Chain AnalysisPrimary Activities:  Technology Development  Research & development leading to product and process innovations, timeliness of technology developments, encourage creativity  Operations  Product design, productivity of equipment, effective quality control systems  Marketing and Sales  Identify customer segments, innovate sales & advertising, image of quality, favorable reputation, brand loyalty  Service  Ability to provide replacement parts or tech support, warranty/guarantee, quality of customer education & training
  16. 16. Core Competencies & CompetitiveAdvantageProcurement First computer software company to negotiate with RIAA to allow consumers to legally download music onlineTechnology & Development Main objective is to be the leading innovator of new technologies that change the way people live their daily livesMarketing & Sales Identify specific customer segments and needs, develop an image and reputation of quality, innovative advertising
  17. 17. Strengths Relative to RivalsiPod & iTunes software revolutionized the musicindustry, worked with RIAA to develop dealConsidered the BMW or “cool” computer systemto ownPC is a mature industry/product—Apple foundnew ways to spark demandSuccessfully differentiate productsBrand Image and Recognition
  18. 18. Weaknesses Relative to RivalsApple’s market share is low as prices forwindows-based machines fallApple has limited number of suppliers to obtainraw materialsApple uses third-party music content—potential tolimit music or limit availability in the futurePromotional activities focus on core groups—misses the larger audience of PC’s for non-graphics based business and home usersCell phone vs. iPod
  19. 19. Industry Specific CompetitiveAdvantagesDevelopment of innovative newtechnologiesDell grew successfully by eliminating themiddle-man and selling directMicrosoft is #1 software companyHP is currently the #1 PC manufacturer
  20. 20. Financial Analysis of Apple Presented by: Kerri Barringer
  21. 21. Operating Income and Net Income 1,000,000 800,000 600,000 400,000Dollars (in thousands) Operating Income 200,000 Net Income 0 2000 2001 2002 2003 2004 -200,000 -400,000 -600,000 Years
  22. 22. Asse ts, Liabilitie s, Stockholde rs Equity 9,000,000 8,000,000 7,000,000 6,000,000Dollars (in thousands) 5,000,000 Total As sets Total Liabilities Total Stockholders Equ 4,000,000 3,000,000 2,000,000 1,000,000 0 2000 2001 2002 2003 2004 Years
  23. 23. Net Profit Margin 15 10 5 0 2000 2001 2002 2003 2004 -5 ApplePercent Dell -10 HP Industry -15 -20 -25 -30 -35 Years
  24. 24. Current Ratio 4 3.5 3 2.5 AppleYears Dell 2 HP Industry 1.5 1 0.5 0 2000 2001 2002 2003 2004
  25. 25. Total Debt to Equity 21.5 10.5 Apple Dell HP Industry 0 2000 2001 2002 2003 2004-0.5 -1-1.5
  26. 26. Revenues/Total Assets 2.5 2 1.5 Apple DellYear HP Industry 1 0.5 0 2000 2001 2002 2003 2004
  27. 27. SWOT Summary & Core Issue Presented by: Matt Lugo
  28. 28. SWOT SummaryStrengths: Innovation; first to enter the market Product & Market DevelopmentWeakness: Customer and Product ServicesOpportunities: Strategic Alliances with leading communication firmsThreats: Forward integration Becoming a low- end commodity
  29. 29. Core Issue of AppleApple needs to focus on productdifferentiation to avoid becoming a low-margin commodity, especially in terms ofdigital music and communications.
  30. 30. Long Term Objective & Strategic Scenarios Presented by: Ben Ponds
  31. 31. Long Term ObjectiveTechnological Leadership Product Development Quality Support Services
  32. 32. 5-year ExpectationsBy 2010 most cell phones will have mp3capability.High quality customer support services willbe in great demand.
  33. 33. Future Scenarios for AppleBest Case  Leader in music capable cell phones  Unsurpassed customer supportWorst Case  Become a low-scale commodity  Fail to integrate quality support servicesMost Likely  Continue to successfully differentiate out products  Retain strong support and service operations
  34. 34. Possible Objective ShiftsWorst Case Scenario Competitive positionBest Case Scenario Productivity Public responsibility
  35. 35. Corporate Level Business Alternatives Presented by: Brooks Johnston
  36. 36. Corporate Level StrategicAlternativesEnter communications industry Establish relationship with cell-phone carrierExpand customer service capabilities Add brick & mortar locations that focus on training clinics to use Apple products, service their product problems, Apple “Geek Squad”, etc…
  37. 37. International Corporate-LevelAlternativesGlobal brick & mortar locationsNearly 2.4 billion people living in Chinaand India alone, accounts for 37% of theglobal populationMajor areas of economic growth are innew-markets (China & India), and inproduct & service expansion
  38. 38. Strategic Alliances as Corporate-Level AlternativesEstablish relationship with cell phonecarrier Entrenched in professional media creation markets, provide fundamental intellectual property to be used in consumer oriented software
  39. 39. Acquisition & RestructuringCorporate-Level AlternativesApple is limited to the number of suppliersit can use to obtain raw materialsSome key components are subject toindustry-wide availability constraints andpricing pressuresApple needs to find multiple componentsuppliersPossibly acquire suppliers
  40. 40. Keys to SuccessInternational Country specific economic, social, political, technological, and ecological factorsStrategic Alliances Challenge in negotiating contract terms & copyright agreementsAcquisition and Restructuring Finding multiple component suppliers
  41. 41. Long-Term Objective: TechnologyLeadershipEnter communications industry: Focus on product development and differentiation in areas of digital music and communicationExpand customer service capabilities: Global brick & mortar locations that focus on quality support services (training and tech support)
  42. 42. Business Level Strategic Alternatives Presented by: Jessica-Anne Stoudemire
  43. 43. Business LevelStrategic AlternativesStrategic Business Units Multimedia Devices and Software  iPod, iTunes, etc. Computers  iMac, iBook, etc. Computer Hardware Computer Software  Safari, iMovie, etc.
  44. 44. Generic Competitive OptionsDifferentiationFocus Differentiation
  45. 45. Differentiation: Pros and ConsPros: Cons: Larger market than focus  No cost advantage differentiation  Hard to sustain due to High customer loyalty imitation  Could achieve greater Reputation for innovative differentiation with products focused marketing • Relevant Rival: Microsoft
  46. 46. Focus Differentiation:Pros and ConsPros: Cons: Ability to meet  Less opportunities for targeted segment’s growth needs  Targeted segment’s Ability to adapt to demand has large segment’s changing impact on revenue needs or demands  Non-focus oriented High customer loyalty competitors can better within segment compete in pricing • Relevant Rival: Dell
  47. 47. Generic Competitive Option: DifferentiationGrand Strategies  Market Development  Product Development  Innovation  Strategic Alliances
  48. 48. Generic Competitive Option:Focus DifferentiationGrand Strategies: Concentrated Growth Concentric Diversification Strategic Alliances Product Development Innovation
  49. 49. Strategic ChoiceIn order to achieve the long term objectiveof technological leadership it isrecommended that Apple establishes astrategic alliance with a leadingcommunication provider