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
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.
General Sector of the External Environment Presented by: Ben Ponds
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
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
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.
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.
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
Value Chain AnalysisPresented by: Brooks Johnston
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,
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
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
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
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
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
Financial Analysis of Apple Presented by: Kerri Barringer
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
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
Net Profit Margin 15 10 5 0 2000 2001 2002 2003 2004 -5 ApplePercent Dell -10 HP Industry -15 -20 -25 -30 -35 Years
Current Ratio 4 3.5 3 2.5 AppleYears Dell 2 HP Industry 1.5 1 0.5 0 2000 2001 2002 2003 2004
Total Debt to Equity 21.5 10.5 Apple Dell HP Industry 0 2000 2001 2002 2003 2004-0.5 -1-1.5
Revenues/Total Assets 2.5 2 1.5 Apple DellYear HP Industry 1 0.5 0 2000 2001 2002 2003 2004
SWOT Summary & Core Issue Presented by: Matt Lugo
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
Core Issue of AppleApple needs to focus on productdifferentiation to avoid becoming a low-margin commodity, especially in terms ofdigital music and communications.
Long Term Objective & Strategic Scenarios Presented by: Ben Ponds
Long Term ObjectiveTechnological Leadership Product Development Quality Support Services
5-year ExpectationsBy 2010 most cell phones will have mp3capability.High quality customer support services willbe in great demand.
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
Possible Objective ShiftsWorst Case Scenario Competitive positionBest Case Scenario Productivity Public responsibility
Corporate Level Business Alternatives Presented by: Brooks Johnston
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…
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
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
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
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
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)
Business Level Strategic Alternatives Presented by: Jessica-Anne Stoudemire
Business LevelStrategic AlternativesStrategic Business Units Multimedia Devices and Software iPod, iTunes, etc. Computers iMac, iBook, etc. Computer Hardware Computer Software Safari, iMovie, etc.
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
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
Generic Competitive Option: DifferentiationGrand Strategies Market Development Product Development Innovation Strategic Alliances