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Strategic Analysis




                                 and he indeed did so…
                    Submitted by:
NILESH A. MASHRU | PGDIBS-2012 | Roll no. 28 | Mumbai, BKC
American Multinational Corporation founded on April 1,
1976 by the legendary Steve Jobs, Steve Wozniak & Ronal
Wayne.
Headquartered in California and present globally
Designs & sells Consumer electronics, computer software
and personal computers
Best known for Macintosh computers, the iPod, the iPhone
and the iPad.
World’s largest publicly traded technology company by
market capitalization
$108 Billion revenue in 2011, 60400 employees, 364 retail
stores in 13 countries
World’s most admired company since 2008 as per Fortune
Magazine
Most competitive & fastest changing market space.
November 1997 - Jobs introduces a new line of Macintosh     April 2010 - Apple begins selling the iPad, a 10-
computers called G3, and a website that lets people order   inch touchscreen tablet, and has an 84 percent
directly from Apple.                                        share of the tablet market by year's end.
1998 - Apple unveils the iMac desktop computer.             Researcher iSuppli estimates 12.9 million iPads
2001 - Apple opens its first retail store.                  were shipped as of December 10.
2001 - Apple introduces the iPod, a palm-sized, hard-       November 2010 - The Beatles' 13 albums become
drive-based digital music player.                           available on iTunes, ending years of talks
2003 - The iTunes Store opens, allowing users to buy and    between Jobs, Beatles' management company
download music, audiobooks, movies and TV shows             Apple Corps and Beatles label EMI Group.
online.                                                     January 17, 2011 - Jobs announces that he will
January 2007 - Apple announces the iPhone. The device       take another medical leave.
features one button on its smooth face and a virtual        February 10, 2011 - Verizon Wireless, a venture of
keyboard. It also introduces Apple TV, which attracts few   Verizon Communications Inc and Vodafone
buyers.                                                     Group Plc, starts selling the iPhone in stores and
September 2007 - Apple unveils the iPod Touch --            puts an end to AT&T's exclusive contract for the
essentially an iPhone without the phone -- which has        phone in the United States.
wireless capabilities and performs much like a portable     February 15, 2011 - Apple launches a long-
computer.                                                   awaited subscription service for magazines,
2008 - Apple opens its App Store as an update to iTunes.    newspapers, videos and music -- a move that
The store features small applications -- from games to      could hurt streaming services Netflix and Hulu.
social and business tools -- that add functions to the      March 2, 2011 - Apple launches the iPad 2, a
iPhone and iPod Touch. Apple also releases the MacBook      sleeker, lighter version of its tablet with a new
Air.                                                        dual-core processor, two cameras and, for the
June 2009 - Jobs returns to the company after undergoing    first time, it comes in either white or black.
a liver transplant.
2009 - Apple releases the iPhone 3GS. The company has
sold more than 220 million iPods so far.
Wozniak’s skill of manufacturing microcomputers



Job’s vision of manufacturing a Personal Computer




Shared Idea of Building & selling personal computers
Redesigned the TV Interface computer
                                       including graphics and eventually
                                       colour
                                       Improved case & keyboard
                                       Debuted at the West Coast Computer
                                       Fair on April 16, 1976.
                                       Sales for 1977 totaled $774K
                                       Most expensive of PC of it’s time




Apple III - Introduced in 1980
Focus of Apple III on competing
with Microsoft and IBM in
business arena
Included software for the first time
Faced stability issues & recalled
Never successful
The ultimate all-in-one goes all out.       It has fun written all over it.




It’s Brilliant. In every sense of the word.   It’s the most amazing iPhone, Yet.
Strengths                 Weaknesses              Opportunities                     Threats
• Strong brand name        • Business Strategy       • Paradigm Shift from PC     • Intense Competition
• Aggressive marketing     • High Price                to Mobile Era              • Dynamic business
  efforts                  • Product offering vs     • Emerging Markets             environment
• Lack of debt               expectations            • Growth in smartphones &    • Risk of International
• Innovation               • Low market share in       tablets market               operations
• Product popularity         desktop & laptop        • Evolution of digital       • Risk of Imitation and
• Design capabilities        segment                   lifestyle                    piracy
• Ecosystem of products    • Corporate Social        • Robust outlook for         • Recent struggles on IPR
                             Responsibility            Mobile advertising           infringement
• Retail presence &
  Strategy                 • Product recalls         • Improved standard of
                           • Absence of Steve Jobs     living
• Wide Distribution
                                                     • Sense of pride in owners
• Horizontal & Vertical
  Integration
• Research & development
• Training to new users
Bargaining Power of Suppliers:
                                                      Highly saturated industry in hardware
         Threat of New Entrants:
                                                     components
High capital investments in technology &
                                                     Dependence on Intel for chips required for
production
                                                     Macintosh. However independence in non-pc
Established brand presence of Apple
                                                     devices helps mitigation
High product differentiation
                                                     Dependency of Microsoft for mac-compatible
High switch costs
                                                     OS ; Apple being 3rd largest seller results in
Dynamic International business environment
                                                     low bargaining power of Microsoft


           Competitive Rivalry:
                                                           Bargaining Power of Buyers:
Large no. of competitors and intense
                                                     High number of substitutes
competition
                                                     High number of product suppliers
High product differentiation
                                                     Low switch costs for consumers
Positive reputation for high quality &
                                                     Innovation helps Apple to maintain
perceived uniqueness in eyes of consumers
                                                     competitive advantage
Dynamic environment making innovation
inevitable



                                   Availability of Substitutes:
                           High no. of substitute products
                           Product positioning & innovation vital for
                           survival
                           Strong brand name & loyal customer base
                           lowers risk for Apple
Product Strength & Innovation
Exclusive Apple Stores – Ensure consumer loyalty
Solutions provider & not a mere product supplier
Hip & posh brand image
Product range
Media presence
Consistency
Attractiveness
Business Level Strategies        Corporate Level Strategies

Product Differentiation          Retail strategy
Unique Features                  R & D at home Strategy
Command Premium Price            Branding Efforts
High Customer Service            Horizontal Integration by adopting a
Superior Quality                 digital hub strategy
Create sense of pride to owner   Vertical Integration between PC &
Rapid Innovation                 Music market
Education Sales                  Focus on competitive advantage
Outsourcing Services             Be Unique
Media fodder – maintain brand    Moderate to High level of
curiosity                        Diversification
                                 Maximize economies of scope with
                                 more products on same platform
A key to greatness is finding the intersection, or the sweet spot, of where
   your passion and strengths, intersect with economic opportunity.



                                                   When Apple stayed focused
                                                   in balanced way on their
                                                   sweet spot, they excelled.
                                                   When the focus was on
                                                   profits first, they flourished
                                                   for a period but then became
                                                   arrogant, and began to
                                                   descend quickly.
                                                   When Apple concentrated
                                                   on their passions at the
                                                   expense of the practical
                                                   needs and of the customer,
                                                   they failed.
Find your noble passion
Make your passion your customers
   Continually invest in your passion and talents
   Thinking deeply about the desired future experience of the customer
   Don't be confined. Innovate beyond today's realities
   Focus on both your customers' functional AND emotional needs
   Use mockups extensively so you can visualize
   Create simplicity, elegance and beauty
S/O                                                 W/O
Increase IPhone and related product sales          Global expansion through Mexico, Portugal,
through      online advertisement. Overall net     France and Australia
sales increased by 66% from 2010                   Robust outlook for mobile advertising market
Apple’s brand recognition throughout all its       provides growth opportunity
markets can strengthen by the offering less        Creating departament responsible for recalls
expensive version of each product to appeal to     and product warranties to maximize customers
lower income market                                satisfaction
The company did not pay dividends because          Improve brand recall through television ads
it reinvests the capital in the operation of the
business
Focus on B2B sales & promotion of software
                                                                       S/T
services & reviving revenues of the iPod           Purchase voice and data network to complement
                                                   the     smartphone division will help acquire
                  W/T                              stronger market position
Long term agreements between Apple Inc. and        Robust     financial   performance    strengthens
the       suppliers to guarantee production        investors’    confidence and provides capital for
commitments                                        future growth avenues, such as opening stores
Constant promotion of the brand will create        and expanding e-commerce throughout the global
stronger awareness and demand for products         market.
Promote laptop & desktop range & price them        Focused      R&D     driving    innovation    and
competitively                                      consolidating its market position. Apple’s R&D
Participation in local communities and charities   expenditure was $1,782 mil in 2010, an increase of
to create positive image which was shadowed        33% from 2009. This provides the company with
by lawsuits                                        new technological innovations which can be used
Continue investment in technology in order to      in Apple products.
stay     ahead of competitors and become a         Form a partnership with Google to supplement
market leader                                      the Apple products
And He indeed did so…

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Strategic Analysis Of Apple Inc Nilesh Mashru

  • 1. Strategic Analysis and he indeed did so… Submitted by: NILESH A. MASHRU | PGDIBS-2012 | Roll no. 28 | Mumbai, BKC
  • 2. American Multinational Corporation founded on April 1, 1976 by the legendary Steve Jobs, Steve Wozniak & Ronal Wayne. Headquartered in California and present globally Designs & sells Consumer electronics, computer software and personal computers Best known for Macintosh computers, the iPod, the iPhone and the iPad. World’s largest publicly traded technology company by market capitalization $108 Billion revenue in 2011, 60400 employees, 364 retail stores in 13 countries World’s most admired company since 2008 as per Fortune Magazine Most competitive & fastest changing market space.
  • 3. November 1997 - Jobs introduces a new line of Macintosh April 2010 - Apple begins selling the iPad, a 10- computers called G3, and a website that lets people order inch touchscreen tablet, and has an 84 percent directly from Apple. share of the tablet market by year's end. 1998 - Apple unveils the iMac desktop computer. Researcher iSuppli estimates 12.9 million iPads 2001 - Apple opens its first retail store. were shipped as of December 10. 2001 - Apple introduces the iPod, a palm-sized, hard- November 2010 - The Beatles' 13 albums become drive-based digital music player. available on iTunes, ending years of talks 2003 - The iTunes Store opens, allowing users to buy and between Jobs, Beatles' management company download music, audiobooks, movies and TV shows Apple Corps and Beatles label EMI Group. online. January 17, 2011 - Jobs announces that he will January 2007 - Apple announces the iPhone. The device take another medical leave. features one button on its smooth face and a virtual February 10, 2011 - Verizon Wireless, a venture of keyboard. It also introduces Apple TV, which attracts few Verizon Communications Inc and Vodafone buyers. Group Plc, starts selling the iPhone in stores and September 2007 - Apple unveils the iPod Touch -- puts an end to AT&T's exclusive contract for the essentially an iPhone without the phone -- which has phone in the United States. wireless capabilities and performs much like a portable February 15, 2011 - Apple launches a long- computer. awaited subscription service for magazines, 2008 - Apple opens its App Store as an update to iTunes. newspapers, videos and music -- a move that The store features small applications -- from games to could hurt streaming services Netflix and Hulu. social and business tools -- that add functions to the March 2, 2011 - Apple launches the iPad 2, a iPhone and iPod Touch. Apple also releases the MacBook sleeker, lighter version of its tablet with a new Air. dual-core processor, two cameras and, for the June 2009 - Jobs returns to the company after undergoing first time, it comes in either white or black. a liver transplant. 2009 - Apple releases the iPhone 3GS. The company has sold more than 220 million iPods so far.
  • 4. Wozniak’s skill of manufacturing microcomputers Job’s vision of manufacturing a Personal Computer Shared Idea of Building & selling personal computers
  • 5. Redesigned the TV Interface computer including graphics and eventually colour Improved case & keyboard Debuted at the West Coast Computer Fair on April 16, 1976. Sales for 1977 totaled $774K Most expensive of PC of it’s time Apple III - Introduced in 1980 Focus of Apple III on competing with Microsoft and IBM in business arena Included software for the first time Faced stability issues & recalled Never successful
  • 6.
  • 7. The ultimate all-in-one goes all out. It has fun written all over it. It’s Brilliant. In every sense of the word. It’s the most amazing iPhone, Yet.
  • 8. Strengths Weaknesses Opportunities Threats • Strong brand name • Business Strategy • Paradigm Shift from PC • Intense Competition • Aggressive marketing • High Price to Mobile Era • Dynamic business efforts • Product offering vs • Emerging Markets environment • Lack of debt expectations • Growth in smartphones & • Risk of International • Innovation • Low market share in tablets market operations • Product popularity desktop & laptop • Evolution of digital • Risk of Imitation and • Design capabilities segment lifestyle piracy • Ecosystem of products • Corporate Social • Robust outlook for • Recent struggles on IPR Responsibility Mobile advertising infringement • Retail presence & Strategy • Product recalls • Improved standard of • Absence of Steve Jobs living • Wide Distribution • Sense of pride in owners • Horizontal & Vertical Integration • Research & development • Training to new users
  • 9. Bargaining Power of Suppliers: Highly saturated industry in hardware Threat of New Entrants: components High capital investments in technology & Dependence on Intel for chips required for production Macintosh. However independence in non-pc Established brand presence of Apple devices helps mitigation High product differentiation Dependency of Microsoft for mac-compatible High switch costs OS ; Apple being 3rd largest seller results in Dynamic International business environment low bargaining power of Microsoft Competitive Rivalry: Bargaining Power of Buyers: Large no. of competitors and intense High number of substitutes competition High number of product suppliers High product differentiation Low switch costs for consumers Positive reputation for high quality & Innovation helps Apple to maintain perceived uniqueness in eyes of consumers competitive advantage Dynamic environment making innovation inevitable Availability of Substitutes: High no. of substitute products Product positioning & innovation vital for survival Strong brand name & loyal customer base lowers risk for Apple
  • 10. Product Strength & Innovation Exclusive Apple Stores – Ensure consumer loyalty Solutions provider & not a mere product supplier Hip & posh brand image Product range Media presence Consistency Attractiveness
  • 11. Business Level Strategies Corporate Level Strategies Product Differentiation Retail strategy Unique Features R & D at home Strategy Command Premium Price Branding Efforts High Customer Service Horizontal Integration by adopting a Superior Quality digital hub strategy Create sense of pride to owner Vertical Integration between PC & Rapid Innovation Music market Education Sales Focus on competitive advantage Outsourcing Services Be Unique Media fodder – maintain brand Moderate to High level of curiosity Diversification Maximize economies of scope with more products on same platform
  • 12. A key to greatness is finding the intersection, or the sweet spot, of where your passion and strengths, intersect with economic opportunity. When Apple stayed focused in balanced way on their sweet spot, they excelled. When the focus was on profits first, they flourished for a period but then became arrogant, and began to descend quickly. When Apple concentrated on their passions at the expense of the practical needs and of the customer, they failed.
  • 13. Find your noble passion Make your passion your customers Continually invest in your passion and talents Thinking deeply about the desired future experience of the customer Don't be confined. Innovate beyond today's realities Focus on both your customers' functional AND emotional needs Use mockups extensively so you can visualize Create simplicity, elegance and beauty
  • 14. S/O W/O Increase IPhone and related product sales Global expansion through Mexico, Portugal, through online advertisement. Overall net France and Australia sales increased by 66% from 2010 Robust outlook for mobile advertising market Apple’s brand recognition throughout all its provides growth opportunity markets can strengthen by the offering less Creating departament responsible for recalls expensive version of each product to appeal to and product warranties to maximize customers lower income market satisfaction The company did not pay dividends because Improve brand recall through television ads it reinvests the capital in the operation of the business Focus on B2B sales & promotion of software S/T services & reviving revenues of the iPod Purchase voice and data network to complement the smartphone division will help acquire W/T stronger market position Long term agreements between Apple Inc. and Robust financial performance strengthens the suppliers to guarantee production investors’ confidence and provides capital for commitments future growth avenues, such as opening stores Constant promotion of the brand will create and expanding e-commerce throughout the global stronger awareness and demand for products market. Promote laptop & desktop range & price them Focused R&D driving innovation and competitively consolidating its market position. Apple’s R&D Participation in local communities and charities expenditure was $1,782 mil in 2010, an increase of to create positive image which was shadowed 33% from 2009. This provides the company with by lawsuits new technological innovations which can be used Continue investment in technology in order to in Apple products. stay ahead of competitors and become a Form a partnership with Google to supplement market leader the Apple products
  • 15. And He indeed did so…