Apple Introduction and Mission and vission

IPhone Strategic Review
FA17-RBA-006
Hafiz Saad Ali
Assignment 2
Submitted to:
Sir Shoib Sajjad
Submitted By:
Hafiz Saad Ali
Reg Number:
FA17-RBA-006
Subject:
Strategic Management
Topic:
Apple Strategic Review
Department of Management Sciences
Comsats Sahiwal

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Hafiz Saad Ali
Contents
Introduction:..............................................................................................................................................3
Vision statement........................................................................................................................................4
Mission Statement.....................................................................................................................................5
SWOT Analysis ........................................................................................................................................6
Strengths: ..................................................................................................................................................6
Weaknesses...........................................................................................................................................7
Opportunities.........................................................................................................................................9
Threats.................................................................................................................................................10
Brand Strength ........................................................................................................................................11
Innovative Products ................................................................................................................................11
Strong Integrated Supply Chain..............................................................................................................12
Premium Pricing Strategy.......................................................................................................................12
Competitive advantage in the Marketing strategy of Apple ...................................................................12
Promotions in the Marketing strategy of Apple......................................................................................14
Apple’s Intensive Strategies (Intensive Growth Strategies) ...................................................................14
References ………………………………………………………………………………………..................................................16

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Introduction:
Apple Inc. is an American multinational technology company headquartered in Cupertino, California that
designs, develops, and sells consumer electronics, computer software, and online services. The
company's hardware products include the iPhone smartphone, the iPad, tablet computer, the Mac personal
computer, the iPod portable media player, the Apple Watch smartwatch, the Apple TV digital media
player, and the Homepod smart speaker. Apple's consumer software includes
the macOS and IOS operating systems, the iTunes media player, the Safari web browser, and
the iLife and iWork creativity and productivity suites. Its online services include the iTunes Store, the iOS
App Store and Mac App store, Apple music, and iCloud.
Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne in April 1976 to develop and sell
personal computers. It was incorporated as Apple Computer, Inc. in January 1977, and sales of its
computers saw significant momentum and revenue growth for the company. Within a few years, they had
hired a staff of computer designers and had a production line. Apple went public in 1980 to instant
financial success. Over the next few years, Apple shipped new computers featuring innovative graphical
user interfaces, and Apple's marketing commercials for its products received widespread critical acclaim.
However, the high price tag of its products and limited software titles caused problems, as did power
struggles between executives at the company. Jobs resigned from Apple and created his own company.
As the market for personal computers increased, Apple's computers saw diminishing sales due to lower-
priced products from competitors, in particular those offered with the Microsoft Windows operating
system. More executive job shuffles happened at Apple until then-CEO Gil Ameljo in 1997 decided to
buy Jobs' company to bring him back. Jobs regained position as CEO, and began a process to rebuild
Apple's status, which included opening Apple's own retail stores in 2001, making numerous acquisitions
of software companies to create a portfolio of software titles, and changed some of the hardware
technology used in its computers. It again saw success and returned to profitability. In January 2007, Jobs
announced that Apple Computer, Inc. would be renamed Apple Inc. to reflect its shifted focus toward
consumer electronics and announced the iPhone, which saw critical acclaim and significant financial
success. In August 2011, Jobs resigned as CEO due to health complications, and Tim Cook became the
new CEO. Two months later, Jobs died, marking the end of an era for the company.
Apple is the world's largest information technology company by revenue and the world's second-largest
mobile phone manufacturer after Samsung. In February 2015, Apple became the first U.S. company to be
valued at over US$700 billion. The company employs 116,000 full-time employees as of October
2016 and maintains 498 retail stores in 22 countries as of July 2017. It operates the iTunes Store, which is
the world's largest music retailer. As of January 2016, more than one billion Apple products are actively
in use worldwide.
Apple's worldwide annual revenue totaled $215 billion for the 2016 fiscal year. The company enjoys a
high level of brand loyalty and has been repeatedly ranked as the world's most valuable brand. However,
it receives significant criticism regarding the labor practices of its contractors and its environmental and
business practices, including the origins of source materials.

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Vision statement
Apple’s current vision statement was introduced by CEO Tim Cook, who stated,
“We believe that we are on the face of the earth to make great products and that’s not changing. We are
constantly focusing on innovating. We believe in the simple not the complex. We believe that we need to
own and control the primary technologies behind the products that we make, and participate only in
markets where we can make a significant contribution. We believe in saying no to thousands of projects,
so that we can really focus on the few that are truly important and meaningful to us. We believe in deep
collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot.
And frankly, we don’t settle for anything less than excellence in every group in the company, and we
have the self- honesty to admit when we’re wrong and the courage to change. And I think regardless of
who is in what job those values are so embedded in this company that Apple will do extremely well.”
Apple’s vision statement is considerably detailed and reflects the company’s comprehensive approach in
ensuring continued growth and success. For instance, the vision statement enumerates a number of major
points, such as the emphasis on innovation, which directly relates with Apple’s rapid innovation strategy.
In addition, the vision statement specifies simplicity, which is also an integral aspect of the company’s
approach to product design and development. Apple is known for user-friendly and easy-to-use products
that help improve daily activities. For instance, the simplicity of the design of iPhone and iOS make it
easy to communicate, use apps, and access the Internet. Moreover, Apple’s vision statement shows
careful selection of markets. This factor reflects the firm’s use of market research to guide decision-
making in product development and strategic formulation. Also, even organizational culture is included
in this vision statement. Apple highlights employees’ collaboration and excellence as keys to its business.
This detailed vision statement is quite comprehensive in addressing the different aspects of Apple’s
business. It effectively shows the holistic approach of the company’s leaders. Thus, based on conventions
on vision statement construction, Apple’s vision statement is satisfactory because it clearly shows the
direction of the company. This direction is stated for the business as a whole, as well as the various
aspects or components of Apple’s organization. Such a detailed vision statement is beneficial to business
because it helps guide decision-makers and other employees in working toward the desired condition,
which in this case is a condition of Apple’s continued global success based on excellence and innovation.

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Mission Statement
Apple’s mission statement has also changed over time. The company considers the changing business
landscape, which influences the possibilities of what Apple can do. The company recognizes the changing
market and industry. Apple’s current mission statement is, “Apple designs Macs, the best personal
computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital
music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its
revolutionary iPhone and App store, and is defining the future of mobile media and computing devices
with iPad.”
Apple’s mission statement is very specific in indicating what the company does and will do. Details about
certain product lines are included to show the firm’s current condition. The mission statement mentions
Macs, OS X, iLife, iWork, and others. These details are important in recognizing and setting the baseline
for future actions that Apple will implement. These future actions are also provided in detail. The mission
statement includes details about what Apple intends to do in its various businesses. For example, the firm
states that it is “defining the future of mobile media and computing devices.” This part of the mission
statement shows that Apple plans to continue focusing its research and development on mobile devices
and related media. Such mobile media may include online media via iTunes, which is accessible through
mobile devices like iPad and iPhone. These points show that Apple’s mission statement is accurate in
depicting the company’s situation and goals. However, the mission statement is quite narrow in
representing possibilities for Apple, which is currently in the best position to explore a wider variety of
options. It is also worth noting that this mission statement is a departure from Steve Jobs’ original mission
for the company: “To make a contribution to the world by making tools for the mind that advance
humankind.” Apple’s mission statement has shifted away from a general picture of the business, toward a
specific reflection of what it wants to achieve in terms of goods and services.
Apple changes our mission statement and also adopt new environment in our mission statement which
apple customers there distributors

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SWOT Analysis
Strengths:
1. Unique ability to design and develop proprietary hardware, software, applications and services
Apple Inc.’s ability to design and develop its own hardware, software, applications and services allows
the company to introduce unique, innovative and easy-to-use products and solutions for its customers.
Unique, innovative and easy-to-use products and services that integrate seamlessly into one Apple
ecosystem are the reasons why customers buy Apple’s premium products and enjoy using them. In other
words, it creates a competitive advantage no other company can match.
Source: Strategic Management Insight
Apple’s ecosystem is the result of the company’s ability to design a wide variety of integrated proprietary
hardware, software, applications and services.

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Many of Apple’s competitors have tried and still try to imitate the success of Apple’s product ecosystem,
but fail due to not having strong capabilities in designing, manufacturing and developing both hardware
and software, applications and services.
Samsung Electronics, Apple’s strongest competitor, lacks a comprehensive OS and has very few apps and
services to offer its customers. Google, Apple’s second largest competitor is very strong on software,
application software and services, but has only developed a few unsuccessful hardware products.
Except for Google and Samsung Electronics, no other company could seriously attempt to challenge
Apple’s competitive advantage.
2. Powerful brand supported by strong advertising and marketing capabilities
Apple is the world’s most valuable and recognizable brand. According to Interbrand [2]
and Forbes [3]
, the
Apple brand is worth US$178.1 billion and US$154.1 billion, respectively. Brand value is closely related
to its recognition, meaning that Apple is also one of the world’s most recognizable brands. Their brand
recognition is supported by its vast product ecosystem.
Moreover, Apple has a reputation of developing highly innovative, well designed, and well-functioning
products, as well as for delivering a great customer experience and sound financial performance.
The company has been able to achieve such strong brand recognition and reputation through its strong
advertising and marketing capabilities.
However, it only spent US$1.8 billion on advertising in 2015 (no data available for 2016), or 0.77% of
the total revenue. In comparison, Samsung Electronics spent 1.86% of its total revenue on advertising,
indicating its comparatively more inefficient advertising spending or poorer capabilities in promoting its
brand.
Apple’s excellence in creating spectacular marketing campaigns, its superior advertising capabilities,
premium quality products and ability to deliver an excellent customer experience has allowed the
company to build the most powerful brand in the world.
Weaknesses
1. Overdependence on IPhone sales
In 2015, iPhone sales grew by 52% over the previous year and generated US$155.041 billion in revenue.
It is the most important revenue source for Apple, accounting for 66% of the company’s total sales.
This makes Apple very vulnerable to changes in the smartphone market. Apple’s smartphones are
targeting wealthier consumers and its biggest sales come from developed regions where the smartphones’
markets are already saturated.

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Hafiz Saad Ali
For the next few years, Apple will be able to grow its sales due to the fast growth of the smartphone
markets in emerging economies around the world and by the introduction of new products. However, in
the long run, the company will face serious challenges in growing its revenues.
Overdependence on IPhone sales weakens the company as shifts in technology, component prices or
consumer tastes may severely decrease Apple’s revenue.
2. Weak direct distribution channels in India
During 2015, 26% and 74% of Apple’s total sales came from direct and indirect distribution channels
respectively. Direct distribution channels include Apple’s retail and online stores. Indirect distribution
channels that Apple uses are third-party cellular network carriers, wholesalers and retailers. The
company’s weakness lies in its direct distribution channels. India, which is the 3rd largest smartphone
market at the moment, has no official Apple stores.
3. Low expenditure on research and development compared to other companies leads to fewer
innovations and products introduced to the market
In the past, Apple has been recognized as one of the most innovative companies in the world due to the
introduction of new product types into the market and the breakthrough technology used in those
products. Yet, for the last few years, Apple hasn’t introduced anything completely new that would disrupt
the market and allow the company to grow significantly.
Apple’s R&D spending accounted for 3.4% of the company’s total revenue, one of the lowest rates
among its competitors.
R&D spending strongly correlates with a company’s revenue growth and expansion into new product
markets. Therefore, Apple should invest much more into its R&D activities than its competitors do in
order to gain a competitive advantage.
4. Incompatibility with other OS
Apple’s proprietary operating systems iOS and OS X are quite different from the OS of both their
Android and Windows rivals. In addition, Apple uses its own design hardware that is often incompatible
with the other manufacturers’ hardware. Sometimes, this difference in software and hardware adversely
affects Apple. Users who are accustomed to using the Microsoft OS may find it hard to get used to the
completely different OS X. Android users face the same problem when an app that is only available on
Google ‘Play’ is not available in the iTunes store.

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Opportunities
1. The Internet of Things (IoT) market is expected to grow significantly over the next decade
Currently, more than 20 billion devices are connected to the Internet and this number is expected to grow
by 50% to 30 billion by 2020.[5]
International Data Corporation (IDC) forecasts that the worldwide market
for the IoT will grow from US$655.8 billion in 2014 to US$1.7 trillion by 2020.[6]
Apple has a unique position to take advantage of the growing IoT market. The company has its own
software platform that is the key to managing information from connected devices. Apple also offers
smartphones, wearable gadgets, tablets, computers and many other hardware products that can be
integrated into one ecosystem and controlled via an Internet connection. Apple could introduce a new OS
system, like Google’s Brillo, designed specifically for the IoT.
2. Health-related wearable gadgets could be introduced to the market
In April 2015, Apple introduced its first smartwatch called Apple Watch. This is the first company’s step
into the wearable gadgets market, which is expected to grow by 35% rate on average each year until
2019.[7]
Business Intelligence (BI) analysts also forecast that the Apple Watch should be the dominant
gadget taking a 47% share of the smartwatch market. With the US$349 price tag, the Apple Watch would
bring the company at least US$14 billion in additional revenue by 2019.
Smartwatches are not the only opportunity for Apple in the wearable gadgets market. There is a trend
toward health-related wearable gadgets. The company could introduce its own range of wearable health
gadgets, which for example could monitor calorie intake, sugar and hydration levels, heart rate and blood
pressure, as well as potentially diagnosing many illnesses or even infusing drugs through the skin.
3. Expanding mobile payments market
In 2015, mobile payments facilitated transactions worth US$8.7 billion in the U.S.[8]
eMarketer predicts
that the mobile payments market will grow by 210% in U.S. alone in 2016 and will reach a value of
US$27 billion. These figures show that the mobile payments market will experience huge growth in the
future, making it a very attractive market in which to compete.
In 2015 Apple introduced Apple Pay, which allows iPhone and Apple Watch users to pay for their
purchases through contactless terminals using near field communication (NFC) technology.
Unfortunately, less than 10% of 12 million terminals in the U.S. are capable of using NFC. Apple should
encourage more businesses to upgrade their terminals, which in turn would encourage more Apple Pay
users.
The mobile payments market provides an opportunity that would greatly benefit Apple in terms of
additional revenue, strengthened ecosystem and better user experience.

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. The mobile enterprise app market will gain traction as more businesses shift toward buying
subscription-based software
The mobile enterprise market is the next big transformation businesses face after cloud computing.
Enterprises are becoming more cost-conscious when it comes to software purchases and are increasingly
choosing subscription-based software in the cloud over buying licenses that have to be installed on
proprietary hardware.
While this trend isn’t new, many analysts predict that it will expand significantly. Apple is also betting on
this and has already announced a few mobile enterprise applications. The company has partnered with
IBM to develop highly usable, transactional and contextual mobile applications for businesses.[9]
Threats
1. Intensifying competition puts pressure on Apple’s market share, revenue and profits
Apple has always faced strong competition from Microsoft, IBM, HP and Dell in the personal computing
sector and since the launch of the iPhone and iPad, that competition has increased significantly. Now
Apple’s main rivals are Google and Samsung, both well-funded and experienced competitors which work
together to provide the best possible offerings to compete with Apple’s devices.
Apple with its high-end but overpriced devices is likely to lose the battle for emerging markets to cheaper
Android devices.
The constantly growing Android market share also puts pressure on iOS, iTunes, Apple Music and the
iBook Store. Android OS usage, with help from Samsung, Huawei, Lenovo and LG devices sales, is
growing rapidly and is the main smartphone OS in emerging markets. As a result, app downloads and the
associated revenue generated has increased significantly in Google Play. Google Play will soon become
the most important app market to compete in and developers will favor it more than the iTunes market.
2. Strong U.S. dollar
Currency exchange rates affect every multinational company, including Apple. The company earns over
65% of its revenue outside of the U.S.
Current forecasts indicate that the U.S. dollar exchange rate is going to rise further against other
currencies over the next few years. This therefore means that Apple’s revenue and profits generated
outside of the U.S. are likely to decrease when converted to U.S. dollars.
3. Lawsuits over patent infringements resulting in damaged brand reputation

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Lawsuits over patent infringements happen often in the market, especially in the technology sector where
devices are made of multiple parts and use software with thousands of lines of code that may have already
been patented by another company.
Apple is not immune to infringement itself as well. Although not willingly, the company has infringed
other companies’ patents numerous times over the years and will likely continue to do so due to the
complexity of its products and the fact that there are so many existing patents in hardware and software
design. According to Unified Patents, Apple is the most targeted company for patent infringements.[10]
4. Risk of data breaches
Apple’s business requires it to collect, store and use customer, employee and its business partners’
personally identifiable information (“PII”). PII information includes names, addresses, emails, phones, ID
numbers, credit/debit card and other personal information that is safely stored and protected from outside
parties. Nonetheless, data breaches occur and stakeholder data does get stolen and exposed from time to
time.
Some of the biggest information thefts have affected Amazon.com, eBay and even Google. All of these
companies have lost customers and sales because of it. With the growing number of data breaches, there
is always a potential risk of Apple being breached in 2016.
Brand Strength
Apple was the world’s leading brand in 2013, ahead of Google, Coca-Cola and IBM, according
to brand consultancy Interbrand. Brand strength gives companies like Apple great visibility in
the marketplace and helps build consumer loyalty. International Business Times notes that the
company’s strong branding encourages customers who buy one Apple product to try another.
Products such as the iPhone, iPad and Mac share the same software and applications, and operate
in a similar way, making the Apple product a natural choice when customers are considering
another device.
Innovative Products
Apple has a long-established reputation for innovation and a commitment to developing new
products. The company developed the graphical user interface, first used in its own computers,
and, more recently, pioneered the iPod music player and introduced new levels of performance
for smartphones. A key competitive advantage for the company is its ability to develop
innovative products that share the same operating system, software and applications. This
minimizes the risk, timescale and costs of product development, enabling the company to
introduce a stream of new products and stay ahead of competitors. Apple’s innovation strategy of
developing products that complement each other strengthens customer loyalty and helps build a
barrier to competition, according to the website Innovation Excellence.

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Strong Integrated Supply Chain
An ecosystem of suppliers, developers and business partners provides Apple with a strong
competitive advantage. The company owns chip manufacturers, controls manufacturing, follows
extremely strict software standards and operates its own stores, points out Market Realist. Deals
with leading music and entertainment companies provide a vast source of media for all the
company’s products. It also has a community of more than 6 million independent software
developers creating applications for Apple products. This gives Apple control over the entire
process of product development, manufacturing and marketing -- an advantage that competitors
find difficult to match.
Premium Pricing Strategy
Apple sets premium prices for its products and minimizes discounts to wholesalers to keep prices
consistent across the market. The company aims to offer customers a high-quality product with
unique features and uses high prices to reinforce the perception of added value and maintain
profitability. The high-pricing strategy also sets a benchmark for competitors, which must offer
equivalent features to match Apple’s perceived value without losing money.
Competitive advantage in the Marketing strategy of Apple
Apple has several competitive advantages over its competitors
1- Superior technology products
Macbook and Iwatch are clearly leaders in their market space because of the OS and the
technology used.
2- Brand equity
Apple has repeatedly taken the top spot for its brand equity and has a cult following since ages.
3- Revenue over time
Apple has deep pockets due to its high margins.
4- R&D
A major competitive advantage of Apple is the amount it spends on R&D keeping its eyes on the
future rather than on the present.

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The Cash cows:
are products which are existing since ages and which cannot be challenged in the current
market conditions and have a majority market share when the global data is referred – These
are Macintosh, Iphone, Iwatch (50% market share in 2015) and Itunes (a solid support
service to all Apple products)
The stars:
are Ipad and Ibooks where there is a lot of competition and Apple has to invest a lot to keep
these businesses on top.

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The question mark:
is Apple TV which has low market share in an industry which is showing great potential and
might grow at a rapid pace in the future.
The dog:
is Ipod because although it has a high market share, the industry itself is rapidly degrowing
because Smartphones have replaced Ipods.
Promotions in the Marketing strategy of Apple
Apple is one of the most elegant advertisers as can be seen from any of its print ads in
newspapers. You will commonly find Apple ads to be clear and crisp in their message. Their
background will be white and there will be a splash of colors on the print ad introducing the
product or differentiating the product.
And that is one major strength of the brand. Apple has so many differentiation points that it can
have a slew of ads, all targeted towards differentiating the products that it is offering. Not only
have the print ads, even the video ads done the same. They tell you one point which highlights
the product features.
Apple’s Intensive Strategies (Intensive Growth Strategies)
Product Development.
Apple uses product development as its main intensive strategy for growth. Product development
requires that the company must offer attractive products to grow its market share and
performance. Apple implements this intensive growth strategy through innovation in its research
and development processes. The company’s mission statement and vision statement specify
product development. Through this intensive growth strategy, Apple views innovation as a
critical success factor. For example, the company continues to innovate through products like
iPhone, iPad, and Apple Watch. In this intensive growth strategy, the firm also develops new
products for the mobile market. Apple grows because new products and models allow the firm to
generate more revenues. This intensive growth strategy agrees with the company’s generic
strategy by focusing on unique Apple products that can increase profits.
Market Penetration.
Apple uses market penetration as its second most significant intensive strategy for growth.
Market penetration involves gaining a larger market share by selling more of the company’s
current products. For example, Apple applies this intensive strategy by selling more iPhones and
iPads to its current target markets. In particular, the firm achieves more sales by adding more
authorized sellers in its current markets. This approach is important in penetrating markets where

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Apple has not yet achieved a significant position. Also, under the market penetration intensive
growth strategy, Apple uses promotion through various websites and media outlets. For example,
advertisements encourage more people to buy Apple products. This intensive growth strategy
agrees with Apple’s broad differentiation generic strategy because it addresses the need to
broadly capture the market. By selling more current products to more customers in current
markets, this intensive strategy enables Apple to reach customers in all market segments.
Market Development.
Apple uses market development as the least significant of its intensive strategies for growth.
Market development involves creating new markets for new products or entering entirely new
markets. This intensive growth strategy is similar to market penetration, but market development
focuses on establishing presence in new markets. Apple applies this intensive growth strategy by
authorizing new sellers in markets where the company does not have any presence yet. Thus, this
intensive strategy applies mainly in developing markets. Also, Apple implements the market
development intensive growth strategy through novel products. For example, the company
innovates to offer goods like Apple Watch, which is an entirely new product line for the firm.
Through Apple Watch, the company develops its reach in the smartwatch market. This intensive
growth strategy agrees with Apple’s generic strategy of broad differentiation by expanding the
company’s market reach. Such generic strategy requires that unique products should be offered
to different market segments, which the company reaches through market development.

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References:
1- https://en.wikipedia.org/wiki/Apple_Inc.
2- https://bizfluent.com/info-8734236-apples-competitive-advantage-industry.html
3- https://www.strategicmanagementinsight.com/swot-analyses/apple-swot-analysis.html
4- http://panmore.com/apple-mission-statement-vision-statement
5- https://www.marketing91.com/marketing-strategy-apple/
6- http://panmore.com/apple-inc-generic-strategy-intensive-growth-strategies

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