Apple Once the world's most valuable company by Levine Jade Lulu, University of the Philippines Strategic Management

1. Once the World’s Most Valuable Company
Levine Jade L. Lulu
BA 190 - Strategic Management
University of the Philippines
Prof. Mita Angela M. Dimalanta

2. August 20, 2012
Stock Market Valuation = $ 623 billion
”Most Valuable Company of All Time”

5. Apple Map is inferior
Top management turnover
Share price dropped more than 45%
Wiping out $290 billion in shareholder value
“If it is difficult to gain
a competitive advantage
in the first place,
it is much more difficult
to sustain it”

6. 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.”

7. 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
-Tim Cook
"To make a contribution to the world by
making tools for the mind that advance
humankind.“
-Steve Jobs

8. Product Strategy

9. Desktops and Laptops
Competitive Challenge
Competitive Challenge

10. PC Competitors

11. Portable Devices
Guiding Policy

12. Smartphone Competitors

13. Product Strategy

15. Conclusion

16. For sustainability…
 Seize opportunities

17. 1. Explain Apple’s success over the last
decade.
 Apple has grown into a multi-million dollar corporation because of a
powerful competitive strategy.
 Due to Microsoft’s investment in Apple, Steve Jobs innovated and
tapped into another market by introducing iPod in 2001 and iTunes
in 2002. Tremendous success was achieved with iPod & iMac sales,
as people instantly had compatibility and accessibility in all of their
devices.
 In 2007, Apple introduced the iPhone, which started the smartphone
revolution.
 In 2010, Apple created the iPad for the tablet industry.
 Apple continued to make incremental product innovations extending
to each product category. Through simplicity, innovation and
excellence, Apple enjoyed increases in revenue and dominated a
large market through time.

18.  Since Apple shifted away from personal computers to mobile
devices, it disrupted several industries through its product and
business-model innovations. The company’s new products
challenged the existing personal computer market because people
who already bought their products wanted the simplicity of having
the same operating system in all their devices and laptops.
 Apple’s main competitors
 - Personal computer industry are those that run in Microsoft
operating system which are Dell, Hewlett-Packard, Acer and
Lenovo. - In the smartphone industry, Huawei, Samsung, Sone,
HTC, Lenovo and others.
 Because of Apple’s revolutionary business model, an entire new
industry of mobile computers emerged. Even though Apple is the
biggest selling company in this market, it has competitors like
Google, Samsung, Nokia and Asus.
Which industries has it disrupted and how?
Look at Apple’s main competitors.

19. 2. Is Apple’s success attributable to industry effects
or firm effects, or a combination of both? Explain.
 Attributable to both the firm and industry effects.
 The unchanging market share of Apple in the desktop
computer industry led to its development and innovative
products.
 Because of the high competition in the industry, the company
entered niche markets which gave them the competitive
advantage among others.
 The firm effect was effective in challenging Apple, its
management and innovators, in improving every year with
their products.

20. 3. Apply the three-step process for developing a good strategy (diagnose the competitive
challenge, derive a guiding policy, and implement a set of coherent actions) to Apple’s
situation today. Which recommendations would you have for Apple to outperform its
competitors in the future?
Diagnosis of the competitive challenge (Strategy Analysis)
Before Apple became successful, its competitive challenge was other
large firms were dominating the desktop computer industry.
In the present, Apple’s competitive challenge is based on the following
external factors: low switching cost and high aggressiveness of firms.
Aggressiveness of other companies in the smartphone and laptop
industry can be seen through their extensive innovation of their products
and advertising. In the context of switching costs, customers of Apple
can easily switch from Apple’s products to others (Ferguson, 2015).
For example, an iPhone 5s user can easily buy a Samsung Galaxy 7
after its introduction.

21. Deriving a guiding policy (Strategy Formulation)
 Apple’s new guiding policy should be a newer business
model. Instead of just looking into different markets, they
should also create their own. Patents for a new state of the
art technology should be developed because smartphones
are already saturated in the market and people are always
wanting for more. In the case of technological products, the
company should employ uniqueness without being too
complex.

22. Implementation of coherent actions
(Strategy Implementation)
 The foremost advantage Apple could do is to innovate.
With so many opportunities to expand and improve their
product line, the company can brush off its competitors.
Continuous innovation alongside the expansion of their
distribution networks is the key to continued success. They
should keep on delivering excellence in all their products and
people will keep on subscribing to them for a long time. It is
also important to be two steps ahead so that nobody can
anticipate and imitate their designs easily.

23. 4. Why do you think it is so hard not only to gain
but also to sustain a competitive advantage?
 It takes just as much effort, time and money to
do both. A competitive advantage is the
company’s core competency. If Apple had years
to build up their competitive advantage, they
should try as hard to make their company grow
and stay as a market leader. They should stick to
their brand value (and key success factors)
which are simplicity, innovation alongside
excellence, so that they can meet the demands
and expectations of people and enjoy success
for a long time.

24. References
Ferguson, E. (2015). Apple Inc. five forces analysis (Porter’s model).
Retrieved from http://panmore.com/apple-inc-five-forces-analysis-
porters-model-case-study
Liu, L. (2013). Distribution policy-apple-1227810589544805-9
[PowerPoint Slides]. Retrieved from
http://www.slideshare.net/liuliu77715/distribution-
policyapple12278105895448059
Rothaermel, F. T. (2015). Strategic management (2nd ed). New York,
NY: McGraw-Hill Education
Tim, B. (2012, May 07). 6 reasons Apple is so successful. Retrieved
from http://techland.time.com/2012/05/07/six-reasons-why-apple-is-
successful/