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Apple iPad Business Plan

A hypothetical business plan for the 2010 iPad (1st generation). The project was to imitate a new product introduction in few basic management aspects.

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Apple iPad Business Plan

  1. 1. Apple iPad “A magical and revolutionary device at an unbelievable price” Group Project Management Of Organizations Instructor: Professor Katsikeas Vasiliki Chatzivasileiou Zoi Karakosta Danai Sbrini Stathis Simeonidis
  2. 2. COMPANY PROFILE “To be a leader in providing simple, powerful, high-quality information products and services for people who learn, communicate, and create” Vision “Our mission is to bring the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings” Mission Apple Inc designs, manufactures and markets a range of personal computers, mobile communication and media devices, and portable digital music players Leading Products Mac iPod iPhone iPad Apple tv
  3. 3. HISTORY OF APPLE 1976 2011 Apple Computer is founded by Steve Jobs & Steve Wozniak 1980 Apple goes Public after releasing the Apple II 1984 1985 The Macintosh, an all-in-one PC is introduced Steve Jobs leaves the company after being forced out by the board 1989 The first portable Macintosh is introduced 1997 Steve Jobs returns to Apple and retakes the CEO Position Apple hits financial trouble after stiff competition from the PC industry 1998 Apple iMac is introduced, a huge commercial success 2001 The iPod is introduced -- Apple redefines the digital music industry2003 iTunes Music store opens 2007 2010 Apple “reinvents” the phone by introducing the iPhone Apple ushers in the tablet era and redefines mobile computing with the iPad
  4. 4. BUSINESS DOMAIN 10% Worldwide Market Share $43.5 billion $ 65.2 Billion (+52%) Revenue 2009 2010 21% U.S. Market Share Americas: 37.6 % Europe: 28.7 % Japan: 6.1 % Asia & Pacific : 12.7 % $25.1 b $8.2 b $4.9 b $2.5 b $6.2 b $4.9 b $11.2 b +93.2% +2.3% +22.6% +6.7% +43.4% - +18.3% Revenues Perprodutline
  5. 5. KEY SUCCESS FACTORS Simplicity Design a full experience Passionate customers Sell at a premium Cross-sell the product line Element of surprise
  6. 6. PRINCIPLES Simple is also effective We don’t follow our customers - we lead them We are our self’s toughest critic We create new needs We focus on every detail of user experience We always think different, think what’s next
  7. 7. A NEW CATEGORY Tablet
  8. 8. Political & Legal Patent dispute with other manufacturers / competitors FoxConn suicide cases in China plant during iPhone production Supplier Code of Conduct must be endorsed and according to domestic laws Environment & import polices worldwide could affect sales in developing countries (e.g. BRIC) Economical Recession / Global economic crisis affects customer’s buying capability Customers are price-sensitive - price must be affordable Exports & currencies fluctuation can affect profits High expectations due to more educated customers Socio-Cultural Intersection of technology & liberal arts Wider target audience not familiar with computers need Customer cultural diversity Declining trust in businesses and multinational companies MACROECONOMIC FACTORS
  9. 9. Technological Netbooks are already popular Battery technology does not evolve in the same pace System On a Chip is an emerging technology Multi-touch technology recently introduced and adoption in large scale is unknown Many standards of wireless connectivity Tablets were perceived as an expensive product only for business uses Environmental Toxic substance removal (no toxic substances at all) Smaller Packaging of products leads to less waste Responsible manufacturing (Supplier code of conduct) Product recyclability and longer product life leads to smaller carbon footprint MACROECONOMIC FACTORS
  10. 10. PORTER’S FIVE FORCES MODEL Direct Competitors Indirect Competitors Creator of the Android 3.0 platform for tablets Creator of the upcoming Windows 8 OS specialized for tablets Samsung GALAXY TAB Small screen size, OS not optimized for tablets. Affordable price at cost limit Motorola XOOM Expensive ($ 799), OS not 100% ready yet. Price is very high Amazon KINDLE FIRE No storage, data in the cloud Low comparative price Smaller Screen HP TouchPad Similar price & screen size but OS not 100% ready. Rushed to the market early RIM PlayBook Small screen size but OS not ready at all, needs a BlackBerry to fully utilize it
  11. 11. Functionality is of vital importance & minimizes consumer’s ability to bargain iTunes ecosystem (apps, music & videos) locks-in the consumer Fan Base / extremely wider audience and versatility in use cases (students to seniors) Simplicity and small learning curve (easy to use) Threat of new entrants Apple is not manufacturing but only designing the iPad Possible Cost-Aggressive entry by some of our suppliers (e.g. Samsung) or Assemblers (e.g. FoxConn) “ ..but we are more than one year ahead & have strong brand name “ Suppliers’ bargaining power The whole design is made in-house for hardware and software so suppliers have a very simple job. Major supplier is a specialized assembler (FoxConn) Some suppliers are already competitors (e.g. Samsung) Buyers’ bargaining power PORTER’S FIVE FORCES MODEL (cont.)
  12. 12. Risk of substitutes Smartphones  Higher mobility  Phone & texting capability  Camera & video capabilities Netbooks  Price  Wider range of buying options  No learning curve  Popular due to the crisis Notebooks  Full Capabilities  Much wider range of buying options  Bigger Screens  Extensibility eBook Readers  Cheaper  Easier for reading under sunlight conditions  Already popular  Only for book reading PORTER’S FIVE FORCES MODEL (cont.)
  13. 13. SWOT ANALYSIS Strengths Brand perception & advertising Good reputation Strong leading Team Focus on detail, quality & reliability Constant Innovation & frequent upgrades Established Ecosystem Opportunities Creates a new Market Constant Market Growth International Reach Loyal Customer Base Increasing demand for online content (Music, Videos, Books) Weaknesses Price of Apple products Initial Lack of functionalities: (USB, Camera, OS Multitasking) The big cost of constant R&D Proprietary / Closed Software Threats Intense Competition (e.g. Android) Financial & Political instability Plethora of substitutes Initial Skepticism Good Ideas are easily copied
  14. 14. COMPETITIVE STRATEGY PURSUED Balance of mobility and function Daylong Plus Battery Life (10hrs, 1 month stand-by) Content Controllability Innovative Design (An Integrated System) Familiarity due to similar software with iPhone Service Advantage (Apple Care Protection Plan , Genius Bar Support) Perceived status for owning an Apple product
  15. 15. MARKETING STRATEGY Superior Quality Reliability Friendly and almost intuitive to use Cutting-edge Design Low Cost And Effectiveness Usage Both For Professionals And Young Customers Many use cases that will be promoted (medicine, [special] education, advertising booths, exhibitions-galleries etc) iPad will be marketed as a product of:
  16. 16. PRODUCT More capable More intimate iPad …than a smartphone …than a laptop
  17. 17. Newspapers and Magazines will use iPad for content consumption / distribution TV commercials developed by Apple marketing department Keynotes to the press and media PROMOTION Product placement in big & small screen Extensive media coverage (specialized sites and magazines only for Apple)
  18. 18. PLACE Directly from Online Apple Store (phone orders included) From the chain of 357 Apple Retail Stores From a network of resellers and worldwide partners
  19. 19. PRICE By outsourcing the assembly and using cost efficiencies we believe we have hit the sweet spot between price and quality $ 499 For the base version $110 Source: iSuppli $90 $70 $230 +Apple Margin Average Industry Margin Cost of Sales Cost of materials and manufacturing 40%
  20. 20. R&D Incorporation of front and rear end cameras to the next iteration Connectivity issues: USB for camera SD Card reader HDMI output is standard between our competitors Weight reduction without compromising battery life Improve readability in sunlight OS development in close sync with iPhone Books & Magazines buying capability to keep up with eBook growth Expand gaming capability (single, multi & on-line) Multitasking must not bring down battery life Set-Up, sync and use must be distanced from PC & iTunes Challenges in Hardware Challenges in Software
  21. 21. HUMAN RESOURCES Support employees throughout their careers Constant training and education philosophy Commitment to diversity - Celebrate diverse experience - Incorporate diverse experience of employees - Work with diversity network associations Generous employee discounts for Apple products Competitive and personalized benefits package
  22. 22. SUPPLY CHAIN High integration with suppliers allows for higher customization High volume equals big discounts on parts & assemblies costs Control on every piece of supply chain from design to retail stores Lock competitors out of the supply chain (e.g. HTC) Effective transportation methods (e.g. air freight) Tightly orchestrated process during new launches Design Procure Assemble Deliver Sell
  23. 23. INFORMATION SYSTEMS Detailed order tracking Many channels for order taking (online, telephone, etc.) Pre order through retail stores and internet Credit card processing requires sophisticated security Employees have access to unified information Established Extranet with all Suppliers Suppliers Assembler(s) Retail Stores
  24. 24. FORECASTS 0 50 100 150 200 250 300 350 2009 2010 2011 2012 2013 2014 2015 Millions Others iPad Global media tablet shipments now are expected to rise to 60 million units in 2011, up 245,9 % from 17.4 million in 2010 and expected to reach about 300 million in 2015. Source: iSuppli
  25. 25. FORECASTS $-20 $- $20 $40 $60 $80 $100 2009 2010 2011 2012 2013 2014 2015 Billions Break-even at early 2011 Price levels to remain the same Cost per unit to decline until 2013 Year Production Sales Average Price Cost of Sales per unit Profit per unit 2009 15m 0 $550,00 $300,00 $250,00 2010 50m 15m $550,00 $300,00 $250,00 2011 100m 60m $550,00 $290,00 $260,00 2012 110m 80m $550,00 $280,00 $270,00 2013 120m 120m $550,00 $280,00 $270,00 2014 120m 140m $550,00 $280,00 $270,00 2015 120m 160m $550,00 $280,00 $270,00 Annual product update cycle must continue at the same pace
  26. 26. IMPLEMENTATION Potential Implementation Barriers after launch Third party sellers lack of faith & training for promoting the product (extensive training and material access to third party retailers) Stock out issues due to high demand (form teams with extra budget to solve the issue) Possible defective products (emergency stocks – immediate and priority replacing ) Difficulties to forecast regional demand might lead to customer frustration (phased launch per country/region)
  27. 27. MONITORING & CONTROL Order tracking per customer at all stages Track demand, sales and pre-orders by the store and by the hour and adjust forecasting daily Own retail stores lead to operational advantage direct and detailed process information Regular meetings of regional sales managers (more frequent during launch and scheduled later) Assign specialized account managers to key third-party suppliers
  28. 28. Q & A Group Project Management Of Organizations Instructor: Professor Katsikeas Vasiliki Chatzivasileiou Zoi Karakosta Danai Sbrini Stathis Simeonidis
  29. 29. STRENGTHS Brand perception Strong past sales have developed Apple as favourable brand. Good Reputation Apple has managed to create a huge fan club through its high quality products, something that led the company to the top Apple has a very creative and strong leading team that cooperates really well Strong leading Team Apple gets to set the specs in detail and delivers its products through a controlled retail experience (Apple Retail Stores) that helps them explain the value to the customer and extract a premium for that value Focus on detail, quality and reliability Constant Innovation & Frequent Product upgrades Established Ecosystem iTunes & App Store as a business model for online media & mobile applications. Apple frequently updates its products and even more frequently updates the software for them.
  30. 30. Price of Apple Products Initial Lack of Functionalities Constant R&D yields high costs Proprietary and Controlling Apple’s products are highly priced in the personal computer market, and that has created a perception (e.g. Apple Tax). WEAKNESSES USB to hook devices directly, cameras for video conferences, OS Multitasking (running multiple applications at the same time) In order to compete at the top and remain as a leader there is a need for constant R&D which takes up resources compared to its competitors (Dell, etc) While this keeps design control inside and up to standards, it has hurt wide adaptation of Apple hardware, especially computers, where we have a relatively small market share.
  31. 31. OPPORTUNITIES Create a new market Market growth is constant International and wider reach Loyal Customer Base Increasing demand for online content (music, videos, books) A new market is always a “greenfield” that the leader can handle as he likes All products are easy to use, almost intuitive – specially iPad can be used by practically all ages and all nationalities making it available to a wider range of consumers All surveys and researches show a rapid growth of the tablet market with more to come into the enterprise sector. Each new product implements appealing new features, strongly inducing the ever-expanding loyal Customer base to buy new products
  32. 32. THREATS Strong Competition Financial Instability Plethora of substitutes Initial skepticism for the product Good ideas are easily copied Apple is facing tough competition in todays global oligopoly as industry is being influenced by many major competitors such as Nokia, Dell, Google, RIM, etc. The global financial instability prompts customers to postpone buying any electronics product which is considered a luxury in some communities Alternative products and substitutes affect the sales of iPad due to their lower price Customers initially questioned the need of a tablet considering the big popularity of netbooks and notebooks Other competitors adapt to our tested practices such as multitouch, applications store, music-video store etc.

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A hypothetical business plan for the 2010 iPad (1st generation). The project was to imitate a new product introduction in few basic management aspects.


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