Apple Inc

1. What are the chief elements of Apples overall competitive strategy? How well do the pieces fit together? Is the strategy evolving? Apple Corporation, Capital requirement degree of completion, Brand identifies the product price; demand, and the apple users. Supplier power, Barriers, Rivalry, Treat of Substitutes, and Buyer Power represents Apples overall competitive strategy. Music, Internet, and Computer is an n innovation for long term development, technological improvement with a unique design, it transcended the barriers of computer industry to cross many aspects of industries such as itunes, ipod, and iphone. Its evolving due to a loyal customer base and ambitious leadership. 2. What are the key elements of Apples strategy in computers, personal media players, and smartphones? Have its strategies in its core businesses yielded success? Explain. Product diversification and innovation for long term development (music, internet, computer). Integration of software and hardware, technological improvement with a unique design, and transcended the barriers of computer industry to cross many aspect of industries (itunes, ipod, and iphone). 3. What does a competitive strength assessment reveal about Apples computer business, as compared to the leaders in the personal computer industry? Use the methodology in Table 4.2 to support your answer. Does it appear that the companys competitive positions in personal media players and smartphones or stronger or weaker than its position in computers? Apples current success and industry position are unparalleled. Steve Jobs digital hub continues to grow and Mac sales are increasing too. The stock price continues to rise, the devices are constantly improved, and Apples presence is almost tangible. Steve Jobs has really done wonders for Apple. Going forward, margins will fall as prices come down in response to wornoff novelty, but costs of goods sold are coming down, too, so its difficult to predict how much margins will fall. For now, Apple is secure in industry

position, which is demonstrated in the financials. From 2006 to 2009, the companys market value went from $72,900 to $189,917.But, with stiff competition and different variables within the industry, though, we cannot be sure that Apple will maintain this. Apple must, above all else, monitor their competition. The competition is going to drive them to do be better because they have to stay out of reach. Apple also has to remain the technology leader. They have to be proactive in continually developing new, innovative technology that appeals to everyone, even those that have previously been PC-loyal. By doing these two things and managing the business end well, they will maintain their place in the industry. Apple worked very hard to get to where they are and they will have to work hard to stay on top, too. 4. Does it make good strategic sense for Apple to be a competitor in the computer, personal media player, smartphone, and tablet computer industries? Are the value chain activities that Apple performs in computers, personal media players, tablet computers and smartphones very similar and compatible or are there very important differences from product to product? Which of the four products lines---computers, tablet computers, personal media players, or smartphones---do you think is most important to Apples future growth and profitability? Why? Yes, Apples current strategy is to bring to its customers compelling new products and solutions with superior ease-of-use, seamless integration and innovative industrial design. Based on this explanation it can be determined that Apple is utilizing a broad differentiation strategy to stay competitive in its industry. Basically, Apple provided a specific strategy based on a generic one that was just used as a guide. According to Bowman (Bowman, Cliff), generic strategies should be used as a tool to help form a solution instead of being the solution itself. To be a competitor in the computer, digital music player, and mobile phone industries, Apple must used to be just in the personal computer and software industry and also utilized its strengths and expanded its business to the entertainment industry. Apple introduction starting from digital music players (iPod) and online music service (iTunes) in 2001 and its another introduction of mobile phones (iPhone) in 2007. Yes, the value chain activities are very similar, but they have their own level of convenient for each. Smartphones will be most important to Apple future due to the demand and the convenience.

5. What is your assessment of Apple Computers financial performance the past three years? (Use the financial ratios in Table 4.1 on pages 94-96 of the text as a guide in doing your financial analysis.) Based on the ratios, we can see the differences of ratios in Apple, Inc. financial statistics from 2005 until 2007. In their gross profit margin, ratios showed that profit margin are decrease from 40.9% in 2005 to 40.8 % in 2006. But in 2007, the gross profit margins were increase to 51.4% and this percentage is the highest compare to 2005 and 2006. So the higher percentage is better than and the trend should be upward. For operating profit margin, the ratio is consistently increased in 2005, 2006 and 2007.The percentage for the both three years is 11.8%, 12.7% and 18.4%. This was proving that Apple, Inc. is consistently gained the profitability of the current operation. The return on total assets (ROA) for Apple, Inc. for the two year are almost remain the same that is 11.5% in 2005 and it showed a little increase to 11.6 % in 2006. But in 2007the ratio were increased to 13.8%. These ratios measure the return on total investment in the enterprise. We take a look for return on stockholders (ROE) equity for 2005 is 17.9% , 2006 is19.9% while for the 2007 it increase to 24.1% which mean the return on stock holders earning on their investment. For inventory turnover ratio, Apple Inc. state 84.4% in 2005 which is decrease a little to71.5% in 2006. But in 2007, the numbers of inventory turnover ratio were decreased to69.4%. It is not a good for Apple Inc. to measure the number of inventory per year because inventory turnover is low. The debt-to-equity ratio in year 2005 and 2006 is remaining the same which is 0.08%.But in 2007, the ratios of debt-to-equity were increase to 0.10%. These ratios show that Apple Inc. has higher creditworthiness and good balance sheet strength. As a whole, Apple has had mediocre performance in the PC industry. Sales significantly increased from the mid-80s to the mid-90s. However, as sales increased, so did debt, and the threat of bankruptcy in1996 led Apple to transform into Apple Inc rather than Apple Computer. At this time, the company recovered fully with the introduction of non-PC products. These new products had a huge hand in the financial recovery, as Apple continued to lose market share in the PC market. The PC market is rapidly

changing, and Apple at times was too slow to respond and did not anticipate the abilities of their competitors. Meanwhile, they used their capabilities to consistently change their strategy. Their efforts to act proactively (alliance with IBM, new product development in the PC arena) often did not pan out profitably. Apple maintained profitability because their product was distinct enough to establish a loyal following. Since 2001, Apple has done a fantastic job, strategically. Steve Jobs has led the company to a new level of success. The new OS, the changes that they made to their products, while maintaining their true Mac identity has done wonders for the company. Total revenue has increased dramatically, as has every other indicator of financial strength, as given in Exhibit 1a of the case. . Of particular interest is the continually increasing net sales. In 2002, the company suffered, as did the rest of the industry. A significant strength for Apple is the value chain. Apple has been able to perfect the chain of activities in innovation. Apple starts from its new ideas of product design, designs it through its own resources and funding, then manufactures it and finally markets it wholeheartedly For the current ratio, Apple Inc. state 2.7% in 2005 and it decreased to 1.8% but after that in 2007 it increase 0.9% which is 1.9%. This current ratio shows that ability of Apple Inc.to pay current liabilities using assets that can be converted to cash in the near term. In 2005 Apple Inc states revenue growth 68.3% and its decrease consistently in 2006which is 38.7% and also decreases for the 2007 to 24.3%. That means income that a company gains from its business activities are not good. R&D as percent of sales of Apple Inc remains the same in 2005 and 2006 which is 4.0%.But in 2007 the percent of R&D sales decrease to 3.0%.From the analysis in overall financial ratios, Apple computers financial performance for the past three years are all remain that have much more differences in the ratio changes. 6. What recommendations would you make to allow Apple to strengthen its position in its most important markets? What steps should it take to ensure that the iPad becomes a success in the marketplace and a major contributor to the companys overall performance? Collaborate with more technology related industries and companies, aim for more interaction with customers, make the iMac more compatible and easier to operate, and loosen the closed ecosystem approach.

Case Study 10
Assignment Case 10 Questions: 1. What are the chief elements of Apples overall competitive strategy? How well do the pieces fit together? Is the strategy evolving? Apples overall competitive strategies were well fit for their industry. They used the cost-based advantage to beat their competitors, they offered a valuable product at a lower price. They would also market the next generation of products that helped them Leapfrog their competitors and they continually produced new product innovations that drew more sales and market shares from their rivals. They also used the hit-and-run tactics, using promotional activities to surprise their rivals. 2. What are the key elements of Apples strategy in computers, personal media players, and smartphones? Have its strategies in its core businesses yielded success? Explain. Apples computer sales started out slow because of their high price and learning curve to use the operating system. The iPod or iPhone helped boost their computer sales. Apple had put very strict restrictions on their programs which made it hard for software developers get Mac at a discounted price. Even though they had some setbacks they kept bringing new products to the market while keeping their technology a secret from their rivals. There shares dramatically increased when they created the Macintosh computer and when the K-12 schools chose to use them because of the graphic capabilities. Although Apple didn't create the first digital music player they held 73 percent of the market shares. The sleek style, ease of use and decrease in price gained more satisfied customers that the rivals could not keep up with the competition. When Apple created the iPhone they sold more than 270,000 in the first 30 hours. They continued to make the phones better by creating the iPhone 3GS and then the iPhone 4. They then created the App Store that allowed their customers to build their own applications. This continued to help their sales and build their business success.

3. What does a competitive strength assessment reveal about Apples computer business, as compared to the leaders in the personal computer industry? Use the methodology in Table 4.2 to support your answer. Does it appear that the companys competitive positions in personal media players and smartphones or stronger or weaker than its position in computers? Although Apple came back boosting their computer sales HP was diverse in their software, personal computers, printers and financial services. However, their sales declined during the next recession. Then their customers started to prefer the portable computers over desktops. Dell also had high sales in computers, having high revenues, and they too suffered during the recession. The strong price competition also hurt Dells sales. They began to offer a wide range of computers from low end, low priced models to fancy high priced models. Acer grew to be too largest fastest growing company in Europe and Africa. Their multi-brand strategy also helped them to become the fastest growing vendor in the United States. They had a winning business model, a competitive products and innovative marketing sales. They also brought in high end smartphones. I think that Apple had a better success rate with their smart phones and personal media services. 4. Does it make good strategic sense for Apple to be a competitor in the computer, personal media player, smartphone, and tablet computer industries? Are the value chain activities that Apple performs in computers, personal media players, tablet computers and smartphones very similar and compatible or are there very important differences from product to product? Which of the four products lines---computers, tablet computers, personal media players, or smartphones---do you think is most important to Apples future growth and profitability? Why? Yes, I do think that Apple does have a good strategic plan to be a competitor in the industry. The value chain in each of the companies were very compatible. Apple does very well in each of their products however they could use to be more competitive with the type of computers they sell, offering more of a variety for the different income/salary ranges. Making low end, low priced computers as does Dell would help them significally.

5. What is your assessment of Apple Computers financial performance the past three years? (Use the financial ratios in Table 4.1 on pages 94-96 of the text as a guide in doing your financial analysis.) Income Statement Data: 2009 2008 2007 Net Sales 36,537 32,479 24,006 Cost/Expenses 5,482 4,810 3,745 Net Income 5,704 4,834 3,496 Based on the income statement data Apples net sales increased and its net income continued to grow each year that they continue to do well in the industry. 6. What recommendations would you make to allow Apple to strengthen its position in its most important markets? What steps should it take to ensure that the iPad becomes a success in the marketplace and a major contributor to the companys overall performance? I would recommend that Apple increase their ability to provide a wide variety of computer products and make them more user friendly to the user plus lower the cost.