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APPLE INC.

Strategic Planning at Apple Inc.

Omar Abdellatif 20057575

Michel Marticotte 20110377
Bethany Murrant 20064864
Chelsea MacPhee 20063287
Donald MacAdam 20122544
Abdulrahman Alharbi 20132550
Haitham Aloufi 20063507

Cape Breton University

APPLE INC.

Table of Contents
Problem definition:........................................................................................................... 2
Analysis:....................................................................................................................... 3
Problems:................................................................................................................... 6
SWOT....................................................................................................................... 7
Strengths.................................................................................................................... 7
Customer Loyalty:..................................................................................................... 7
Brand reputation:....................................................................................................... 7
Leader in Innovation:.................................................................................................. 7
Changing Music:....................................................................................................... 8
The Apple Store:....................................................................................................... 8
Weaknesses................................................................................................................. 9
Short comings:.......................................................................................................... 9
High Price:.............................................................................................................. 9
Opportunities............................................................................................................. 10
High demmand :...................................................................................................... 10
Threats..................................................................................................................... 10
Reseller Dilemma:................................................................................................... 10
Competitors:.......................................................................................................... 10
Technology:........................................................................................................... 11
Alternatives............................................................................................................... 11
Alternative 1-......................................................................................................... 11
Alternative 2-......................................................................................................... 12
Alternative 3-......................................................................................................... 13
VRIO analysis to the alternatives: Impact on performance........................................................14
Implementation and recommendation..................................................................................14

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Problem definition:
Most people have the knowledge that Apple lost a war to Microsoft in the PC world years ago
but the company went in another direction with the creation of the IPod, the IPhone and other
Tech gadgets, therefore; created an amazing success to the company. Now Apple owns retailer
stores that offer great customer service and a unique in-store experience.
Steve Jobs, one of the founder and former CEO; is wondering how the company should allocate
its resources between its traditional and new products to remain or gain a better competitive
advantage in the market and if Apples retail strategy should remain to contribute further the
product decisions and the companys success.
This case analysis seeks to find the answers to these questions by exploring the growth
strategies used by Apple, to rise to its present standards by comparing it with other strategies
used by its competitors who include, Hewlett-Packard (HP), Dell, Nokia and Microsoft (Muro,
2010). And will also be looking at the various growth strategies used by Apple, to reach its
current status include changing the name of the company, market and product diversification and
retaining its mainstream products and ideas.

Analysis:
Steve Jobs through his innovation and management skills helped the Apple to establish a
strong market share despite being criticized by most stakeholders and analysts. His major
decisions revolved around diversification and marketing strategies. Apple began its long journey
on April 1, 1976 after the formation of Apple Inc. by Stephen Wozniak and Steve Jobs in Jobs

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garage. Apple was the company's first product which operated on a MOStek 6502 processor.
This was shortly followed by the Apple II which was built on a similar processor. The second
invention was introduced as a general purpose computer while the first mainly targeted
individuals interested in electronics and computers. The introduction of the third product, the
Apple III and the development of the Macintosh, an operating system which was supposed to
operate on the three computer models saw the exit of Jobs from Apple after he received
widespread criticism. All along, Steve jobs main focus, was to introduce a product that could
better serve the clients need and compete with existing products from other companies. For
instance, by creating the Macintosh, Jobs was geared towards providing consistency in the type
of operating system used in their brand of computers, which resulted in a major setback.
However, this did not yield the desired results but only consumed most of the companys
resources and the projected Macs sales of 80000 turned out to be 20000 units on the ground
sales. Apple went ahead and purchased NeXT and begun realizing profits from the last quarter of
1997.
Owing to failure of his previous Mac invention Jobs was faced with a tough decision of
designing a new product upon his return to the company. However, he went ahead to launch the
internet Macintosh (iMac) in mid-1998, which turned out to be a success because, in the first
year, two million units were sold. This new product targeted consumers who were switching to
Mac computers from other computers and first time buyers. He continued to diversify the
companys products by introducing the iMac G5 followed by Mac Mini in 2005. Besides, the
company changed its name from Apple computer Inc. to Apple Inc. as a diversification strategy
in 2007 a strategy that was also used by Sony Corporation, which changed to Sony Group. After
changing its name, Apple Inc. ventured into the entertainment and communication world by

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introducing the iPhone and Apple TV. This gave Apple a competitive advantage over other
companies such as Sony and its stock price also hiked from $97.80 to $100 in a day.
Merging is a marketing strategy that enables a company to increase its market share
(Lussier, 2008). As such, Apple was able to exploit this option by purchasing Next, a venture
which made computers for students. By doing so, the company increased its profits, which it
used to design new products thus contributing to its tremendous growth. HP also used the same
strategy by merging with Compaq which had purchased a number of corporations making it a
major player in laptops, desktops, and servers in several markets. In this case, company mergers
seemed to be a viable option in reducing the number of competitors and increasing the market
share for any company.
In its diversification strategy, Apple was able to reclaim a large market share out of the
digital market music providers such as Sony. This was through the introduction of the iPod
which had a large internal storage which could store about 1000 songs as compared to the other
flash players that could only hold about 30 songs. This strategic diversification seemed to be well
informed of what the current market was providing.
In an attempt to increase its sales, Apple used a marketing strategy that involved the use
of authorized Apple resellers. This was the case with Dell which used to sell products through
retail stores such as Costco. However, this came to an end after Apple Inc. opened its first
physical stores in 2001. The resellers were outdone by the stores because most of Apples
marketers appealed their clients to purchase from Apple stores only. This resulted to unfair
advertising followed by numerous lawsuits filed by the resellers that have all been reached with

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In order to make the companys retail outlets viable and maximize its profits, the
company had to invent a way of outdating the resellers, and this resulted in conflict between
Apple and the resellers on ethical and economical basics. Dell also stopped selling through retail
stores from 1994 due to the declining profit margins. Although by using physical stores, Apple
was in a position to create a personal touch with its consumers thus offering them the product
that best served their needs.
Another marketing strategy that apple used was to manufacture computers that matched
the customers specifications (Prakashan, 2010). Rapport between the customer and the company
was maintained through online stores, and this strategy was also used by Dell. Apple was also
able to sell to its customers directly through its sales people, and this gave Apple a competitive
advantage. This marketing strategy worked for the company and most of its competitors.
However, Apple made a number of mistakes in its marketing strategies which if corrected
on time could have increased its overall sales and market share. This included false advertising,
unfair competition and blocking resellers from stocking Apple's most recent products. Such a
move led to the loss of customers who frequented its retail stores because of the loss of
confidence in Apple products.
Apples out of court settlements was enormous loss of revenue that could have been used
in marketing and development of new products and Apple also failed in its diversification
strategy in that it focused primarily on creating products which were just an advancement of
what its competitors produced instead of introducing a unique product in the market. A new
product would have given it a whole market share to enjoy before competition arose.

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Problems:
Apple has high revenue demand due to operating costs that has to be maintained as well as a
revival for the continuous innovative, visionary attitude that Jobs had. Costs ranging from sales
stores, maintenance, employees satisfaction, continuing training and development, repair
locations and research and development on which jobs usually spent most of the retained income
on. The company needs to stay ahead of the curve with strong competitive advantage to remain
sustainable. In addition, Apples reputation for innovation is on rival, but if the company fails to
churn out ground breaking material, it could experience difficulty sustaining its position.
SWOT
Strengths
Customer Loyalty:
Apple customers are often lifetime brand consumers, creating a strong financial platform to
sustain its business and keeping an edge over competition in the long-term.
Brand reputation:
Apple has a powerful brand, rated AAA and according to many studies, Apple is the most
reputable company in the world with is well-designed and well-functioning products, and even
surpassed Coca-Cola and Google in 2012.
Leader in Innovation:
For over 30 years now Apple Inc. has been a leader in innovation with the products it has
offered to consumers, it all begin with the introduction of the Apple I back in 1976, followed by
the Apple II in 1977 and then the Mac (Macintosh) in 1984. All of these products were less
expensive and easier for users to operate compared to other competitors of Apple. What made the
Mac stand apart from the rest of the pack was its operating system; the Mac OS was able to run

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on all Apple computers, not to mention the Mac itself had a whopping 128 Kbs of memory and a
32-bit microprocessor. Jump ahead a few years to 1998 and Apple launched the very successful
iMac 2 which sold 2 million units in its first year, which was then followed by iMac G5 in 2004
and then the MacBook pro in 2005. The MacBook pro was different from any other product they
had manufactured before, it used Intel chips and was available with a new software that Apple
released which was Boot camp, this software aloud Mac Intel users to install Windows XP OS
alongside the tradition Mac OS X. These brought huge advantages to Mac users because they
were not able to use programs and softwares that were not traditionally available for Apple
computers.
Changing Music:
Apple was able to become even more innovative in the electronics arena with the
introduction of the first iPod in October of 2001. This first generation iPod had 5 gigs of storage,
could hold up to 1000 songs and had a hard drive based memory. It was far superior then
traditional flash drive mp3 players that could only hold up to 30 songs at the time. Prior to this
on January 9th, 2001, Apple introduced the first edition of iTunes, it aloud you to store music on
your computer to listen to, also allowing you to burn CDs. Following this on April 28th 2003
apple launched the first iTunes music store where customers were able to purchase full albums
from the comfort of their home. Of course these programs were compatible with the iPod so in
2002 Apple released a 10 GB and 20 GB iPod which allowed customers to upload even more
music onto their devices, by 2005 Apple had 90% of the hard disk player market share in the US.
The Apple Store:
On May 19th 2001 Apple opened its first physical retail store in Mclean Virginia, it was so
successful in the first 2 days of being opened that it had and astounding $599,000 in sales.
Feeling confident that their stores would do well, apple planned on opening 25 more stores, one

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every 10 days. The reason behind the Apple stores success was the amount of product they
carried along with the employees selling the items; essentially, their retail employees were their
competitive advantage. They were trained to work together by job shadowing experienced sales
reps along with executing their 3 step sales process: position, permission, and probe. They were
also trained to ask customers questions in order to get an understanding of what product would
best suit their immediate needs. The Apple store was extremely successful generating $1.185
billion in revenue and $39 million in profit of the end fiscal year of Sept 2004.
Weaknesses
Short comings:
Not all of Apples products were blockbuster products; they did in fact have a few failures. The
Apple III bombed and did not have the greatest sales, even though it had updated OS, 8
applications, more RAM and was less expensive than the Apple II. There was also the fact that
the first 3 models of Apple ran off of different operating systems which could not be modified or
change to work with one another. Not only that Jobs tried to launch his passion project the Lisa
which was not successful at all, this may be due to its selling price which was $9,995.00 US.
Apple computers also were not compatible with other PCs such as IBM, so convincing large
corporation to change their operations was a very difficult thing to do. Apple also had a hard time
selling their Mac back in 1984; they had projected sales of 80,000 units, but were sadly
disappointed when they were only able to sell 20,000 units. And their once growing market share
that had a great start in the 1980s holding 11% of the market share worldwide; fell to 5.3% in
the mid 90s.

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High Price:
Apple is no longer selling product at prices that appeal to the growth segment of the market and
is a premium gadget maker that mostly sale to people that can effort their product. High price
can become a strong weakness for Apple Inc. because customers can easily go to competitors
with similar product at lower cost.
Opportunities
High demand:
The rise of tablets, smartphones, fast internet connections and social media are creating high
consumer demand for new digital products and service that creates a very strong opportunity for
Apple to expand and innovate in to new markets.
Jobs left Apple in 1985 he started another company NeXT, a venture that created computers for
students; they began to hit their growth stage in the product life cycle as Apple was on the
decline. However this worked out in Apples favour because they purchased the venture in 1996
and also brought back Jobs as an informal advisor.
Threats
Reseller Dilemma:
Since Apple was having such great success with their own retail locations, customers were no
longer going to their resellers and in fact were stealing away their business. This caused many
problems for Apple because some resellers did take legal action and were expecting some sort of
compensation. In December of 2004 there were over 5 lawsuits against Apple with charges that
included fraud, breach of contract, unfair competition, false advertising, and charges under the
federal racketeer influenced and corrupt organization act. These lawsuits were all looking for

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several million dollars in compensation and damages caused by Apple but in 2006 Apple settled
with all plaintiffs out of court in order to save face.
Competitors:
Dell computers was one of the largest sellers of PCs in 1999 with $25 billion in revenues, they
also branched out into various multimedia and home entertainment products such as TVs,
handhelds, and digital audio players. Not only that they saved money by pulling their products
off the shelves in 1994 to sell them over the phone and online, this allowed them to perfect their
mass customization assembly lines.
Microsoft had revenues of $51.12 billion in 2007 and is one of Apples biggest competitors. They
had great success with their selling their own PCs along with Microsoft Office Suite, which is
considered the cream of the crop when it comes to business applications. Not only that,
Microsoft sells other products such as mice, keyboards, game pads, joysticks, and game
consoles.
Technology: The rapid change in technology is representing and very serious threats to Apple
Inc. The company needs to stay innovative and release new product fast to stay competitive
Alternatives

Alternative 1-They should meet the logical market demand that apple consumers rely on in
order to maintain and improve their standings. As they did with the IPad, Apple should continue
providing innovative futuristic products in their sustained manner as theyre doing. Jobs already
had the vision with Incorporating Apple and going into TV and Music Players. For apple to
increase their market share, they should be thinking about new products to introduce so they are
able to directly compete with Nokia, Sony and Microsoft on the gadgets front. Apple can do this

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by creating new product lines to keep customers interested and make sure they are keeping up
with the markets. For example the company could start looking into producing electronic
medical equipment so they can compete in the health industry, for example Microsoft already has
participated in this industry. Another product that Apple could begin to manufacture are
cameras, they already have a good reputation with cameras as they have already been introduced
in their laptops, phones and tablets. Adding new product lines will definitely make the company
more valuable and because Apples current customers see value in their already existing products
they will trust its new products and see them as valuable. Its new product line would be
implemented throughout lots of marketing and promotion as well as introducing the new
products in its retail stores. Apples new product line would mostly products that are already
offered from another company, however; Apple would have to work hard so there is something
rare and different about its new product, for example a camera that offers features that a
competitor does not. As an organization, Apples team will work together to make a strong, new
product that will help them succeed in the market, and give them a competitive advantage.

Alternative 2- Apple is known as a high quality brand among consumers and competitors across
the technology market, for this reason Apple has had difficulty becoming a cost-leader in this
market. In fact, Apple tends to be one of the more expensive brands among out there when it
comes to personal computing and smart phones. We feel Apple should consider the option of
creating a line of personal computers that meet a wider variety of budgets. This new computer
would come with the great brand and quality Apple tends to offer us with a cheaper price tag.
This could bring in a whole new market of consumers, those of who would otherwise purchase a
Sony or Dell because of the significant price difference. Apple will create from value for the

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company by extending its product line. The rarity and imitability of this new line would be
something their competitors could not duplicate, the name Apple often stands on its own, and the
use of social complexity can be used to its advantage as a brand. Apple is certainly organized
well, and through its organization of its brand, marketing and retail stores, we can see this new
product thriving among competitors.

Alternative 3- Apple is one of the only ones in the industry that offers retail stores to showcase
its products and this gives them a competitive advantage. However; to further as well as sustain
this advantage Apple should look into expanding the services that they offer at its retail locations.
For example, they could offer learning programs to help consumers to use their products. This
would be especially helpful for the older generation who like to have the latest technology but
are unsure how to use it, as well as those individuals who are not so interested in the technology
but like to have the most up-to-date devices. According to Job, he felt that the companys
unique retail approach was the key to Apples phenomenal success (Ivey, 2009, p.11). The
retail stores have definitely added to the companys success and by expanding the stores and
adding more locations, Apple should be able to remain successful. As mentioned above, Apple is
one of the only brands that offer retail locations; this is something that gives the company value.
The stores are already implemented in many locations, however; to offer new programs in its
retail locations they would need to hire and train new employees to help get these programs
started, as well as market the programs to ensure consumers are aware of these great
opportunities. The retail stores and offering learning programs at its retail locations makes gives
the company a rare advantage, not many others offer this so therefore making this rare to its

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APPLE INC.

competitors. With Apple being a strong organization, it will be able to efficiently market and
promote this great new opportunity to help the company achieve great success.

VRIO model analysis to the alternatives: Impact on performance

Alternative Valuable? Rare? Difficult to
Supported by
s
Imitate?
Organization
1

Yes

Yes

No

Yes

Yes

No

No

Yes

Yes

No

No

Yes

Competitive
Implications

Performance

Sustainable
competitive
advantage
Temporary
Competitiv
e advantage
Temporary
Competitiv
e advantage

Sustainable
above
normal
Temporary
above
normal
Temporary
above
normal

Implementation and recommendation

For the time being Apple is looking to increase revenues and somehow create a sustained
competitive advantage. In order to do this we feel Apple should consider targeting a market they
have yet to try. This market might include consumers looking for more products more affordable
and cost efficient. Apples competitors such as Dell, Sony and Microsoft have already created a
market for cheaper, more cost friendly products like personal computers and smart phones. If
Apple could create a product similar to its mac books and mac computers at a more affordable
price it would be able to reach a broader audience. The company would maintain their current
product line for the consumer who is more concerned with quality over price, while adding a
new line targeting mainly consumers looking for cheaper products. Apple has made many

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products from its Mac desktop to the MacBook pros and the MacBook air, the MacBook air was
an attempt to create a product that offers a few less features with a smaller, more travel friendly
frame for lower price tag, and although that has worked for Apple there is still a demographic
they are not aiming for. If you are a student looking to buy a laptop for school but dont have a
big budget to work with it is unlikely you will run out and buy a Mac. Many people wish they
could purchase a Mac but are unable to afford the price, this leads to consumers going to their
competitors and purchasing a lap top more affordable to them. So if Apple was able to offer a
product that could serve all the needs consumers are looking for with z lower price tag, it would
enhance the Value, Rarity, Imitability and Organization of the company. The value Apple has
created for its consumers is already great, Apple has loyal following of consumers and by
increasing its target demographic they will only increase its value. The rarity and Imitability
Apple will create by creating this new product will be something its competitors will have a hard
time copying. Apples high quality product and brand name along with affordability will be
something a lot of consumers will go for. Competitors like Sony and Dell have already
established themselves as affordable to most consumers, and to a lot of people the brands seem
just mediocre, It would be difficult for Apples competitors to be able to maintain its market share
when Apple releases a line similar in similar price to the competitors offering the great quality
and features Apple has to offer. Apple is certainly organized well enough to exploit the full
competitive advantage that could come out of this recommendation. Apple has shown great skills
in hiring employees, creating retail stores and in marketing itself; Implementation of this new
line will be demonstrated in the same manner Apple has used for all other aspects and divisions
of the company.

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APPLE INC.

References
Muro, F. D. (2010, November, 1) STRATEGIC MANAGEMENT AT APPLE INC. Competitive
strategies at Cape Breton University. 1-12
Prakashan, N. (2010) Case Study in Marketing. New Delhi. NiraliPrakashan
Lussier, R (2008) Management Fundamentals: Concepts, Applications, Skill Development. New
York. Cengage Learning
Time Bajarin (2012) 6 reasons Aplle is so successful. Retrieve from:
http://techland.time.com/2012/05/07/six-reasons-why-apple-is-successful/
Nathan Tsui (2013) Study says Apple is the most reputable brand. Neowin. Retrieve from:
http://www.neowin.net/news/study-says-apple-is-most-reputable-brand