STRATEGIC MANAGEMENT

PERSONAL LEARNING PAPER- APPLE

Submitted By: Abi Thampi

Submitted To: Sanjeev Ganguly Sir

Introduction

Apple Inc. is an American multinational corporation that designs and manufactures consumer electronics and computer software products. The companys best known products include Macintosh, the iPod, and the iPhone. Apple software includes the Mac OS X operating system, the iTunes media browser, the iLife suite of multimedia and creativity software, the iWork suite of productivity software, Final Cut Studio, a suite of professional audio and filminduatry software products, and Logic Studio, a suite of audio tools. The company operates more than 250 retail stores in nine countries and an online store where hardware and software products are sold. Company History

The company stated off as Apple Computer by Steve Jobs and Steve Wozniak, in 1976. Despite a strong brand, rapid growth and high profit in the late 1980s, Apple almost went bankrupt in 1996. Jobs then went to work and transformed Apple Computers into Apple Inc. with innovative and technologically sophisticated non-PC products in 2000s. By 2010 the company also viewed itself as a mobile device company. Apple became the fourth largest PC vendor in the US Market with an 8% share by the end of 2009. Its market capitalization went to $220 billion in spring of 2010. Through multi-million dollar marketing campaigns such as successful Think Different ads and catch slogan. Apple promoted itself as a hip alternative to other computer brands. It also highlighted its computer as the world greenest line-up of notebooks. The goal of apple is to differentiate its product amid intense competition in the PC and mobile device industry.

Vision Apple is committed to bringing 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 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 has recently introduced iPad 2 which is defining the future of mobile media and computing devices

Values Apple Values are the qualities, customs, standards, and principles that the company believes will help it and its employees succeed. They are the basis for what we do and how we do it. Taken together, they identify Apple as a unique company. These are the values that govern our business conduct: Empathy for Customers/Users We offer superior products that fill real needs and provide lasting value. We deal fairly with competitors and meet customers and vendors more than halfway. We are genuinely interested in solving customer problems, and we will not compromise our ethics or integrity in the name of profit. Aggressiveness/Achievement We set aggressive goals and drive ourselves hard to achieve them. We recognize that this is a unique time, when our products will change the way people work and live. It is an adventure, and we are in it together. Positive Social Contribution We build products that extend human capability, freeing people from drudgery and helping them achieve more than they could alone. But beyond that, we expect to make this world a better place to live. As a corporate citizen, we wish to be an economic, intellectual, and social asset in communities where we operate. Individual Performance We expect individual commitment and performance above the standard for our industry. Only thus will we make the profits that permit us to seek our other corporate objectives. Each employee can and must make a difference. In the final analysis, individuals determine the character and strength of Apple.

Team Spirit Teamwork is essential to Apple's success, for the job is too big to be done by one person. Individuals are encouraged to interact with all levels of management, sharing ideas and suggestions to improve Apple's effectiveness and quality of life. It takes all of us to win. We support each other and share the victories and rewards together. We are enthusiastic about what we do. Quality/Excellence We care about what we do. We build into Apple products a level of quality, performance, and value that will earn the respect and loyalty of our customers. At Apple, quality management is critical to our continued success. Individual Reward We recognize each person's contribution to Apple's success, and we share the financial rewards that flow from high performance. We recognize also that rewards must be psychological as well as financial, and we strive for an atmosphere where each individual can share the adventure and excitement of working at Apple. Good Management The attitudes and behaviours of managers toward their people are of primary importance. Employees should be able to trust the motives and integrity of their supervisors. It is the responsibility of management to create a productive environment where Apple Values flourish.

SWOT Analysis

Strengths: Over the years, Apple has grown by offering superior products compared to competitors. Apple has positioned itself to be a pioneer in the personal computer industry. It is one of the original hardware producers in the market that controls both the manufacturing of its products as well as its operating system. Apple is self-sufficient and creates its own internal components for the core of its computers. Apple has set standards for high quality products in order to meet customer satisfaction. It is dedicated to research and development in order to create new products, which are expected to make Apples products more efficient and

feasible to use. As a result of the companys commitment to excellence, most of its products are compact and simple to operate. Apple is known for its loyal consumers who purchase its products for quality, regardless of price. Apple has ascended to a brand of distinction in the computer industry, which yielded a successful net income. In addition, the companys stock price is the highest in the personal computer industry. Apple is financed mostly by its equity. In fact Apple does not have any debt, so investors would bear less risk by holding Apples stocks. The company is well-endowed and capable of acquiring any firm that could enhance the value of the company. Its customer service department is monumental and highly respected by consumers. Apple plans to maintain its status through organizational stability and creativity

Weaknesses: Advanced technology is being developed and produced for customers; therefore, Apple is faced with the difficult task of ensuring consistency and quality within its products. For example, the iPod, which is a global success, had many glitches and technological flaws including battery life and screen faults that plagued iPods when they were first released. Currently, these flaws have been resolved in newer models, though the products are still not perfect. With many other companies creating similar products, it is imperative for Apple to remain competitive by solving technological errors in devices. It is advantageous that Apple continue to invest in its Research and Development department to remain competitive. Apple is a seemingly financially stable organization; its lack of debt is a potential weakness for the infrastructure because it creates potential risk for stock acquisition by other corporations. Opportunities: The employees at Apple are sufficient in their expertise because they predict the target audience for the latest technology. Because of their originality, Apple is known for its innovative thinking. It has developed a product line that is both functional and attractive. The organization is spreading beyond the confines of its products and into the lives of its consumers. The Apple iLife applications allow users to connect to multiple programs through one package. ILife provides a well-integrated elegant interface that enables users to tie into iMac, iTunes, iMovie, iPhoto, Garage Band and YouTube accounts. The current opportunity for Apple is the development and campaign of the new iPod shuffle - the worlds first talking MP3 player. Apple has proven its quality by packing 4 gigabytes of memory into a device half the size of the original Shuffle. Another area that Apple is pursuing is the use of Intel chips. The Apple Intel chips will allow new machines to run the Windows Operation System and could also be used to develop iTunes and music player technology that can be

applied to a mobile phone. Apple must continue to create opportunities through new, innovative software markets and strive to introduce its ground-breaking hardware into these markets.

Threats: The computer technology industry is a consistently transforming and highly competitive industry. There are more competitive companies entering the market that Apple has saturated. Microsoft is Apples historic rival, and has managed to maintain its competitive status. In the computer hardware division, there are many competitors such as HewlettPackard and Dell. Dell produces low-budget computers and products that appeal to economically cautious consumers. Apple has a higher stock price than Dell and HP but Apples market share and total revenue are significantly lower. It is imperative for Apple to consistently create new products that set financial and technological standards for the computer industry. Apple has a growing international market, specifically in Asia. The exchange rates challenge the organization and create a shift in supply and demand. With the depreciation of the US dollar, the international revenue is declining. The global economy threatens most industries in the global market, which presents a revenue obstacle for Apple.

Core Competency

Apple's core competency is innovative design and technology. That's the spirit behind its famous "Think Different" ad campaign. Apple introduces products that truly wow the market. Think back to the Macintosh in 1984 -- the first affordable computer with a graphical user interface (GUI). Today, the iPhone challenges the definition of a phone, by combining a portable digital media player, Internet client, GPS navigator, camera, and ... um ... oh yeah, a phone. Not only does Apple wow consumers, but it changes the way we think about consumer electronics.

Marketing

The greatest marketing lessons that Apple brings to the table. 1. Ignore Your Critics Apple decides to flip the script and instead focus on building what they want to build, no matter the perceived cost. When Steve Jobs debuted the iPad, the critics stood in line, throwing every insult they could muster. The critics said that the iPad would fail. Each and every time Apple decided to innovate, they were laughed at. They prevailed anyway. Great ideas often receive violent opposition from mediocre minds. - Albert Einstein 2. Turn the Ordinary into Something Beautiful

For quite some time, PC fans enjoyed the work of buying their own parts and building their own tower systems. At the same time, PC makers were building standard hardware for standard applications. Apple would have none of that. Theyve been pioneering not only the features of standard operating systems and computer systems, but simultaneously reinventing the design standards as well. As a result, we have the gorgeous iMac, the beautiful new Macbook Air, and who could forget, the amazing iPhone 4. Where others focus on one aspect of the equation, Apple focuses on the entire product, and it shows. 3. Justify Your Price Were in a time when pricing strategies are all over the place. People dont know what to charge, and in many cases, prefer to race to the bottom instead of pricing strategically to a market that can bear the cost. Once more, Apple ignores the standard by not only pricing their technology more than 2x what their competitors charge, but doing so without blinking. How can they get away with it? Well, the answer is twofold:

1. They build beautiful products for an audience that loves them passionately. 2. They justify their price with features and benefits that cant be matched. No other computer can match the display of a 27 iMacit simply cant be done. No other software can match what iTunes brings to the table. No laptop is as thin as the Macbook Air. No software is more intuitive, no product more valuable than the Apple product. Any other smartphone looks like it was developed by rookies when compared to an iPhone 4. You simply cannot compare the two. Critics will play on the fact that the core features are the same, and they might be, but thats not the point. The point is that Apple is the Rolls Royce of the technology and design world, and their customers will gladly pay a premium because of it. 4. Communicate in the Language of Your Audience It makes no sense to talk about things like megabytes, gigahertz, and processing power to customers that simply dont care about technical jargon. Take a look at any Apple product page and youll find that though they do discuss product specifications and technical information, its hidden behind the benefits that their audience is truly after. Instead of display resolution, youll see phrases like edge to edge glass, retina display, and LED backlighting. Sure, the jargon is there for those that need it, but its presented in a way that makes you want to learn about megapixels, rather than shy away from them. The art is in the copy, not in the features. 5. Extend the Experience Have you ever heard of an unboxing? I hadnt either until recently, when I learned that not only was I not the only one keeping Apple packaging post-sale, but that there are legions of people that record the actual process of unwrapping their newly purchased Apple products. Do a search on YouTube and youll find hundreds of Apple unboxings, each from different users from across the globe. Its pretty crazy right?

No one tells these people to video their experience, but they do it because the process is so Zen that you cant help not to. Apple does this by making sure that the experience doesnt end at the cash register. They take great care in designing a user experience from browsing to unwrapping, which relies on incredible packaging and installation procedures. By reducing installation to the lowest common denominator, they make buying new products a snap, and by spending as much time on designing packaging as they do on the products themselves, theyve ensured that the box matches whats inside. As a result, theyve built an experience that is nearly impossible to match. 6. Build a Tribe Its no secret that Apple has built one of the most hardcore fan bases of any product and of any time. Theres a reason theyre called fanboys. But who cares, right? Most of the chatter is out of jealousy more than anything, but Apple doesnt really care. They know that they serve an elite audience, and rather than back away from that fact, they embrace it. 7. Become The Name

You dont buy tissues, you buy Kleenex. You dont buy MP3 players, you buy an iPod. You dont buy a smartphone, you buy an iPhone. Apple isnt content with being a leader in sales alone, they want to own the market itself, which explains why theyve engineered iTunes as the major music provider that it is, and why the iPad, having the luxury of being the first, has now set the trend for future tablet devices. From here on out, everything will be compared to the iPad, iPhone, iPod, and iTunes. Sadly, this sort of thing is tough to duplicate, but its not impossible. You need to have one of two things:

1. A clear head start in terms of being first to market. 2. A USP that differentiates your product in a way that makes people wish it were first. The iPhone wasnt the first phone, but they engineered it to be so unique that you couldnt help but think it was. The iMac isnt the first all in one, but it became the only one that mattered.

Distribution

Initially Apple wanted to control it all with an iron fist. In an effort to expand its sales, they have been slowly adding other distribution channels with high sales volume. Such is the case with AT&T, Best Buy and now Wal-Mart. Wal-Mart Stores Inc said on Friday it will start selling Apple Incs iPhone on Sunday. Wal-Mart plans to sell the black 8-gigabyte iPhone 3G model for $197. The 16-gigabyte model, in black or white, will be priced at $297. All of the phones require a new two-year service agreement from AT&T Inc or a qualified upgrade. The move gives Apple the chance to reach millions of Wal-Mart shoppers who may not be as familiar with the companys products. The phones will be available in nearly 2,500 stores beginning Sunday, December 28. Despite the 2009 recession, Apple made significant alterations to its products and also the company decided to change its strategy in 2010 to compete with Google, Microsoft and other companies. There is a possibility that the company will open the iPhone to various companies, also it will release an iPod Touch that will come with a camera, broadening its retail footprint, launching the tablet PC as well as releasing the Beatles catalogue to iTunes. Despite the fact that many tech carriers underwent losses because of the recession, Apple achieved rising profits and revenue during 2009. Some strategies for 2010 of the company are already known such as to augment a number of retail stores. Also it plans to launch a tablet PC. Apple has a lot of plans for 2010 that are possible to achieve. AT&T is the only provider of the iPhone in the US that has brought both advantages and

disadvantages as well. The smartphone achieved big success in sales. It became known that the Smart phone traffic has augmented by 5,000 percent for the last three years. But still AT&T was criticized because the iPhone did not cover in major urban areas like New York City. Apple also has its network of stores, which gives it a major advantage in distribution. "There's no question Apple has done something that will help extend their leadership position," said Tim Bajarin, president of Creative Strategies, a research firm in Campbell. "If I'm another vendor, I'm concerned about Apple's extremely solid operating system and their retail presence. That's where it's going to be hard for any of these guys to compete." The company also buys components in bulk, so it is able to keep the price lower than its rivals. Apple also has its network of stores, which gives it a major advantage in distribution. "There's no question Apple has done something that will help extend their leadership position," said Tim Bajarin, president of Creative Strategies, a research firm in Campbell. "If I'm another vendor, I'm concerned about Apple's extremely solid operating system and their retail presence. That's where it's going to be hard for any of these guys to compete." The company also buys components in bulk, so it is able to keep the price lower than its rivals. The huge promise of the Apple brand, of course presents Apple with an enormous challenge to live up to. The innovative, beautifully-designed, highly ergonomic, and technologyleading products which Apple delivers are not only designed to match the brand promise, but are fundamental to keeping it. Apple fully understands that all aspects of the customer experience are important and that all brand touch-points must reinforce the Apple brand.

Pricing Apple products are expensive . Apple gets high margins on its hardware, allowing it to recoup large investments in NRE (non-recurring engineering) to design the hardware and its accompanying software. This is a great place to be from a competitive standpoint, because as a company they dont need to squabble over the cheapest parts to try to deliver the best prices to consumers. So long as they can maintain a sufficiently large customer base to support the practice, it is an easy place to defend against competition from. Certainly a lot easier than being Dell or HP, who struggle with operational efficiency to compete on price, and try to innovate within a very narrow window defined by their platform. Apples success at selling high-end products has secondary benefits for the rest of the ecosystem. Because the products are expensive, they tend to be purchased by people with more disposable income. So the segment of the computer market which buys Apple products self-selects to be very attractive demographic for many other reasons. Advertisers love to get their products in front of people who are more-willing-than-most to buy something expensive / unnecessary / fun.

Promotional Strategy Apple has been very active in its promotional endeavours. Its logo has become one of the most recognizable symbols nationwide. The company uses two primary methods of promotional strategies towards its public. The first promotional tool it uses is advertising. Investing heavily into this area, Apple has managed to create a large amount of advertisements that can be found on any television network, in any technology magazine, and all over the Internet. For example, in 2008, the company successfully managed to create a series of televised advertisements that utilized a form of comparative advertising. Two men, an older one in professional business attire with an intellectual flare about him, the other one, younger and sporting casual attire, stand sideby-side surrounded by a blanket of white space. The older, more "traditional" man represents Microsoft Windows-branded personal computers (PCs), while the younger, more "hip" man represents Apple's Mac brand of computers. The commercials often poke fun at PCs' flaws, subtly suggesting that using a Mac is the way to go to solve all your computer problems. The "Mac versus PC" ads created such a buzz for the product, Apple even expanded this scenario globally. Televised ads were then made to play out in the same manner in Japan, only instead

of two Caucasian males speaking English; they were replaced with two Asian males speaking Japanese, to accommodate the culture for which it was aired to. Today, the use of advertising has proven to be a strong aid in maintaining sales and popularity among its consumers. The second promotional tool that Apple uses extensively is personal selling. The company's Apple Stores are home to many young and knowledgeable sales representatives who are trained thoroughly in both product information and customer service. With the release of new products and upgrades the company produces every few months or so, it is important for sales representatives to stay abreast of the latest technologies entering the market. Walking into any Apple Store will reveal that employees are often young and most likely fall within the Generation Y or X age range. Today, technology explosion has caused people to either accept the new changes or quickly fall behind. The employees of Apple, however, grew up in this technology era, and have naturally absorbed these new processes of life easily. Along with understanding the product, it is equally important that sales representatives offer excellent customer service. For those consumers who are not necessarily exposed to technology on a daily basis or are suddenly required to obtain the knowledge of using it, they may become overwhelmed or dismissive. That is why it is important that sales representatives of Apple are able to make the transition from "old-world" to "new-world" much easier for these customers. In doing so, it not only creates an accepting stance of advancing technology and increased sales, but it also creates a trusting and reputable image for Apple in the long-run. Conclusion

Over the past 30 years Apple has amplified from computer design to developing consumer electronics. The company was started by Steve Jobs, Steve Wozniak, and Ronald Wayne in the 1970s. Steve Jobs is the current CEO of Apple and is doing a very efficient job in running the company. Apple uses a differentiation business strategy, which means that all employees and departments work together in the creation of their products. Since the employees work together our products tend to be more productive. Apples main business initiative is customer relationship management. When working with or purchasing from Apple you are promised top notch customer service and assistance. Apple uses many different types of internet business models. Business to Business ecommerce is used in the selling of computers to help operate everyday proficiency in other businesses. Business to Consumer e-commerce is the selling of iPods, computer, and other products to different individuals rather than businesses. Business to Government e-commerce

is the process of selling of any Apple products to government operated organizations. As you can tell Apple works with many different groups of customers. When purchasing from Apple you are offered many different payment options. One payment option is electronic bill presentment and payment, this system sends bills over the internet and helps to provide an easy method for you to pay them. This method is most convenient for customers so that they can purchase and pay for their items without ever leaving their home.

References

www.managementparadise.com www.toi.com www.investor.apple.com www.slideshare.com