APPLE INC.

STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY

Apple Inc. Strategic Plan: Innovative Productivity Strategic Management of Technology Bradford C. Jenkins Keller School of Management - Devry University NETW583 Professor John Lambrou

APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY

Table of Contents
Overview ............................................................................................................................ 5 Summary............................................................................................................................ 5 History................................................................................................................................ 6 Strategic Analysis .............................................................................................................. 9 External Environment of Apple ................................................................................ 9 Macro-Environment PESTEL Analysis ................................................................... 9 Polical .................................................................................................................. 10 Economic ............................................................................................................. 10 Social ................................................................................................................... 10 Techonological .................................................................................................... 11 Environmental ..................................................................................................... 11 Legal .................................................................................................................... 11 Industries and Sectors - Five Forces Framework Analysis................................... 12 The Bargaining Power of Suppliers ................................................................. 13 The Bargaining Power of Customers ............................................................... 13 Risk Entry by Potential Competitors ............................................................... 14 Substitutes............................................................................................................ 14 Rivalry.................................................................................................................. 15 Internal Environment of Apple ............................................................................... 15 Branding Strategy ............................................................................................... 15 Life Cycle of Apple Inc. Core Product .............................................................. 17 Finance ................................................................................................................ 18

APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY Human Resource Process ................................................................................... 18 Competitive Strength Assessment ................................................................................ 19 Competitive Views and Strategic Groups ..................................................................... 21 Key Resources and Capabilities .................................................................................... 22 Steve Jobs .................................................................................................................. 23 Apple Stores - Retail Locations .............................................................................. 24 Relationship with OEMs .......................................................................................... 25 Apple Inc. Conception Outsource and Strategy Implementation .............................. 25 Partner with the Enemy .......................................................................................... 25 Put Sexiness into Products ....................................................................................... 26 Revamp the Vision and Business Plan .................................................................... 26 Inform Customers What They Want Instead of Asking for Feedback ............... 26 Trends and Opportunities ............................................................................................. 27 General Environment Analysis ............................................................................... 27 Trends ....................................................................................................................... 27 Metered Data Usage ........................................................................................... 27 App Store Increase ............................................................................................. 28 Mobile Internet Access beyond WLAN ............................................................ 28 SWOT Analysis ............................................................................................................... 30 Strengths .................................................................................................................... 30 Well-designed Products ..................................................................................... 30 Loyal Customer-base ......................................................................................... 31 Company Readiness: Flexibility to Change...................................................... 31

APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY Weaknesses ................................................................................................................ 32 Apple's Softness in the Business Market .......................................................... 32 Consumer Purchases vs Business Purchases .................................................... 33 Opportunities ............................................................................................................ 34 Consolidation ...................................................................................................... 34 Global Teleconferencing .................................................................................... 34 Resource Outsourcing ........................................................................................ 35 Threats ....................................................................................................................... 35 Android Smartphone Growth............................................................................ 35 Tablet Computer Market Growth ..................................................................... 35 Recommendations ........................................................................................................... 36 Conclusion ....................................................................................................................... 37 References ........................................................................................................................ 38

APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY Overview

Summary Apple Inc. (Apple) is United States based company employed in modernizing and promotion of personal computers, portable digital music players, mobile communication and media devices. The company offers personal computing products that include stationary desktops and convenient personal computers, associated devices and peripherals, as well as third-party hardware and software products. Software products include Mac OS X in versions from Snow Leopard to Mountain Lion; its premier operating system, the Macintosh software including consumer, education, and business-oriented application software throughout the United States and beyond. Apple has developed substantial devices that engulf the personal computer and mobile device industry. The Apple Smartphone, tablets allow customers the ability to conduct business activities while being mobile and flexible in their respective industry. The creation of the Mac and Macbook presents capabilities of sustaining the many user requirements from the audio music industry to architectural design with its advanced Intel Core i5 and i7 processors. The power of these processors alone have created devices that run 60 percent faster graphics making everything that is done feel quicker and more fluid than ever. The iPod, iPad and iPhone are just a few of Apples product that have taken the forefront of telecommunications worldwide. Apple has placed their mobile equipment at the top of the food chain. The capabilities of devices range from hands-free calling to presentation development. These capabilities have etched a mark in the cornerstone of the present and past technology.

APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY This strategic analysis will examine the opportunities and threats in the general environment and the companys strengths and weaknesses and how Apple operates in respect to the many aspects of consumer electronics to maintain their status in a highly competitive industry. I would like to make a statement in saying, Apple needs to not lose focus on the cornerstones of the company to covet the building of strong relationships, encourage innovation, and support strategic marketing. Brand management is also the key to discuss as they manage diverse products that have put them into new and extremely fast paced, ever changing markets. For this reason, I choose Apple Inc. as the business to analyze its practical strategic direction and how their utilization of mobile applications continues to gain an advantage over their competitors.

History Apple was established on April 1, 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne, to sell the Apple I personal computer kit. They were built personally by Wozniak and first revealed to the public at the Homebrew Computer Club in Silicon Valley. The Apple I premiered in July 1976 and was sold at market value of $666.66, which is equivalent to $2,723 in year 2012 monetary values in regards to inflation. This foundational computer consisted of a motherboard with Central Processing Unit (CPU), Random Access Memory (RAM), and basic text written video chips. This computer is indeed makes todays complete personal computers. The Apple I, Apples milestone invention, was introduced to the market as a circuit board that lacked basic peripherals of a monitor, keyboard, and outside case. The owner who purchased Apple I built a wooden case and added a keyboard to make the motherboard operational. The company of Apple was incorporated January 3, 1977 in absence of Ronald Wayne, who

APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY cashed in his portion of company shares back to Steve Jobs and Steve Wozniak for $800 valued at $3,030.30 in 2012. In that timeframe, Mike Markkula, a multi-millionaire business expert, imparted essential business expertise to the upcoming Apple, Inc. He also invested $250,000 in funds during the incorporation process of Apple. Markkula saw the vision and potential of a US business that would dominate the mobile technology industry. On April 16, 1977, the Apple II was introduced at the first annual computer industry conference, West Coast Computer Faire. Major rivals of the Apple II were the TRS-80, Tandy Corporations desktop microcomputer, and Commodore PET, Commodore Internationals Personal Electronic Transactor. These rivals were overshadowed by the Apple IIs character cell based color graphics and open physical, structural design. The vast array of early computer mock-ups utilized an ordinary cassette tape as storage mechanism. This storage mechanism was archaic to the launch Disk II, 5 inch floppy disk drive and interface. Apple II was selected as the first premier desktop platform of the corporate world VisiCalc spreadsheet program. VisiCalc shaped the business market industry with its ability to energize the microcomputer platform utilization as a business tool in exponential of gaming. Apple II provided users an extra incentive to purchase an Apple II that is well suited with the office. By the late 1970s, Apple had computer designers and a functioning assembly line to advance the microcomputer infrastructure and provide mass production. Throughout the 1970s Apple maintain a steady production and return on investment until May 1980. This month marked the premiere of the Apple III. This specific microcomputer presented a competitive attempt against IBM and Microsoft. Unfortunately, the Apple III was a shortfall, failure in the business and corporate market industry.

APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY In response to the shortfall of Apple III, the next step taken by Steve Jobs, Jef Raskin and numerous Apple employees would change the scope of the microcomputer industry. A meeting was scheduled by Xerox Alto to discuss a walk-through of Xerox Palo Alto Research (PARC) including Jef Raskin visited Xerox PARC in December 1979 to see the Xerox Alto. The outcome of this walk-through advanced the monetary buy-in of Xerox in the Apple shares. Xerox convinced a traded off of one Xerox PARC facility walk-through for Apple shares. The negotiation of the walk-through granted Xerox PARC a purchase of 100,000 shares at an 800,000 split-adjusted share rate of Apple facilities prior to the initial public offer (IPO) price of $10 per share. Jobs was immediately convinced that all future computers would use a graphical user interface (GUI), and development of a GUI began for the Apple Lisa (Wikipedia, The Free Encyclopedia History of Apple, Inc., 2012, para. 10). Apple went public in the 1980s producing more revenue than every IPO given. Fact is Ford Motor Company was the last IPO to produce mass amounts of revenue in 1956 (Wikipedia, The Free Encyclopedia History of Apple, Inc., 2012, para. 11). Throughout the next 4 years, Apple went through a power struggle that landed the most important engineer, Steve Jobs, of the Apple Lisa computer development project. In lieu of the internal fighting, Jobs went on to seize the Macintosh project. This was the most profound decision made by Jobs that would pay off in the long run. Jobs managed to debut Apples first Macintosh in 1984 during a $1.5 million television commercial (Wikipedia, The Free Encyclopedia History of Apple, Inc., 2012, para. 12). The commercial was aired during Super Bowl XVIII and is regarded as the defining moment for Apples achievements.

APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY Strategic Analysis External Environment of Apple Macro-Environment PESTEL Analysis PESTEL characterizes the organizational environment in terms of six factors: political (e.g., the threat of terrorism), economic (e.g., unemployment levels), social (e.g., demographic changes), technological (e.g., development of new/substitute products), environmental (e.g., antipollution policies), and legal (e.g., antitrust law).

Political The political environment that Apple operates in is quite stable and has been over a long period of time. However, since Apples products are widely distributed and sold the world over, there is high risk of problems occurring in some countries where trading with Apples distributors is not feasible. Terrorism factors come into this, as because of such factors, Apples products would not be able to reach these markets and hence restrict the growth of the company. Some governments may interfere with different protectionism policies like in Japan and hence Apple had to adapt its policies. Governments may even enforce barriers to entry however due to the global nature of Apples operations; this factor does not have much influence. Furthermore, since one-third of Apples production is outsourced, these factors may even interfere in the timely manufacturing of the products.

APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY Economic Economically, the industry has been in a stable shape ever since the 1990s recession and the 1999s economic collapse. Significant companies failed as a result and those few years were not good for the technology companies. Also, since the government purchases a huge number of computers, any political problems or economic recession activity has a negative consequence on the computer industry and thus on Apple. The recent recession has slowed down the economic growth of the company from the inside and as well as in the decrease in demand of computers. However, this decrease has been met with increase in sales of companys other products. Furthermore, when the economy shows a sign of improvement, consumer spending and investment might increase as well thus improving the whole industry.

Social The social trend in the case of Apple is very important because consumers know that Apples products are innovative, fashionable and they carry a fashion statement. Having a hitech Apple computer or an iPod is a way to show others that a person belongs to the cool class. Due to the increasing usage of computers and Internet in the education sector, there is more demand of computers with applications that help students to learn. Also due to betterperceived efficiency and awareness, the global trend is increasing in the usage of computers, which is a sign that the industry is still growing.

Technological Being a technological company, Apple has always been in the limelight by developing quality and innovative products. This trend grew from the start when Apple saw that the industry

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY giants like IBM, HP and Intel were making headway into the technological development of hardware. To match the capabilities powered by the new chips and hardware systems, companies like Microsoft and Apple competed for the best operating system. Soon this fight took a different turn when Microsoft took the lead while Apple became focused on a particular niche. Ever since then, technology has drastically improved giving the company more chance to shrink the hardware size and make it even more faster and powerful. Even more devices can be connected to the computer enabling wireless communications and development of media devices.

Environmental With the advent of modern computing, technologies keep on evolving whole the old ones get obsolete. Organizations and consumers have to regularly changing their machines to stay in touch with the latest applications. The problem is that these old systems are of hardly any use anymore and thus computer wastage has been increasing. Computer manufacturers are now ordered to develop machines that use less electricity or that can be recycled and are green in some way.

Legal Being a global company Apple has to sift through different legislations in new areas, which can be quite different from those at home. These may cause problems to the company as discussed above. Furthermore, local regulatory authorities and bodies like Copyright Arbitration Royalty Panel (CARP) and Recording Industry Association of America (RIAA) can influence the working of the company. Due to several copyright infringement cases, the Music Online Competition Act had to be tweaked to provide security. These laws and changes affect the

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY company a lot and promote legal downloading of media and curb piracy.

Industries and Sectors - Five Forces Framework Analysis Force-field analysis is another model for looking at the factors that can assist or hinder the implementation of change. The forces pushing for change are driving forces; those working against the change are restraining forces. Porters five forces framework has to be applied to recognize and highlights the possible prospects: Figure 1: Fives Forces Framework

Source: A graphical representation of Porter's five Forces 12

APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY The Bargaining Power of Suppliers Apple gains it supplies from a large range of suppliers. However, in some cases Apple is bound to a single supplier to obtain their resources. Also, most components vital to the company's trade are regularly available from many sources. The assured key components including application-specific which integrated circuits and microprocessors. In addition, strong bargaining power of suppliers creates high cost of computer components. As there is only small number of processor suppliers such as Intel, AMD, Cyrix and IBM. Meanwhile, few of them have capability and willingness to provide the best for Apple. Thus, the current situation made the price of processor component is high.

The Bargaining Power of Customers The amount of customers power exerted over the company relies on several factors as described by Porter (1979). Apples products have unique selling points; which are offered and sold as bundles with Mac OS. Apple had won a patented of invention in operating systems including its software. A Mac really is just an attractive enclosure for Mac OS and for Apples software. It sets the product apart from its competitors. Another factor that influences the buyers price sensitivity is the products relative price. When a product is relatively expensive for the buyers income, then the buyer will be more interested in lower priced alternatives. Therefore, the consumer is paying such a high price; the lower priced alternatives are extra attractive. In that case, the only thing that which is keeping the consumer from buying Apple product is to be a unique.

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY Risk of Entry by Potential Competitors Apple has 91% market share in the US for computers costing over $1,000, although only 8% share overall. Also, nine out of 10 dollars spent on computers costing $1,000 or more went to Apple. Mac revenue market share in the premium price segment was 91 percent, up from 88 percent in May (McGlaun, 2009: p.1). Potential competitors are willing to enter a market if short-term prices do not equal marginal costs by taking away market share from the established companies. Although the high levels of competition among the existing producers, who can be observed in the PC industry and gaining access to the market is not easy. The PC market does not have a high level of brand loyalty. The market implies certain products are not more preferred by consumers due to high standardization, low patent protection, diminishing brand advertising efforts and lower product quality. In Apple, brand loyalty always played a vital role to achieve this brand loyalty through profound R&D and emphases the products innovation. While Dell is able to drive down costs by mass production of standardized goods and resources are cheaply through increased parts purchasing. Furthermore, spreading overheads, marketing, advertising expenses and fixed costs for enhance advantageous constellation of Pacs manufacturers.

Substitutes Apple is known as a somewhat exclusive brand that provided customers with powerful computers with beautiful designs. Apples competitors such as Dell and IBM were not as focused on design. Apple has differentiated itself brilliantly as a company that produces highend, beautiful products, with a name that speaks to everyones imagination. In the computer industry barriers to switch to other products are usually very low, since there is stiff competition

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY and suppliers usually have deals with multiple computer manufacturers products tend to have the same capabilities.

Rivalry The rivalry between competitors is the final competitive force. This force is placed in the center of the five forces model; it is the most prevailing force. According to Porter (1979: p.1) Rivalry among existing competitors takes the familiar form of jockeying for position using tactics like price competition, product introduction, and advertising. Apples main competitors HP and Dell launched several new products to compete for market share. At the same time however, there was also fierce price competition with the existing products. In the midst of the Dotcom crash, these companies felt the need to lower their prices to keep a competitive edge. Although Apple never intended to follow the dominant industry company in terms of price, this often occurs by establishing an oligopoly. Moreover, the rivalry of the personal computer market is determined by the industry demand, which is currently positioned at a very high level. Favorably for all the market participants it implies that from this point of view theres less rivalry due to a large number of spending buyers, visualized by the industry life cycle.

Internal Environment of Apple

Brand Strategy Apples, capital requirement degree of completion, brand identifies the product price, demand, and the apple users. Supplier powers, barriers, rivalry, treat of substitutes, and buyer power represents Apples overall competitive strategy. Music, Internet, and computer are an

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY innovation for long-term development, technological improvement with a unique design evolving due to a loyal customer base and ambitious leadership. Lets start by defining what brand is. Brand is the product, the manufacturer, or recognizable type of something. Branding is used to cover many different effects. It can be an emotion, feeling that one can have about a certain product or business. These emotions, feelings can be cognizant or oblivious to the manufacturers goal to link both emotions. Brand name of products is very important activity of Apple and can bring more benefits to companies; it relates to future products and increases the value of products. Apple also create brand loyalty which may be high competitive advantages in the market including personal computer industry and consumer electronics industry such as Macbook, iPod, iTunes and the newest iPhone 5 and iPad 3. Brand name of Apple focuses on brand personality, which refers to emotion, dream, hopes, innovation, and power-to-the-people through technology. Comparing emotions to logic, the later falls short to the precepts of emotions. Emotions have a physical, mental, and spiritual association with interactions with others. Think of when you first entered an Apple Store. I remember being greeted by an Apple Store sales associate who first said, Welcome to our Apple Store. His body language read, I am here to help you on the diverse Apple products prior to asking, What may I help you with today? Just the feeling of someone that is genuinely interested in your best interest made me emotional attached to seeing what Apple has to offer. To make a long story short, I left the Apple Store with 2 iPad, iPod Touch, and Macbook Pro smiling, filled with excitement of playing with my new toy. The emotional sensation warranted by Apple remains even to this day. I have become an advocate of Apple.

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY Apple branding focuses on lifestyle, imagination, liberty regained, innovation, passion, hopes, dreams, and aspirations; and power-to-the-people through technology. (Marketing Minds The Apple Brand Personality, 2012) Particularly, brand name strategies of Apple have some distinctive differentiations. For instance, Apple only uses the i prefixes for consumer products such as iPhone, iPod, iTunes and iPad, but it is not used for a huge number of customers products such as Mac mini, Apple TV, Safari, QuickTime and Mighty Mouse (Marketing Minds, 2010). Furthermore, Brand ranking of Apple has increased from 24 the position in 2008 to 20 the position in 2009 and the value of brand also grew from 13,724 million in 2008 to 15,433 million in 2009 (Data Monitor, 2010). Apple has done great at creating an emotional attachment to its products. When we think of Apple and how we feel when operating their products, it places us at an emotional state that drives us to purchase the latest and greatest Apple product.

Life Cycle of Apple Inc. Core Product Apple is known globally for its innovation and specific uniqueness to branding. Apple initially started as a company that sold just computers. Apple has developed six main products these are Mac Computer, Mac book laptop, iPhone, iPod, iTunes and iPad. The story of Mac is an intriguing one it is a tale of downward slide and a turnaround in prove nest its successes, Mac experienced a huge loss in the mid-nineties until Steve Jobs re-directed the company union. A new director for the corporation, with radical changes in the way it would design, sell and build computer Kimmel (1998: p.19). Currently Mac is in the growth stage. IPod is also in the growth stage and has generated a huge profit turn over for Apple Inc. it is less expensive as compared to other Apple products and more affordable to wider group of

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY customers. According to Kerin (2009), it is important to set a price to achieve organization goals. IPhone 4G is a newest product of Apple, which can be demonstrated for Kerins idea. Because it was very successful to convey more profits for Apple, Inc., six hundred thousand customers ordered iPhone 4G in advance before it launched. Currently, iPhone 4G is in mature stage in Apples products.

Finance According to Johnson et al (2008:489), finance and the way that it is managed can be a key determinant of strategic success; it can be seen that finance has an important role not only in businesses of a company, but also in strategies of companies. Relating to Apples finance, revenue of Apple on 26th September 2009 ($42.905 billion) increased by 32.1% compared to on 26th September 2008 ($32.479 billion). Besides, income before tax of it in 2009 ($12.066 billion) was also higher in 2008 ($6.895 billion) by 0.75% (Apple Inc. (AAPL), 2010). These statistics proves that Apple has strong finance, which can be seen as competitive advantage in competition.

Human Resource Process Among other resources human resource plays a vital role in every organization, and Apple Inc. would not be exceptional case. In an every organization there is some process of human resources. In case of Apple Inc. to develop its superior performance, it provides a skill full employee of its necessary departments. It believes only skill full employee can maintain the high

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY quality of products. To manufacturing of best product Apple Inc. not compromise on the employees performance, because compromise has no alternate. The US base company carried out a recent survey about the Apple, Inc. that the admiration of its product and services 45% compared to industry average of 13%. It shows that the development of human resource contain unique strategy among its objectives development better than best position in the market. It gives importance to the employees and employees gives importance to their works. In a mutual effort of both the quality products has been creating (Llive et al 2004).

Competitive Strength Assessment Apples current success and industry position are unparalleled. Steve Jobs digital hub continues to grow and Mac sales are increasing. 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. In much success, Apple is commendable for its stock positions and marginal revenue in the NASDAQ over its competitors. Apple, Inc. (AAPL) has 3 main direct competitors, Google, Inc. (GOOG), Hewlett-Packard Company (HPQ), and Research in Motion Limited (RIMM). As of May 31, 2012, APPL is leading its competitors in NASDAQ with a real-time market cap of (541.21B) to its competitors GOOG (189.36B), HPQ (44.88B), and RIMM (5.32B) (Yahoo Finance AAPL Competitors, 2012, Direct Competitor Comparison). APPL is the leading in the personal computer industry worldwide. In fact, APPL (142.36B) grossed (18.32B) in revenue over its next leading direct competitor, HPQ (124.04). Although this is a

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY slight margin, APPL (38.62B) outshined HPQ (5.23B) in Net Income with GOOG (10.83) RIMM (1.16B) is incomparable. This net income is worth a look at Apples 2012 first quarter earnings. From January to April, Apples iPhone and iPad increase in sales doubled. In some cases, sales tripled last years first quarter earnings. Apple reported sales of 35.1 million iPhone and 11.8 million iPad during the first fiscal quarter of 2012. It was an incredible quarter in China, Timothy D. Cook, Apples chief executive, said in a conference call with Wall Street analysts. It is mind-boggling that we could do this well (The New York Times Apple Profit Rises on Higher iPhone and iPad Sales, 2012, para. 3). Apple has an astounding market of devices to support the ever-changing personal computer industry. The iPhone and iPad cooperatively are shaping the market with a whopping net income of $11.6 billion, at $12.30 per share, in comparison of last years first quarter net income of $6 billion, at $6.40 per share. I believe it is safe to say that Apple will be in existence for years to come. In fact, Apple has proven its ability to overcome faults of which was reported in 2010 with the triumphant release of Microsofts Windows 7. Some Apple users were migrating back to Windows 7. The market for Windows 7 increased a boasting 0.1 percent with its release to 92.1 percent of windows-based machines for clients. This slight increase in Windows 7 users was nothing to stop Apples consistent progression toward gaining U.S. manufacturing. Critics want Apple to manufacture more products in the U.S. CEO Tim Cook does, too. But theres a lot in the way (ZDNet Apple wants U.S. manufacturing, but it aint that easy, 2012).

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY Consumers are bouncing around thoughts of why not produce a U.S. made iPhone, iPad, and Macbook. Well bottom line up front, I believe the U.S. is behind the power curve on hightech manufacturing skills. Apple would not make millions if they were to migrate its production to the U.S. The development of its products is suitable for its current location Silicon Valley, CA.

Competitive Views and Strategic Groups Apple directional progression toward creating a division between the PC world and mobile device has stunned the technological world. The developments of the iPod and iPhone have surpassed the loss of PC wars to Microsoft. Apple has used its mobile devices leverage to continue to promote use of mobile technology as a means of conducting business in everyday lives. Every product that Apple develops places them a step ahead of the unpunctual, timing of Microsoft. Apples product developers must have a desire to own themselves, taking ownership of all the specifications that are input into each device. Each product must be user-friendly with ease of use, Steve Jobs pet peeve simplicity. Industrial design is pertinent in creating a competitive view of Apple products. Products that are difficult to use, from a consumers standpoint, is insignificant as water running under a bridge. This is what continues to drive the company user-interface designers and hardware engineers to create instinctive, understandable, and discoverable products every day while maintaining a level of diversification that is relative to industry demands. Product diversification and innovation for long-term development (music, internet, computer) accompanied with

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY technology is and has become a key part of everyday activities and users desires for more advanced products with additional company products readily available to invest. Integration of software and hardware, technological improvement with a unique design has transcended the barriers of the computer industry to cross many aspects of industries (iTunes, iPod, iPad, and iPhone). Apples ease of use with each product has created a totally different market and accomplished a key goal within the company.

Key Resources and Capabilities Apples key resource and capability was the late Steve Jobs, CEO. The hardware system and software has also added industrialization and successfully marketed the company-desired outcome. As history told, Steve Jobs drive and dedication rebounded Apple to a tremendous success following a lost in market value and continued intuition to generate billions in revenue has proven as the main key resource. Despite the fact that Apples designers, programmers, and engineers individually represent key resources, the aptitude of the company to infuse their capabilities to invent a software/hardware ecosystem is the companys key capability. If the key resources act as stand-alone, the companys temporary advantages over the competitive equivalence would be in jeopardy of an epic fail. Taken each individually, the resources only represent competitive equally and gives temporary advantages. As a collective resource arrangement in its key capabilities, they have instituted a valid and continuous aggressive edge beyond its expected performance within the industry. Apples innovative creativity and ability to implement elegant, functional design into each product is adept in its key resources and capabilities. Lets not forget about the brand-marketing competency. Apple is one of the most

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY established and reputable IT brands globally. Its popular multi-million dollar marketing campaigns included successful Think Different ads and catchy slogans such as It just works, which positioned the firm as a trendy alternative to its competitors. Apple also promoted its computers as the worlds greenest lineup of notebooks that are recyclable and energy-efficient. In 2007, the U.S. Environmental Protection Agency ranked Apples notebooks as the most environmentally friendly portable computers. As a result of its massive marketing efforts, Apple has built a very loyal customer base that advocates the brand, enabling it to not only recruit customers, but also retain them. This provides a platform for Apple to introduce new products, such as the thin Macbook Air and slim iPhone 5. Besides, Apple branding is so successful that it is able to license its Made for iPod logo, which serves as a form of advertisement and a revenue source as it earns an estimated 5% of the retail price of such products.

Steve Jobs Apple founder and late CEO, Steve Jobs, was an extraordinarily, highly respected visionary who proved to be valuable in every instance to the company. His unique vision and analytical approach to business operations set Apple as the industry leader in the early forming stages of the company. He was a person that could exercise the form, the storm, and the norm leadership approach. He saved the company from a lost of revenue in his strategic approach when he returned to Apple in the mid-1990s. Under his leadership, the company recovered exceptionally well and surpassed competitors in various markets and revolutionized industry categories of products. Apple saw Steve Jobs as a highly respected, exceptional, unique, and

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY irreplaceable resource.

Apple Stores Retail Locations The opening of Apple stores across the United States and beyond has provided the company with a pronounced personal presence to act as a sales and marketing location. The stores were and are excellent ideas on presenting Apple products. The storefronts allow Apple the ability to be personal with each customer, listen to their needs, and address any questions that may arise. The delineating factor is the quality of customer service. The customer experience is what sells products in excess product capabilities. This is why Apple continues to surpass many retailers in earning from year to year. In 2010, Apple store revenue was $480,000 per employee. By comparison, JC Penney pulls in about $124,000 in revenue per year per employee. Apple has shown that it is on the glide path of doing something tremendous. Something that is incomparable. This resource is an extraordinary value to Apples mission statement, 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. Apples success is one of a kind in its deliberate intent to reinvent the mobile phone and technology industry. Intentions are relevant to business and corporate industry worldwide. Corresponding successes and impacts like the Apple store model, iPhone, iPad, and professional software is intricate, impossible for competing companies to achieve in the production timeframe.

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY Relationship with OEMs Apple currently outsources all original equipment manufacturer (OEM) processes to China partners, Foxconn and Hon Hai Precision Industry, while maintaining internal design within Silicon Valley, CA. The close relationships between Apple and their OEM partners are essential in providing Apple with top-notch service and high quality products. Business relationships that are reciprocal in nature are time intensive and extremely demanding. Development and control are valuable to Apple and puts them steps ahead of their competition that manufacture internally all OEM and delay outsourcing products.

Apple Inc. Conception Outsource and Strategy Implementation Partner with the Enemy Steve Jobs was an intelligent man whose strategies and concept were profound. Jobs had unusual ways of making Apple an industry defining company that created in own entity in the mobile industry. He was confident in his decision to make things happen partnering with the enemy. Jobs made Apple the worlds most renowned, admired company when he reached out to Bill Gates. Jobs had gone through 12 years of loss in revenue, stocks, and receivables. He was tired of the conditions of the company, so he contacted Bill Gates and explained the value of investing money in a new and upcoming mobile technology company. Bill Gates took the bait investing a total of $150 million into Apple. That investment is what set Apple on its way to the top of the industry.

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY Put Sexiness into Products In 1998, Jobs made a contentious decision to do something outside of the box to make Apple products personal, bringing reality into the aesthetics. Jobs said, You know whats wrong with this company? The products SUCK there are no sex in them. What he meant is there is no eye-catching appearance that draws consumers to Apple products. With that statement, the transformation in the aesthetics of the Apple products from iMacs to iPads became high priority. To this day, Jobs is credited for the creation of the most astoundingly, attractive, colorful technology ever built by Apple.

Revamp the Vision and Business Plan Jobs intuitive nature as a leader was pertinent in developing a new vision and business plan. He had foresight for what technology would evolve in to. Jobs analyzed the courses of actions and determined that it was time to make additions to the product lines. It was time to broaden the companys perspective. Just a walk down the history lane, Apple started with as a computer-based company that focused on that one product that was bringing in revenue. Jobs knew that the market was progressing toward being saturated with desktop computers. So, he revamped the vision and business plan to expand its products beyond the norm with the introduction of Final Cut Pro, iPods, iTunes, iPads, and iPhones. In addition, Jobs changed the company name from Apple Computer, Inc. to Apple Inc. in 2007 instituting a new perspective.

Inform Customers What They Want Instead of Asking for Feedback What better way to create a buying, emotional attachment to a product than to inform

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY customers of what they want instead of asking for feedback? This is true on the level that when you tell someone what to do, there is no room for a person to analyze the shortfalls of the product. Jobs did this exceptionally well. He focused on creating an emotional attachment that is unwavering. As director of consumer research for Yankee Group, Carle Howe, said, Apple has a great track record for making you want and buy things you thought you didnt need.

Trends and Opportunities General Environment Analysis Of all the technological entities that exist, mobile applications are the fastest growing portion of the mobile market referred to as a mobile application ecosystem. This market is the most interesting in how it utilizes many approaches to create the necessity in mobile devices that operate as an office separate from the desk and four walls. Smartphone and tablet applications have saturated the industry with applications TurboScan, Bible Reader, DocuSign, CardMunch, and many more that perform as stand-alone. This is separate from the historical Plug, Connect, and Go requirements. Mobile applications alone have created a trend that is constantly evolving.

Trends Metered Data Usage As technology continues to evolve, larger data bandwidths and access time requirements in the United States will soon receive Metered Data Usage. This usage will create revenue and return on investment. The once All you can eat buffet approach to data usage will be replaced

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY with metered data usage; users will be required to purchase data packages at rates based on data usage. For instance, currently 300MB of data from AT&T costs $20.00, Sprint Unlimited, and Verizon 2 GB costs $30.00. Once metered data usage is implemented, cost could rise to four times the current value. So that means, AT&Ts data package for 300MB would be upwards of $80.00 and Verizon could increase to $120.00 hypothetically speaking. The reality of is the evolution of mobile applications will cause an increase in demand for data usage. In the end, someone has to pay for the luxuries.

App Store Increase A trend that mobile applications have created is a demand for store applications that allow users to have access to shopping, banking, etc. at their fingertips. Stores are more focused on marketing via mobile applications by utilizing the global positioning system access demographics to market products. Apple Store, Overstock.com, Amazon.com all has mobile applications that are readily accessible. This is a marketing tool and decreases the need for shoppers to shop in stores, but increases the demands for mobile access and purchase. This feeds into the requirements of having an App Store to download mobile applications. In all, the future is promising for expansion of consumer choices.

Mobile Internet Access beyond WLAN Mobile Internet access beyond WLAN is an opportune strategy that incorporates connectivity with reoccurring daily work requirements. As industries and businessmen work abroad, away from their offices, they grow more accustom to operating in a geographically diverse environment with connectivity in all areas. Mobile Internet is high priority to conducting

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY business and closing deals. Businessmen are more apt to have lunch and a round of golf while conducting business transactions with nine iron in hand. The ability to be flexible, accessible from abroad is mandatory for traveling, partnering with other entrepreneurs. Mobile Internet is detrimental in creating contracts, providing a swipe/pay transaction, and the signing of important documents via smartphone or tablet is a powerhouse in conducting business on the fly. If all mobile phones and tablets required a hard-wired CAT5 cable to access the Internet, I believe businesses would be inapt to be sociable outside of the office and impatience would cause prospects to become disinterested.

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY

Strengths

Well-Designed Products The evolutionary design of a product from a fine focal point on aesthetics into a more affluent discipline that embraces branding, services, readiness, innovation--even the operational excellence--is on clear display for consumers to decide from. What had once been the Motorola market now belongs to Apple. Apple has proven and continues to prove that their design hands down carries weight in the mobile technology industry.

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY Loyal Customer-base Apple holds a strong, loyal customer-base that reflects the expansion of the role and definition of design. It shows that Apple can embody the vast dynamics of the technology industry in its ability to attract a new crop of seekers who are stepping outside of the Microsoftbased PCs to embrace change to Mac PCs. The number of Apple OS as of June 11, 2012 is approximately 60 million users worldwide showing a whopping 40% increase of Mac users over a 9 months span from the release of OS X Lion. Whether the download, installation, or purchase via Mac Apple Store, Compact Disk or system purchase, this is proof that Apples customer-base is by far solid.

Company Readiness: Flexibility to Change Many companies have taken the approach to remain steady, vigilant to the method of success. The questions arises is What happens when success has dwindled? The answer is simple; implement an approach that allows the company the ability to adjust to changing times. This approach is the emergent strategy, which is synonymous with, evolving strategy. The emergent strategy is a strategy that allows for flexibility, innovation and operational excellence. (Emergent Strategy in Uncertainty, para. 4) Apple best exemplifies this strategy in their ability to maintain its competitive position by the use of its iTunes App Store Model, a cohesive system that supports various devices therefore increasing marketing and financial growth. For this reason, Apple continues to uphold the standard of progressive operational structure ready for any and all change.

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY Weaknesses

Apples Softness in the Business Market On October 10, 2012, the U.S. Market reported the top 5 vendors, U.S. PC Shipments, Third Quarter 2012 Preliminary figures. The companies are listed in ascending order: Table 1.1 Top 5 Vendors, U.S. PC Shipments, Third Quarter 2012 (Preliminary) (Units in thousands) 3Q12 3Q12 VENDOR 1. HP 2. Dell 3. Apple 4. Lenovo 5. Acer Group All Vendors SHIPMENTS 4,293 3.402 2,056 1,368 1,006 16,424 MARKET SHARE 26.1% 20.7% 12.5% 8.3% 6.1% 100.0% 3Q11 SHIPMENTS 5,284 4,049 2,211 1,252 1,251 18,746 3Q11 MARKET SHARE 28.2% 21.6% 11.8% 6.7% 6.7% 100.0% 3Q12/3Q11 GROWTH -18.8% -16.0% -7.0% 9.2% -19.6% -12.4%

Source: https://www.9to5mac.com/tag/dell Notice that Apples position in the chart third overall shown with estimates two firms with ranking higher. Shares for the U.S. Market for Apple was 12.5% compared to HPs 26.1%. This is a difference of 13.6% showing demise on Apples shipment weaknesses. I have noticed that Apple has this shipment policy or procedure that requires users to pay for shipment fees for returning a product to the firm for repairs, replacements or recycling. I recently shipped my iPad 32

APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY in for repairs to find out that the shipping label had not been created nor the fees paid. So, I had to package, create a label, paid for the box and shipping fees in order to ship my iPad. This is a downfall considering other companies will send you a replacement device, regardless of type, with packaging and labels in contents ready for return of old device. This is a testament of how Blackberry Enterprise operates although ranked within the Top 5 Vendors chart. This is indeed a weakness in my book and seems like users are agreeing to disagree with this point.

Consumer Purchases versus Business Purchases Apple has programs to manage consumer purchases from the App Store. One in specific is the App Store Volume Purchase Program (VPP) that tracks App purchases and protects the licenses for each. This prevents the company from making multiple license purchases of the same item when requested by consumers. This is an instrument utilized by accountants and business owners that gives visibility of resources, assets and revenue. This is also a weakness how the program is geared toward consumer App purchases only. It omits the aspect of marketing sales of PCs to businesses. PCs are more common in an office, laboratory or R&D department. Apple fails to approach the aspect aggressively in order to challenge the strongholds of firms as Dell and Blackberry. These two firms have mastered the strategy of marketing products to businesses at a reasonable price based on consumer specifications. This is an uphill ascent that must be tackled in order for Apple to conquer the remaining battlefield the business market.

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY Opportunities Consolidation What is consolidation? Consolidation means to combine, strengthen, bring together, or to compact. For years, telecommunications have transformed from circuit switching boards to packet-switched boards to including Voice over IP integration. Consolidation has been occurring for the path 10-15 years. Unfortunately, integration calls for transformation, revision or what the military calls, Shape up or Ship Out of companies. Those companies who are willing to partner with progressive competitors will survive; companies with a stern, immoveable approach will fade away just as the rainbow. The analogy is whether the companies will buy or sell to adapt to the evolving opportunities that are available.

Global Teleconferencing Teleconferencing is a key opportunity that is detrimental in maintaining connectivity to daily process and activities in the work place. Accessibility, reliability, and cost efficiency are the main key factors that allow businessmen the ability to interact with co-workers and employees anytime, anywhere, and with anyone in real-time. This further allows users to market, advertise, modify sales, and provide dislikes/likes of current events. Apple has crafted all of its devices with the ability to hold teleconferences with FaceTime, Skype, etc. The craftiness of Apple has proven to be sustainable and will be in existence for years to come.

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY Reverse Outsourcing Outsourcing is key in producing mass product volumes with minimal over-head costs. Partnering with a contractor, consultant, or industry creates an open market for reverse outsourcing. An example of reverse outsourcing is China resourcing its Apple device parts from New Zealand. At this point, Japan is using reverse outsourcing by sub-contracting portions out to increase efficiency and create revenue for Japan.

Threats

Android Smartphone Growth Apple iPhone 4S was the best thing since white sliced bread in late 2011 until the unveiling of the iPhone 5 and the Samsung Galaxy S III. The iPhone 5 has projected total purchases of 46.5 million comparatively to the Samsungs projected total of 30 million Galaxy S III to be purchases by the end of fiscal year 2012. This is a close margin of 16.5 million units that can quickly change with the smallest, marginal error in marketing or timing. Dont forget that Apple best quarter in 2011 recorded totaled 37 million iPhone. Atypically, this is only a 7 million-unit difference from Samsungs projections for 2012.

Tablet Computer Market Growth The market for tablets is at a steady rise to the top. It seems that the once popular PC is become antique to the mobile tablet PC. Apple and Android have tablets that are becoming increasingly competitive from day-to-day. Each has similar capabilities that can be duplicated, cannibalized, and leveraged for profit. In 2010, the Apple iPad was released as the first product 35

APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY using an independent core processor that is capable of joining over 500 thousand applications with one touch. The Android Tablet PC has similar capabilities with an avenue of creating shortcuts to undermine the market to regain lost market share. In all, Apple maintains the competitive market maturity as of now, but can easily lose grounds if Android gains enough momentum to overtake the market.

Recommendations The Apple stores represent an important resource of revenue for Apple and serve as an interactive advertisement and customer friendly environment for the Apple brand. Their success has been beyond comparison to its competitors by any other industry competitor. An emphasis on the integrated system in advertisements is pertinent. Apples integrated system holds a significant advantage over competitor systems relying on Microsoft Windows. Although some customers prefer Windows based products to Apple, the inexperience of iOS is by far incomparable to Windows. I recommend all users take out time to step outside of the norm and explore the Apple products with an open mind to experience a world-renowned product, experience the seamless interoperability of all Apple products. This experience will hold up to scrutiny against critics. Once an inexperienced Apple product user has life-changing experience, marketing becomes primary in selling of more products to new and existing customers. Customers become marketers for Apple products by nature of the emotional connection. This is why Apple continues to maintain stellar positions in comparison to its competitors.

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APPLE INC. STRATEGIC PLAN: INNOVATIVE PRODUCTIVITY As long as Apple maintains the customer relation, the OEM partners will continue to support production. Apple should continue to arrange OEM partners abroad to ensure that each Apple product has indistinguishable features that create redundancy, increases operation rate, and harnesses OEM partner buy-in.

Conclusion Apple is the most outstanding company that I have researched. From the transformation of iMac aesthetics to Apple Store expansion, Apple has re-innovated the mobile technology industry. Apple has proven to be top-notch from its history of knowing how to get up from a fall. Although there were some shortcomings, Apple has what it takes to continue to maintain and progress in its competitive arena. Google Inc., Hewlett Packard Company, and Research in Motion Limited will continue to be runner up to Apple for years to come. With Apple Store expansion, employee quarterly revenue will compile to provide sustainable revenue to hold the stock positions. Apple integrated system evolution toward smartphones and tablets are target products for consumer buys. Consumers are now moving toward relying solely on mobile devices to expand their immediate audience beyond the boardroom. The future beholds something spectacular for Apple Inc. And I will continue to promote, market, and invest into their products.

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