Enterprise Strategic Management

Apple Case Study

Strategic Management Tools Analysis
Submitted By:
Junaid Ali khan
I!"#"$$
%h& in Management Science and Engineering
Table of Contents
Summary..............................................................................................3
Introduction...........................................................................................4
A%%'E Inc(...........................................................................................4
S)*T analysis +or A%%'E Inc(..................................................................5
Strengths...........................................................................................5
)eaknesses........................................................................................5
*pportunities......................................................................................6
Threats..............................................................................................6
%orters ,i-e ,orces Model........................................................................6
%orter ,i-e ,orce Model +or Apple...............................................................8
.ecommendations...................................................................................8
.e+erences.............................................................................................9
Summary
Apple Inc( is a technology company/ 0hich designs/ produces and sells goods o+ the
Computer/ Music and Mobile1phone Industries( It is di++erentiated by its brand1
perception and identi+ication( *-er the last couple o+ years/ Apple has become a cult1
brand/ thanking its i'i+e/ iTunes/ 2uickTime and iMac lines( Apple Inc(s short1term
goals is currently increasing the sales o+ the 3ust launched i%ad series 4i%ad Air 5 i%ad
Mini6( In the long1run/ Apple aims +or staying as market leader(
Apple Inc( has incorporated numerous +eatures that are uni7ue and 0ell kno0n in the
market today( )e consider that there are se-eral Apple products 0ith se-eral
appealing +eatures such as: iMac/ i%od/ i%hone and i%ad( These products represent a
re-olutionary era +or the de-elopment o+ Apple( By placing such products in the
market/ Apple Inc( has attracted a lot o+ customers in one 0ay or another( 8ighly
ad-anced technology/ simplicity and design/ and the sense o+ lu9ury are the main
+eatures integrated in these products( Moreo-er the com+ort and con-enience that
these products pro-ide are -ery crucial(
:Think &i++erent;
A -ery important +act about Apple products today is that these products are globally
spread( This has created among us the idea that Apple products are no longer lu9uries
but real necessities due to the technological de-elopments( Moreo-er/ 0hat has
moti-ated us most to select Apple Inc(/ is the 0ay 0e relate oursel-es 0ith its
products( Each o+ us being an Apple consumer has build trust0orthiness relationship
0ith the products that this company o++ers( *0ning an i%od or i%hone today de+initely
0ill make your li+e easy and simple(
Introduction
According to 4*%%apers/ !"6(Apple Inc is an American multinational organi<ation
located in " in+inite loop/ Cupertino/ Cali+ornia =>!"?/ in the middle o+ the Silicon
@alley( It is +ocused on designing and de-eloping the personal computers/ other
related so+t0are products/ and the electronic products such as M%# players and i%ods(
Apple Incs main products are iMac/ i%od/ i%hone/ and its latest ad-anced product is
i%ad Air/ 0hich is on the -erge o+ creating another re-olution a+ter i%hone( Apple Inc
0as +ounded in "=$A and since then Apple Inc has been leading the 0ay in inno-ating
ne0 products/ ho0e-er it has encountered numerous ups and do0ns since then(
Apple Inc produced the +irst e-er e9tremely success+ul personal computer( It has been
al0ays on the +ore+ront o+ inno-ating ne0 productsB ho0e-er it has o+ten struggled to
maintain the hold on the market share in the product line( 'ately/ Apple Inc has
trans+ormed its image +rom an in-enti-e computer manu+acturer to a +ully1+ledged
consumers electronic company( Some +acts o+ its success can be calculated +rom its
sales o+ C"#(=> billion in the year !!>( In year !!>/ Apple Inc had controlled ?(D
o+ the ES market in %Cs( Also/ Apple i%ods models had controlled $!D o+ the hard
dri-e M%# player market( Apple Inc en3oys the leading share in the handset market/
generating o-er $"D o+ the industrys pro+it 0ith A(>D o+ the international handset
market( Apple un-eiled its +irst i%hone on =th January/ !!$( The most recent i%hone/
is i%hone >s and >c released in !"#(
APPLE Inc.
According to 4Scribd Inc(/ !"#6 Apple has to be one o+ the greatest success stories o+
all time( The beginnings o+ Apple started 0ith )o<niak assembling a simple built
computer machine( It 0as in the summer o+ "=$" )o<niak " and Jobs "A 0ere
introduced to each other by a mutual +riend Bill ,ernande<( )o<niak had sho0n Jobs
his simple built computer machine and this impressed Jobs to the point Jobs belie-ed
he could sell it +or a pro+it( It 0as here they 0ould +orm a strong +riendship because
they not only shared a passion +or computers/ but because they 0ere both kno0n as
outcasts and +or the +irst time they had a great understanding/ admiration and respect
+or each otherFs abilities/ personality and intellect( They 0ould begin the Apple
pro3ect by selling some o+ their possessions: )o<niakGs 8% scienti+ic calculator and
JobsG @olks0agen/ they raised C"#!! and assembled their +irst prototypes in Jobs
bedroom( )hen the pro3ect became too big +or the bedroom they mo-ed the pro3ect
into Jobs +amilyGs garage/ it 0as on a huge 0ooden 0ork bench that ser-ed as their
+irst manu+acturing base( The computers 0ere hand built by )o<niak and +irst sho0n
to the public at the 8ome bre0 Computer club( A+ter selling a number o+ the
machines Apple 0as established on April "/ "=$A and 0ent public on &ecember "/
"=H!(
Apple has maintained its great success 0ith its ability to understand 0hat the
consumer 0ants be+ore the consumer e-en kno0s 0hat they 0antB Apple e++ecti-ely
creates 0ants by their constant creati-e inno-ation and uni7ue design 0hich is stylish/
user +riendly and a++ordable( They ha-e also been able to create a brand in the high
technology 0orld 3ust as Chanel has in the +ashion 0orld( %eople can easily recogni<e
an apple 0hether itGs the I1%od/ the I1%hone/ the Mac Air or the I1%ad( It has become a
product that de+ines oneGs identity in ho0 they desire to be seen by society that is a
person 0ho is highly inno-ati-e/ intelligent/ stylish and apart o+ the in cro0d( This is
pure marketing genius( This marketing genius o+ Apple has seen this company
outper+orm beyond the business 0orldGs e9pectations( )hile so many companies are
struggling to break e-en in the current recession Apple is getting stronger by the day(
SWOT analysis for APPLE Inc.
S)*T analysis stands +or Strength/ )eakness/ *pportunity and Threat +or a
particular organi<ation/ 0hich can help in +ormulating a strategy +or its business and
can also help in analy<ing its internal en-ironment 4Strengths 5 )eakness6 and
e9ternal en-ironment 4*pportunities 5 Threats6(
Strengths
According to 4)harton/ !"6 The +irst and +oremost strength o+ Apple Inc( is its
technological edge o-er its competitors( I%hone ha-e turned out to be a great success
and has been associated 0ith status in many o+ the countries( ITunes has turned out to
be a 0onder+ul re-enue generating source and since it also sells 0ith its o0n tool i(e(
the i%od/ thus/ re-enue has multiplied +or Apple Inc( Another strength +or the
organi<ation is that +or e-ery so+t0are that Apple Inc( produces/ it introduces its
hard0are 0ith it too/ 0hich leads to its e9pertise in both the industries( Apple Inc(
products are classi+ied as lu9ury items/ thus its products pro-ide enough room +or it/
so that the competitor products are no longer a competition( The another strikingly
ad-antage o-er competitors products/ is the design o+ the Apple products/ and 0hich
are also simple to use( The brand loyalty o+ its product and its super dedicated
research and de-elopment department are also its ma3or strengths(
Weaknesses
)eaknesses are the disad-antages that are hindrance in obtaining the business goals
+or the organi<ation( The poor relationship 0ith the market than Microso+t is surely a
disad-antage to Apple Inc( Another point could be that the products introduced by
Apple Inc( ha-e -ery short li+e cycle/ 0hich concludes that the research and
de-elopment department has to be constantly maintained/ 0hich re7uires huge capital(
Apple Inc( has -ery lo0 presence in the ad-ertisements/ and also it has -ery small
market occupation as compared to its main ri-al Microso+t( Thus/ all this leads to the
+act that Apple Inc( gets -ery less business +rom its home country ES/ and ma3or o+ its
business is +rom outside the ES(
Opportunities
According to 4Marketingteacher/ !"6(*pportunities can a++ect both the present as
0ell as the +uture condition o+ an organi<ation( Apple Inc( opportunities are the
introduction o+ more and more %C -iruses/ on 0hich Apple Inc( can capitali<e on( The
second opportunity is the population o+ the 0orld is gro0ing at a rapid pace and thus/
this opens the +ront +or many ne0 markets/ also the purchasing po0er o+ a common
man has increased drastically/ 0ho can be pursued or impressed to buy the lu9ury
Apple products( The online sales o+ the organi<ation are increasing and also/ the
bonds and the partnership 0ith the other organi<ations ha-e been on the rise in the
past +e0 years( %roducts such as i%hone ha-e create a ne0 set o+ potential customers
altogether 0hich can be targeted in the +uture i(e( the young population 0ho ha-e a
cra<e +or any ne0 technology gadget 4MarketingTeacher(com !"6(
Threats
In the past +e0 years/ many competitors ha-e come up +or Apple Inc(/ especially in the
+ield o+ laptops/ like &ell/ Sony/ 8%/ and Toshiba( Another threat could be that many
o+ the customers ha-e started do0nloading the music +or +ree instead o+ purchasing at
iTunes( The product e9pensi-eness is itsel+ a threat to the product/ as substitutes at a
lo0er price are al0ays a-ailable( 'ong lasting recession could also be a threat to its
products( )indo0s $ so+t0are is gaining more market place a+ter -ista +lopped and
last but not the least/ the technological ad-ances that ha-e been taking place e-ery
single day/ is a big threat to Apple Inc(
Porters Five Forces Moel
%orters ,i-e1,orces Model o+ competiti-e analysis is a 0idely used approach +or
de-eloping strategies in many industries( The intensity o+ competition among +irms
-aries 0idely across industries 4&a-id/ !""6(
Porters Five Forces Moel for APPLE Inc.
%orters ,i-e +orce Model is a -ery po0er+ul tool to understand the core o+ the po0er
in a business or in a company(
Bargaining Power of Suppliers! This is ho0 much pressure
suppliers can place on a business( I+ one supplier has a large enough impact to a++ect a
companyGs margins and -olumes/ then it holds substantial po0er(
There are -ery +e0 suppliers o+ a particular product
There are no substitutes
E(g( Microso+tGs relationship 0ith %C manu+acturers
Bargaining power of buyer! This is ho0 much pressure customers
can place on a business( I+ one customer has a large enough impact to a++ect a
companyGs margins and -olumes/ then the customer hold substantial po0er( 8ere are a
+e0 reasons that customers might ha-e po0er:
Small number o+ buyers
%urchases large -olumes
E(g( Tata 0ants automobile parts +or their ne0 cars so bargaining po0er o+
customer is -ery high(
Threat of New Entrants " The easier it is +or ne0 companies to enter
the industry/ the more cutthroat competition there 0ill be( ,actors that can limit the
threat o+ ne0 entrants are kno0n as barriers to entry( Some e9amples include:
E9isting loyalty to ma3or brands
Incenti-es +or using a particular buyer 4such as +re7uent shopper programs6
8igh +i9ed costs
Io-ernment restrictions or legislation E(g(1 %harmaceuticals
Availability of Substitutes " )hat is the likelihood that someone 0ill
s0itch to a competiti-e product or ser-iceJ I+ the cost o+ s0itching is lo0/ then this
poses a serious threat( 8ere are a +e0 +actors that can a++ect the threat o+ substitutes:
The main issue is the similarity o+ substitutes( ,or e9ample/ i+ the price o+ co++ee rises
substantially/ a co++ee drinker may s0itch o-er to a be-erage like tea(
Competitive Rivalry " This describes the intensity o+ competition bet0een
e9isting +irms in an industry( 8ighly competiti-e industries generally earn lo0 returns
because the cost o+ competition is high(
"6Many players o+ about the same si<eB there is no dominant +irm
6'ittle di++erentiation bet0een competitors products and ser-ices
Porter Five Force Moel for A##le
The %orter ,i-e ,orce Model +or Apple Inc( is sho0n belo0:
EKISTILI .I@A'.M
)indo0s *S and media player +or playing music and -ideo 4 Microso+t6
Competition to Mac *S K 4'inu96
Alternate sources o+ computer hard0are 4&ell/ 8%/ 'eno-o6
Small stylish M%# players 4Creati-e/ Samsung/ Sony6
*nline music stores similar to itunes stores 4Lapster6
T8.EAT *, LE) ELT.ALTS
Streaming audio and -ideo 0ith -1cast 4@eri<on6
*n demand online ser-ices 4similar to i1tunes6
Le0 entrants 0ith disrupti-e technology 4The :ne9t google;6
BA.IAILILI %*)E. *, SE%%'IE.S
Suppliers o+ processors and computer memory 4Motorola/ IBM/ Intel6
Strategic allianceNsupplier o+ Mac 4Microso+t6
Supplier o+ t- and mo-ies 4&isney/ ABC/ ,o9/ Sony6
Sources o+ music 4BMI/ Sony/ )arner/ Eni-ersal6
BA.IAILILI %*)E. *, CEST*ME.S
Customers share music using peer1to1peer net0orks 0ithout paying +or music
4Ares/ 'ime0ire6
.etailers may pressure +or lo0er prices or better terms 4&istributors6
ConsumersNBusinesses may reduce spending on computers i+ they +ear
economic do0nturns 4Consumer Attitudes 5 Beha-iors6
Consumer .e+resh Cycles
T8.EAT ,.*M SEBSTITETES
Satellite radio +or music 4KM/ Sirius6
Entertainment media/ media and music 4KB*K/ %S6
Alternati-e means to ac7uire music 4Music C&s/ &@&s6
Alternati-e sources +or -ideos 4Cable/ Broadcast/ Theatres6
$ecommenations
'o0ering the cost o+ products and maintaining the same 7uality standards
Can +orm 3oint O -entures
Pno0ledge Management
More number o+ retail stores +or easy access
Continuous inno-ation to e9pand
$eferences
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mission1statement
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annual1reportN
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@#R"(pd+
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0riting1analysis1re-ie01online1apple1s0ot1pestle1analysisN