APPLE / IPHONE

Final Project
Group name: Apple
GROUP MEMBERS
1. Methawee Keawlamoon (May) 4914218
2. Yu Mao (Mike) 5135617
3. Nuttagridta Paisansatan (Eye) 5214665
4. Vo Thi Quynh Thy (Tea) 5238360
5. Yonglin Huang (Ong) 5238369

Section 408
Submit to
A. Pornchanoke Tipgomut
Academic year 1/2012
Date: 07/09/2012
i

Group profile

May
Name: Methawee Keawlamoon

ID: 4914218 Mobile no. : 086-352-2288
Email: maybe_panda@hotmail.com GPA 2.51
Major: Marketing Minor: -


Mike
Name: Yu Mao

ID: 5135617 Mobile no. : 081-489-3457
Email: yurainy@msn.cn GPA 2.4
Major: Marketing Minor: MGT


Eye
Name: Nuttagridta Paisansatan

ID: 5214665 Mobile no. : 086-388-4213
Email: funnylove_516@hotmail.com GPA: 2.8
Major: Marketing Minor: HTM


ii


Tea
Name: Vo Thi Quynh Thy

ID: 5238360 Mobile no. : 083-545-3848
Email: vo.quynhthy@yahoo.com GPA: 3.6
Major: Marketing Minor: BIS



Ong
Name: Yonglin Huang

ID: 5238369 Mobile no. : 090-661-8773
Email: ong1989@live.cn GPA: 3.27
Major: Marketing Minor: -


iii

Martin de Tours School of Management
Department of Marketing
Plagiarism Acknowledgement Form

Subject: MKT4725 Competitive Analysis and Strategy Section: 408
Group Name: Apple Company/ Brand: Apple / IPhone
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Student I.D. Group Members Names Signature Date
1. 4914218 Methawee Keawlamoon 07/09/2012
2. 5135617 Yu Mao 07/09/2012
3.5214665 Nuttagridta Paisansatan 07/09/2012
4. 5238360 Vo Thi Quynh Thy 07/09/2012
5. 5238369 Yongling Huang 07/09/2012
iv

Table of content
GROUP PROFILE ...................................................................................................... I
PLAGIARISM ACKNOWLEDGEMENT FORM ........................................................ III
TABLE OF CONTENT ............................................................................................. IV
LIST OF FIGURES AND TABLES ........................................................................... VI
EXECUTIVE SUMMARY ........................................................................................... 1
SECTION I: AN ANALYSIS OF THE INDUSTRY
1. INDUSTRY ANALYSIS ......................................................................................... 2-3
2. ADVANTAGE MATRIX ............................................................................................ 4
3. ENVIRONMENTAL SCANNING .............................................................................. 5-6
a. PESTEL Analysis .................................................................................................. 5
b. Micro environment Analysis ................................................................................ 6
4. FIVE FORCES ANALYSIS .................................................................................. 7-10
5. EFE MATRIX................................................................................................. 11-12
SECTION II: AN ANALYSIS OF COMPANY/BRAND
1. COMPANY BACKGROUND ............................................................................... 13-14
a. Vision .................................................................................................................. 13
b. Mission ................................................................................................................ 14
2. PRODUCT BACKGROUND .................................................................................... 14
3. BCG MATRIX ..................................................................................................... 15
4. STRATEGIC FOCUS GENERIC STRATEGY ..................................................... 16-18
a. Strategic Focus ................................................................................................... 16
b. Generic Strategy.................................................................................................. 18
5. SIX FUNCTIONAL ACTIVITIES .......................................................................... 18-19
6. SPACE ANALYSIS ............................................................................................. 20
7. IFE MATRIX .................................................................................................. 21-22
SECTION III: COMPETITIVE ANALYSIS
1. COMPETITORS ANALYSIS .................................................................................... 23
2. MAP OF STRATEGIC GROUPS ............................................................................. 24
3. COMPETITIVE GRID ....................................................................................... 25-26
Samsung ................................................................................................................. 25
HTC ......................................................................................................................... 26
v

4. COMPETITIVE PROFILE MATRIX COMPETITIVE STRATEGIC POSTURE .................. 27
5. PRODUCT AND CUSTOMER MATRIX ..................................................................... 28
6. POSITION STATEMENT POSITION MAP ......................................................... 29-30
Positioning Statement .............................................................................................. 29
Positioning Map .................................................................................................. 29-30
SECTION IV: FINAL ANALYSIS AND STRATEGIC DECISION
RECOMMENDATION
1. GENERIC ROUTES TO COMPETITIVE ADVANTAGE CREATION ................................. 31
2. IE MATRIX ......................................................................................................... 32
3. TOWS MATRIX ............................................................................................. 33-36
4. STRATEGY CANVAS............................................................................................ 36
5. ERRC GRID ................................................................................................. 37-38
6. RECOMMENDATIONS ..................................................................................... 39-40
REFERENCES ................................................................................................... 41-42
APPENDIX
APPENDIX 1: MARKET SHARE OF SMARTPHONE INDUSTRY IN Q4, 2011 AND FY 2011 43
APPENDIX 2: FIVE FORCES ANALYSIS SCORE ..................................................... 43-44
APPENDIX 3: SBU CALCULATION TABLE .................................................................. 45
APPENDIX 4: SPACE ANALYSIS TABLE ............................................................... 45-46
APPENDIX 5: CPM SCORE ANALYSIS ....................................................................... 47
APPENDIX 7: POWERPOINT SLIDES AND CD ............................................................ 47


vi

List of Figures and Tables

Section I An Analysis of Industry
Figure 1-1 Smartphone Market share ........................................................................ 3
Figure 1-2 Advantage Matrix ..................................................................................... 4
Figure 1-3 Threats of Segment Rivalry ...................................................................... 8
Figure 1-4 Threats of New Entrants ........................................................................... 8
Figure 1-5 Threats of Substitute Products ................................................................. 9
Figure 1-6 Threats of Suppliers Power.................................................................... 10
Figure 1-7 Threats of Buyers Power ....................................................................... 10
Figure 1-8 Five Competitive Force ........................................................................... 11
Table 1-1 EFE Analysis ...................................................................................... 11-12
Section II An Analysis of Company / Brand
Table 2-1 Products Line .......................................................................................... 14
Figure 2-1 BCG Matrix ............................................................................................. 15
Figure 2-2 Strategic Focus ...................................................................................... 17
Figure 2-3 SPACE Analysis ..................................................................................... 20
Table 2-2 IFE Analysis ............................................................................................ 21
Section III Competitive Analysis
Figure 3-1 Competitors Map ..................................................................... 23
Figure 3-2 Map of Strategic Group ............................................................ 24
Figure 3-3 Competitive Strategic Posture Map .......................................... 27
Figure 3-4 Product Customer Matrix ...................................................... 28
Figure 3-5 Positioning Maps ..................................................................... 29
Section IV Final analysis
Figure 4-1 Generic routes ........................................................................ 31
Figure 4-2 IF Matrix ................................................................................. 32
Table 4-1 IE Analysis Table ..................................................................... 32
Figure 4-3 Strategic Canvas ..................................................................... 36
Table 4-2 ERRC Grid ............................................................................... 37
Figure 4-4 Grand Strategy ........................................................................ 40
1

Executive summary
In this report, we choose the smartphone industry to analyze. Our brand name is
IPhone which is belonged to Apple. We analyze the market in four big sections.
The first section is about the industry analysis. In this section, we introduce the brief
situation of smartphones industry, the environmental scanning of our company, the
five forces model that influence Apple and also the Opportunities - Threats analysis
of Apple.
The second section is about our own company analysis. We briefly introduce about
our company Apple, about its product lines, six functional activities, and BCG
matrix. Moreover, we have the strategic focus and generic strategy analysis of
Apple. In this section, we also have the SPACE analysis and Strengths
Weaknesses analysis for the company.
Third is the analysis of our direct competitors. It has the brief introduction of our
main direct competitors such as Samsung and HTC. We also show the position
map as well as map of strategic groups. In addition, we also calculate for CPM
(company profile matrix) to clarify about our companys position.
Lastly, section IV is about the final analysis and strategic decision recommendation.
We made recommendation toward Apple base on IE Matrix, TOWS Matrix,
Strategic Canvas and ERRC that we analyzed.
2

SECTION I: AN ANALYSIS OF THE INDUSTRY
1. Industry Analysis
1

For this report, our group chooses smartphone industry to analyze. Since it is
quite difficult to find the information about sales or market share of this industry in
Thailand particularly, the data we show below about sales or market share is
coming from worldwide data.
First of all, as we all know, smartphone is not an old industry. Nowadays, it is in the
Growth evolution. In 2007, Apple introduced the first version of IPhone and it is
seemed to be the start of smartphone industry. Compare with feature phone,
smartphone is still a small segment; however, the growth rate of it is amazing. In
2011, feature phone segment growth rate is just 10%, but with 20 times more than
that, smartphone segment achieved the growth rate of 200%, according to IDC
analysis (this growth rate is belonging to Thailand mobile phone market). With this
potential of growing, smartphone segment is on its way to gain more segment share
compare with feature phone. However, in 2011, because of smartphone is a high
price product, its segment share is just nearly one-fourth of the whole mobile
market.
Secondly, we will analyze the smartphone market share by brands in 2011.
2
As
shown in Figure 1-1 below, in Q4 2011, Apple took the leader position with 23.5%
market share; Samsung is the second with 22.8%. It is due to the introduction of
IPhone 4S made a big move in gaining market share for Apple. Also in this quarter,
we can see the Blackberrys market share is quite low with 8.2%. HTC is also gain
the small share in total; however, HTC has big potential to become the main
competitors of Apple. Please see the data details in Appendix 1 in page 43

1
http://www.idc.com/getdoc.jsp?containerId=prTH23393612
2
http://www.idc.com/getdoc.jsp?containerId=prUS23299912
3


Figure 1-1. Smartphone Market share worldwide by brand, in Q4 2011

In conclusion, even though the market share of smartphone segment still low, it has
a huge opportunities in winning the market share from feature phone. The main
reason is the convenient that a smartphone can give to the customer. Moreover, the
number of competitor is increasing sharply; it will shift down the price in order to
compete with each other. Lastly, the standard of living of people not only in Thailand
but also around the world is increase. Therefore, owning a smartphone is easy.
Smartphone is becoming the trend of people in modern world, especially generation
Y.
For Apple, smartphone industry is a competitive industry when there are many big
competitors such as Samsung or HTC. Therefore, in order to compete and confirm
its position, Apple must try to defense themselves and their position in customers
mind.

23.5%
22.8%
12.4%
8.2%
6.5%
26.6%
Smartphone marketshare
Apple
Samsung
Nokia
Blackberry
HTC
Others
4

2. Advantage Matrix

Figure 1-2. Advantage Matrix
Smartphone industry completes in specialized quadrant because
Smartphone businesses gain benefits from both economies of scale and
differentiation .First of all, Smartphone industry gains economic of scale by
increasing sales volumes. If the smartphone companies get more market share, the
return on assets will increase. Moreover, smartphone industry can reduce
production cost to achieve economic of scale. For example, smartphone industries
move their factories to the low labor cost countries Such as China, India. Another is
differentiation which smartphone industry can provide many kinds of product to
different from others. Some smartphone companies provide more application than
other. For example, Apple Company launches it IPhone that has a lot of
applications and utilities. It provides more entertainment to customers, not only
make a phone call. So, many smartphone companies try to come up with a new
high tech phone.


5

3. Environmental Scanning
a. PESTEL Analysis
Political:
Trading policy, free trade policy and open trade policy in Thailand help the
smartphone industry which includes Apple to trade their products, especially
IPhone. However Apple is facing with the unstable political in Thailand, importantly
the protest in Bangkok, that affects the employees decrement. In additional, it also
affects the consumption spending of Thai people as well.
Economic:
After the flooding situation, the economics of Thailand went down in fourth
quarter of 2011. It also plunged 9% year-on-year
3
.This problem affects the domestic
consumption decreased. Thai Government keep encouraging consumption
spending to stimulus or boost up the economic, same as import and export goods
and services. Interest rate is 3.25% in January, 2010 and exchange rate is 31.24.
(Dated 11/06/2012)
Social:
As the changing of lifestyle of Thai young people, Apple has a great
opportunity to increase its sales. Because of, young people in Thailand prefer
smartphones such as IPhone, Sony, Samsung, HTC or Blackberry. Moreover, the
increasing of income will increase the standard of living of Thai people. Then
smartphones are now becoming the necessary devices for a modern lifestyle from
the point of people view.
Technological:
Nowadays, the new generation of cellular telephony or 3G, as known
globally has been uniquely designed to carry packet data. As mainly, speech is
simply treated as a particular data application. Moreover, 3G systems will allow the
end users more flexibility dealing with the traffic channel, delivering multiple
services easily. Furthermore, ICloud is the newest and easiest way to manage
customers stuff. Hence, end users can easily get their data automatically with the
effortless and seamless.


3
http:///www.bangkokpost.com/business/news/280733/94-2011-golp-down-q
6

Environmental:
As the trend of the green word today, the commitment to environmental
friendly becomes the most important awareness to any firms and every industry.
Insulting in all products is strictly followed same rules or regulation of environmental
such as toxic substance removal and design greener products. Moreover, all the
firms need to present that they use recycle materials whenever, possible in order to
save the environment of us.
b. Micro environment Analysis
Marketing Intermediaries
o iStudio is an Authorizes reseller for Apple Company in Thailand.
o Physical distribution: Apple Company paid 30% that is just a little
higher than the costs of physical distribution for newspapers or the
percentage that magazine publishers pay to get physical products to
readers
o Marketing service agency
o Financial Intermediaries: Apple Company has used the banks as
financial assistance to borrow the money for investment.
Suppliers
o Microsoft and Intel produced microprocessor and operating
system for Apple Company.
o Sony Co., Ltd is supplier of Apple Company for producing battery of
Ipad.
o Pegatron Co., they are a major supplier to produce iPhone.
o FoxConn Co., they are a major supplier to produce iPad that they
have a plan to expand and develop capacity in China.
Marketers need to monitor trends in prices of inputs and raw materials. If the price
of inputs is increase, it will affect to selling price of products higher and sale will be
decrease as well.
Competitors Analysis
o Apple Company has to respond need of customers or gain
competitive advantage so that marketers need to analyze and do a
research the competitors in same industry. The competitors of Apple
Company are the smartphone line of Samsung, Nokia, LG, and HTC.
Nowadays, Samsung become a major competitor of Apple Company,
they have closely rate market share in smartphone market because
Apple may has a weakness about their software that operating
7

system is close---users have to download through iTunes program.
Almost applications of Apple Company are not for free but android
system that is used for download applications of Samsung Company
almost for free and easier to use.
Customers Analysis
o Customer needs and Expectations
Marketers need to focus on users that are the biggest customer group.
Marketers have to understand customers want and need, for example nowadays
users want a convenience to buy an application from iPhone and iPad because
consumers have many choices in the market so the consumers have a chance to
purchase other brands of smart phone and tablet. Thus, Apple Company needs to
develop system to respond need of consumers for gaining more market shares.
Designs are also important for a decision making of customers so that the company
has to create new design to meet customers expectation such as adding more
color than black and white.
o Customers Behavior
Cultural and social factors have influence to purchasing decision of
customers such as income, education, and social status. Apple Company is the
producer that is produces and provides advance and new technology products in
the market so the customers of Apple will be the innovators and high income.
Marketers have to up-to-date and understand customers in today well enough and
also in the future to gain profit maximization. Age and occupation also have
influence to customers decision making such as business man always use new
technology products more than older people.
o Change in Customer Trends
Customers want to change their preference such as Thai teenagers want to
use Blackberry more than iPhone because of chatting is important application for
them and Blackberry can respond their need and easier to chat more than iPhone.
However, Apple is always in the trend and Apple Company has to check the trends
for improving and developing products to gain competitive advantage.

4. Five Forces Analysis
Five Forces Model can tell whether the industry is attractive or not based
on five factors which are degree of rivalry, threats of new entrants, threats of
substitute product, threats of suppliers power and threats of buyers power.
8

Please see the Five Force Analysis table in Appendix 2 page 43-44
Threat of Segment Rivals
Figure 1-3. Threat of Segment Rivalry

Analysis: Industry of rivalries is high threat at 3.57. It shows that Apple Company
has high competitiveness in its industry. Even though this industry requires a high
degree of differentiation and ability to expand, the number of competitors, the
growth rate of sales and the barriers is low. So, it makes a lot of compete in the
industry.
Threat of New Entrants

Figure 1-4. Threat of New Entrants
0
1
2
3
4
5
Economies of scale
Product
differentiation
Capital requirements
Cost of switching
costs
Access to distribution
channels
Government
regulation
Threat of New Entrants
0
1
2
3
4
5
No. of competitor
Competitor size
Industry sale growth
Ability to expand Differentiation
Fixed cost
Exit Barriers
Threat of Segment Rivalry
9

Analysis: The threat of new entrants is the average score at 2.5. It means that
Apple Company has moderately threat of new entrants. The new entrants cannot
enter to the market easily because the cost of switching costs and capital
requirement is high, also the product differentiation is high as well. However, the
government regulation channel is easy for new comer.
Threat of Substitute Products

Figure 1-5 Threat of Substitute Products

Analysis: Intensity of substitute product is moderate at 3.67. It means that mostly
high number of actual and potential substitutes which make high threat to iPhone
because customers can find other substitutes product then likely high rate of
technology in substitute industries, its also threat. Anyway, the product switching
cost is low so it makes customers can change their mind to buy others substitute.
So, iPhone should concentrate on the differentiation of the product.

0
1
2
3
4
5
No. of actual and
potential substitute
Technology in sustitute
industry
Switching cost
Substitute products
10

Threat of Suppliers Power

Figure 1-6 Threats of Suppliers Power
Analysis: The average score is moderately threat at 3.5. It means that the power of
suppliers is middle. In cell phone industry has many suppliers and substitute of
suppliers is few. For importance of supplier product is less. Moreover, switching
cost is low. Differentiation of suppliers product is low. In summary, the suppliers
power is average. Suppliers have some threat to affect cell phone industry. Cell
phone industry should maintain good relationship with suppliers.
Threat of Buyers Power

Figure 1-7 Threats of Buyers Power
0
1
2
3
4
5
No. of suppliers
No. of substitute of
suppliers
Importance of
supplier's quality
Differentiation of
supplier's product
Switching costs
Forward Integration
Threat of Supplier's Power
0
1
2
3
4
5
Buyers' size
Volumes of purchase
Product purchases
Products' quality to
buyers
Switching costs for
buyers
Price sensitivity
Backward Integration
Threat of Buyer's Power
11

Analysis: The average score is low threat at 1.71 which means that power of
buyers is low with average score. On the other hand, it shows that the buyers size
has larger number of phone. The volumes of purchase are slightly lower than
average. However, the product purchase, switching cost, and buyer ability are
slightly lower than average.
Five Competitive Forces

Figure 1-8 Five Competitive Forces
Analysis: Overall smartphone industry is quite attractive. The main reason is
because of the development of living standard. A cell phone is becoming a
necessary thing for everyone. However, to access this industry, it is quite hard
because the requirement for the differentiation and the high of switching costs for
end users.

5. EFE Matrix
EFE matrix weight rating score
Opportunities
1. Technological development 0.06 4 0.24
2. Market for smartphone is expanding 0.08 2 0.16
3. Changing in life style of Thai people 0.09 3 0.27
4. Development and spread of 3G technology 0.05 3 0.15
5. More mobile applications are available 0.03 2 0.06
6. Many new suppliers in the market 0.04 4 0.16
0
1
2
3
4
5
Degree of Rivalries
New Entrants
Substitute Products Suppliers' Power
Buyers' Power
Five Competitive Forces
12

7. Living standard of Thais people increase. 0.06 3 0.18
8. Open trade policy in Thailand 0.05 3 0.15
9. High switching costs of customer can
decrease the ability to change brand name
0.06 4 0.24
10. Mobile phone is a necessary products
nowadays
0.03 2 0.06
Threats
1. Many competitors in Thailand smartphone
market
0.09 2 0.18
2. Threat from cheaper substitute products 0.07 1 0.07
3. Price war from other mobile brand 0.05 2 0.1
4. Economic crisis will reduce demand for
iPhone
0.04 4 0.16
5. Increasing bargaining power of buyers 0.04 3 0.12
6. Unstable political situation in Thailand 0.03 2 0.06
7. External changes in government policies 0.03 3 0.09
8. Increasing bargaining power of suppliers 0.06 3 0.18
9. European market criticism for iTunes 0.02 3 0.06
10. Environmental friendly commitment 0.02 4 0.08
Total 2.77
Table 1-1 EFE Analysis

Analysis:
Apples IPhone has the average ability to respond to external factors that
affect to its products.
In order to increase its ability, Apple should be concerned more about:
- Threat 1 (Weight: 0.09, Rating: 2): The competitors in the market like Samsung or
HTC. Samsung has big potential to be the leader of the industry. Apple should have
more defensive and offensive strategy to protect their products.
- Opportunities 3 (Weight: 0.09, Rating: 3): Pay more attention to improve the
performance in order to satisfy the changing in lifestyle of Thais people
- Opportunities 2 (Weight: 0.08, Rating: 2): Try to expand the market share to gain
more profit and take the advantage of potential market expanding.
- Threat 2 (Weight: 0.07, Rating: 1): Can reduce the price or increase the quality to
gain more customers attractiveness in order to fight with cheaper substitute
products.
13

SECTION II: AN ANALYSIS OF COMPANY/BRAND
1. Company Background
4

Apple started in 1976 as a computer company. In the last decade, however,
Apple has expanded into a very intricate company that specializes in much more
than just computers. In 2001, Apple broke the barrier with the iPod, eventually
becoming the dominant market leader in music players. As well, Apple joined the
phone industry in 2007 with the IPhone, which has also been widely successful.
Apple sells its products worldwide through its retail stores, online stores, and
direct sales force, as well as through third-party cellular network
carriers, wholesalers, retailers, and resellers. In addition, the
Company sells a range of third-party IPhone, iPad, Mac and iPod
compatible products, including application software, printers,
storage devices, speakers, headphones, and various other
accessories and peripherals, through its online and retail stores. The Company sells
to consumers, small and mid-sized businesses (SMB), and education, enterprise
and government customers. The Company has designed a range of products,
services and programs to address the needs of education customers. It also
supports mobile learning and real-time distribution and
accessibility of education related materials through iTunes U, a
platform that allows students and teachers to share and distribute
educational media online. It sells its products to the education
market through its direct sales force, select third-party resellers
and its online and retail stores. It also sells its hardware and software products to
enterprise and government customers.
a. Vision
5

We believe that we are on the face of the earth to make great products and
thats not changing. We are constantly focusing on innovating. We believe in the
simple not the complex. We believe that we need to own and control the primary
technologies behind the products that we make, and participate only in markets
where we can make a significant contribution. We believe in saying no to thousands
of projects, so that we can really focus on the few that are truly important and

4
http://www.fundinguniverse.com/company-histories/apple-computer-inc-history/
http://www.brighthub.com/computing/mac-platform/articles/65346.aspx
5
http://www.anthonycilella.com/2011/10/11/apples-mission-vision-business-description/
14

meaningful to us. We believe in deep collaboration and cross-pollination of our
groups, which allow us to innovate in a way that others cannot. And frankly, we
dont settle for anything less than excellence in every group in the company, and we
have the self-honesty to admit when were wrong and the courage to change. And I
think regardless of who is in what job those values are so embedded in this
company that Apple will do extremely well.
b. Mission
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.

2. Product Background
6


IPhone
Classic
2007
IPhone 3G
2008
IPhone 3GS
2009
IPhone 4
2010
IPhone 4S
2011




-Camera 3MP
-Display 480
by 320
resolution
- Has new
white model
-Camera 5MP
-Display 960
by 640
resolution
-Camera 8MP
-Display 960
by 640
resolution
-Having Siri.
-Retina Screen
Table 2-1 Product Line

6
http://www.apple.com/iphone/compare-iphones/
15

3. BCG Matrix
Please read the BCG Table Analysis in Appendix 3 page 45

Figure 2-1 BCG Matrix
1- IPhone 2- Ipad 3- IPod 4 Mac 5- Software and Hardware

Analysis:
For question mark box, Apple has software and hardware and Mac
segments. It is the segments that content all the software and hardware products
such as iTunes, Mac OXS etc. For this type, the suggested strategy should be
where build it to be stronger or harvest. The reason is the segment still make profit,
however, the market share is low. For Mac segment, it is still in this box because
Mac has many strong competitors in the laptop industry. Apple should try to build it
to become a strong segment in that industry.
For star box, Apple has IPhone and IPad. These two segments nowadays
are the most important segments of Apple. Even though the fact that these two
segments are just introduced in market, they are strong since these two are the
innovation products. Apple creates the wonderful devices that never have before.
16

These two segments gain the highest market share in the industry (IPhone 23.5%
and IPad 58.2%) and also the growth rate of industry is really high (smartphone is
more than 200% growth rate in 2011). Therefore, the appropriate strategy for this
two is to build. By gaining more profit and more market share, Apple can be able to
make these two become sources of fund for other activities.
Lastly, for cash cow, Apple has IPod. From the beginning of introducing
iPod, Apple created a big move in music player industry. Since then, Walkman or
CD players lost the market share into Apples hand. However, nowadays, with the
development of Internet and also smartphone, a music player is not attractive that
much. Customers want a multi-function products rather than a single function.
Therefore, IPod segment become the cash cow, they become the source of funds
for Apple. Apple should use Hold strategy in order to gain the maximum profit of this
segment since its market share now nearly three-fourth of the whole industry.
In conclusion, this is not a healthy BCG portfolio. The main reason is that it
is not balance between cash cow and star segment. Therefore, it will not have
enough financial supporting in order to build the star segment as well as question
mark segment. However, it is still have a good side when Apple doesnt have any
segment in dog, horse and dodo box. It shows that Apple doesnt have negative
growth in all SBUs.

4. Strategic Focus Generic Strategy
a. Strategic Focus
Our companys strategic focus is improving profitability.
17


Figure 2-2. Strategic focus
Objectives Analyze and give specific example of activities your
company has done
Add value Apple company has a good brand image and they focus on
products differentiation such as iPhone easier to use and good
designed: Siri which has Thai language.
Change
product mix
Apple company develops iPhone products such as iPhone 4s
faster than iPhone 4 and they launch other products that are
iPod, I pad to meet need of variety of users need.
Capital costs Capital cost is low because they have manufacture in China.
They produced their products from China so cost of land is low.
Fixed costs They have low fixed cost because they hired employees in
China where has low labor cost or outsourcing methods to
reduce costs.
Variable cost Cost of raw materials that they used is low because they deal
with the LG company to produce their LCD monitor that can be
help to reduce cost. If they produce LCD monitors by
themselves, the cost will be high.
Increase price IPhones price always higher than other so they can gain a lot
of profit margin.

18

b. Generic Strategy
Our companys generic strategy is Differentiation
Analysis: our company used the generic strategy is differentiation, which served
mass target market and differential cost advantage. Firstly, their products are for
everyone. Their target customers are boarded. However, they use cost
differentiation. The main reason is based on their ease-of-use. For example, IPhone
is really easy use. Moreover, they are the innovations in smartphones industry and
also tablet industry; therefore they can differ themselves from others. Lastly, Apple
gains the good image in customers with a different way. They affirm themselves as
a premium brand among its competitor.

5. Six Functional Activities
7

Marketing activities
o Positioning
- Using product differentiation, positioning the iPhone as the versatile,
convenient, value-added device for personal and professional use.
- Focus on the convenience of having one device for communication, but
also music, pictures, and video, and full Internet access
o Targeting
- Primary customer targets are the middle-upper income professional to
coordinate their busy schedules and communicate with colleagues,
friends and family.
- Secondary consumer targets are high school, college and graduated
students who need one portable multifunction device.
Management activities
o How their employees work together and control in the organization
- To plan our strategy we will meet monthly with the board of Apple,
present our information, and make a proposal for continued marketing
efforts. Before each meeting our team will meet in private, with each
person presenting their own proposal based on the information they
have learned. After the initial proposals, we will vote on the best one or
come to a compromise. The final proposal sent before Apple is the result
of that meeting.

7
http://marketingmixx.com/marketing-plan-2/203-marketing-plan-of-apple.html
http://www.vertygoteam.com/apple_marketing_strategy.php
http://blog.openviewpartners.com/apples-marketing-strategy-history-repeats-itself/
19

Financing and Accounting
- Workers $5 incentive pays for every non reject phone they produce.
- $10 per phone six sigma quality program.
- Each worker $5000 each year for best practice training.
- Our break-even analysis assumes wholesale revenue of $500 per unit
variable cost of $250 per unit and est. fixed cost of $50 million. Based on
these assumptions the break-even calculation is $50 million divided by
$500 minus $250 equals 200,000 units sold.
Production and Operation
- Full year warranty along with an optional three-year Apple Care
warranty.
Research and Development
- High research and development to enhance newest technology for
customers.
- This research will be done through surveys (via email campaign through
portals such as, iTunes and other on-line application developed for the
iPhone) and interviews (in Apple stores) with the same age groups listed
before.
- Apple Company outsources to produce their products in China with low
production costs.
Information system
- To use control measures to closely monitor quality and customer service
satisfaction consumers can contact the main headquarters about any
possible technical problems by using Apple Customer Service Bar and a
customer service phone number stored in the phone book.


20

6. SPACE Analysis
Please read the SPACE Analysis score in Appendix 4 page 45 - 46

Figure 2-3 SPACE Analysis
Analysis:
Quadrant: AGGRESSIVE
(+) Its good in a strongly high Financial Strength at 5, slightly increase in Industry
Strength at 4.8, and an increasing in Competitive Advantage at (-2). But its quite
moderate in Environmental Stability at (-4).
According to the result of SPACE Matrix, there are 2 strategies suggested:
1. Product development: because of Apple has the strong in term of financial,
smartphone industry so Apple can invest in establish or innovate some new
models of IPhone with more different features, in order to gain more
competitive advantage.
2. Concentric diversification: according to there is quite moderate in
environmental stability, so Apple should establish some new unrelated
products, such as Apple Television. Even it is in different industry, Apple still
can use some old related technology, which they used to support their
products.

21

7. IFE Matrix
IFE matrix weight rating score
Strengths
1. Brand name Brand name of Apple is
recognized and has good image in customers
mind
0.1 4 0.4
2. Growing sales fast 0.07 4 0.28
3. Low debt 0.06 3 0.18
4. Wide range of innovative products 0.05 4 0.2
5. Large number of retails store 0.03 3 0.09
6. Market share large and global expansion 0.09 4 0.36
7. Ease-of-use 0.04 4 0.16
8. Low cost Apple placed its manufacture in
China in order to lower the labor and
manufacturing costs
0.1 4 0.4
9. Massive number of application 0.05 4 0.2
10. Retina display, good quality screen 0.03 3 0.09
Weaknesses
1. Legal proceedings 0.02 2 0.04
2. No immediate revenue reflection from IPhone 0.03 2 0.06
3. Incompatible software IPhone cannot be
used without iTunes. It is hard to install the
music, videos.
0.05 1 0.05
4. Unstable leadership - Changing top
management in high frequency, it comes with the
change in revolution and strategy regularly
0.02 2 0.04
5. Limitation in design of products 0.05 1 0.05
6. Use interface - long term use will be
uncomfortable
0.02 2 0.04
7. Battery lifespan is short 0.03 2 0.06
8. Easy to copy 0.05 2 0.1
9. Apple is facing the strong criticism for
environmental friendly.
0.04 2 0.08
10. IPhone less attractive to business enterprise 0.07 2 0.14
Total 3.02
Table 2-2 IFE Matrix
22

Analysis:
Total score is 3.02 (>2.5), it means that Apple has high strengths.
In order to maintain its high strengths, Apple has to maintain its major
strengths such as brand name or its easy-to-use feature. It will help Apple to keep
its position and improve customers loyalty. Apple also can increase it strength of
massive apple store.
Moreover, to overcome the weaknesses, Apple should pay attention in major
weakness such as design, improve integration with Microsoft office, and try to
reduce the cost to be able to compete with others competitors.



23

SECTION III: COMPETITIVE ANALYSIS
1. Competitors Analysis

Figure 3-1: Competitors map
Analysis:
Samsung and HTC are the main direct competitors of Apple Company
because they are in the mobile phone industry same as Apple Company and they
used the same strategies such as all of them are smart phones and setting high
price.
ARMA, WELCOM, NEC, and T-Mobile are indirect competitors because they
are in the mobile phone industry same as Apple Company. However, they have
difference strategies when compare with Apple Company by using lower price
strategy. For the case of Blackberry, since it emphasize on business phone and
also keypad - phone, it becomes the indirect competitor of IPhone as well.
For competitors from different industry that people can use this way
substitute mobile phone such as E-Mail, MSN chatting, Skype, Public telephone,
Home phone, Letters, and VoIP. These methods of communication may reduce and
effect to sale of smart phones.

24

2. Map of Strategic Groups


Figure 3-2. Map of strategic group
Analysis:
According, to the map above shown that, Samsung and HTC are main
competitors of Apple (IPhone). Moreover, for touchscreen features, Sony Ericsson
and Nokia seem to be the second largest competitors of IPhone. They are on their
way to catch up with the trend of consumers. If IPhone wont change much, Nokia
and Ericsson can become bigger competitors of IPhone. Furthermore, WELCOM, T-
Mobile and NEC are just the indirect competitors, since they are not smartphones or
high technology like IPhone, Samsung, or HTC. Lastly, even though Blackberry
product is smartphone, but the strategy is much different comparing to Apple
(IPhone), so it is also become a minor competitor that IPhone has to concern.


25

3. Competitive Grid
Samsung
Samsung is one of the famous electrician
products from Korean. Over the long history,
nowadays, Samsung become one of the leaders in
digital appliances and media, semiconductors, memory and system
8
. Even though
Samsung just entered the smartphones industry for not a long time, they had a big
jump in this industry. Their smartphones like Galaxy note, Galaxy Y, Galaxy SIII are
now becoming the good choices for consumer. We can tell that Samsung
smartphone is the biggest competitor with IPhone and the leader in using Android
OS.
Like Apple, Samsung also use the skimming pricing strategy. The
significant benefit is that they can gain the profits quickly. Moreover, it can be used
to target early adopters of products or service. However, this strategy can just be
employed for limited period.
As the Market Challenger, Samsung is using many offensive strategies in
order to be the market leader. They are using Flank attack, which is fighting with
the weakness point of Apple. Samsung use lower price than Apple to attract
customers who think that Apples price is quite high, they can still get the
smartphone with similar feature and lower price. Moreover, Samsung also use
encirclement attack. They attack Apple in many aspects together when they
continuously launch new products together with many PR campaigns and
advertisements as well as promotion.
Samsung has a lot of potential in long run competition with Apple. At the
current stage, Samsung gain a lot more market share from Apple since they
introduced many model of smartphones and tablets. Samsung products are variety
in design, in application and the price as well. Customers do not need to have high
financial status to afford one smartphone. Moreover, if customer does not need all
the features that offer, they can choose the lower version. It helps them to both save
costs and be more satisfaction.


8
http://www.samsung.com/sg/aboutsamsung/corporateprofile/history.html
26

HTC
Different from the two competitors above, HTC is the
company that mainly concentrates on mobile phone. Founded in
1997, HTC focus on customize customers experience and provide
to the customer the best phone they want. HTCs smartphones and
tablets are developed under Android OS like Samsung and Windows Phone
Operating system. HTC is also the innovators in many aspects such as 4G
smartphones in US, large 2.8 TFT touch screen LCD display, etc.
HTC is using value-based pricing strategy. HTC defended that they do not
selling a cheap smartphone even there are many competitors in the market. They
set the price based on the perceive value of customer rather than the exactly costs
of the product. This strategy can help them meet the requirement and perception of
customer about buying a smartphone.
Recently, HTC announced that they had a new partnership with Beats the
world high-class headphone. By doing this, HTC wanted to increase their market
share by targeting the teenage market. Moreover, it also attracts to the users who
are music loving. Those customers can be satisfied with this strategy most. Lastly,
HTC users might not care about the fashionable design like Samsung users;
however, they are more interesting in the technological aspect and prefer to the
strong hardware of the smartphone.
HTC has its own strengths and potentials to become the big competitor of
Apple. They have strong partners (such as Microsoft), therefore, they have ability to
build a strong mobile phone. Secondly, they have good hardware design that will
provide high quality products with high technology. In addition, HTC has strong
setup of R&D so they can invest in many good potential projects.
Like Samsung, HTC is a Market Challenger. By using its strength of strong
hardware, HTC can attack Apple by using Flank Attack. The weakness of Apple
about attractiveness for business enterprise will be solved by HTC. HTC can win the
customers who try to find a good smartphone that can help them in business field.
HTC smartphone also use many strategies in order to attract customer by many
promotion campaign as well.

27

4. Competitive Profile Matrix Competitive Strategic Posture
Please read the CPM Score Analysis in Appendix 5 page 47

Figure 3-3 . Competitive strategic posture map
Please see the CPM analysis Table in Appendix 4 Page.
Analysis:
-Compare with other competitors, Apple has the highest competitiveness with the
score of 3.51.
-In the second place is Samsung .Samsung has the score of 3.04 which is quite
high and they are the biggest competitor of Apple right now.
-Blackberry is one of Apples competitors. However, because of its poor
performance last few years, its score of competitiveness still far away from Apple
with 2.10
-Lastly, HTC competitiveness score not to high but its opportunity of raising its score
is high so it is also one of strongest competitor of Apple.
According to this analysis, Apple does not have major weakness compare
with other brands. They should use defensive strategy which is position defense in
order to maintain the current position. Apple can use product innovation by creating
0
0.1
0.2
0.3
0.4
0.5
0.6
Market Share
Financial
Position
Product Quality
Consumer
Loyalty
Sales
Distribution
Organization
structure
E-commerce
Consumer
service
Global
expansion
Management
experience
Competitive Strategic Posture Map
Blackberry
HTC
Samsung
Apple
28

new features for smartphone, or improving services in order to fulfill customers
needs and wants. Moreover, Apple can also use flanking defense. The weak point
of Apple is the high price product. By using improving service or add value to the
products, Apple can create in customers mind that high price products are coming
with high quality products and post purchase services.
5. Product and Customer Matrix

Age Segments (market)
P
r
o
d
u
c
t
/
p
r
o
d
u
c
t

l
i
n
e

(
I
n
d
u
s
t
r
y

o
f
f
e
r
)


Kids (< 10
years old)
Teenagers
(10 - 20
years old)
Adult ( 20
60 years
old)
Elders ( > 60
years old)
Communication
Music Player
Camera
Internet using
Mobile game

Figure 3-4. Product Customer Matrix

29

Analysis:
Strategy: Market Specialization
Apple creates a smartphone that can satisfy the needs of one specific
market segment which is adult (people from 20 to 60 years old). As we can see that,
using IPhone, customer can do everything, not only communication (which is the
basic function of a mobile phone), they can use IPhone as a music player, an 8MP
camera (IPhone 4S), can access to the Internet through Wi-Fi or 3G, and can also
play games. To use such a multi-function mobile phone like IPhone, customer
should be someone who has need of all the functions that are provided. Therefore,
the main target customers of IPhone are people who are from 20 to 60 years old.
He or she is a person who is a nearly graduate student or an employee; so he/she
has his/her own need to use a smartphone like this.
6. Position Statement Position Map
Positioning Statement
To technophile who love high technology product, Apple is a smartphone producer
that provides the wonderful smartphone which is the innovation in design and in
technology. Moreover, IPhone is an easy-to-use smartphone that can satisfy
customers needs and wants.
Positioning Map

Figure 3-5. Positioning map
30

Analysis:
As showing in the position map above, we can see that Apples position is
touch screen smartphone with the main purpose of entertainment. Apples IPhone is
not suitable for business because of the duration of battery, the small screen size
and also it is not supporting Word file which is really important for business
objective. Samsung is lying between entertainment and business since they have
many models to satisfy customer needs of both entertainment and business. Other
brands such as Motorola, Nokia, Blackberry has different strategy and also different
design with Apple. Most of their models emphasize on key pad mobile phone;
therefore they could be the indirect competitors of Apple.
31

SECTION IV: FINAL ANALYSIS AND STRATEGIC DECISION
RECOMMENDATION
1. Generic Routes to Competitive Advantage Creation
Customer Valued Uniqueness Cost Relative To Competitor
Uniqueness
Drivers
Weight
Rating
(1-10)
Value
Cost
Drivers
Weight
Rating
(1-10)
Value
Product
Differentiation
0.3 8 2.4
Economies
of Scales
0.2 2 0.4
Promotional
Differentiation
0.15 7 1.05

Experience 0.15 4 0.6
Brand
Differentiation
0.25 10 2.5
Degree of
Integration
0.3 1 0.3
Distribution
Differentiation
0.1 6 0.6
Policy
Choices
0.1 3 0.3
Pricing
Differentiation
0.1 9 1.8

Location 0.25 2 0.5
Total 1 8.35 Total 1 2.1


Figure 4-1 Generic Routes

32

Analysis:
Market and Financial Advantage
Apple is in the box Market and Financial advantage with score 8.35 in
customer valued uniqueness, and score 2.1 in cost relative to competitors. It is the
best position since Apple has competitive advantage of both customer valued
uniqueness attribute and cost relative to competitors.
Apple should increase more product differentiation. Moreover, concern
about the price differentiation. In cost relative to competitors, Apple should pay
more attention to different of location. Lastly, try to gain more economical of scales.

2. IE Matrix
9


Figure 4-2. IE Matrix
Division Sales Percentage
Sales
Profits Percentage
Profits
EFE
score
IFE
score
1. IPhone $47,057 43.47% $7,480 28.86% 2.77 3.02
2. IPad $20,358 18.81% $5,372 20.72% 3.36 3.12
3. Mac $21,783 20.12% $5,121 19.76% 2.66 2.35
4. IPod $13,767 12.72% $4,783 18.45% 1.92 3.21
5.
Software,
hardware
$5,284 4.88% $3,166 12.21% 2.02 2.04
108,249 100% $25,922 100%
Table 4-1 IE Analysis Table


9
http://www.sec.gov/Archives/edgar/data/320193/000119312511282113/d220209d10k.htm
33

Analysis
According to the matrix above, Apple has 5 divisions in the company which
are IPhone, Ipad, Mac (laptop and PC), IPod and software, hardware.
IPhone leads the sales revenue of Apple in 2011 with 43.47%. It is due to
the introduction of IPhone 4S make the huge increase in revenue. IPhone also
contributes 28.86% of profit for Apple. With the EFE score of 2.77 and IFE score of
3.02, Apple should use build strategy for this segments in order to maximum its
ability to generate the profit for the company. Similarly, IPhone also can use build
strategy for IPad since it has high potential in growing sales and profit.
For other 3 SBUs, Apple can use hold strategy in order to maintain the profit
that is generated from this three segments. Especially in software and hardware
segment, even though its own net sales is not that high portion in total sales, but it
contribute the profits a lot because it does not require much cost like other
segments
3. TOWS Matrix

As we have analyzed the environmental threats and opportunities with the
companys weaknesses and strengths in IFE and EFE, some important factors in
IFE and EFE will be matched and used in TOWS Matrix in order to develop
strategies as follows:
S-O Strategies are developed to maximize both strengths and opportunities:
S6 Market share large and global expansion
O2 Market for smartphone is expanding
S - O Strategy 1: Market development Apple should try to grab the opportunity
of market high growth rate of smartphone and Apple high market share gain more
share
S7 Ease-of-use
O3 Changing in life style of Thai people
S O Strategy 2: Market Penetration - Apple should use the strength of easy to
use to attract more Thais people. The opportunity of changing lifestyle of Thais
people will make Apple easier in catching the attention of Thais people
34

S1 Brand name Brand name of Apple is recognized and has good image
in customers mind
O9 High switching costs of customer can decrease the ability to change
brand name
S O Strategy 3 Market Penetration Apple can increase its brand image and
catch the opportunity that nowadays, switching cost of a smartphone is high The
more customer loyalty Apple can make, the more opportunity to expand.

S-T Strategies are developed to maximize own strengths while minimize threats.
S8 Low cost Apple placed its manufacture in China in order to lower the
labor and manufacturing costs
T8 Increasing bargaining power of suppliers
S T Strategy 1: Backward Integration By doing backward integration, Apple
can overcome the threats of suppliers bargaining power. Moreover, it can
reduce the cost more.
S1 Brand name Brand name of Apple is recognized and has good image
in customers mind
T9 European market criticism for iTunes
S T Strategy 2: Market Penetration: Apple can use its reputation to reduce the
criticism from European. Many people around the world is addicted to Apple
brand name, it can be used to prove for European and change their mind.
S3 Low debt
S8 Low cost Apple placed its manufacture in China in order to lower the
labor and manufacturing costs
T4 Economic crisis will reduce demand for iPhone
S T Strategy 3: Backward or forward Integration: Apple can base on its strength
of low cost of producing and low debt and try to imply backward or forward
integration in order to minimize the cost and overcome the Economic crisis
35

W-O Strategies are developed to minimize own weaknesses while maximize
opportunities.
W3 Incompatible software IPhone cannot be used without iTunes. It is
hard to install the music, videos.
O1 Technological development
W T Strategy 1: Joining the partnership this one will help Apple to get more
benefit from applying new technology and be able to compatible with other
software; so that will make customer easier in set up.
W2 No immediate revenue reflection from IPhone
O8 Open trade policy in Thailand
W O Strategy 2: Market penetration: Gain more benefit from free trading policy
from Thailand will help Apple to gain more revenue. Apple can try to do more
promotion to increase revenue.

W-T Strategies are developed to minimize both weaknesses and threats.
W9 Apple is facing the strong criticism for environmental friendly
W7 Battery lifespan is short
T10 Environmental friendly commitment
W T Strategy 1: Use solar energy battery in order to reduce both weaknesses
and threats that come from environmental friendly commitment.
W8 Easy to copy
T2 Threat from cheaper substitute products
W T Strategy 2: Apple should pay more concern in getting the legalization
documents such as copy right, in order to reduce the threats of substitute
products and copycat products.


36

4. Strategy Canvas

Figure 4-3. Strategic Canvas
Analysis:
As showing in the strategy canvas above, Samsung is represent for the
direct competitor with IPhone since it is in the same industry and similar strategy
with IPhone. Blackberry is indirect competitor because even it is in the same
industry with IPhone but it uses different strategy comparing to IPhone.
Compare with Samsung, Apple has many similar features such as the
speed, the camera quality. Others features, IPhone and Samsung even not in the
same level but it is still similar and have close gap in offering level.
For Blackberry, because of different in strategy, the offering levels of these
competitive factors also different. However, the difference is not big and Blackberry
can be able to catch up.
In conclusion, after analyzing those factors, Apple IPhone is in RED
OCEAN. It is using similar strategy in order to fulfill the customers needs and
0
1
2
3
4
5
6
7
8
9
10
O
f
f
e
r
i
n
g


L
e
v
e
l

Competitive Factors
Strategy Canvas
Samsung Blackberry Apple (before ERRC) Apple (after ERRC)
37

wants. It does not have any different feature in other to create the new market
space. In the past few years, we can see that Apple is in Blue Ocean when Apple
first introduced such a wonderful smartphone like IPhone. However, with the
developing of technology, Samsung and HTC are on their way to catch up with
Apple and turn the market in to RED OCEAN. Therefore, if Apple wants to become
the innovator again, they have to think of something new in order to attract
customer and meet the customers expectation.
5. ERRC Grid
As mention above, Apple now is in RED OCEAN market. Therefore, in order
to create innovation value and feature, we will use ERRC Grid. By using this tool,
we can recommend to the company to follow this grid and they can jump again into
BLUE OCEAN if it applicable.


REDUCE RAISE
Price of application
Battery lifespan
Price
Speed
Camera quality
Screen size
ELIMINATE CREATE
Bluetooth
EDGE feature
Solar energy battery
Water resistant

Table 4-2. ERRC Grid

38

Analysis:
As we know, in order to create a new generation of smartphone is not easy.
The table above is showing our suggestion to Apple to create the BLUE OCEAN, to
gain more profit as well as market share.
First of all, Apple can eliminate some unimportant function. Bluetooth and
EDGE features are not that necessary to people nowadays. With the development
of 3G or 4G networks, these two functions seem to be useless. Therefore, eliminate
these two functions will not effect on the whole product at all.
Secondly, Apple should raise the speed, camera quality and screen size in
order to satisfy customers needs and wants. Nowadays, these features are almost
the same or even lower compare to other brands such as Samsung. Therefore, in
order to add value for the new products, Apple should improve such kind quality.
About the price, because we emphasize on create the new features as mention
below; so, increasing the price in order to gain the profit is the only way to cover the
costs of producing those function.
Importantly, we suggest about the new features that would help Apple to
jump into the new market space. There are two suggestions which are using solar
energy battery and water-resistant features. For solar energy, nowadays, saving
limited source of energy and using unlimited source is one of the most important
strategies all around the word. By using solar energy for IPhone, Apple will catch
the good image and also help to save the world. For water-resistant feature, it will
attractive customer because when it is water resistant, it will make customer no
worry about getting wet and broken down the IPhone if it get wet. These two
features are not that hard to imply. Many other products in other industries such as
camera (using water-resistant), calculation (use solar energy) already use these two
features; therefore, customers know how it is, how it works. We believe that if these
two features can be applied, it will be a huge step forward of Apple.
By using solar energy battery, Apple can be able to reduce the fixed battery
lifespan, make it become the alternative battery for IPhone, not the main one.
Because at this current stage, the battery lifespan of Apple is not good compare
with others and it is the point that makes customer unsatisfied with IPhone.
Moreover, nowadays, most of the applications for Android are free. Therefore, in
long run, to increase the attractive points and be able to compete with Android,
Apple should reduce its price of applications as well.
39

6. Recommendations

According to the analysis we have done in this report, we would like to make some
recommendations based on the current situations of Apple
In overall, Apple should implement Build strategy for IPhone segment as it
contributes largest in company revenue and profit. Moreover, IPhone has a huge
opportunity in growing sales because the market growth for smartphone is quite
high. . As Apple cannot totally control the threats of new entrants or threats of
rivalry, Apple should be more concern in defensive strategy with positioning defense
or bypass attack since there are many big competitors in the market such as
Samsung, HTC or Nokia. They can try to minimize the cost of manufacture or try to
have as many as possible innovation products in order to attract customers and
fulfill their expectations.
The following are specific recommendations that focus on strategic focus, generic
strategy and grand strategy:
Strategic Focus: Apart from improving performance by improve profitability
that we have mentioned above, we suggest that Apple can improve its
performance by increase sales also. They can either launch a new product to
attract more segments or create alliances in order to gain more share. By doing
this strategy, Apple can maintain its position as a leader and the innovator of the
industry.
Generic Strategy: We still recommend that Apple should continue to use
Differentiation strategy as their generic strategy. Apple could gain a huge
success like current time mostly based on its differentiation. By affirm
themselves as the premium brand among their competitors, Apple gain a lots of
reputation and customer loyalty. Moreover, by doing some significantly
difference in distribution channel such as open uStore in many universities,
Apple move their products closer to the target segment of them. It gained a lot of
success nowadays; so, using differentiation is the best choice for Apple.
Grand Strategies: As the figure below, we analyze that Apple is in
Quadrant I, which has strong competitive position and rapid market growth. This
is the excellent strategic position, Apple should pay attention in the current
markets and products; however, they can take risks when necessary in order to
gain more return. The suggestion strategies for this quadrant are similar with
40

what we have recommended throughout this report. First, Apple can use Market
Penetration in order to gain more customer loyalty to protect their position at
current time. Next, by using Product Development, Apple can attract more
customers because they can create toward what customers expectation. By
doing this strategy, somehow Apple create a new Blue Ocean and become the
first mover to a new market space. On the other hand, Apple can try some
integration strategy so that they can minimize the cost and gain more profit by
economies of scale and prevent the threats of new entrants as well.


Figure 4-4. Grand Strategy
41

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http://www.idc.com/getdoc.jsp?containerId=prUS23261412
(Oct 27, 2011). Annual Report. Apple Inc., [from]
http://files.shareholder.com/downloads/AAPL/2042018267x0xS1193125-11-
282113/320193/filing.pdf
42

The Worlds Most Politically Stable Countries and Most Politically Unstable
Countries. Expatinvesting. [from] http://www.expatinvesting.org/the-worlds-most-
politically-stable-countries-and-most-politically-unstable-countries/
Inflation rates (Consumer Prices). The World Factbook. [from]
https://www.cia.gov/library/publications/the-world-factbook/fields/2092.html
Jack Loo. (May 15, 2012) Thailand to outspend Singapore in IT: IDC. MIS Asia.
[from] http://www.mis-asia.com/tech/industries/thailand-to-outspend-singapore-in-it-
idc/
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http://marketingmixx.com/marketing-plan-2/203-marketing-plan-of-apple.html
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http://www.vertygoteam.com/apple_marketing_strategy.php
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strategy-history-repeats-itself/
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http://www.samsung.com/sg/aboutsamsung/corporateprofile/history.html

43

APPENDIX
Appendix 1: Market share of smartphone industry in Q4, 2011 and
FY 2011

Appendix 2: Five Forces Analysis Score
Five Forces Analysis
Degree of Rivalries
o There are many number of competitors (4)
o Large competitor size (5)
o Rapid sale growth in industry (2)
o Easily to expand (4)
o A lot of differentiation (2)
o High fixed cost (4)
o High exit barriers (4)
Intensity of rivalries is high with average score equal to 3.57
Recommend Strategy
o The company has to focus on quality and differentiation.

Threats of New Entrants
o Moderate economies of scale (3)
o Many product differentiation (2)
o High capital requirements (1)
o High switching cost (2)
o Moderately to access to distribution channels (3)
o Low government regulation (4)
Likelihood of new entrants is middle with average score equal to 2.5

44

Recommend Strategy
o The company should develop the better post-purchase planning to
keep existing customers.

Substitute Products
o Many actual and potential substitutes products (4)
o More technology in substitute industries (5)
o High switching cost (2)
Intensity of substitute products is middle with average score equal to 3.67
Recommend Strategy
o The company should concentrate on product differentiation.

Supplier Power
o Moderate of the number of supplier (3)
o No substitutes of Supplies (5)
o Suppliers quality is very important (4)
o Suppliers product is very differentiate (4)
o High switching cost (4)
o Low ability of suppliers for forward integration (1)
Power of suppliers is middle with average score equal to 3.5
Recommend Strategy
o The company has to maintain a good relationship with the existing
suppliers.

Buyer Power
o Large buyers size (2)
o Small volumes of purchase (1)
o Purchasing in differentiate product (2)
o The importance of products quality to buyer is high (1)
o High switching cost for buyer (2)
o Moderate price sensitivity (3)
o Low buyer ability for backward integration (1)
Power of buyers is low with average score equal to 1.71
Recommend Strategy
o The company has to reduce price while maintain good quality and
product differentiation.
45

Appendix 3: SBU Calculation Table
SBU
SBU Sales &
Market Share
Competitors SBU
Sales &Market Share

RMS

Market
Growth
Rate
Mobile
phones
(IPHONE)
Sale=
MS=23.5%

Competitor: Samsung
Sale= MS=22.8%

1.03X


19%


Tablet
(Ipad)
Sale=
MS=58.2%
Competitor: Samsung
Sale= MS=38.8%
1.50X

14.3%

Music
player
(iPod)

Sale= MS=70%



Competitor: Sony
Sale= MS=22%

3.18X


5%


Laptop
(MacBook)
Sale=
MS= 10.92%
Competitor: Acer
Sale= MS=23.02%
0.47X 14.8%
Software
and
harware
Sale=
MS=7%
Competitor: Microsoft
Sale= MS= 92%
0.08X 12%

Appendix 4: SPACE Analysis table

Values Identify Cause
Environmental Stability (ES)
Political stability (low) not
good for the industry
-5
Massive protest in 2009, changing
government
10

Rate of inflation (low) good
for the industry
-3
Inflation rate in 2010 is 3.3%
11

Entry barriers (high) prevent
new entrants well
-2
To enter smartphone industry require
high technology and costly
Competitive pressures (high)
high pressure => not stable
-4
A lot of pressure from substitute
industries
Technological changes (high)
=> not stable
-6
Technology changing very quickly

10
http://www.expatinvesting.org/the-worlds-most-politically-stable-countries-and-most-
politically-unstable-countries/

11
https://www.cia.gov/library/publications/the-world-factbook/fields/2092.html
46

Environmental Stability is quite moderate with average score = -4
Industry Strength (IS)
Growth potential (high) =>
good for the industry
5
Demand of smartphone is increasing
Profit potential (high) => good
for industry
5
More developing technology will
increasing more gain EOS
Resource utilization (high) =>
lots of attention by Thais ppl
4
Thailand is the one of regions rising
smartphone stores
12

Market entry ability (low) =>
prevent new entrants
5
Not easily to enter and compete with
the strong competitors like Apple,
Samsung, HTC and Sony
Productivity (high) => high
ability to growth
5
Yearly updated of smartphone
Industry strength is slightly high with average score = 4.8
Financial Strength (FS)
High return on invest 5
ROI(company) = 40.76, (industry) =
13.85
Low debt 6
Debt to equity ratio (Apple) = 0.13,
(industry) = 1.51
High liquidity 4
Current ratio(company) = 2.98,
(industry) = 1.51
High capital reserves 5 Apple has $97.7 billion in cash reserve
High rate of cash flow 5 Company = 13.8x
Financial strength is strongly high with average score = 5
Competitive Advantage (CA)
Market share (high) -1 In May 2010, MS of Iphone is 40%
Product quality (high) -1
Apples products gain good product
quality
Customer loyalty (high) -1
Nowadays, many people addicted to
Apple brand
EOS (high) -3 Apples economics of scale is high
Technological breadth (high) -2
Apples products have many wonderful
features with high technology
Vertical integration (low) -4
Apple controls and has big impact on its
retailers and wholesalers around the
world
Competitive advantage is increasing high with average score = -2
Calculate the X and Y axis:
Y= FS + ES = 5 -4 = 1
X = CA + IS = -2 + 4.8 = 2.8


12
http://www.mis-asia.com/tech/industries/thailand-to-outspend-singapore-in-it-idc/
47

Appendix 5: CPM score analysis
Critical
Success
Factors
Wtd Apple Samsung HTC Blackberry
Ratig Wtd
Score
Ratig Wtd
Score
Ratig Wtd
Score
Ratig Wtd
Score
Market
Share
0.15 4 0.6 3 0.45 2 0.3 2 0.3
Financial
Position
0.08 3 0.24 3 0.24 3 0.24 2 0.16
Product
Quality
0.17 3 0.51 3 0.51 2 0.34 2 0.34
Consumer
Loyalty
0.12 3 0.36 3 0.36 2 0.24 2 0.24
Sales
Distribution
0.10 4 0.4 3 0.3 2 0.2 3 0.3
Organizatio
n structure
0.06 3 0.18 2 0.12 2 0.12 2 0.12
E -
commerce
0.06 4 0.24 3 0.18 3 0.18 2 0.12
Consumer
service
0.10 4 0.4 3 0.3 3 0.3 2 0.2
Global
expansion
0.10 4 0.4 4 0.4 4 0.4 2 0.2
MGT
experience
0.06 3 0.18 3 0.18 2 0.12 2 0.12
Total 1 3.51 3.04 2.44 2.1
Appendix 7: PowerPoint Slides and CD