FIGURE 1: Porters value chain

FIGUR E 3: Apple SWOT Analysis

FIRMS INFRASTRUCTURE
Top-down management structure from North America through defined set of cultural values
7 key product lines servicing different markets spread out over a PLC
5 territory segments that are all steadily growing , Europe faster than others
Revenue is steady and above industry average a key competitive advantage
HR MANAGEMENT
Large workforce of 34,000 permanent & 2,500 temp staff; invests in training retail staff to deliver
great customer service; Value relies on service and availability of key personnel; to achieve its
innovation positioning, Apple must have a Highly skilled and creative product development team; this
is a risk for Apple where key employees can get poached
TECHNICAL DEVELOPMENT
Pioneers new technology; technical excellence in terms of quality and innovation and NPD; key
competitive advantage;
PROCUREMENT
Key strategic relationships with suppliers deliver top quality of products; exclusive relationships can
be managed easier and better controlled and Apple can negotiate favourable contracts, however can
be problematic as reliant completely on 3rd party for service delivery which effects brand
INBOUND
OPERATIONS
OUTBOUND
MARKETING AND
SERVICE
LOGISTIGS
Good internal
LOGISTICS
SALES
Retail stores focus
Dependency on
process to
Uses iTunes, App
Price skimming
on accessibity,
suppliers for right
repeatedly
store, 273
strategy; good
flexibility highly
qty and priced
produce quality
specialist retail
corporate
knowledgable
deliveries &
new product
stores(56 outside
reputation to
staff and
services
which are market
the US subjected
reinforce
attention to
leaders; Produces
to risks of
differentiated
detail, results in
quality products;
international
positioning
customer loyalty
Faces inventory
operations);
and assets risks;
Depends on 3rd
party distributors
and carriers,
retail outlets and
online shops
Address logistics, and gain better control of qty, price and introduce TQM to ensure quality
significant value in technical

FIGURE 2: Brand audit

BRAND PROPOSITION
Providing innovative products to enhance
evolving digital lifestyle and work environments;
(creative and different; anarchic; idiosyncratic)
BRAND STRATEGY
Brand differentiation; Umbrella branding;
company brand combined with individual brand
names; all 6 core sub-brands are reinforcing
Apples core branding and the use of i as prefix
for sub-brands reinforces that and technical
innovation
BRAND ASSOCIATIONS
Innovation, reliability, trendy, sophistication,
anti-establishment
BRAND STRENGTH
Strong collection of attributes which strongly
influence purchase and brand loyalty, resulting
in devoted customers;

BRAND IDENTITY
High quality, innovative products;
Bold, simple and striking logo is easily
identifiable image and has strong brand
recognition;
BRAND DEVELOPMENT STRATEGY
Brand extensions, Sub-brands use consistent
naming conventions that further reinforcing
Apple image;
Continue to be loyal to the brands core values
of delivering cutting edge products to discerning
customers
BRAND PERSONALITY
Technology frees up imagination to give it free
expression; Lifestyle that celebrates freedom and
originality;
BRAND POSITIONING
Premium strategy: high price and high product
quality ; differentiating factors of product
features; innovation

Strengths
Strong brand (grown by 32%
to $83.2b) voted 3rd most
valuable brand in the world;
leveraged to provide
competitive advantage
Customer loyalty to brand
(strong value proposition)
Innovator with first mover
advantage
Good internal HR processes
quality of staff
Customer service
Quality management in place
Building relationships with
publishers so they can charge
their own pricing
PR on quality issues
Revolutional product, touches
on many vertical markets

Opportunities
Changing consumer behaviour
Declining market share of
competitors
Competition e-books
New vertical markets,
including the print industry
Sustainability printing industry
is bad for the environment
Entertainment global industry
to grow by 5% to $1.7trillion by
2014; growth in Asia pacific to
be the fastest

Weaknesses
iPad product design: E-ink is
more versatile in sunlight; Use
of android open source
platforms by competitors
makes Apples products less
accessible
Poaching of key personnel
Competitors infringe IP
High customer expectation
( innovation, sophistication,
elegance and cutting edge
technology) which may be
hard to live up to
Need to constantly innovate
to survive in market
R&D at the expense of
current business; threatens
revenue growth
Products and services can
have quality issues affecting
the bottom line
Bad PR management can
affect share price (iPhone 4s
poor quality aerial)
Quarterly revenue can
fluctuate; stock price is volatile
Threats
Rapid evolving technology
poses threats from
competitors
Current innovator image
may be hard to live up to
customer expectations
Highly competitive market
Relying on third parties for
service delivery (US market:
only one cellular provider)

FIGURE 4: Measuring Brand strength

Interbrand
Market
Stability
Leadership
Profit
trend
Support
Geography
Protection
Result

Highly competitive
Long-established brand; dependant on
NPD
Market leader/innovator
Profitable, very strong brand value

L
H

Investment is available
Selected markets
High need for IP protection
Strong brand

H
M
L
H/M

H
H

 Excellent customer service; retail stores focus

Voted 3RD most valuable brand in the world;
on accessibility, flexibility, highly knowledgeable
leveraged to provide competition advantage.
staff and excellent attention to detail;
Brand has grown by 32% in 2009;
Positioning had given Apple a competitive advantage which allows Apple to attain an above level of
profit; Umbrella branding poses the risk of one sub-brand failing and reflecting on the rest of the brand

Segment: consumer, B2B, education, enterprise, govn, creative

customers
Target: single or series of segments
Position: Differentiated; technological leadership

FIGURE 5: PESTLE Analysis for Apple and the Print Industry

State of the print industry
POLITICAL
-

ECONOMIC
- Advertising revenue is declining by 10%
annually, (dropped by 44% in print in the
last 4 years along)
- Current business model is no longer
sustainable
- 3.2% revenue is generated online ($6b of
$182b)
- Developing markets (Africa, Asia, South
America) are growing;
- More and more free content is available
- Economic decline has contributed to
decline of industry: Third of journalists
have lost jobs since 2006;
SOCIAL
- User expectations have changed; demand
for printed newspapers is decline in North
America & Europe;
- Sales of traditional books is declining:
3.08b books have been sold in 2008,
1.5% drop from 2007;
- Developed markets present opportunities,
34% of the world read newspapers (India
largest market, Nordic, Switzerland,
Portugal, Japan) (in total 1.9b people)
TECHNOLOGY
- e-books and digital media is growing at a
rapid rate, with Amazon e-book
downloads up by 400% from 08
- This presents new opportunities, as 24%
of the world population have access to
internet; twice as many people use
mobile devices to access the internet
than at PCs
- iPad presents printed media in a highly
attractive readable which may revitalise
the industry
ENVIRONMENTAL
- Increased pressure for print companies to
be environmentally friendly, it s the
largest user of water and 3rd largest
contributor to greenhouse gases (150b
newspapers are produced each year)
LEGAL
- New EU laws may change working
conditions

Apple
POLITICAL
- Political events, war, terrorism can
adversely affect the company
- New tax legislation can affect its profits;
exclusive alliances may prove to be
against competition laws
ECONOMIC
- Can adversely affect the company
- Recent recession has slowed growth; and
competitors have struggled (Sony)

SOCIAL
- Changing consumer patters are showing
more demand for online media, in 2009
more book apps than game apps were
sold (for iPhone & iTouch
- Wall st journal already has 10,000 iPad
subscribers;
- Digital media makes sharing very easy,
resulting growth in this segment
TECHNOLOGY - Pace of change in the entertainment and
media industry is greater than 12months
ago
- Rapid evolving technology poses threats
from competitors;
- To remain competitive, company must
manage frequent product introductions
and transitions which are risky and can
disrupt ongoing business, especially if
unforeseen
ENVIRONMENTAL
- Can adversely affect the company

LEGAL
- Company is subjected to risks that can
arise from laws, regulations and industryimposed standards in relation to mobile
communication devices;
- May face litigation over past stock-option

FIGURE 6: Porters 5 Forces

SUPPLIER POWER (high)
- Relies on 3rd party distributors,
carriers & resellers (some with
exclusive agreements ie in US
relies on one mobile phone
carrier)
- Success hinges on ability to
obtain key components
(microprocessors, flash
memory) at right price and
quantity
- Depends on 3rd parties for
component & product
manufacturing as well as
logistical services; digital
content & applications;
- Relies on 3rd party IP & patents
- Needs 3rd party software
developers to keep developing
BARRIERS TO ENTRY (medium)
- Entrants dont need to commit
high investment costs in
technological innovation, as
Apple have already done so
- Current IP is hard to copy if
protected

BUYER POWER (high)

- Unique product without current
substitutes
- Commands high price and loyal
customers
- Switching is unlikely once buyers
have bought one type of e-reader

THREAT OF SUBSTITUTES (high)

- Highly competitive
marketplacesubject to:
- rapid technological change which
poses the risk a competitor will
create a better product, affecting
Apples positioning and market
share
- Copy cat products which dont need
to recoup high R&D costs and can
be priced lower
RIVALRY
- Three established competitors (Dell,
Sony, Amazon)
- In e-reader market fiercely
competitive
- Overall iPad doesnt have a direct
competing product as yet

FIGURE 7: Bownams Strategy Clock

Hyrbid

Differentiation
Focused
Differentiation

Low price

Low price/low
added value

Risky, high
margins

Loss of market
share

Monopoly
pricing

Implications: Focused differentiation will play on Apples brand strength and

product line and help in an increasingly competitive market

practices which can affect company

FIGURE 8: Competitor Product Analysis

Apples iPad
Sales

6m*

Launch
Size
Cost

April 10
9.7inch
$550 $800

Amazons
Kindle
3m*

Sony Reader
n/a

FIGURE 11: Competitor Resource Analysis

Barnes & Nobles
Nook
60,000 (37% of
market)
Oct 09
6inch
$260

Nov 07
Nov 06
6inch
7inch
Basic $260;
T ouch $280;
Kindle DX
Daily Edition
$490
$400
Downloads
11,000
460, 000
n/a
7m e-books; new
unique apps
e-books
Google deal
& 200,000
(66% of
increases this to
on app store
market)
several mil
*estimate as data not disclosed;
Products yet to enter the market are Skiff reader and Dells Streak tablet yet to be
launched is 5inch, part mobile phone; mini tablet and the closest rival to iPad
1.43m e-readers have been sold in total
Implications: iPad is positioned to compete against the higher end e-books, with its
larger size and retail value. Amazon has the largest record in e-books sales however
the Nook will overtake.

FIGURE 9: Competing Sales

e-book Product Features Analysis

Sony
Apples
Amazons
Sony Reader
Barnes & Nobles
iPad
Kindle
Nook
Countries
Sale
Size
3
5
4
5
operated
Growth
Weight
3
5
3
3
in
Display
3
5
1
3
crispness
Easy to use
5
5
3*
1
Use of e-Pub
5
0
5
5
Years
Use
ofin
e-Ink
0
5
5
5
Net
operatio
Downloads
2
3
3*
5
Income
Total
21
28
24
28
n
Rank
3rd
Equal 1st
2nd Apple
Equal 1st
Comparison
is on basic models
o
Implications: e-readers areAmazon
favoured on being simple, small, cheap, light and reflect
trueoper
book experience; Rated solely on e-reader qualities, the iPad has product
weaknesses that will need to be addressed if it is to compete successful in the eBrand
reader market. However as it competes with laptops & high-end notebooks; games
value
console;
the Apple can do much more; music, video, email, internet,Assets/
photos, which
may prove the key to its success.
Resourc
Figure 10: Key advantages to digital vs print es
Brand
Digital
Print
Live updates & breaking news ranking
Able to share larger readership
Implications:
is the
brand
with vast resources however internal
Apps make itSony
possible
tomore
read established
off-line
Cheaper
Media rich
content
(videos)
readership
upheaval
and
investment
in games,ran
not wellEstablished
placed for the
competitive e-book
More enjoyable
to read resources are inferior
Established
production,
journalists
etc and
environment;
Amazons
to Apple, however
its strong
growth
Advertising
is measurable;
diversify
One-off
presence
in more
countries will
pose a challenge
for purchase
Apple. Sony & Apple both have a
adverts distribution network that is established and possible access to cheaper
stronger
Virtual journalism
No digital medium needed (iPad, PC)
manufacturing sites (economies of scale). Lower inputs and higher margins.
Interactive, comments, polls, opinions
Lower ongoing costs (no internet
(market research can be used for
connection)
revenue)
Environmentally friendly
Appeal to new demographic; young

Sales
Sale growth
Net income

Assets

Apple
$36.5b
12% on 2008
$5.7b;
17% growth on
2008
38% on 2007
$53b;
$15b increase on
08
No 3
$83.2b
34

Amazon
$24.5b
28% growth on 2008
$0.9b;
28% growth on 2008
40% on 2007

Sony
$5 trillion*
13% decline on 2008
Loss 0.1trillion

$13.8b
66% increase on 08

$7.8trillion*
4% decrease on
2008
no 94
$8.2b, grown by 30%
60

Brand ranking
no.15
Brand value
$27.5b, up 29%
Yrs in
16
operation
Employees
34500
24300
Countries
22
120
200**
* adjusted per technology sector which accounts for 65% of total Sony market
** estimate

FIGURE 12: Competitor Resource Diagram

people
Smaller than broadsheets; more
accessible
Reduce cost of printing
Bybook uses animated illustrations,
sound effects and more. It sounds
brilliant

FIGURE 13: Product portfolio analysis

Growth by product segment for 2009 vs

FIGURE 16: BCG Matrix

High

Comparison of total sales by product for year 2009 vs2008

2008

S iP
a
d

Mac

ipo
ds

Cash cow

Boo
k
Implications:
iPhone - sales risen more than units, suggest it commands premium prices still in the growth stage; key product
in Apples portfolio, with growth and potential to become a new cashcow.
iTunes slower growth but apps are promising for future;
Peripherals - declining, software stagnating;
Desktops maturity; units increasing & revenue declining, showing a price competitive market; been important
for Apples revenue stream;
iPods slight increase in units, declined sales (12%) showinga competive market place
Portables small growth in units & but smaller growth in revenue suggests shakeout and a more price
competitive marketplace;

iTunes

Desktop
Portables
iPods

iPhone

Introducti
Growth
Maturity
Decline
on
Implications: Software and desktop; repeat buying is
needed to keep sales growth; market is mature, high
competition with lots of offerings; Apples high price
means its less accessible. New releases needed.
iPad: high advertising costs & promotion to convince
customers of features.
iPhone: More competition in market, competiting
products have marked quality technical differences.

FIGURE 15: Ansoffs Matrix

NEW MARKETS EXISTING MARKETS

FIGURE 14: Product lifecycle

iPad

Problem child

EXISTING
PRODUCTS

NEW PRODUCTS

Market
penetration

Product
development

Enter print
industry
Enter new
geographical
markets

Diversification

Low

Market growth

Stars

Dogs
High

Market share

Low

Key: S software;P peripherals;T iTunes; D desktop;; H iPhone

Implications: Invest in new releases of cashcows to boost
sales and prolong life;
iPhone is the outright star and 3rd biggest product line
overtaking the more established desktops, where Apple
started.Peripherals may need tp be harvested

FIGURE 17: US Print & e-books sales

($b)

Market
development

1.Sales of iPads; 2. Support newspapers; 3. Support

print industry; 4. Support environment; 5. Build
relationships. It has to be profitable; accessible;
mearuablel feasible and long-term sustainibility

Implications: Books represent a lucrative market and sbows

e-books sales are more in their infancy than US online
advertising; Size of print industry 182b, 3.2% revenue is
generated online $6b of $182b)

Company strength

High

FIGURE 18: Market attractiveness

Retai
l

High
Invest for growth

Market attractiveness
Low
Invest for growth
Manage
selectively

Japa
n$1
.8b Euro
Invest
for growth
pe
USA

India
Growing
economy
Large
readershi
p 107m

Japan
Strong
economy
Large
readershi
p 91%

Low

high

Capacity to
pay for

Research
required
GDP $4.1
trillion
9%
change;

Currency
Contractual
agreements

Rupee
Research
required

Research
required
GDP is
$5.07
trillion;
11%
decline in
press
advertisin
g in Asia
Yen
Strong

High;
highcontext
society

Country
Consumptio
n

Manage selectively

Harvest/
withdraw

Concentratio
n
Channels

Low

$16b
$9.4
b
China Brazil
$6b
India $4.8 Russi
$6.5b
$2.5
b
a
b
$3.5

FIGURE 20: 12Cs Framework Doole and Lowe Print

Industry

Manage b
Manage selectively
Harvest/withdra
selectively
w
Current markets:
Europe is stronger than America; Nordic Countries, Switzerland, Portugal all
have avid readers similar to Japan showing potential for further growth;
although print advertising is declining in Easter and Western Europe (19%,
26%) and USA 20% new opportunities may exist for digital media .

FIGURE 19: Sales per market; Growth per market

territory

Choices
Culturebuyer
behaviour

Caveats
Sales
potential
Size of
market
Essential the
product is

Implications: Highest growth is in Europe; followed by Japan although both

declining; America is the biggest market but one with the slowest growth,
showing increasing compeition and mature products. It is however integral to
Apples revenue streams. Retail spike in 08 is due to the iPhone showing a
new verions can boost sales.

Medium;
language
& cultural
differenc
es

Africa
Political
instability
Growth in
paid-for
newspape
r
readershi
p
Low

China*
Booming
economy
Research
required

Research
required
GDP low
dependin
g on
country

Brazil
Growing
economy
Growth in
paid-for
newspape
r
readershi
p
Research
required
Research
required
GDP
$2.023
trillion; .
02%

Russia
Growing
economy
Research
required

Research
required
GPD high
$4.9
trillion;
9.8%
change

Research
required
GDP
$1.477
trillion;
4%
change)

Various
Research
required

Real
Research
required

Yuan
Risk of
copycats

Ruble
IP will be
an issue

High;
language
difference
s

Low;
Language
a barrier
yet
modernis
ed

High;
Fastest
growth in
M&E
industry

Low

Medium

107m

Pop.
Pop.
Pop.
Pop. 1.3b Pop.
127m
680m
193m
141m
115m
(91%)
(5% of
(5% or
(1% of
(5% of
(1% of
(5% of
market)
readershi
populatio
populatio
populatio populatio
p)
n)
n)
n)
n)
Sales
$2.5b
$5.25
$3.4b
$4.8b
$6.5b
$3.5b
Competition
Low
High
Low
Medium
High
Medium
*The highest growth will be in M&E market in Asia-Pacific
** Japan currently has 3% of readership market
Sales potential: when calculating sales potential the following have been taken into account:
price of product; amount of money spent on promotion; essential the product is to users;
overall size of market; competition
Short-term opportunities: Japan s highest readership will provide an attractive market, and its
advanced economy; the easiest route to market; however vast cultural differences pose a
challenge that needs to be addressed first.
Long-term opportunities: China, Asia and foreign markets that involve substantial product
enhancements (language) and new distribution networks, opportunities for scale of economies
and new manufacturing base for CA; localise manufacturing

Strategy

Structure

Systems

Shared
values

Skills

Staff

Style

FIGURE 22: Shareholder value tube

Current situation
1.Differentiation
2.Market leadership
through new product
development
Apple enjoys first mover
advantage, charging
premium prices and
positive PR.
Hierarchical, American,
innovative, yet CEO Steve
Jobbs adopts dictatorship
style
Reliant on 3rd party
suppliers.

Innovation lies at the

heart of the company; core
brand values are evident
in all new products and
retail outlets
Technical and creative
skills have lead Apple to its
leadership position
Customer service
training is successful
Company success is
underpinned by quality
staff
Excellent customer
service shows happy staff

Vision, drive and

entrepreneurial spirit o the
CEO shape the
management style which
is hands-on

Future Situation
Leadership status
dependant on new product
development.
As competition increases,
technology and innovation
will play important role in
NPD and companys
position
CEO will be stepping
away from key roles; more
multicultural if Apple
enters new territories
Gain more control 3rd
parties
Key components will
need to be reliable and
high quality.

This needs to remain at

the heart of the
organisational, motivate
staff to achieve & pursue
right goals
Technical skills are
essential for future success
and to deliver value
Technology & design can
be a commodity
As competition increases,
quality staff will be in more
demand
Customer service will be
paramount as will ongoing
training
New CEO will need to be
nominated; survive
pressures for short term
results

Gap analysis
Cashcows are in reaching
the maturity stage of their
PLC; new products will be
key to companys success;
revitalising key product
lines with new versions will
be key to success of sales
and revenue
New management
structure that supports
Apples vision;
Quality management
systems need to put in
place ie TQM to check 3rd
party components
Control through joint
venture/alliance
Heads of 3rd party report
to Apple
Own fleet of operation
Reinforce what Apple
stands for
Culture needs to spread
over territories (ie Toyota
struggled)
Look at licencing external
technologies to decrease
R&D; invest in market
research & prototyping to
reduce cost of NPD
Incentives needed to
encourage staff to stay and
not be poached; develop
motivation to pursue right
goals
Lower staff turnover
means higher customer
loyalty
Vision needs to stay
within corporate culture
Localise leadership;
Europe HQ; SBU for india

Control
Risks
MARKING IT FLOW WIDER

FIGURE 21: McKinseys 7

Invest in market
development:
- grow e-book
and newspaper
market
- form strategic
alliances in print
and book
industry

MAKING IT FLOW FASTER

Invest in people to keep
innovation at forefront;
decrease reliance on 3rd parties;
maximise economies of scale;

MAKING IT LONGER
Develop new geographical
markets;

FIGURE 24: Financial Position

Performance
Indicator

2009

200
8

Profit margin
Gross profit
Mark up
Rate of sale
Asset turnover
Liquidity
Gearing
Acid test
Collection period
(in days)
Creditor days

22%
18%
57%
16%
68%

22%
30%
52%
15%
82%

Highly profitable; good

cash flow
Good markup shows
good economies of
scale

1.88
0.1

2.29

34
34

Return on sales

15%

42
28
14.9
%

Highly liquid
Low-geared shows
potential to borrow
more funds
Better at collecting
payment provides
faster cashflow
ROCE indicates funds
tied up in R&D; good
prospects for
expansion;

Profitability

Return On Capital
Employed - ROCE
Shareholder value

10.8
%

12.3
%

Return on equity
Total Shareholder
return

20%

23%

20%

FIGURE 23: Core competencies & Competitive Advantage

COMPETITIVE ADVANTAGE
Strong financial position; higher
than industry profits
Technological Innovation
Strong brand value

CORE COMPETENCIES
High profile management (Steve Jobs)
vision of founder; Personnel and people
Worldwide differentiated reputation
Experience in NDP

Earnings per
share

8.77

Strong shareholder
value,; Rising EPS is
favourable for
investors; Its cheaper
to raise money
through shares than
borrowing; however
threats of take-over
increases

PE Ratio
0.30
Implication: Very strong balance sheet with potential to pursue

Value chain can be a CA

Product quality & value
proposition
Key stakeholders:
Management; employees; shareholders; bankers; customers; suppliers; government

chosen growth strategies