Professional Documents
Culture Documents
Jessica Bourgoin
Amy Kakuk
Beth Theriault
04/25/2005
Outline
Brief History of HD Strategic Analysis
Where we are now SWOT Matrix
Vision and Mission SPACE
External Analysis Grand Strategy Matrix
CPM IE matrix
EFE BCG
Summary Summary
Internal Analysis Possible strategies
IFE QSPM
Financial ratio analysis Recommendations
Net Worth Analysis Strategic implementation
Summary and desired results
Objectives & Goals
History 1976-1978
Wozniak and Jobs form the Apple Computer Company on April Fool's
Day.
Wozniak and Jobs finish work on a preassembled computer circuit
board. It has no keyboard, case, sound or graphics. They call it the
Apple I.
The Apple I board is released for sale to hobbyists and electronics
enthusiasts at the price of $666.66.
Apple's first formal business plan sets a goal for sales to grow to $500
million in ten years. As it turns out, the company will pass that mark in
half the time.
Apple I computer boards are sold through 10 retail stores in the U.S.
Apple moves from Jobs' garage to a building on Stevens Creek
Boulevard in Cupertino, California.
The new Apple II is unveiled at the first West Coast Computer Fair. It
is the first personal computer able to generate color graphics and
includes a keyboard, power supply and attractive case.
The Apple logo as seen today is designed by Rob Janoff, art director
for Regis McKenna Advertising.
Regis McKenna Advertising launches its first ad campaign for Apple.
Although advertising is initially aimed at electronics enthusiasts,
Apple will soon become the first company to advertise personal
computers in consumer magazines.
Monthly orders reach a $1 million annual sales rate.
http://www.apple-history.com/frames/?
History 1978
Apple introduces various interface cards for connecting
to most printers.
Apple's Disk II is introduced at the Consumer
Electronics Show. It is the easiest to use, lowest priced,
and fastest mini-floppy disk drive ever offered by a
computer manufacturer. It will make possible the
development of serious software. Production at first is
handled by just two employees, turning out 30 drives a
day.
In only its second year, Apple is one of the fastest
growing companies in America. Sales have increased,
and its dealer network has grown to over 300.
History 1979-1981
Apple's first printer, the Silentype, is introduced.
Apple opens a manufacturing plant in Carrollton, TX. Apple facilities
now occupy more than half a million square feet of floor space in the
U.S. and Europe.
Apple goes public. Morgan Stanley and Co. and Hambrecht & Quist
underwrite an initial public offering of 4.6 million shares of Apple
common stock at a price of $22 per share. Every share is bought
within minutes of the offering, making this the largest public offering
since Ford went public in 1956.
Apple's employee count breaks 1,000.
Apple's distribution network is the largest in the industry-800
independent retailers in the U.S. and Canada, plus 1,000 outlets
abroad.
Apple's first mass storage system, the 5MB ProFile(tm) hard disk is
introduced, priced at $3,499.
Apple becomes a household name. Surveys show that public
awareness rose from 10 percent to 80 percent in 1981.
History 1982-1985
Apple Dot Matrix printer introduced for $2,195.
Apple becomes the first personal computer company to reach
$1 billion annual sales rate. It throws a "Billion Dollar Party" for
employees.
Apple University founded to provide employee training
programs.
Apple enters the Fortune 500 at number 411 in under five years.
EVA (Employee Volunteer Action) is created to match the skills
of Apple employees with community needs.
Apple is elected to the Consumers Digest Hall of Fame for
responsiveness to consumer needs.
Apple II receives the 1984 Industrial Design Excellence Award
(IDEA) sponsored by the Product Industrial Designers Society
of America.
Apple announces a computer training scholarship program for
elementary and secondary school educators.
History 1986-1990
Apple announces plans to create an independent software company,
to be known later as Claris.
For the first time, Apple uses its HyperCard technology to distribute a
1987 HyperCard supplement on diskette for Macintosh personal
computers.
Apple files suit against Microsoft and Hewlett-Packard to protect its
Macintosh audio visual display. The lawsuit is seen as having industry
wide implications regarding copyright laws.
Apple reports first billion dollar quarter in its history as net
income rises 108 percent.
Apple reports net sales of $4.07 billion and net income of $400.3
million for fiscal year 1988.
Apple acquires Coral Software Corp., which markets programming
languages and artificial intelligence tools for Macintosh computers.
Apple introduces 32-Bit QuickDraw(tm) that allows Macintosh
personal computers to process and display photo-quality documents,
images and visualizations with exceptional color clarity.
Apple donates $2 million in computers to 23 schools to help at-risk
students.
Fiscal 1990 revenues surpass $5.5 billion.
History 1991-1995
Apple announces it will restructure the company over the next
12 months to reduce operating expenses. Apple's workforce is
reduced approximately 10 percent.
Apple and IBM sign a letter of intent to cooperate on major
technology initiatives for the 1990s.
Apple, IBM, and Motorola finalize milestone technology
alliance.
Apple announces a new Token Ring 4/16 NB Card, for the
Macintosh product line. It is the first product to emerge from
Apple and IBM alliance.
Apple and Kodak announce that they are working together to
integrate support for Photo CD images into future versions of
QuickTime.
The U.S. Environmental Protection Agency officially releases
the Energy Star emblem for display with energy-efficient
computers and peripherals. Apple has more than 20 products
that meet the EPA's the technical requirements.
Apple's Macintosh celebrates 10th birthday!
Apple in 2005
http://www.apple.com/macosx/newfeatures/over200.html
Apple in the Market (as of 4/22/05)
Large population (Gen X & Y) which are extremely individualistic and name 0.15 4 0.60
brand conscious.
Increase in sales of laptops by 20 percent. 0.04 3 0.12
Increasing sales of computers online by 25 percent. 0.05 3 0.15
Creating more ties with Microsoft products. 0.10 4 0.40
Threats
Increasing competition with music downloads. 0.07 2 0.14
Intels future Pentium release. 0.03 3 0.09
Dell and HP are major competitors. 0.10 4 0.40
Dell does not invent but provides computers at a more cost effective rate for 0.06 3 0.18
customers.
Recessionprice of Apple computers are higher. 0.04 2 0.08
Companies not seeing Apple as compatible with their software. 0.15 2 0.30
TOTAL 1.00 3.24
External Summary
Apple has rated the Increase in worms and
virus on PCs, Large population (Gen X & Y)
which are extremely individualistic and name
brand conscious, and the Creating more ties
with Microsoft products as their three highest
opportunities.
Apple has rated that the fact of Dell and HP
being such huge competitors as their top
threat.
Internal Audit
Strengths Weaknesses
iTunes Music Store is a good Weak relationship with Intel and
source of revenue, especially Microsoft.
with the iPod and the availability Weak presence in business arena.
on Windows platform. Dependency on new product
Developing own software and launches.
hardware. Weak presence in markets other
Apples niche audience provides than education and publishing.
the company with some Slow turn around on high demand
insulation from the direct price products.
competition.
Revamping desktop and
notebook lines.
Web technology can be used to
improve product awareness and
sales.
Low debtmore maneuverable.
Good brand loyalty.
Internal Factor Evaluation (IFE) Matrix
Key Internal Factors Weight Rating Weighted
Score
Strengths
iTunes Music Store is a good source of revenue, especially with the iPod and the 0.15 4 0.60
availability on Windows platform.
Apples niche audience provides the company with some insulation from the 0.10 3 0.30
direct price competition.
Revamping desktop and notebook lines. 0.10 3 0.30
Low debtmore maneuverable. 0.06 4 0.24
Developing own software and hardware. 0.14 3 0.42
Good brand loyalty. 0.05 3 0.15
Web technology can be used to improve product awareness and sales. 0.10 4 0.40
Weaknesses
Dependency on new product launches. 0.06 1 0.06
Weak presence in business arena. 0.07 1 0.07
Slow turn around on high demand products. 0.03 2 0.06
Weak relationship with Intel and Microsoft. 0.10 1 0.10
Weak presence in markets other than education and publishing. 0.04 2 0.08
Total 1.00 2.78
Financial Ratio Analysis (March 2004)
Company Industry Sector S&P 500
Valuation Ratios
P/E Ratio (TTM) 69.70 26.87 33.52 24.01
P/E High - Last 5 Yrs 277.96 54.58 64.14 45.41
P/E Low - Last 5 Yrs 6.84 17.34 19.55 16.26
Beta 1.75 1.60 1.91 1.00
Price to Sales (TTM) 1.41 1.84 5.08 3.33
Price to Book (MRQ) 2.20 7.56 4.78 4.29
Price to Tangible Book (MRQ) 2.26 8.77 6.53 7.56
Price to Cash Flow (TTM) 37.64 19.69 25.48 17.32
Price to Free Cash Flow (TTM) 45.13 23.77 28.26 28.97
% Owned Institutions 63.21 50.31 48.14 64.19
Dividends
Dividend Yield N/A 0.70 0.75 2.04
Dividend Yield - 5 Yr Avg 0.00 0.34 0.27 1.48
Dividend 5 Yr Growth Rate NM 7.94 1.50 6.48
Payout Ratio (TTM) 0.00 7.99 9.34 26.78
www.investor.stockpoint.com
Financial Ratios (cont)
Growth Rates % Company Industry Sector S&P 500
Sales (MRQ) vs Qtr 1 Yr Ago 36.28 12.54 18.89 13.40
Sales (TTM) vs TTM 1 Yr Ago 15.45 10.97 11.78 11.90
Sales - 5 Yr Growth Rate 0.88 7.09 14.52 9.30
EPS (MRQ) vs Qtr 1 Yr Ago N/A 34.00 35.07 28.69
EPS (TTM) vs TTM 1 Yr Ago 587.04 35.55 41.74 21.92
EPS - 5 Yr Growth Rate -29.16 6.85 13.18 12.15
Capital Spending - 5 Yr Growth Rate 28.95 2.65 1.99 4.06
Financial Strength
Quick Ratio (MRQ) 2.26 1.02 2.54 1.26
Current Ratio (MRQ) 2.53 1.25 3.02 1.76
LT Debt to Equity (MRQ) 0.00 0.38 0.23 0.68
Total Debt to Equity (MRQ) 0.07 0.52 0.29 0.85
Interest Coverage (TTM) 13.75 11.34 9.81 11.86
Profitability Ratios %
Gross Margin (TTM) 27.27 30.60 51.71 47.32
Gross Margin - 5 Yr Avg 26.65 31.08 51.13 47.01
EBITD Margin (TTM) 3.34 12.43 18.41 20.79
Financial Ratios (cont)
EBITD - 5 Yr Avg 2.87 12.18 16.18 20.82
Operating Margin (TTM) 1.63 8.70 13.63 20.33
Operating Margin - 5 Yr Avg 1.25 8.28 11.62 18.35
Pre-Tax Margin (TTM) 2.77 9.47 15.96 17.27
Pre-Tax Margin - 5 Yr Avg 5.34 9.76 14.77 17.54
Net Profit Margin (TTM) 2.03 6.02 9.90 13.12
Net Profit Margin - 5 Yr Avg 4.24 6.55 8.67 11.59
Effective Tax Rate (TTM) 26.74 29.57 27.57 31.31
Effective Tax Rate - 5 Yr Avg 22.62 30.59 32.39 34.20
Management Effectiveness %
Return on Assets (TTM) 2.09 8.44 6.07 6.40
Return on Assets - 5 Yr Avg 5.47 9.25 5.79 6.79
Return on Investment (TTM) 3.05 16.54 8.75 9.97
Return on Investment - 5 Yr Avg 7.90 17.57 9.30 10.93
Return on Equity (TTM) 3.26 30.10 12.17 18.71
Return on Equity - 5 Yr Avg 10.37 31.78 13.11 19.22
Efficiency
Revenue/Employee (TTM) 617,760 568,624 401,787 622,866
Net Income/Employee (TTM) 12,555 37,722 65,474 81,707
Receivable Turnover (TTM) 11.59 7.25 7.64 9.76
Inventory Turnover (TTM) 91.47 20.93 9.64 10.46
Asset Turnover (TTM 1.03 1.45 0.77 0.92
Net Worth Analysis
Apple did not rate any of their weaknesses higher than a 2. they
should work on being able to direct more attention to those areas
and especially concentrate on the two areas of dependency on new
product launches and the weak presence in business arena.
SWOT Matrix
S-O Strategies W-O Strategies
Increase awareness through the Increase ties with Microsoft and
web of the immunity of Mac products Intel and their products.(W1, W2,
to worms and viruses. (S5, O1) W4 O2, O3)
Advertise using individuals that will
link Generation X & Y to the iTunes Promote to business the safety of
and other related products. (S1, O2, having a worm and virus free
O4, O5, O6) computer by using Mac. (W2, W4,
Using movies and music groups that O1, O5, O6)
are geared towards Gen X and Y to W-T Strategies
promote computers and laptops. Improve relationship with
(S3, S5, O2, O5, O6)
Microsoft and Intel so that
S-T Strategies companies will see them as
Increase and promote the compatible. (W1, W2 T1)
compatibility to Window operating
system. (S5,T1) Increase productivity and turn
Promote the originality of Apple
around of high demand products
computers and the different style to compete with Dell and HP (W5,
and stable system that is slightly T2)
more but worth the price difference
in style, stability and speed. (S2, S5,
T2, T4, T5)
Space
SPACE Matrix
Matrix
Conservative FS Aggressive
CA IS
Forward Integration
Backward Integration
Horizontal Integration
Market Penetration Defensive Competitive
ES
Market Development
Product Development
Joint Venture
Grand Strategy Matrix
RAPID MARKET
GROWTH
Quadrant II Quadrant I
WEAK STRONG
COMPETITIVE COMPETITIVE
POSITION POSITION
Apple
Concentric Diversification Computer
Conglomerate Quadrant III Quadrant IV
Diversification
SLOW MARKET
Horizontal Diversification GROWTH
Retrenchment
Divestiture
Liquidation
The Internal-External (IE) Matrix
Strong Average Weak
3.0 to 4.0 2.0 to 2.99 1.0 to 1.99
III
I II
High
3.0 to 3.99
IV V VI
Medium
2.0 to 2.99
VII VIII IX
Market Penetration
International Market
Medium Cash Cows Dogs Development
0
Product
Development
Sell
Low -20
Segments Revenue Profit EFE IFE Growth Rate Relative Market Share
Domestic 54% 52% 3.5 2.6 17 0.3
International 46% 48% 3.0 3.0 5 0.2
Matrix Analysis Summary
Alternative Strategies IE SPACE GRAND COUNT
Forward Integration * * 2
Backward Integration * * 2
Horizontal Integration * * 2
Market Penetration * * 2
Market Development * * 2
Product Development * * 2
Concentric Diversification * 1
Conglomerate Diversification * 1
Horizontal Diversification * 1
Joint Venture * 1
Retrenchment * 1
Divestiture * 1
Liquidation * 1
QSPM
Key Internal Factors Start Expand
Weight producing production into
Wintel Asia
compatible
Strengths AS TAS AS TAS
iTunes Music Store is a good source of 0.15 1.00 0.15 3.00 0.45
revenue, especially with the iPod and the
availability on Windows platform.
Apples niche audience provides the 0.20 4.00 0.80 3.00 0.60
company with some insulation from the
direct price competition.
Good brand loyalty. 0.20 4.00 0.80 3.00 0.60
Web technology can be used to improve 0.15 4.00 0.60 3.00 0.45
product awareness and sales.
Weaknesses
Weak relationship with Intel and Microsoft. 0.15 4.00 0.60 1.00 0.15
Weak presence in markets other than 0.15 2.00 0.30 4.00 0.60
education and publishing.
SUBTOTAL 1.00 3.25 2.85
QSPM
Key External Factors Start producing Expand production
Weight Wintel into Asia
Opportunities AS TAS AS TAS
Increase in worms and virus on PCs. 0.15 2 .30 3 .45
Downloadable music and MP3 players are highly 0.06 1.00 0.12 4.00 0.48
marketable.
Large population (Gen X & Y) which are extremely 0.15 1.00 0.10 4.00 0.40
individualistic and name brand conscious.
Increase in sales of laptops by 20 percent. 0.08 1.00 0.08 4.00 0.32
Creating more ties with Microsoft products. 0.10 4.00 0.12 2.00 0.08
Threats
Intels future Pentium release. 0.10 1.00 0.10 3.00 0.30
Dell does not invent but provides computers at a 0.06 1.00 0.06 3.00 0.18
more cost effective rate for customers.
Companies not seeing Apple as compatible with their 0.15 1.00 0.05 3.00 0.15
software.
SUBTOTAL 1.00 0.93 2.36
SUM TOTAL ATTRACTIVENESS SCORE 4.18 5.21
Recommendations
Strategy 1
Open six computer retail stores (not just peripheral and accessories). Apple currently has
stores opened throughout the United States with only peripheral and accessories for their
computers. Adding the hardware should generate more hands-on awareness and use
already established locations.
This will increase product accessibility for those who wish to view items other than just
accessories and increase awareness of the originality of Apples products.
2 percent increase over the next 2 years in sales representatives for the computer
hardware.
Strategy 2
Contract music spokesperson to attract the upcoming generation who are attending high
school and college. This will invoke a sense of style and linking apple with a distinctive and
memorable top 10 hit. This will stay in the customers awareness and influence future
purchase decisions.
Contracting one music spokesperson estimated $6 million.
Strategy 3
Add more features to current products for greater Wintel compatibility. Features such as
iTune software compatible with windows based computers, Office programs loadable from
PC installation disk (This would require a software agreement with Microsoft). In late
October 2003 Apple released an iTune software package that is PC ready.
It will increase the United States market share at least 30 percent for the next 2-3
years.
$50 million is the estimated cost for Research and Development.
Cost of Recommendations
Open 6 computer retail stores (not
just peripheral and accessories)
100M
Contract music spokes person
(Sarah McLachlan | 50 cent) for a
cost of 6M