APPLE INC.

A. Current Market Situation

Apple, founded in 1976 by Steven P. Jobs and Steve Wozniak, is the worlds largest technology company, taking the lead from its long-time rival Microsoft in 2010. Over the last decade, Apple has redefined the music business through the iPod, the cell phone business through the iPhone and the entertainment and media world through the iPad. On Oct. 5, 2011, the company announced the death of Mr. Jobs, after a long battle with pancreatic cancer. Rarely has a major company and industry been so dominated by a single individual, and Mr. Jobs influence went far beyond the iconic personal computers that were Apples principal product for its first 20 years. Again and again, Mr. Jobs gambled that he knew what the customer wanted, and again and again he was right. The death of Mr. Jobs stirred deep emotions inside and outside Apple and raised concerns about whether the company can, in the long run, continue its remarkable streak of hits. In August 2011, Apple named Timothy D. Cook as the companys chief executive. In October 2011, Apple reported fourth-quarter results that were a rare disappointment when the company missed Wall Street forecasts for its iPhone business. The company reported big increases in the sale of the iPad and of Mac computers, and even said the number of iPhones it sold in the quarter jumped 21 percent from 2010. But investors fixated on a 16 percent decline in iPhone sales from the third quarter. Apple shares fell 7 percent after the release of the results. Apple executives blamed the shortfall in iPhone sales on unusually heated rumours that the company would release a new phone in the fall, leading consumers to delay their purchases so they could get the latest version. That new phone the iPhone 4S did, indeed, come out in October, to what Apple said was the best initial sales of any iPhone yet. But it was too late to benefit the fourth quarter, which ended Sept. 24.

Apple said its net profit for its fiscal fourth quarter was $6.62 billion, or $7.05 a share, up from $4.31 billion in 2010, or $4.64 a share, a 54 percent increase. Revenue rose to $28.27 billion from $20.34 billion, a 39 percent increase. Those results were well ahead of the $5.50 a share in earnings and $25 billion in revenue that Apple had forecast for the quarter.

B. Product Review
i. Target Segment Consumer and SME (Small Medium Enterprise) - 75% of overall sales The Apple focus on number of sales in which 75% of the products which are produced in one period sold. - Emotional buying In this term, the Apple Corporation focus on the product which can attract the customer to buy it. In the other words, the company create the product which can influence emotion of any people to buy the product of Apple. - Highly sensible to purchasing experience This means that the product of Apple provide price which is sensible for the consumer to purchase or in the other words it is the product which is worth it with the price. Education - Emphasis on simplicity & Reliability In this term, it is not only concern on the laptop but also iPad which is simple to use simple and can be trusted for the people who are having education like in school or college. - Typical solution consists in one laptop for every student and teacher, along with installation of a wireless network. This is the solution which can fulfil the needs of student and teacher on access from the internet. This is very essential because students usually search materials from the internet in order to finish the projects from school.

Enterprise, government, and creative - Require high power computing performance The computer which has high performance is needed in any enterprise and government because it can help the employees in the enterprise and also the members of government do their job well. Besides, the high power performance is useful for people who work in the visual communication design. We know that Apple has a good graphic and also performance for them who are hobby in designing. - Need high integration & service level This means that Apple Corporation provide both Enterprise and Government product like laptop or computer which can help them implement high integration and service level.

ii.

Customer need Apple, throughout all industries it participates in, tries to implement its vision of being the digital hub in an area where networking between hardware, software, and services is getting more and more important, as consumers require sophisticated as well as integrated digital devices who can smoothly communicate with each other. Apple since ever tries to differentiate itself from competitors in order to justify the premium price it charges. It is important to find the right balance between customer satisfaction and pricing option as this mix is crucial to maximize value for the customer and drive up profitability. Apple is known for its high cost structure, as development of product design and innovation is a costly matter. Nevertheless product differentiation is a strong competitive weapon because Apple can increase the perceived value of its product and be as profitable as other competitors despite the higher cost structure.

C. Competitive Review D. SWOT Analysis

i. Strengths Apple is a very successful company. The favourable brand perception had also increased sales of Macintosh computers. So iPod gives the company access to a whole new series of segments that buy into other parts of the Apple brand.

Sales of its notebooks products are also very strong, and represent a huge contribution to income for Apple. Brand is all-important. Apple is one of the most established and healthy IT brands in the World, and has a very loyal set of enthusiastic customers that advocate the brand. Such a powerful loyalty means that Ample not only recruits new customers, it retains them i.e. they come back for more products and services from Apple, and the company also has the opportunity to extend new products to them, for example the iPod. The Apple Inc. has iTunes store. Their consumer that uses product from Apple can download and buy the music in this store. It help consumer to search from their product because its already installed in their product so, they can be easier to find the music, they want. ii. Weaknesses It is reported that the Apple iPod Nano may have a faulty screen. The company has commented that a batch of its product has screens that break under impact, and the company is replacing all faulty items. This is in addition to problems with early iPods that had faulty batteries, whereby the company offered customers free battery cases. There is pressure on Apple to increase the price of its music download file, from the music industry itself. Many of these companies make more money from iTunes (i.e. downloadable music files) than from their original CD sales. Apple has sold about 22 million iPod digital music players and more than 500 million songs though its iTunes music store. The company is resolute, but if it gives in to the music producers, it may be perceived as a commercial weakness. Early in 2005 Apple announced that it was to end its long-standing relationship with IBM as a chip supplier, and that it was about to switch to Intel. Some industry specialists commented that the swap could confuse Apple's consumers. iii. Opportunities Apple has the opportunity to develop its iTunes and music player technology into a mobile phone format. The Rokr mobile phone device was developed by Motorola. It has a colour screen, stereo speakers and an advance camera

system. A version of Apple's iTunes music store has been developed for the phone so users can manage the tracks they store on it. Downloads are available via a USB cable, ands software on the handset pauses music if a phone call comes in. New technologies and strategic alliances offer opportunities for Apple. Podcasts are downloadable radio shows that can be downloaded from the Internet, and then played back on iPods and other MP3 devices at the convenience of the listener. The listener can subscribe to Podcasts for free, and ultimately revenue could be generated from paid for subscription or through revenue generated from sales of other downloads. iv. Threats The biggest threat to IT companies such as Apple is the very high level of competition in the technology markets. Being successful attracts competition, and Apple works very hard on research and development and marketing in order to retain its competitive position. The popularity of iPod and Apple Mac are subject to demand, and will be affected if economies begin to falter and demand falls for their products. There is also a high product substitution effect in the innovative and fast moving IT consumables market. So iPod and MP3 rule today, but only yesterday it was CD, DAT, and Vinyl. Tomorrow's technology might be completely different. Wireless technologies could replace the need for a physical music player. Bargaining power of buyers in online music market. It means that the iTunes should lower the price to maintain their customer in buying the song in their store. In decreasing the price, means that it will determinant the key success. Besides, the threats are also from a music piracy.

E. Pricing Strategy
Skimming is referred to as selling a product at a high price; basically companies sacrificing sales to gain high profits. This is employed by companies in order to reimburse their cost of investment put into the original research of the product. This strategy is often used to target early users of a product/service because they are relatively less price sensitive than others. Early users are targeted either because their need for the product is more than others or they understand the value of the product better than others. In any case, this strategy is employed only for a limited period of time as a way to recover most of the investment of a product. According to Koehler (1996), the skimming price strategy is a high price strategy which provides a healthy margin but risks a depressed sales volume. Since high prices also attract piracy, protection costs against piracy basically eat up margins. In the case of Apple, the buyers are not attracted by pirated versions of products because of the image of the brand linked to the snobbism of the members of the Apple family. Once known as the tech industrys high-price leader, Apple has been beating rivals on price over the last several years, according to an article in The New York Times on Oct. 23, 2011. For instance, people who wanted the latest Apple Smartphone, the iPhone 4S, were able to get one the day it went on sale if they were willing to wait in a line, spend at least $199 and commit to a two-year wireless service contract with a carrier. Or they could have skipped the lines and bought one of the latest iPhone rivals from an Apple competitor, as long as they were willing to dig deeper into their wallets. For $300 and a two-year contract, gadget lovers could have picked up Motorolas Droid Bionic from Verizon Wireless, or they could bought the $230 Samsung Galaxy SII and $260 HTC Amaze 4G, both from T-Mobile, under the same terms. Apples new pricing strategy is a big change from the 1990s, when consumers regarded Apple as a producer of overpriced tech baubles, unable to compete effectively with its Macintosh family of computers against the far cheaper Windows PCs. But more recently, it began using its growing manufacturing scale and logistics prowess to deliver Apple products at far more aggressive prices, which in turn gave it more power to influence pricing industry wide. Analysts and industry executives say Apples pricing is an overlooked part of its ability to find a large audience for its products beyond hard-core Apple fans. Apple sold more than four million iPhone 4S Smartphone over its debut weekend.

People can still easily find less expensive alternatives, with less distinctive and refined designs, to most Apple products. Within the premium product categories where Apple is most at home, though, comparable devices often do no better than match or slightly undercut Apples prices.

F. Distribution Strategy
Initially Apple wanted to control it all with an iron fist. In an effort to expand its sales, they have been slowly adding other distribution channels with high sales volume. Such is the case with AT&T, Best Buy and now Wal-Mart. Wal-Mart Stores Inc said on Friday it will start selling Apple Incs iPhone on Sunday. Wal-Mart plans to sell the black 8-gigabyte iPhone 3G model for $197. The 16-gigabyte model, in black or white, will be priced at $297. All of the phones require a new twoyear service agreement from AT&T Inc or a qualified upgrade. The move gives Apple the chance to reach millions of Wal-Mart shoppers who may not be as familiar with the companys products. The phones will be available in nearly 2,500 stores beginning Sunday December 28. Despite the 2009 recession, Apple made significant alterations to its products and also the company decided to change its strategy in 2010 to compete with Google, Microsoft and other companies. There is a possibility that the company will open the iPhone to various companies, also it will release an iPod Touch that will come with a camera, broadening its retail footprint, launching the tablet PC as well as releasing the Beatles catalogue to iTunes. Despite the fact that many tech carriers underwent losses because of the recession, Apple achieved rising profits and revenue during 2009. Some strategies for 2010 of the company are already known such as to augment a number of retail stores. Also it plans to launch a tablet PC. Apple has a lot of plans for 2010 that there are possible to achieve. AT&T is the only provider of the iPhone in the US that has brought both advantages and disadvantages as well. The Smartphone achieved big success in sales. It became known that the Smartphone traffic has augmented by 5,000 percent for the last three years. But still AT&T was criticized because the iPhone did not cover in major urban areas like New York City.

G. Research H. Organization Structure

CEO
Applicatio n

Finance

Operations/Sales

Retail

Marketing

Hardware

Software

This structure groups people on the basis of their common expertise or experience and resources. It enables the companys function to learn from another to become more specialised and productive. Moreover, this enables effective monitoring and efficient activities which consequently reduces costs and increases operational flexibility. As we can see in Apples case, where the executive management teams structure corresponds to this structure, a functional structure, a functional structure gives managers greater control of organisational activities and enables the company to avoid becoming too tall by creating several different hierarchies. By decentralising authority and responsibility as well as through a relatively flat hierarchical structure, Apple encourages its lower-level managers and employees to take the initiative and foster the companys strengths (i.e. Apples innovation, engineering excellence, and marketing skills). Moreover, decentralisation enhances the companys planning, decision making, and control processes due to better information availability.

I. Action Program J. Budget Every Department