A- Case Summary

Apple was by two college dropout students: Steve Wozniak and Steve Jobs with the motto of Think Differently. In the early 1980s, Steve Wozniak left the company and Steve Jobs hired John Sculley as the President of the company. After facing many failures, Apple launched its Macintosh computers for house hold users. In mid 1980s, Steve Jobs had to leave the company because of his controversial relations with the president. At that time John Sculley rejected the offer of Microsofts CEO, Bill Gates to license the Macintosh operating system to Microsoft.A f t e r t h i s r e f u s a l , G a t e s d e v e l o p e d D O S o p e r a t i n g s y s t e m a n d i n l a t e 1 9 8 0 s , t h e competition between DOS and Macintosh decreased Apples sale, workforce andresignation of John Sculley. So, Apples current CEO planned to purchase Next Step operating system of Jobs in order to improve the Macintosh operating system. In late90s Jobs again became the CEO of the company and be started surprising relations with Microsoft by developing a Macintosh version of office software. Apple also took cost saving measures like streamlining the product line, production of printers. Steve Jobs brought Apples focus on two concepts of consumer series with the prefix I for internet like iMac, iBook laptop and professional with prefix power sucha s P o w e r M a c d e s k t o p a n d P o w e r B o o k l a p t o p s e r i e s . U n d e r J o b s , A p p l e a g a i n becomes the innovator of computer market. His leadership leads the company to US Band Firewire ports, introduction of iPod and iTunes website put Apple in the digital computing age. Apple manages its business on geographic locations having offices in Americas, Europe, Japan and Asia Pacific. Apples sale is continuously growing. In the era of 2000, Apple opens 86 retail stores in USA and two international stores in Tokyo and Osaka which increases its sales. It introduces eMac line of cathode ray screen, but its most impressive and fastest growing market is of iPod line of digital music players and iTunes music store website. The three major competitors of Apple are Dell, Hewlett-Packard and IBM; however Apple also competes with Microsoft in software industry. Dell is the largest computer manufacturer with extremely low cost production strategy. Dell has entered the in the line of music against Apple by its Jukebox. Hewlett Packard is a big brand name and leading provider of technology. Apple combined with IBM enjoyed profit jointly but now Lenovo took over IBM and become a competitor of Apple. Apples new products like speech recognition program will help take industry into a new age of computers and is according to the companys motto and it is hoped that it will double the profit margin in the near future. Overall, Apple is continuously growing and its future seems bright. With the slight change in their strategies, they can become giant sin technology industry.

B) SWOT ANALYSIS
a) Strengths: (i) Produce innovative products by using innovative technology (ii) Produce aesthetic / stylish products (iii) They make diversified products (iv) Customers of Apple computers are brand loyal (v) Have technology of interacting with computer using human senses (vii) They have virus free systems (vii) First company which adapt calligraphic font style (viii) Introduce USB and firewire ports for digital connection (ix) Make music website b) Weaknesses (i) Apple has high manufacturing and inventory cost (ii) Management is not stable (iii) Has low market share in software industry (iv) Majority of retail stores located in U.S.A. (v) No compatibility options in their soft wares (vi) Decline in sales of iMac (vii) Less emphasis on marketing issues to create awareness for their innovative products c) Opportunities (i) Should expand on the basis of sales (ii) Should open retail stores in different countries (iii) Should target government and educational institutions (iv) Should make compatible soft wares

(v) (vi) (vii) (viii)

Should capitalize on the basis of virus free systems Should introduce the speech recognition program They should focus on customized products for customers Should start making their own microprocessor chips

d) Threats (I )Merger & acquisitions of competitors (ii) High cost can be a limitation in future (iii) High market share of Microsoft Windows (iv) Competition increases in music downloading sites

C) Internal / External Factor Evaluation

a) IFAS

B. EFAS

D) Problem Statement
How Apple can provide differentiated products with low cost in order to maximize its market share?

E) Alternatives (a) Continue without any change

Advantages (i) Produce innovative products (ii) Virus free systems (iii) Brand loyal customers. (iv) producing diversified products Disadvantages (i) Low market share (ii) high operation and marketing cost (iii) less emphasis on marketing

(iv)

Competing against giants of t h e industry

b) Should capitalize on the basis of virus free systems

Advantages (i) Increase in sales of computers (ii) Market share will increase (iii) Start competing Microsoft on the basis of virus free soft wares. (iv) New segments will be attracted. Disadvantages (i) R&D cost will become higher (ii) High marketing efforts are n e e d e d to create awareness. (iii) Low compatibility with other systems.

c) Should introduce speech recognition program

Advantages (i) More user friendly system (ii) Open new market horizons (iii) Increase diversity of products (iv) Capture new consumers (v) Helps in improving brand name

Disadvantages (i) Cost will increase which affects t h e price of product (ii) Has to maintain big data dictionary for different words of different languages

d) Go for strategic alliance for producing specific products(microprocessors)

Advantages (i) Reduction in cost (ii) Reduction in product d e v e l o p m e n t process (iii) No compatibility issues (iv) Sharing of resources (v) Increased profit margin

Disadvantages (i)Contradiction between cultures o f organizations (ii) Privacy of developing i n n o v a t i v e products will be slightly affected.

e) Go for customized products

Advantages (i) Targeted niche will be highly satisfied (ii) Understand the changing environment easily (iii) No new channel needs to be introduced for sales Disadvantages (i) Cost will extensively increase (ii) Difficult to cater all requirements of customers along with innovation (iii) Chance of ambiguity will increase which affects the brand name (iv) Chances of failure will increase.

F- Best Alternative

According to the current situation, the best strategy or alternative for Apple is:Go for strategic alliance

G- Reason
Its reason is that no doubt Apple is going fine now but for future growth it is must to create something new and stylish while keeping the cost optimized. This does not mean that Apple start making whole product with the collaboration, instead they have to go for a l l i a n c e i n m a k i n g h i g h c o s t p r o d u c t s . T h i s w i l l h e l p A p p l e i n o p t i m i z i n g c o s t a n d development process with innovation. Somehow, a problem o f organizational cultureconflict will occur but it is manageable. Now days, to sustain and compete in the market companies go for strategic alliances just to reduce the cost and gain high profit margins.