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Apple 2006

Ellen Suprun
Julie
OHalloran
Wojciech
Jagiello

Introduction
1.
2.
3.
4.

External Analysis
Internal Analysis
Strategy
Assessment and
Recommendations

Porters Five Forces


Threat of
Entry

Suppliers
High (components
suppliers)
Most components
are commoditized,
however Intel,
Motorola, IBM
become dominant,
that increases power
of supplier

Low
High capital investment
Commoditized market makes it difficult
to differentiate
Substantial dominance of Wintel
platform and low-cost large-scale players
(Dell, Gateway, HP, IBM)
Oligopoly market

Buyers
Low
PC and new applications High
End-users are mostly loyal
Imperfect knowledge about
price forming

Substitut
es
High
PCs are available in multiple
configurations, performances and price
ranges
Other firms offer as good products
Rivalry is very high

The Value Chain


Support Activities

Leadershi
p
Culture

Company
Infrastructure
Materials
Management

Information
Systems

Human Resources
Jobs and
Wozniak
John Sculley
Mike Spindler
Gilbert Amelio
Return of Steve
Jobs

R&D
Production
Customer Service
Apple have
Vertical

always
added value
through R&D
Failed R&D
project with
IBM

Integration
to
outsourcing
1998 to
reduced
costs

Marketing and Sales


Premium
Pricing
Brand
Loyalty
Retail
Outlets
Low
market
share in

Strengths
Technology and
R&D team
Investors
Organizational
culture
Brand Loyalty
Marketing
Partnerships

Weaknesses
Lack of compatible software 1984
Strategy change inconsistent with
the business model cutting costs
Failed investments
Leadership changes and succession
planning

Opportunities
iCloud
New markets- expansion into mobile
phones, tablets, BRIC countries
Large corporate market segment

Threats

Open architecture
Economic downturn
Competitors
Suppliers
Legal issues

Apples Competitive Strategy


Differentiation Strategy
Core competencies
Innovative Culture
Team spirit (people)

Marketing
Consumer Loyalty
Distribution network

Questionable moves
Mac Clones
Niche market
Strategy change & Leadership
problem
Partnership with IBM

Critical Success Factors


Leadership of Steve Jobs
Marketing and design
Innovation and new product
development

The role of vertical integration in


strategy
Simplicity and
quality

Complete user
experience

Benefits

Capturing values
on every step
Higher costs of production
and development

Not dependent
on innovation
Importance of
strong leader

Danger
s

Apple being
relatively
fragile

Preventing others from innovating

The iPod Phenomenon

Launched November 2001


Buy Listen - Manage
Sold 42 million iPods by 2005
75% market share
iTunes: a justified loss leader
2005 -39% Apple revenue

2006 to Date

Apple Computer-> Apple


2007, iPhone, Apple TV
2010, iPad
Ongoing Software Innovation
(iCloud)

Recommendations

Vision and leadership


Learn from mistakes
Corporate Social Responsibility
Stick to Core competencies
Design
Innovation and R&D

Any Questions?

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