Strategy

Business
STRATEGY APPLE
INC.

By Jayesh Goswami WMG 24- R No

242005 14-Jan-17 Your Name
 Content
Introduction
Mission, Goal, Stakeholder
External Analysis
Apples Business Strategy
Apples Product Portfolio
Business
Strategy

Apples Strategy Formulation

Analysis of industry competition- Porters 5-Force Model

Value Chains Apples Approach

Strategy implementation Thru- Schumpeterian Rent
Financial Analysis on Economic Profit- Apple Inc.
Key Success

By Jayesh Goswami WMG 24- R No 242005 2

 Introduction

Apple Inc. is an American corporation that designs and

manufactures computer hardware, software and other
consumer electronics

Apple was established on April 1st, 1976 by Steve Jobs,

Steve Wozniak and Ronald Wayne to sell the Apple I
personal computer kit.
Business
Strategy

Apple has developed a unique reputation in the consumer

electronics field.

Product Include the iPhone, iPad, MAC, iPod and Apple TV.

By Jayesh Goswami WMG 24- R No 242005 3

 MISSION, GOALS &
STAKEHOLDERS
Mission
Apple designs Macs, the best personal computers in the
world, along with OS X, iLife, iWork and professional software.
Apple leads the digital music revolution with its iPods and
iTunes online.

Goals and Objectives

Business

To provide customers with high-quality services with a

Strategy

knowledgeable sales staf

To bring best user experiences to customers through its
innovative products and technologies
To design and develop its own operation systems, hardware,
application software and services.
To increase sales volume by opening more stores, launching
new products, streamlining production and using smart
marketing tactics

By Jayesh Goswami WMG 24- R No 242005 4

Stakeholders
 External Analysis

Developing foreign . Buying power of Legal battle with

economies could cause consumers could Samsung over patents.
Apples production decrease as wages
facility in China to flatten. Apples unethical way
increase costs as of re-routing profits to
wages in China Aging population could mitigate American
increase. influence Apples taxes.
Government laws product design
regarding development.
environmental
Demographic Political/Lega
Global
concerns could afect
Apple. s l
Business
Strategy

Recent recession could Consumers Apples products nearing

cause buyers to spend environmental concerns end of product cycle; (Ex)
less and save more. could influence Apples iPhone and iPod
Apples products device manufacturing. nano/touch.
Rapid changes in
Consumers may value
technology could outdate
could be seen as out of more portable and Apples technology.
range for buyers faster devices; Apples diverse product
therefore, Apples line may become obsolete
devices could be seen (Macbook Air, Macbook
as outdated. pro,
Socio-
Economic Trends: Bigger screens Technological
iPad, iPad mini, iPhone,
cultural
and more functions iPod Touch, iPod Nano,
could outdate Apples Mac Mini, etc.).
products.

By Jayesh Goswami WMG 24- R No 242005 5

 Apples Business Strategy
Dominant Business type of diversification: 70% -95% -Revenue comes from a single business.
The dominant business: computer business. Supporting businesses: software and chips
Corporate businesses
Strategy Related constrained diversification.

Differentiation strategy.
Focuses on high quality and innovation.
Offers strong graphic performance with great design.
Business Level Creates brand loyalty.
Strategy
Innovation focuses on superior quality and innovation.
Business
Strategy

Follows a global strategy.

Promotes its products worldwide as a standardized product.
International Uses centralized control to tightly monitor and coordinate their pricing across different
Strategy international markets

Uses strategic alliances and joint ventures to enter markets.

Alliances with companies like HP and Nokia to promote products
Cooperative Joint venture with Nike to create the Nike+Ipod to further brand recognition in
Strategy other markets

By Jayesh Goswami WMG 24- R No 242005 6

 Business
Strategy

Se
Org tting
Ob aniz
jec atio
tive n
s s

Ev
Orgaluati
En aniz ng the
viro atio
nm nal
ent

Se
Qu tting
Tar antita
get tive
s

By Jayesh Goswami WMG 24- R No 242005

Aim
con ing i
the text n
pla Divis with
ns ion
al
Apples Strategy Formulation

Pe
An rform
aly anc
sis e

Ch
Str oice o
ate
gy f
7
Business Apples Product Portfolio
Strategy

By Jayesh Goswami WMG 24- R No 242005 8

 Apples Strategy Formulation
SWOT- Analysis
Strong brand image. ES
WEAKN
Customer loyalty. Dependence on the third party
S
software developers.
High customer switching costs.
N
STROResearch
Products and services
and Development.
G experience quality problems
Outstanding financial from time to time
performance. (inconsistency).
Frequent product introduction.
Business
Strategy

Intense competition in the

Increasing demand in
industry.
emerging foreign markets, for
example, China and India. Intellectual rights
infringement..
Retail store expansion. THRE
A
Political events, terrorism,
Increase lifestyle brand image. T
etc..

RT UNITI
OPPO
ES
By Jayesh Goswami WMG 24- R No 242005 9
 Apples Strategy
Implementation
1. Developing an organization having potential of carrying out
strategy successfully.

Formulate and
implemented Robust
2. Disbursement of abundant resources to strategy essential Strategy on Innovation
activities. and product
distinctiveness
Huge funds disbursed on
R&D

3. Creating strategy-encouraging policies

Huge funds disbursed on
Business
Strategy

R&D

4. Employing best policies and programs for constant

improvement Best HR Practices

Generous employee
5. Linking reward structure to accomplishment of results. benefits program

Empowered
leadership at all level
to ensure high
6. Making use of strategic leadership growth

By Jayesh Goswami WMG 24- R No 242005 10

 Analysis of industry competition- Porters 5-
Force Model
Supplier : Power Th Substitute
r
o f e at
Reliance on underlying, proprietary
Feature-rich smart phones
standards
- Few chip designers, one dominant Su - Alternate forms of entertainment
bst + Central hub for leisure, entertainment, information,
player e i tu and work
- High switching costs from suppliers
Pro t
+ Suppliers reliant on industry for
du Rivalry Threat
distribution and ct
consumptionB
arga Commoditized product, intense price competition
Powe ining
- Intense competition for large corporate contracts

(Sup
r t e n sity - Breakneck product/technology lifecycle pace
In - Products based on standardized components, difficulty in
plier
) R iv alry diferentiation
of e
it h in th Barg
a
w Pow ining
stry
Indu er
(Cus Buyers
New Entrants Threat to m
e r)
Business
Strategy

Economies of scale
- Outsource to OEMs for production Thr Buyer Power
+ Several large, entrenched players o e at Consumer dependence on computers, high
f N
with well established brand loyalty ew demand
- Convergence of mobile devices, - Varying needs, latest and greatest v. just good
mobile phone makers entering Ent enough
market ran
- OEM forward integration s t + Difficulty of switching to/from proprietary
platforms

By Jayesh Goswami WMG 24- R No 242005 11

 Apples Value Chain
A greener Apple Reduction in energy use in production and transportation to match trend
in green business.
Strong cash position allows the firm to internally finance expansion and development without
cost of capital.

Selective hiring process Find and attract talent

Generous employee benefits program Retain industry-leading talent

M
ar
gi
Research & Development expenditure increased about 66%

n
Patent filing protection of important inventions and innovations in the US and worldwide

Positive relationships with suppliers EICC member, working to improve working conditions, created and
enforces a Supplier Code of Conduct. 1
n- ts
Business

o
1- uc
Strategy

Automated Economical/ f ul rod

Get a Mac Ads p p
receiving systems Utilizes OEMs Stylish Packaging
Various direct/indirect el n nty y
H o
Eye-catching e a nt
Reduce facility economies of favorable comparisons s i c r. arr l d r a e
footprint and s scale packaging takes up
n iu rv e W b ui ar for
against competing e s v e e i d d w e
pace Offshore less space and weight, G s, -
of b
reducing shipping costs
products, selling on l e and pro nd sue t- es
requirements. production to p t e u
o ssu
quality and image. is

M
Delegate raw save money on and costs of disposal. Ap ion rty Ex d or e i
Retail a n

a
t p d a -
Apple Stores/ ac t an In in

r
materials costs of build. ts .
Locations/Flagship er 1 s d rm

gi
Authorized Retailers t c
e e n e
acquisition Offer Internal design Stores Living ads In ith de t e f g io e t

n
supervision to OEM Design and working to maintain w clu ec t d ma ltat o d
with strong branding
partners who carry conceptualize standards over In rot ins e i su t
presentation of products
and image promotion. P ga tiv on ion
out acquisition products Secretive & Selective a osi C tat
internally for sale. p ee sul
Unveilings Creation
Direct shipment ship Fr n g.
products from China to
of hype and co illin
suspension around b
consumer to minimize
product launches.
inventory buildups in
costly locations.

By Jayesh Goswami WMG 24- R No 242005 12

 Strategy implementation Thru-
Schumpeterian Rent Schumpeterian rents are earned by innovators and occur during the period of time between
the introduction of an innovation and its successful diffusion.

Apple announces the iPhone.

IPhone
4,5,6,7

iPhone 3GS.
The introduction of the Macintosh

iPode
iTunes is introduced
The iMac
Apple Computers is born
Innovation
Business
Strategy

1976 1984 1998 2001 2003 2007 2010 2016

Time Line
 Financial Analysis on Economic Profit-
Business Apple Inc.
Strategy

By Jayesh Goswami WMG 24- R No 242005 14

 Key Success Apple Inc.

Apples Success Key & Conclusion

1. Rethink the Need for Advertising

a. Product Placement & Positive Reviews about the product.
2. Avoid Price Wars by Emphasizing the Unique Value Proposition
a. Compete again uniqueness which take apples product far away from rivalry
3. . Keep Marketing and Products Simple
a. Apples ads and marketing convey isnt specifications and features, but rather how
the product can change life and make it better of the customer.
Business
Strategy

4. Know Audience and Talk to Them in Their Language

a. Apples doesnt talk in the engineering language, they talk what customer
understand like, edge to edge glass, retina display, LED backlighting
5. Design a Better Customer Experience
a. Apples product features and design leaves memorable experience to the
customers, which create differentiation in the market.
6. Build a Community of Users.

By Jayesh Goswami WMG 24- R No 242005 15

Business
Strategy

By Jayesh Goswami WMG 24- R No 242005 16