Case Study of Apple Inc

Question 1
How well has Steve Jobs done as Apple’s CEO? Has he done a good
job of performing the five tasks of strategic management discussed in
Chapter 2? Why or Why no? What grade would you give him?
Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Monitoring
Crafting Developments,
Developing Strategy Imprementing Evaluating
Setting
A strategic Objectives
to achieve And executing Performance, and
Objectives The strategy Making corrctive
vision And vision adjustments

Revise as needed in light of actual performance, changing

Conditions, new opportunities, and new ideas
 Components of Apple’s Strategy
Efforts to build competitive
advantage : Lower costs, different
or better product, niche market
Key Functional
Strategies
- R&D, technology, engineering strategy
-Supply chain management strategy
-Manufacturing strategy
-Sales,marketing,promotion,and distribution
Strategies
-Human resources strategy
-Financial strategy
Planned, proactive moves to
outcompete rivals (better product
Design, added features, improved
Quality or service, better e-
commerce capabilities, wider
product lines, and so on
Business
Strategy
Moves to respond and react to
changing conditions in the macro-
environment and in industry and
competitive conditions
Scope of geographic coverage
(local, reginal, multinational, or
global)
Collaborative partnerships and
strategic alliances with others
 Question 3
• Does it make good strategic sense for Apple to be a competitor in the
computer, digital music player, and mobile phone industries?

– Used to be just in the personal computer and software industry.

– Utilized its strengths and expanded its business to the entertainment industry.

• Starting from digital music players (iPod) and online music service (iTunes) ~ 2001.
• Are the value chain activities that Apple performs in computers, digital music
players, and mobile phones very similar and “compatible” or are there very
important differences from product to product? Which of the three products lines
• And to mobile phones (iPhone) ~ 2007. —computers, digital music players, or mobile phones—do you think is most
important to Apple’s future growth and profitability? Why?
– The marketplace trend seems to be destroying all the boundaries of each industry.
• More than just a digital music player.
– More enhanced tool for full-motion videos and data storing.
• More than just a mobile phone.
– Taking the role as a digital camera, a carry-on PC for memory storing
and internet, and an audio device.

– The value chain activities are not much differences from product to product.

– Instead, Apple has been able to command a premium in the market and gain above
average returns from utilizing the similar and “compatible” of its value chain activities
across the products.

– Competitive advantages, especially in its mobile phones products.

– The most important industries for Apple’s future growth and profitability.
 Question 4
• In which industry—computers or digital music players—is competition
more intense?

– Computer industry is seem to be more intense for Apple as it can gain only
8.5% of the total market shares.

• Dell Inc. (23.4%)

• Hewlett-Packard (16.8%)

– Apple is used to be just in the computers and software industry.

• Expanded its business to the digital music players (iPod) industry.

– Occupying 71% of the total market shares.
» SanDisk (11%)
» Microsoft (4%)
» Creative (2%)

– Contributed a significant revenue to Apple Inc.

 Question 5 (1/2)
• What does a competitive strength assessment reveal about Apple, as
compared to the leaders in the personal computer industry?
– Design and innovation oriented.
– Greater horizontal and vertical integration.
– R&D oriented.
– Everything ready device.

• Use the methodology in Table 4.4 to support your answer. Among these
competitors, who enjoys the strongest competitive position?
– Dell Inc. enjoys the strongest competitive position.
– Apple’s operating in a fast-cycle market.
– Firm’s capabilities that contribute to competitive advantage aren’t shielded
from imitation.
– Where imitation is very fast and inexpensive.
– Apple’s products and services have more restriction than its rivals.
 Question 5 (2/2)
• Who is in the weakest overall competitive position?
– Acer.
– Most of its revenue (63.8%) was rely in the mobile phone industry.
– But mobile phone industry that have very intense competitive.
– With Apple and Nokia as major players.

• Has Apple’s strategy resulted in a substantial competitive advantage over

its rivals in the computer industry? What is the basis for whatever
competitive advantage it has?
– Innovation plays a dominant role in the competitive dynamics in fast cycle
markets.
– Stronger brands value.
 Question 6
What does a competitive strength assessment reveal about Apple, as
compared to other main players in the digital music industry? Use the
methodology in Table 4.4 to support your answer. Among these digital music
player competitors, which company enjoys the strongest competitive position?
Who is in the weakest overall competitive position?
Has Apple’s strategy resulted in a substantial competitive advantage over its
rivals in the digital music player industry?
What is the basis for whatever competitive advantage Apple has?
 Apple has highest while iRiver get lowest score
 Previously Sound quality, design, legal MP3 download
 “Sony Music” iRiver
 iTunes & Legal download (Encrypt password)
 Best Designed hardware from aesthetic point of view
 Other Apple’s competitive advantages
 Marketing
 Not talk about its features and technology, but better life
 Best Replacement in TV shows

Movie : "Chloe"

 Steve Jobs
 Question 7
What is your assessment of Apple Computer’s financial performance the past
three years? (Use the financial ratios in Table 4.1 of Chapter 4 as a guide in doing your
financial analysis.)
 Question 8
What accounts for Apple’s noteworthy success in the markets for mobile
smart phones and digital music players, but its overall weak showing in the
computer industry?
 iPod, iPhone and iPad
 Mobile phone industry
 “Just work” (Best industrial and user
interface)
 Customers who had the problems with
technology
 Basic communication (mobile voice and
simple sms)
 Advanced mobile phone ≠ user interface
 Synchronization
 Digital music players
 Aesthetics and fashion
 innovative approach to music download
(copyright) 99 cents/song
 Cheap songs with expensive music
players
 Gartner's Preliminary U.S. PC Vendor Unit Shipment Estimates for 4Q09
(Thousands of Units)

 Factors lead to Apple’s weakness in computer industry

 Price and Compatibility
 Price – Hardware, software and software licensing
 Higher ownership cost
 Compatibility – Different application
 Hugh amount of PC competitors around the world
 Question 9
Is Apple’s strategy in its computer business strong enough to compete
successfully against Dell and HP?
U.S. PC Market Shares 2nd Quarter 2007 and 2008
40.00%
Apple did a better
performance
compared to Y-1 but
could still penetrate
30.00% only less than 10%
in the market.

Q2 2007
20.00% Q2 2008

10.00%

0.00%
Dell HP Apple Acer Toshiba Others
 Question 10
Does Apple’s strategy for its iPod business seem capable of allowing the
company to remain on top of the digital music player industry over the next 5
years?
MP3 player Market Shares in Units, Q1 2007 vs Q1 2008
80%

60%

Q1 2007
40% Q1 2008

20%

0%
Apple Sandisk Creative Microsoft

eBooks
& Video &
GamesPhotos
Email
Browsing
NewspapMusic
ers
 Question 11
What steps should Apple take to improve its corporate performance and to
strengthen its position in itsDevelopi
most important markets?
ng their
strength

Plan to become
a greener Apple
&
Environmental
leader
Improvi
ng its PC
products

Better clear
picture of the
succession
plan
 Thank you
For
Your attention