Management 449

APPLE CASE PRESENTATION

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5 Star Group
Consultant Team: Lianne Petty Monica Lee
Evan Campbell RuchitaShah Yazmin
Briseno
AGENDA
Company Background
Vision & Mission
Goals, Objectives & Strategies
Business Model
Company Performance
Management Characteristics
SWOT & Analysis of Core
Competencies and Capabilities
Industry and Competitor Analysis
Major Issues/Problems
SARS Analysis
Recommendation & Implementation Plan
HISTORY & MILESTONES

Apple was
founded – PowerBook is iTunes is
introducing released created
Apple I

Apple Lisa iBook is

is developed released

1976 1978 1979 1984 1991 1998 1999 2001 2003

Apple II is launched iMac is released

iPod is developed

Macintosh is introduced
HISTORY & MILESTONES
MARKET SHARE ( 2007 )

Personal Computer
Industry
•

MP3 Player Smartphone

Indus try Industry

27%
73%
LOCATIONS

North
America Japan and
the Middle
and Canada East

Italy , United
South America and Africa Kingdom , and
other parts
of Europe
BUSINESS DESCRIPTION

Providing consumer electronics, including personal and portable

computers, mp3 music players, and cellular phones; services such as
iTunes and software applications. Market analysis
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PRODUCT & SERVICE LINE •Go ahead an replace
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iMac and example text.
iPod
Macbook

Product
iTunes & s
Other iPhone
Services

Products
 VISSION & MISSION

Vission Statement Mission Statement

Apple’s “business strategy

“Introducing leverages its ability,
innovative, high- through the design and
quality consumer development of its own
electronics to the operating system, hardware,
masses” and “impressive and many software
performance and applications and
leadership in technologies, to bring to
innovation into the its customers around the
future” world compelling new
• products and solutions with
superior ease-of-use,
seamless integration, and
innovative industrial
design.”

Source: Thompson, Strickland & Gamble. (2010). Crafting and Executing Strategy.
GOALS , OBJECTIVES & STRATEGIES

Goals Objective Strategie

s s
Attain double- Introduce innovative
digit growth in products at
Take market share terms of unit competitive prices to
from competitors such shipments through the market to
as Dell and Hewlett- 2010 and then high convince investors
Packard single-digit and consumers that
growth through Apple offers a unique
2012 product over the
competition.

Synchronize the Ease of compatibility

digital electronics Resolve MobileMe Web between the iPod,
and computer market application failures iPhone and iTunes via
to 0% by 2009 the App Store

Maintain funds Pour large amount of

Achieve superior allocated to the R&D operating budget into
technological budget while research & development
innovation establishing a $0 ▪ Closely guard secrets
long-term liability behind company’s
balance technology.
 BUSINESS MODEL
OPERATION
SUPPLIERS MANUFACTURING DISTRIBUTION
REVENUE

ONLINE STORES PARTNERSHIPS

MICROSOFT WINDOW USERS ( iTUNES ) AT & T ( iPHONE )

BY PHONE RETAIL DIVISION - APPLE OWNED STORES

NORTH AMERICA

INTERNATIONAL DISTRIBUTION

JAPAN
UNITED KINGDOM
JAPAN
ITALY

EUROPE
AFRICA
CANADA
U.S.
MIDDLE EAST SOUTH AMERICA

CUSTOMERS
CUSTOMERS
 MANAGEMENT VALUE PROPOSITION

Values Customer Benefits

Superior value through

Top management leadership diversified and innovative
built on the founders’ products
“spirit and standards”
Exceptional quality in each
“A business discipline product
the younger Jobs had”
Customer satisfaction
and ease-of-use for each
purchase
Friendly and knowledgeable
retail sales team

Source: Thompson, Strickland & Gamble. (2010). Crafting and Executing Strategy.
 FINANCIAL PERFORMANCE

FY 2007 FY 2007 FY2007 FY2007

Marketing pla Market analysis
Industry
This Apple
is an example SanDisk Microsoft •Dell
This is an example
Indicators •text text.
Average
. (AAPL) (SNDK) (MSFT) (DELL)
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Debt to Equity it with0.08your own
0.00 0.25 0.00 it with your own
0.17
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Return on
34.70% 24.06% 3.95% 45.23% 58.19%
Stockholder's Equity
Business
Net Profit Margin 19.80% 14.56% 5.03%strateg
27.51% 4.50%

•This is an
Current Ratio 1.90 2.36 3.61 example1.69
text. 1.12

Source: Google Finance

STRATEGIC PERFORMANCE

•A customer survey by PC Magazine concluded that Apple

iPods ranked significantly higher than other brands in terms of
overall quality, sound quality, ease of use, and overall reliability.

•The Industrial Designers Society of America presented gold

awards to the iPhone, MacBook Air, and Apple Wireless
keyboard while it gave the iMac a silver award.

•In 2007, the iPhone was named theTime Magazine invention of

the year.

•Apple Inc.’s continues to expand into geographic segments

including North America, South America, Europe, Africa, the
middle east, and Japan.

•Excellence in providing both “profitability and power values” to target

users
 CUSTOMER SATISFACTION SCORES ( MP3 PLAYERS ) - PC MAGAZINE
READER SURVEY

Industry Apple SanDisk Microsoft

MP3 Players
• Average (AAPL) (SNDK) (MSFT)
• Apple 8.3 8.7 8.6 8.3

Microsoft 8.1 8.7 8.3 8.2

SanDisk 7.5 8.0 7.5 7.9

Toshiba 7.6 8.5 8.1 8.0

ource: PC Magazine customer survey, October 31, 2007, www.pcmag.com.

 MANAGEMENT BACKGROUND
Michael Scott
resigned as
1981 president ;
became Steven
vice Jobs became chairman of theMarkkula
Mike board became president and CEO
chairman of
the board .

1983
culley replaced Mike Markkula as Apple ’ s president & CEO

1993 Spindler replaced John Sculley

Michael Gil Amelio became CEO

1996

2000
Jobs announces himself to be the permanent CEO of Apple
MANAGEMENT CHARACTERISTICS

Culture & Values Philosophy

Encourage teamwork in Steve Jobs’ vision to become

technological change by an employee’s own
fostering imagination
Company growth can only be
A stylish product appeal maintained by pushing for
and ease- better product designs
of- use takes center stage
All strategies to emphasize a
Flexibility in meeting customer view point
increasing customer demands
QUALIFICATIONS OF TMT

Qualifications of TMT

Chief Executive Officer ( CEO )

Oversees entire operation
Implements board decisions and crafts
strategy

Chief Financial Officer ( CFO )

Supervises, analyzes, and reviews financial
data and performance
Prepares budgets and monitors expenditures
and costs

Chief Operations Officer ( COO )

Manages supply chain, sales activities,
service and support in all markets and
countries
ORGANIZATION STRUCTURE

CEO Board
Steve Jobs of
Directors

Operatio iOS
COO
Retail ns Software Hardware Legal
CFO
Timothy Cook Peter Oppenheimer

Global Product Software

Communicati Marketin Engineer Design
on g ing

Apple America & Consumer & iPhone &

Mac OS Internet
Online Asia Education Pro Engineering Services iPod
Store Regions Application Marketing
 SWOT ANALYSIS

Strengths Weaknesses Opportunities Threats

•Innovative •Battery life •Product “halo” •Consumer

technology & (iPods) effect preference for

industrial design •1st generation •Expanding more
•High quality
product quality consumer demand customization
consumer •Inability to meet for stylish •Cutbacks in

products product demand products back-to-school

•Superior ease-of- • •Increasing
Concern with spending
use health of Steve younger •Struggling U.S.

•Seamless Jobs generation and economy

integration •Overloaded corporate need for•
Maturing U.S.
•Competitive servers on portable and easy-
cell phone market
prices cellular networks to-use products •
Purchasing
•Excessive •Increasing
•Global sales & power less in
bargaining power worldwide cell developing
distribution
•
of suppliers phone growth rate markets
•Lack of product •
•
variety •
SWOT EVALUATION & CORE COMPETENCIES AND CAPABILITIES

In Favor Core Competencies

Brand loyalty and repeat
customers Being the industry leader in
introducing products with a
Progressive technological unique concept
change offers more
potential to set market Offering seamless integration
trends
Offering a complete
Internal strengths offset entertainment experience
weaknesses
Offering something beyond
Product awareness heightens quality: style
market share potential
INDUSTRY ANALYSIS
Apple Inc. is in the personal computer industry.

Dominant Economic
Features
Rapid pace of
technological change
Large market size with
increasing market growth
rate

Demand-supply conditions

Source: SIC Code 357101, Computers-Electronic-Manufacturers; NAICS Code 334111, Electronic Computer Manufacturing
INDUSTRY ANALYSIS

Driving Forces
Diffusion of
technological know-how
across more companies
Changes in who buys the
products and how they use
it
Changes in cost and
efficiency
Globalization of
operations

Source: Worlds United Online Community http://www.worldsunited.net

Technology News http://www.tgdaily.com
INDUSTRY ANALYSIS

Key Success Factors

Strong network of retailers

Manufacturing capability to
meet demand

Product variety to meet

varying consumer needs
Price/quality excellence

Source: Worlds United Online Community http://www.worldsunited.net

Technology News http://www.tgdaily.com
INDUSTRY ANALYSIS

Industry Trends

Blu-ray disc compatibility

High definition quality
Quad-core processors
Unlimited storage space

Source: Worlds United Online Community http://www.worldsunited.net

Technology News http://www.tgdaily.com
 FIVE FORCES ANALYSIS
Suppliers Scale: 1 (least favorable) – 5 (most
favorable)
2
Substitute
Products
3

Rival Firms Buyers

2 5

Overall Industry
Ranking
New Entrants

5 3.4
Source: Laptoping. http://laptoping.com/pda-vs-laptop.html
 STRATEGIC GROUP ANALYSIS

High

Apple
Price / Qua

Toshiba Dell
HP
lity

Acer

Low
Few Many

Product Variety
WEIGHTED COMPETITIVE STRENGTH ASSESSMENT
             

(Rating Scale: 1 = very weak; 10 = very strong)              

                       

Apple Dell HP Acer Toshiba

   

Key Success Importanc Strengt Scor Strengt Scor Strengt Scor Strengt Scor Strengt Scor
Factors / e Weight h e h e h e h e h e
Strength Rating Rating Rating Rating Rating
Measure 0.1 7 0.7 8 0.8 8 0.8 8 0.8 5 0.5
Manufacturing
capability to
Technological 0.2 8 1.6 7 1.4 7 1.4 6 1.2 5 1
meet
know-how
demand
Product variety 0.3 4 1.2 7 2.1 6 1.8 5 1.5 5 1.5
to
meet varying
consumer needs
0.15 9 1.35 8 1.2 8 1.2 5 0.75 6 0.9
Strong network
of
Financial
retailers 0.1 5 0.5 4 0.4 8 0.8 9 0.9 4 0.4
resources
Price/quality 0.15 8 1.2 6 0.9 5 0.75 4 0.6 4 0.6
Excellence

Sum of 1 . 00                    
importance
weights

                       
Weighted overall strength
  rating
                 
41 6 . 55 40 6.8 42 5 . 75 37 5 . 75 29 4.9
GENERIC STRATEGY ANALYSIS
Type of Competitive Advantage Being
Pursued
Lower Cost Differentiation

A Broad
Cross-Section Toshiba
of Buyers Acer Apple

Dell
Market
Target

HP
A Narrow
Buyer Segment Durabook
(or Market Peewee PC
Niche) Alienware
STRATEGIC ISSUE 1

Issue Instability of top management and

concerns over a successor CEO

Cause Deteriorating health of Steve Jobs

Impac A new vision , relatively

t inexperienced leadership , and loss
of innovative edge

Impac
t
STRATEGIC ISSUE 2

Issue Lack of product variety

Cause Product excellence concentrated in

few products

Cause Inability to acccelerate pursuit of

innovation

Loss of sales to competitors and

Impac inability to meet consumer
t preferences more effectively
STRATEGIC ISSUE 1 — ALTERNATIVE 1
Issue 1: Instability of top management and concerns over a
successor CEO

Alternative 1 : Steve Jobs should return to his prior position as Chairman of the
Board , with the current Chairman of
the Board to succeed as the new CEO .

Pros
Steve Jobs to still perform
oversight of strategic
operations
Steve Jobs to still pursue his
vision and guide the new CEO
in doing so.
Cons
A new and less powerful vision
Lack of a powerful visionary
and role model
Weaker corporate discipline

An internal company member who is Steve Jobs‘ health may continue

already aware of the corporate to detiorate
culture
Apple‘s stock might suffer due
Steve Jobs‘ presence will continue to uncertainty
to enhance Apple‘s reputation

Prevents a major organization

change
 STRATEGIC ISSUE 1 — ALTERNATIVE 2
Issue 1: Instability of top management and concerns over a
successor CEO

Alternative 2 : Steve Jobs should step down and appoint an experienced executive
from the Asia market to serve as the new CEO .

Pros Cons

Apple’s response to globalization

to become more explicit
Expand presence and increase
sales in Asia
New vision and strategic plan
Better international supplier
relations
Better ability to control demand
Better profit margins and
operating results
New vision could be
inconsistent with existing
corporate values
Extensive training to
familiarize new CEO with
corporate culture
Aggressive moves by competitors
to move supplier favor towards
them
An operational perspective may
lose sight of an overall
strategic approach
STRATEGIC ISSUE 2 : ALTERNATIVE 1
Issue 2: Lack of product variety

Alternative 1 : Divide PC product line by consumer type ( student , instructor ,

corporate , professional ) and provide at
least 4 PCs per product line .
Pros Cons
A more competitive product line
Technological know-how would
An appeal to a broader customer require large amounts of
base investment in R&D

New customers can produce sales in Financial resources to invest in

other product lines via the “halo” new plants and production
effect facilities

Provides ease-of-use depending Increase in supplier bargaining

upon the skill of the user power

The quantity demanded can be met Increase in payroll costs due to

more effectively the hiring of more employees
STRATEGIC ISSUE 2 — ALTERNATIVE 2
Issue 2: Lack of product variety

Alternative 1 : Customers should be allowed to order personal computers that fit

their lifestyle , application needs and budget .

Pros Cons
Large initial start-up costs for
More avenues to explore innovation R &D
An enhanced product line to adapt R&D may not result in a broad and
to changing consumer successful range of features
preferences to be offered
Increased strength of competitive Inability to manage costs and
advantage based on offer competitive prices
differentiation
Restructuring of manufacturing
Increased profits for higher- process
priced orders to enhance assembly efficiency
Opportunity to move towards a Increased supplier bargaining
best-cost strategy power
TRADEOFF ANALYSIS
Problem 1: Concerns over Steve Jobs’ health Scale: 1 (least favorable) – 5 (most
favorable)

Profitability Supplier Relations Reputation

Total Weighted
(50%) (20%) (30%) Score
Alternative 1: Switch
Steve Jobs, CEO, with 4.1
Chairman of the Board 4 3 5

Alternative 2: New CEO

from Asia to be 5 4
appointed
4 4.5 Recommendation

Problem 2: Lack of Product Variety

Alternative 1: Divide
product line by 3 2 3.1
4
consumer type and
increase product
offerings

5 3
Alternative 2: Custom
orders
5 4.6 Recommendation
RECOMMENDATIONS

Short-Run Long-Run

Discussion among the Board of Steve Jobs to continue close

Directors to propose and approve a supervision of Apple by mentoring
major management change the former CEO

A press release to inform Market the new CEO as the face of

stakeholders and maintain market Apple
reputation
Revamp supply chain by using Just-in-
Research and development to Time (JIT) and lean systems to
accommodate various demand assemble and ship computers on a
preferences timely basis

Production and marketing of the new Monitoring long-term profitability by

products manage costs from an operational
perspective

Offering value-added features

unmatched by competitors
IMPLEMENTATION PLAN

2008
January Board of Directors meeting and appointment of new CEO; investment in R&D

June Network with suppliers from the Asian market

CEO to formally establish a new vision

December
Advertise customization features availability
2009
January Prepare sales budgets and use ABC accounting to price products

June Begin shipment of orders to establish market share

Continue R&D to offer features that keep up with industry trends

2010
January Monitor financial and strategic performance

June Continue to partner with suppliers

Appoint a new Chairman of the Board should Steve Jobs’ health continues to
worsen