OPERATIONS MANAGEMENT CASE PRESENTATION

Case: Strategic Planning at Apple Inc.

Group - 5
012/2 014/2 021/2 044/2 053/2 062/2 063/2 064/2 Avishek Basu Mallick Dave Chintan Hanu Prateek Sameer Agrawal Sujith Kumar S. Vikram Veer Singh Vishal Shetty Yash Agarwal

INTRODUCTION
Apple Inc. (Apple) along with its subsidiaries designs, manufactures and markets mobile communication and media devices, personal computers, and portable digital music players, and sells a range of related software, services, peripherals, and networking solutions The Companys products and services include iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and Mac OS X operating systems, iCloud

THE BEGINNING

Apple was established on April 1, 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne
Apple 1 was its first product and was hand built by Wozniak Incorporated in 1977. Ronald Wayne sold his shares Apple 2 was introduced in April 16, 1977 and was made compatible with office.

Apple 3 was introduced in May 1980

Apple went public as Jobs was convinced that GUI was the way forward

THE BEGINNING (CONT)

Apple LISA (1983) was the first PC with GUI. High price led to its failure Macintosh (1984) launched with aggressive promotion saw decent sales With advent of printer, it sales improved despite high price

With the failure of bulky Mackintosh Portable (1989), Apple introduced Powerbook in 1991
Weighed 7.5kg and 12 hr battery back up and was a success Introduced several low end products from 1989 and experimented with digicams, music players, tv appliances; None of which were successful

Apple Lisa

THE SCULLEY FACTOR & WHATS NEXT?

1983 - Jobs hires John Sculley to serve as Apple's CEO

1985 - Jobs was asked to resign by the board of directors

Jobs sells his 6.5 million shares in the company for $70 million Jobs then acquired the visual effects house, Pixar for $5M He also went on to found NeXT Inc.

RETURN OF JOBS

1996 - NeXT company beat out Be Inc.'s BeOS in its bid to sell its operating system to Apple
July 9 , 1997 - , Gil Amelio was ousted as CEO of Apple November 10, 1997 - Apple introduced the Apple Store New direct sales outlet was also tied to a new build-to-order manufacturing strategy

1997 - Steve Jobs announced that Apple would be entering into partnership with Microsoft

IPOD

October 2001 - Apple introduced its first portable digital audio player
5 gigabyte player capable of storing around 1000 songs Array of products including the Mini (now discontinued), the iPod Touch, the Shuffle, the iPod Classic, the Nano, and the iPhone As of March 2011, the largest storage capacity for an iPod was 160 gigabytes

ITUNES
Apple signed the five major record companies to join its new music download service the iTunes Store.

Unlike other fee-based music services, the iTunes Store charges a flat US$0.99 per song (or US$9.99 per album).
Users have more flexibility than on previous on-line music services. For example, they can burn CDs including the purchased songs (although a particular playlist containing purchased music may only be burned seven times), share and play the songs on up to five computers, and, of course, download songs onto an iPod. The iTunes Music Store was launched in 2003 with 2 million downloads in only 16 days. Apple has since released a version of iTunes for Windows, Initially, the music store was only available in the United States due to licensing restrictions, but there were plans to release the store to many other countries in the future.

APPLE RETAIL
Traditional retailers

Retail chain: Sears

Resellers: MacMall, MacZone & Best Buy Poor support, low margin & less market share

Online Store(1997) www.apple.com/store Customized products Revenue USD12 million in a month

APPLE RETAIL
Physical Stores(2000): Hired Ron Johnson, VP Merchandising @ Target. Investment : USD 700 million Brand Awareness & Customer solutions Newspaper Campaign: 5 down. 95 to go Result: End of 2005, 103 outlets 3 international(London, Tokyo & Osaka) Revenue: USD 1.185 billion, Profit : USD 39 million Created rift with Resellers

APPLE RETAIL APPROACH

Researcher Alex Frankel undercover project Competitive advantage people management Employees: Brand Loyalty Passionate Training Selling techniques through podcasts

3 step sales process: position, permission and probe

Average gross sales per sq. foot: $4,000 Treatment of Employees (eg: Gap, Starbucks etc.) Abundance of employees at every retail store Extra focus on togetherness

Business Card distribution

APPLE CHANNEL CONFLICT

Earlier products were sold through resellers Apples advent into retailing created fear Focus will be more on Apples own stores Tom Santos, MacAdam Computers claimed: CD / DVD Combo drives hard to obtain Shipment of new models to resellers later Undermining the authenticity and integrity Faulty accounting & control system Unfair fixation of the upper limit of faulty goods

APPLE CHANNEL CONFLICT

Santos filed a multimillion-dollar lawsuit under the Federal Rackateer Influenced and Corrupt Organizations Act

Accusations of fraud, breach of contract, unfair competition, false advertising and charges
MacTech Systems & Computers International followed with lawsuits in February 2003 Thomas Armes, Elite Computers claimed US$5mm in compensation

On June 4, 2004, Santos filed and amendment complaint claiming more than US$70,000 as part of unpaid currencies owned and another US$7.5mm in damages
On August 26, 2004. the Santa Clara superior court ruled that there was sufficient evidence to proceed with charges By December 2004, there were 5 lawsuits However, by 2006, Apple had reached out-of-court settlement with all plaintiffs

APPLES COMPETITORS : HP
Hewlett-Packard Company (HP) is a provider of products, technologies, software, solutions and services to individual consumers, small- and medium-sized businesses (SMBs) and large enterprises, including customers in the government, health and education sectors. Its operations are organized into seven segments: Services, Enterprise Storage and Servers (ESS), HP Software, the Personal Systems Group (PSG), the Imaging and Printing Group (IPG), HP Financial Services (HPFS), and Corporate Investments. Services, ESS and HP Software are reported collectively as a broader HP Enterprise Business. In April 2010, HP completed its acquisition of 3Com Corporation. In July 2010, it completed the acquisition of Palm, Inc. In September 2010, it acquired Fortify Software. In September 2010, it acquired 3PAR Inc., a global provider of utility storage. In October 2010, it acquired ArcSight, Inc., a security and compliance management company. In December 2011, it acquired Hiflex Software GmbH.

APPLES COMPETITORS : MICROSOFT

Microsoft one of the biggest competitors of Apple competed in computer devices & home entertainment.
Top products of Microsoft: Operating system Windows & Microsoft Office. Windows had different versions ranging from 3.1, 95, 98, Me, Vista. These products were at the top of computer products and had 90% market share.

To compete with Apple iPOD Microsoft came out with Zune, a product that provides online music, video and podcast download. It came in two versions a hard drive based and one flash memory based.
Microsoft also introduced window powered smart phones that will be competing with iPhone from apple.

Microsoft took lead by introducing gaming console Xbox in late 2001 that gave them an edge in this field since apple is not having any such Product.

APPLES COMPETITORS : NOKIA

A Finnish telecom giant focused on wireless and wired telecom solutions. Nokia had was one of the largest telephone manufacturers of cell phone in the world with market share of 38 percent in 2008. Produced cell phones for almost every segment. Nokia wanted to attract Nintendo Game Boy users by incorporating cell phones functionality on its cell phone system. This move was not fruitful because the buttons for phone were difficult to be utilized by the cell phone. Nokia also entered the smart phone segment but could not do much.

APPLES COMPETITORS : SONY

SONY was one of the largest media conglomerates, leading manufacturer of electronics, video communication and video game consoles. In 1994 SONY entered the video games console market with release of Play station that was succeeded by Play station 2 in 2000 and Play station 3 in 2006. A revolutionary product Play Station Portable gave SONY a lead in the gaming industry this console used to work on UMD.

In 2007 SONY introduced Rolly a 1GB Digital Music player with colored light that flashes as the download takes place. The player also had flapping wings that moved to the tunes of music.
SONY is also in process of developing dog shaped robot AIBO and humanoids called QRIOS.

THANK YOU
(Any Questions?)