Case Study of Apple Inc

Developing A strategicvision

SettingObjectives

CraftingStrategy to achieveObjectives And vision

ImprementingAnd executing

The strategy

MonitoringDevelopments,Evaluating Performance, andMaking corrctiveadjustments

Revise as needed in light of actual performance, changing Conditions, new opportunities, and new ideas

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

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?

Question 1

Components of Apple’s Strategy

Business 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

Efforts to build competitive advantage : Lower costs, different or better product, niche market

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

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

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.

• And to mobile phones (iPhone) ~ 2007.

• 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 —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.

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?

Question 6

Apple has highest while iRiver get lowest score Previously Sound quality, design, legal MP3 download

“Sony Music”iTunes & Legal download (Encrypt password)Best Designed hardware from aesthetic point of view

iRiver

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

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 7

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

Question 8

Factors lead to Apple’s weakness in computer industry Price and Compatibility Price – Hardware, software and software licensing Higher ownership costCompatibility – Different application Hugh amount of PC competitors around the world

Gartner's Preliminary U.S. PC Vendor Unit Shipment Estimates for 4Q09 (Thousands of Units)

Dell HP Apple Acer Toshiba Others0.00%

10.00%

20.00%

30.00%

40.00%

U.S. PC Market Shares 2nd Quarter 2007 and 2008

Q2 2007Q2 2008

Apple did a better performance com-

pared to Y-1 but could still penetrate only less than 10%

in the market.

Is Apple’s strategy in its computer business strong enough to compete successfully against Dell and HP?

Question 9

Apple Sandisk Creative Microsoft0%

20%

40%

60%

80%

MP3 player Market Shares in Units, Q1 2007 vs Q1 2008

Q1 2007Q1 2008

BrowsingEmailPhotosVideo & MusicGames

eBooks &

Newspapers

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?

Question 10

Better clear picture of

the succession

plan

Improving

its PC produc

ts

Developing their

strength

Plan to become a greener Apple

& Environmental

leader

What steps should Apple take to improve its corporate performance and to strengthen its position in its most important markets?

Question 11

Thank youFor

Your attention