5/14/2009

Apple Inc. Case Study

Key Success Factors

•Expertise in particular technology/research • Proven ability to improve production processes • Customer-need satisfaction • Continued innovation

Recommended Strategy

Spread out consumer confidence in Steve Jobs to the Apple team and stakeholders Develop and launch the stakeholders. MacBook Air Mini by 2nd quarter 2010 to encourage said consumer confidence in Apple.

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8%.5/14/2009 Environmental Analysis Internal Positive ● Brand Recognition ● Customer Loyalty ● Sterling Reputation External Positive ● Highly technological society ● BRIC countries’ continued growth Internal Positive Internal Negative ● Steve Jobs’ health concerns ● Stagnant Desktop line ● Lack of netbook product line External Negative ● Global recession ● Poor IP protection in emerging markets Five Forces Model Threat of SubstitutionLow • Cost of switching F products is high • Product loyalty is strong Supplier Bargaining PowerModerate • Only two CPU manufacturers (Intel/AMD) • Small pool of talent to choose from Competitive Rivalry-High • Rapid and frequent product innovation by large firms • Product technology copying • Large firms with disparate unique strategies Buyer Bargaining Power-Moderate • Infrequent Customer Purchases • Customer Switching dd costs are high g • Recession creates decreased demand Potential new Entrants-Low •High barriers to entry •Incumbent firms spend to keep out new firms Apple Notebook Sales on the Rise! 12000 10000 8000 6000 4000 2000 0 2001 2002 2003 2004 2005 2006 2007 2008 Mac percentage of revenue has increased 15% since 2006… …and iPod’s percentage of revenue has decreased 20. Notebooks Desktops D kt 2 .

5/14/2009 Product Life Cycles Introduction Growth Maturity Decline Product lifecycle curve iPhone iPod. Product life cycle curve: Time Constraints Industrial World Economic Slowdown Apple’s dependency on Steve Job’s health Technological Limitations h l i l i i i MP3 Market is shrinking rapidly iPod Market is saturated iPhone Cannibalizes part of iPod Sales Alternatives Do Nothing Pro: No increased risk Con: Continue being stagnant Reposition the iPod Pro: Increase the profit capability of a Cash Cow Con: Placing advertising money into a lost cause 3 . all models Mac desktops Sales NetBooks Early majority 34% Late majority 34% Laggards 16% Diffusion curve Early adopters 13.5% Diffusion curve: Percentage of total adoptions by category.5% Innovators 2.

4 .1 . 1) Regular Rules Don t Apply Don’t 2) Micromanager 3) Intense Secrecy 4) Concentrated.5 1 2 2 3 3 .8 .4 .2 . Hard-Fought Innovation 5) Communicated Zeal 6) Radical Opacity 4 .2 .5/14/2009 Alternatives Renovate the Mac desktop line Pro: More competitive with other desktops Con: Repositioning into a Market that is decreasing due to a global economic slowdown Create a netbook based on the MacBook Air platform Pro: Great for the psychology of the company and shareholders.5 .25 . and stakeholders Con: Expensive development in a recession Alternatives Matrix Alternatives 1 Key Success Factors Expertise in particular technology/research Proven ability to improve production processes Customer-need satisfaction Continued innovation 2 .75 4.5 .1 .6 .5 .85 3 2 3 3 4 1.25 2 2 2 1 1.25 2 3 2 2 2.0 Alternatives 1) Do nothing 2) Reposition iPod 3) Renovate Mac desktop 4) Create netbook based on MacBook Rating scale: 1: Black Hole 2: Flickering star 3: Shooting Star Steve Jobs = Apple Inc.3 .? Apple’s Success is Related to Steve Jobs’ Standards.8 .25 . Not Steve Jobs Himself.5 .4 1.75 1.75 Totals 1.

5 inch LCD Display No Internal Optical Drive Few Moving Parts • Marketed-to Customers: • Commuters • College Students • Educational Partnerships • Obama’s desire for more computers in school Cost Structure of MacBook Air Mini Component CPU RAM Case Hard Drive Total Cost Price Point Profit per Unit Price $80 $75 $125 $80 $360 $499 $139 • Component costs are based on current market costs with supplier bulk discount 5 .5/14/2009 Issue: Bridging the Gap Steve Jobs Dependency ? How? Steve Jobs’ Standards Macbook Air Mini 7.

109 MacBook Air Mini Development Cycle Research & Development • Negotiate with AT&T to allow for constant broadband access @ $34.000.000. Implementation Timeline Now June ‘09 MacWorld ‘10 June ‘10 Research and Development Testing Advertising Launch 6 .000. broadband access.000.000.00 $2.99.000.000.000.00 $10.000. Advertising Launch •Announce the •Hit the market in creation of the the end of MacBook Air second quarter Mini at 2010 MacWorld 2010.163 135. i.00 $4.00 $8.5/14/2009 Break-Even Analysis $16.000.000.000. •This will also allow for hype to build before the launch.000.000.00 $6.136 Profit 108. Testing • Ensure the unique specifications of the proposed mini will work.00 50000 100000 150000 200000 Units Sold 162.00 $12.000.000.e.00 $14.00 $0.

Daves. (2006).. 7 . Aquilano. New York: McGraw-Hill Irwin.. A. Intermediate financial management.. C..R.W. III. p pp Post letter in Apple stores. Strickland. McGraw Hill Lamb. A. Apple Web site.J. New York: McGraw-Hill Irwin. J. R. Chase. At MacWorld 2010: • Have Tim Cook or other appropriate corporate leader reveal MacBook Air Mini… not Steve Jobs. and the e-mail newsletter. E.. Jr. (2006).F.5/14/2009 Spread out the Confidence Before MacWorld 2010: • Move from “fallen hero” image to fellow team member. (2008). Operations management for competitive advantage. Jr.E. (2007). Ohio: Thompson SouthWestern. Gamble. Crafting and executing strategy: The quest for competitive advantage.F. Mason. Steve Jobs Apple Image: pp g Consumer Confidence •Publish a letter to employees and consumers commending comprehensive Apple team. Ohio: Thompson South-Western. C. R. Questions? References Brigham. J. Mason.F.J.B. N. Essentials of marketing. McDaniel.. Jacobs.A. Hair. P. Thompson.

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