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A- Case Summary Apple was by two college drop out students: Steve Wozniak and Steve Jobs with the motto of Think Differently. In the early 1980s, Steve Wozniak left the company and Steve Jobs hired John Sculley as the President of the company. After facing many failures, Apple launched its Macintosh computers for house hold users. In mid 1980s, Steve Jobs had to leave the company because of his controversial relations with the president. At that time John Sculley rejected the offer of Microsofts CEO, Bill Gates to license the Macintosh operating system to Microsoft. After this refusal, Gates developed DOS operating system and in late 1980s, the competition between DOS and Macintosh decreased Apples sale, workforce and resignation of John Sculley. So, Apples current CEO planned to purchase NextStep operating system of Jobs in order to improve the Macintosh operating system. In late 90s Jobs again became the CEO of the company and be started surprising relations with Microsoft by developing a Macintosh version of office software. Apple also took cost saving measures like streamlining the product line, production of printers. Steve Jobs brought Apples focus on two concepts of consumer series with the prefix I for internet like iMac, iBook laptop and professional with prefix power such as PowerMac desktop and PowerBook laptop series. Under Jobs, Apple again becomes the innovator of computer market. His leadership leads the company to USB and Firewire ports, introduction of iPod and iTunes website put Apple in the digital computing age.

Apple manages its business on geographic locations having offices in Americas, Europe, Japan and Asia Pacific. Apples sale is continuously growing. In the era of 2000, Apple opens 86 retail stores in USA and two international stores in Tokyo and Osaka which increases its sales. It introduces eMac line of cathode ray screen, but its most impressive and fastest growing market is of iPod line of digital music players and iTunes music store website. The three major competitors of Apple are Dell, Hewlett-Packard and IBM, however Apple also competes with Microsoft in software industry. Dell is the largest computer manufacturer with extremely low cost production strategy. Dell has entered the in the line of music against Apple by its Jukebox. Hewlett Packard is a big brand name and leading provider of technology. Apple combined with IBM enjoyed profit jointly but now Lenovo took over IBM and become a competitor of Apple. Apples new products like speech recognition program will help take industry into a new age of computers and is according to the companys motto and it is hoped that it will double the profit margin in the near future. Overall, Apple is continuously growing and its future seems bright. With the slight change in their strategies, they can become giants in technology industry.

B) SWOT ANALYSIS a) Strengths:

(i) Produce

innovative

products

by

using

innovative

technology (ii) Produce aesthetic / stylish products

(iii)They make diversified products

(iv) Customers of Apple computers are brand loyal (v) Have technology of interacting with computer using human senses (vii)They have virus free systems (vii) First company which adapt calligraphic font style (viii) Introduce USB and firewire ports for digital connection (ix) Make music website b) Weaknesses
(i) Apple has high manufacturing and inventory cost

(ii) Management is not stable

(iii)Has low market share in software industry

(iv) Majority of retail stores located in U.S.A.

4 (v) No compatibility options in their soft wares (vi)

Decline in sales of iMac

(vii)Less emphasis on marketing issues to create awareness for their innovative products c) Opportunities (i) Should expand on the basis of sales (ii) Should open retail stores in different countries
(iii)Should target government and educational institutions

(iv) Should make compatible soft wares (v) Should capitalize on the basis of virus free systems (vi) Should introduce the speech recognition program (vii)They should focus on customized products for customers (viii)Should start making their own microprocessor chips d) Threats (i) Merger & acquisitions of competitors (ii) High cost can be a limitation in future (iii) High market share of Microsoft Windows (iv) Competition increases in music downloading sites

C) Internal / External Factor Evaluation a) IFAS Internal Factors Weigh t

(out of1)

Rating
(1 - 5)

Weighted Score

Comments

Strengths (i) Produce innovative products Stable products to control (ii) They make diversified products (iii) Brand loyal customers (vi) Virus free systems (v) Produce aesthetic products (vi) Introduce USB and firewire ports Weakness (i) High manufacturing and inventory cost 0.05 3 0.15 0.05 2 0.10 0.10 3 0.30 0.05 2 0.10 0.15 4 0.6 0.10 4 0.40 shocks in different product markets High end customer 0.10 3.5 0.35 Good R&D efforts

satisfaction level High level of security Cutting edge, high end stylish products Enabling peripherals More focus on portable

development and R&D

(ii) Has low market share industry (iii) No compatibility options in soft wares 0.10 3 0.30 Extremely products (iv) Decline in sales of iMac (v) Less emphasis on marketing issues to create awareness 0.10 4.5 0.45 Low investment in 0.05 2 0.10 high end in software 0.15 4 0.6 Less awareness

marketing

TOTAL

1.00

3.45

b) EFAS Internal Factors Weight

(out of1)

Rating
(1 - 5)

Weighted Score

Comments

Opportunities (i) Should expand on the basis of sales 0.10 2 0.20

Emphasize on the sales of innovative products

(ii) Should target government and educational institutions (iii) Should capitalize on the basis of virus free systems (iv) Should introduce speech recognition program (v) Should focus on customized products 0.05 3 0.15 0.10 3 0.30 0.15 4 0.60 0.15 3 0.45

Find a propitious niche

Give advanced security

Give

new meaning to

technology

Cater the segment in a better way

Threats (i) Mergers & acquisitions of competitors (ii) High cost can be a limitation in future (iii) High market share of Microsoft (iv) Competition increases in music downloading sites 0.05 2 0.10 0.10 3.0 0.30 0.15 4.5 0.67 0.15 3.5 0.7

Rival companies become giants and good name

It is a question for Apple

Well positioned rival

TOTAL

1.00

3.47

D) Problem Statement How Apple can provide differentiated products with low cost in order to maximize its market share?

E) Alternatives (a) Continue without any change Advantages (i) Produce innovative products (ii) Virus free systems (iii) Brand loyal customers. (iv)producing diversified products Disadvantages (i)Low market share (ii) high operation and marketing cost (iii) less emphasis on marketing (iv) Competing against giants of the industry

b) Should capitalize on the basis of virus free systems Advantages Disadvantages

(i) Increase in sales of computers (ii) Market share will increase

(iii)Start competing microsoft on the (i) R&D cost will become higher

(ii) High

marketing

efforts

are

basis of virus free softwares.

(iv)

needed to create awareness. be

(iii)Low compatibility with other

New

segments

will

attracted.

systems .

c) Should introduce speech recognition program Advantages (i) More user friendly system (ii) Open new market horizons (iii) Increase diversity of products (iv) Capture new consumers (v) Helps in improving brand name Disadvantages (i) Cost will increase which affects the price of product (ii) Has to maintain big data dictionary for different words of different languages.

d) Go for strategic alliance for producing specific products (microprocessors) Advantages Disadvantages

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(i) Reduction in cost (ii) Reduction in product

(i) Contradiction between cultures of organizations (ii) Privacy of developing innovative products will be slightly affected

development process (iii) No compatibility issues (iv) Sharing of resources (v) Increased profit margin e) Go for customized products Advantages (i) Targeted niche will be highly satisfied
(ii) Understand the changing

Disadvantages (i) Cost will extensively increase (ii) Difficult to cater all requirements of customers along with

environment easily (iii) No new channel needs to be introduced for sales

innovation (iii) Chance of ambiguity will

increase which affects the brand name (iv) Chances of failure will increse

F- Best Alternative

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According to the current situation, the best strategy or alternative for Apple is: Go for strategic alliance G- Reason Its reason is that no doubt Apple is going fine now but for future growth it is must to create something new and stylish while keeping the cost optimized. This does not mean that Apple start making whole product with the collaboration, instead they have to go for alliance in making high cost products. This will help Apple in optimizing cost and development process with innovation. Somehow, a problem of organizational culture conflict will occur but it is manageable. Now a days, to sustain and compete in the market companies go for strategic alliances just to reduce the cost and gain high profit margins. So, Apple should go for this strategy. H- TOWS Analysis Internal Factors Strengths (S) (i) Produce innovative products (ii) Brand loyal customers (iii) Virus free External Factor Opportunities (O) systems SO Strategies Weaknesses (W) (i) High manufacturing cost (ii) No compatibility issues (iii) Less emphasis on marketing issues WO Strategies

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(i) Capitalize on virus free system (ii) Introduce speech recognition system (iii) Target govt. and educational institutions

Apple should emphasize more on expansion in order to increase market share by developing new innovative products and provide better after sale services to make customers more brand loyal.

Apple should emphasize on making new and focus on creating awareness among the customers.

Threats (T) (i) Merger & acquisitions of competitors (ii) High cost cab be a limitation in future (iii) High market share of Microsoft

ST Strategies Apple should have to keep its cost optimize by strategic alliance and make high cost products cheaper.

WT Strategies Apple should have to focus on producing new compatible products and focus on marketing its products.

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Raio Analysis 1. Liquidity Ratios Current Ratio Quick Ratio

Invetory to net working

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Apple,s Consolidated Projected 2005-2009

Period Ending Assets Current Assets Cash and Cash Equiva Short-term Investment Net Receivables

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Apple's Incom e St Projected 2005-20

Period Ending T otal R evenue C ost O f R evenue