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Introduction

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Business strategy of Apple Inc
Issues Analysis of Issues

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Recommendations

"We value originality and innovation and pour our lives into making the best products on earth.“ ---- Tim Cook

Apple Inc. (formerly known as Apple Computer, Inc.) is an American multinational corporation that designs and sells consumer electronics, computer software, and personal computers. Established on April 1, 1976 in Cupertino, California, and incorporated January 3, 1977, the company was named Apple Computer, Inc. for its first 30 years.

Apple has 364 retail stores in thirteen countries. The company is the largest technology company in the world by revenue and profit.   The word "Computer" was removed from its name on January 9. . 2007. and an online store. as its traditional focus on personal computers shifted towards consumer electronics. It is the largest publicly traded company in the world by market capitalization. more than Google and Microsoft combined. As of July 2011.

the company has received widespread criticism for its contractors' labour. However. the company had 60. Fortune magazine named Apple the most admired company in the United States in 2008. and in the world from 2008 to 2012. growing to $108 billion in 2011. its worldwide annual revenue in 2010 totalled $65 billion. and for its environmental and business practices.400 permanent full-time employees and 2.   As of September 24. .900 temporary full-time employees worldwide. 2011.

 “Apple designs Macs. and has recently introduced its magical iPad which is defining the future of mobile media and computing devices. Apple reinvented the mobile phone with its revolutionary iPhone and App Store. iWork. iLife. Apple leads the digital music revolution with its iPods and iTunes online store.” . the best personal computers in the world. along with OS X. and professional software.

” . software and Internet offerings. educators. “Apple is committed to bringing the best personal computing experience to students. creative professionals and consumers around the world through its innovative hardware.

Source : Wikipedia .

Year 2012 Launched January 19 March 16 Model iBooks Author iPad (3rd gen.) Apple TV (3rd gen.) Family Software iPad Apple TV Mac Pro MacBook Air MacBook Pro Retina Discontinued current current current current current current June 11 Mac Pro (Mid 2012) MacBook Air (Mid 2012) MacBook Pro (Mid 2012) MacBook Pro with Display MacBook Pro current Source : Wikipedia .

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41 15.292 81.578 3.119 2007 24.592 902.878 .183 33.386 24.15 9.258 936.013 2009 42.491 6.05 27.905 8.225 14.922 2010 65.005 881.249 25. cash equivalents and marketable securities 924.570 Total assets 116.235 2008 37.78 4.68 108.011 75.08 6.93 0 0 0 earnings per share: Basic Diluted Total cash.04 3.490 36.595 889.645 909.712 893.22 9.016 907.94 6.371 51.495 15.992 47.461 924.139 864.171 15.501 24.2011 Net sales Net income Earnings per common share: Basic Diluted Cash dividends declared per common share Shares used in computing 0 0 28.

501 24.183 33. 2011.756 51.490 36.392 3.502 15. cash and 2010 2009 2008 2007 5.100 Total cash.531 3.2011 Total long-term obligations (a) 10.100 39.531 27.347 Total equity shareholders’ 76.502 1.615 47.371 long-term 10.745 687 equivalents marketable securities Total assets Total 81.011 75. Long-term obligations exclude non-current deferred revenue.171 15.531 (a) The Company did not have any long-term debt during the five years ended September 24.878 obligations (a) Total liabilities 5.640 22.861 1.570 116.297 14. Source : Apple annual report 2011 .386 24.745 13.791 31.992 47.874 687 10.

50 -0.31B 54.23 14.79 -0.APPL Market Cap: Employees: Qtrly Rev Growth (yoy): Revenue (ttm): Gross Margin (ttm): EBITDA (ttm): Operating Margin (ttm): Net Income (ttm): EPS (ttm): P/E (ttm): PEG (5 yr expected): P/S (ttm): 591.85 0.97 1.600 RIMM 3.45B 0.604 HPQ 38.82B 0.05 -49.98 GOOG = Google Inc.41B 0.19 0.81B 0.73 19.00M -0.03 124.81B 0.34B 0.57 7.43 16.06 1.13B 42.00 5.36 40.08 5.24 1.44 55.44 0.33 N/A 42.55 14.11B 33.64 3.15B 106.31 11.24 148.500 INDUSTRY 592.10 N/A 0.34B 60.23 148.88B 16.04B 0.13 3.32 2.23B 2.83 0.82B 0.31 -1.44 55.16B 0.63 15.70k 0.04B 349.55 14. HPQ = Hewlett-Packard Company RIMM = Research In Motion Limited Industry = Personal Computers .73B 0.400 GOOG 218.35 43.

     Innovation Business strategy leverages ability to make own OS. hardware and software Heavy investments in R&D and marketing and sales – key to success of innovative products Delivery of third party digital content and applications through iTunes Store High quality sales and post sales service experience .

 Enjoys fanatical brand loyalty through creation of an Apple culture Creation of Apple Stores Retail stores in key cities Encourage customers to play and explore with technology that company offers    .

    Expert sales staff : Apple provides Apple Mac-expert retail floor staff to selected resellers' stores Strategic alliances with other companies to cobrand or distribute Apple's products and services Retail staff are helpful. and let their enthusiasm show without being brash or pushy . informative.

 Complete package : products complement and complete each other Apple is a young and ‘hip’ brand. Myriad of products Media buzz: with leaked rumors Apple keeps customers excited about new products    .

 Consistency : Consistently high quality products . Sales to educational institutes : creates customers even before they know it Outsourcing unpleasantness : concentrates on building a good product and outsources servicing etc.

hopes. imagination. simplicity and the removal of complexity from people's lives. dreams and aspirations. liberty regained. innovation.   focuses on the emotions Apple’s brand personality is about lifestyle. and power-tothe-people through technology. passion. .

everything being associated with the Apple name. .  The very successful Apple retail stores give prospective customers direct experience of Apple's brand values The company maintains a "monolithic" brand identity . even when investing strongly in the Apple iPod and Apple iTunes products.

Production difficulties Huge amount of cash • Declaring a special dividend to stockholders • Technology acquisitions • Market expansion • Large scale acquisition across geography Product’s prices • Loss of potential customers .

Samsung • Current content producers and distributors .Market shares on PC industry • Restricted group of customers • Too original (compatibility problems with some software) Scaling all operations to meet global demand • Meeting demand with flawless execution Rapid expansion in China and developing economies • Requiring incremental product improvements Next Product Form Factor: Apple TV • Competitors: LG.

Game Centre • Apple's social strategy to be determined • Complicated relationship with Facebook: integration into the iPhone iOS Focusing on innovation rather than litigation • Continue judging when to sue and when to settle • Need to stop patent madness .Steve Jobs was an emblematic figure Fixing Social Networking • Improvement in Apple’s social services -.Ping.

Issues IV.Recommendations •Fragility of the products •Strategy too much focused on the US market •Apple is far behind the leaders on the PC market •Patent infringement •Need for a charismatic leadership .SWOT (1) Strengths •Innovative products. innovative. high investment in R&D •Ubiquitous services in the music market: I-tunes.Analysis of Issues V.Business strategy of Apple Inc III. design •Diversified products and services for each segment •Globalized Weaknesses I. dynamic.Introduction II. I-tunes ping (social network designed for music addicts) •An “Apple community” •Strong image: young.

Introduction II.Recommendations •Price gets more weigh in customers’ decision •Growing complexity of products : people need to adapt •Consumers’ volatility & strong competition •Global Crisis .Issues IV.Analysis of Issues V.SWOT (2) Opportunities •Progress in technology •Smartphones market •Consumers want increased synchronization between products •New distribution networks •Increasing impact of design and innovation on consumers’ behavior •Emerging markets Threats I.Business strategy of Apple Inc III.

Introduction II.PESTEL Opportunities Politics Economics Socio-Demographics •Policies encouraging consumption (ex: go policies) •Increasing demand on the market •Increase of equipment rate •Consumer more experienced •Population growth •Casual use of Etechnologies •New techniques and new products •Increasing problems with electronic equipments •Environmental approvals •New rules in terms of music or videos downloads I.External environment .Issues IV.Analysis of Issues V.Business strategy of Apple Inc III.Recommendations Threats •Impact of taxes on sales •Differenciations between countries •Economic world crisis •Apple high prices despite the recession •No concerns with products provenance •New social needs •Internet power •Be reactive •Technology is evolving at a rapid pace Technologicals Environmentals Legals •Global warming: waste of electricity… • Non legal website to download music or videos .

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STARS QUESTION MARKS iPhone iPod iPad Mac OS X. "Mountain Lion" iTV APPLE CASH COWS iTunes DOGS Apple Mac .

20 0.20 0.20 0.Attractivenes s Factors X Cost Position Differentiation Response Time Financial Strength Human Assets Public Approval TOTALS Weight IPHON E IPAD IPOD IMAC LAPTO ITUNES P PRO ITV CES SOR 0.00 .10 0.10 6 7 7 6 7 6 6 6 6 6 6 6 5 6 6 6 1.20 6 7 7 7 7 8 6 8 7 8 7 7 5 6 6 6 6 7 7 8 6 7 6 7 6 5 5 5 5 6 4 4 0.

2 1 1 1 0.20 1.7 1.4 1.6 1.6 5.4 1.6 1.4 0.7 0.5 0.4 1.2 1.6 0.6 5 1 1.1 1 1.Weigh t Cost Position Differentiati on Response Time Financial Strength Human Assets Public Approval TOTALS IPHO NE IPAD IPOD IMAC LAP ITUNE PROCE SSOR TOP S ITV 0.00 6.4 1.6 1.6 0.20 1.6 6.2 0.10 0.3 1.4 1.2 0.20 1.20 1.2 1.8 0.6 0.10 0.2 0.4 1.4 0.6 0.1 1.4 0.6 0.4 0.2 1.8 0.2 1.6 5.6 7.2 1.2 7 1.6 0.7 0.6 0.7 .6 7.2 1.4 0.8 1.

25 6 7 4 6 7 2 5 7 6 2 8 7 4 7 7 5 0.Attractiv eness Factors Competiti on Bargainin g Power Substitut es/ New Entrants Economi c Financial Sociopolitical TOTALS Weight IPHO NE 8 8 IPAD IPOD IMA C 7 5 LAPTOPS ITUNES PROC ITV ESSO R 6 4 6 5 0.20 0.15 0.05 1.25 0.00 9 8 7 7 8 7 7 8 7 6 6 6 6 6 6 7 6 6 4 5 5 4 4 5 .10 0.

25 2 1.9 1.6 1.3 5.15 5.35 7.5 0.5 0.9 1.20 1.4 0.4 1.5 0.2 0.5 0.6 1 0.6 1.25 4.05 1.8 0.7 .25 1.25 0.8 0.Attractiv eness Factors Competit ion Bargainin g Power Substitut es/ New Entrants Economi c Financial Sociopolitical TOTALS Weight IPHO NE IPAD IPOD IMA C LAPTOPS ITUNES PROC ITV ESSO R 0.3 5 2 0.25 0.2 1.05 0.3 5 8.6 1 0.75 1.15 6 1 1.7 1 0.15 0.05 2 0.4 0.25 5.35 1.10 0.05 2 0.9 1.75 0.25 0.1 0.3 6.3 1.75 0.6 0.7 1 0.9 1.00 1.6 0.75 0.

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Business strength Industry attractivene ss Strong Average IPHONE ( Invest grow ) Week IMAC & (Selective investment) PROCESSOR S (Harvest / High Medium IPAD ( Invest & grow ) IPOD ( Invest & grow ) LAPTOPS (Selective investment) divest) Low ITUNES (Selective investment) ITV (Hasrvest /divest ) .

 Value chain analysis .

The most strategically relevant would be Legal Services.4 billion. . and others who do business with Apple. • Company’s hardware products are manufactured by outsourcing partners primarily located in Asia. 2010 and 2009. independent contractors. • Apple’s history is richwith cutting-edge technology development Custom components that are not common to the rest of these industries.3 billion in 2011. • Intellectual property is sacred to Apple. $1.8 billion and $1. The Company continues to develop new technologies to enhance existing products and to expand the range of its product offerings • Total research and development expense was $2. consultants. respectively. • Apple’s Business Conduct Policy and principles apply to employees. • the sole-sourced suppliers of components. • All individuals are expected to comply with Apple’s Business Conduct Policy and principles and with all applicable legal requirements.

and r edefined intuitive operation with the iPod Customer Service •Focus on providing innovative. Outbound Logistics •Competition and Trade Practices •Kickbacks •Endorsements •Side Deals or Side Letters Marketing & Sales •cannibalization of a loyal consumer base •Apple’s Principles of Business Conduct •Apple’s success is based on creating innovative.Production • Apple achieved unparalleled performance via 64-bit architecture. . Apple’s principles of business conduct define the way we do business worldwide. high-quality products and services and on demonstrating integrity in every business interaction. high-quality products and services and on demonstrating integrity in every business interaction •Increasing their customer base by delivering technically superior products and aggressively pursuing hardware and software updates. integrated distinctive styling with the multicolored translucen t iMac cases. •• •• •• Respect. Confidentiality.. Compliance. These principles are: •• Honesty.

 Meeting the demand – excess demand initially might add to products credibility but later tends to harm brand image PC share problemApple has restricted group of customers as its products are not compatible with those of other brands Concentrate on products which are doing well    .

  Flawless execution across supply chain Shortage of even one component can stall the production process Further rapid expansion in China and developing countries is required Market access more important that continuos innovation in these countries   .

 Selling to corporate clients Flexibility  .

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