Apple Inc.

Core Competencies & Competition Strategies
Abdullah Adlouni  Hee Myoung Park  Amanda Pereira  Sujin Rye  Jeffrey Trinh

Apple’s History
 1976: Founded by Steve Jobs and Steve Wozmiak  1977: Incorporated as Apple Computer, Inc.  1980: Became public and PC industry leader  1984: Introduced Macintosh

 1985: Jobs resigned and founded NeXT
 1997: CEO, Gilbert Amelio, bought out NeXT and Jobs returned

 2001: Opened first retail stores and released the iPod

Apple’s History
  2003: Introduced iTunes Store 2006: Began producing Intel-based computers and market cap surpassed Dell 2007: Renamed as Apple Inc. and introduced the iPhone 2010: Released the iPad 2011: Introduced the iTouch, Jobs died, and Tim Cook became CEO 2013: Released iTunes Radio

   

Apple Today

“Thirty years ago, Apple introduced the Macintosh with the promise to put the creative power of technology in everyone’s hands. It launched a generation of innovators who continue to change the world. This 30-year timeline celebrates some of those pioneers and the profound impact they’ve made.”

Apple Today
 CEO: Tim Cook

 No. of Full-time Employees: 80,300
 Market Cap: $485.23 billion  Direct Competitors: Samsung, Google, HP

Overview: SWOT Analysis
STRENGTHS
•Customer loyalty •Expanding closed operating system •Brand reputation/recognition •Retail stores •Strong marketing and advertising teams

WEAKNESSES
•Relatively high price •Incompatibility with different OS •patent infringement

OPPORTUNITIES
•Growth of tablet and smartphone markets •iTV launch •The new provider of application processors •Create a budget smartphone for a younger age and the developing market. THREATS •Rapid technological change •Price pressure from Samsung over key components •change in management •The growth of windows and andriod OS

Strengths
Dominance of Apple & Samsung Global handset industry share (%)
100% 50% 0%

 Customer loyalty combined with expanding closed operating system
 apps, software and products that are interlinked and support each other

 Brand reputation/recognition  Retail stores
Apple Samsung All other

RATIO OF PROFITS TO MARKET SHARE 3.12% Apple (2013 Q1 market share was 18% with 57% profit share = 0.57/0.18) 1.30% Samsung 0.41% All other

 Strong marketing and advertising teams - Emotional branding

Weaknesses
 Relatively high price compared to its competitors devices
 Incompatibility with different OS  Boot Camp (software)  iOS jailbreaking  Patent infringements

Opportunities
  

Growth of tablet and smartphone markets iTV launch The new provider of application processors
Samsung: the only provider

Create a budget smartphone(iPhone 5C) for the developing market and younger age

Threats
 Rapid technological change  Price pressure from Samsung over key components  Change in management  Android OS, Windows phone growth

Overview: Porter’s 5 Forces

Threat of New Entrants
Global R&D spending rankings, 2013

Threat of Substitutes

Bargaining Power of Suppliers

Bargaining Power of Buyers

Rivalry Among Existing Firms

2013 Market Shares

Financial Ratio Analysis
 What are we analyzing?
 Apple’s tangible financial resource – Cash  Ability to invest internally and retain human capital – Revenue & Operating Income

 Growth over time – Assets

Cash
Cash (in 000s)

16 14 12 10 8 6 4 2 0 Cash 2011 2012 2013 2011 2012 2013

Revenue & Net Income
Revenue & Net Income
180,000,000 160,000,000 140,000,000 120,000,000 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 0 Revenue (in 000's) Net Income (in 000's) 2011 2012 2013

2013 2012

2011

Asset Growth
Total Assets

250000000 200000000 150000000 100000000 50000000 2011 0 Assets 2011 2012 2013 2012 2013

Value-Chain Analysis
 Definition: A strategic analysis of an organization that uses value creating activities
 Used to determine a firm’s competitive position – creating value that exceeds the cost of production  Value is the amount that buyers are willing to pay for what a firm provides them and is measured by total revenue

Value-Chain Analysis

Apple’s Strategy
“Apple’s company strategy is to leverage its unique ability to design and develop its own operations system, hardware, application software, and services to provide its customers new products and solutions with superior ease-of-use, seamless integration and innovative industrial design.”

General Administration
 Strong Core Values
 Strong executive team
 Tim Cook, CEO  Angela Ahrendt, SVP of Retail and Online Stores

Technology Development
 Apple continues to be a leader in innovation and brand management  Heavy investment into R&D  Ability to retain resourceful human capital

Procurement

Marketing & Sales

 Utilizes big data analysis to appeal to consumers  Possesses exclusive distribution channels through highend retail fronts  Maintains partnerships with large brands to promote brand awareness

Discussion Questions
1. What part of the value chain is most important to Apple? And what can they do to improve on it? 2. What can Apple do to strengthen customer loyalty? 3. Is Apple really innovative relative to its competitors?

Recommendations
• We would recommend that Apple focus on: Research and Development In Store Retail Experience Expand Market Presence