INTERNATION ISLAMIC UNIVERSITY ISLAMABAD

STRATEGIC MANGEMENT
Implication of strategies of SM on APPLE Company

Submitted to:

Submitted By:
Contents
Acknowledgment.........................................................................................................................................4
EXECUTIVE SUMMARY:................................................................................................................................5
INTRODUCTION:..........................................................................................................................................6
Vision Statement:........................................................................................................................................7
Vision Statement of APPLE......................................................................................................................7
Mission Statement:.....................................................................................................................................7
Mission Statement of APPLE....................................................................................................................7
Values..........................................................................................................................................................8
PESTL Analysis for Apple..............................................................................................................................8
Political Factors.......................................................................................................................................8
Economic Factors.....................................................................................................................................8
Social Factors...........................................................................................................................................8
Technological Factors..............................................................................................................................9
Legal Factors............................................................................................................................................9
SWOT analysis for APPLE.............................................................................................................................9
Strengths.................................................................................................................................................9
Weaknesses...........................................................................................................................................10
Opportunities........................................................................................................................................10
Threats...................................................................................................................................................10
SWOT Matrix.............................................................................................................................................10
Strategies:..................................................................................................................................................12
Integration Strategy:..............................................................................................................................13
Generic Strategy:...................................................................................................................................13
Intensive strategy:.................................................................................................................................13
Diversification strategy:.........................................................................................................................14
Porter’s Five Forces Model........................................................................................................................14
Porter’s Five Forces Model for APPLE....................................................................................................14
External Audit:...........................................................................................................................................15
EFE Matrix.............................................................................................................................................15
Competitive Profile Matrix (CPM):.............................................................................................................16
CPM for APPLE.......................................................................................................................................16
Internal Factors Evaluation Matrix:...........................................................................................................17
IFE Matrix..............................................................................................................................................17
SPACE matrix:............................................................................................................................................18
Interpretation:.......................................................................................................................................19
BCG Matrix:...............................................................................................................................................20
BCG Matrix for APPLE............................................................................................................................20
Interpretation:.......................................................................................................................................21
Internal External Matrix:...........................................................................................................................21
IE Matrix for APPLE................................................................................................................................22
Interpretation:.......................................................................................................................................23
QSPM matrix:............................................................................................................................................23
Grand strategy Matrix:..............................................................................................................................25
Market segmentation of Apple:.................................................................................................................26
Demographical bases (age, family size, life cycle, occupation)..............................................................27
Geographical bases (states, regions, countries)....................................................................................27
Behavior bases (product knowledge, usage, attitudes, and responses)................................................27
Psychographic bases (lifestyle, values, personality)..............................................................................27
Marketing Segmentation on the basis of 4P’s:..........................................................................................28
Product:.................................................................................................................................................28
Price:......................................................................................................................................................28
Place:.....................................................................................................................................................28
Promotion:.............................................................................................................................................28
POSITIONING MAP:...................................................................................................................................28
Apple Organizational Structure.................................................................................................................29
INCOME.....................................................................................................................................................30
Interpretation:.......................................................................................................................................31
INCOME STATEMENT.................................................................................................................................30
FINANCIAL RATIOS:....................................................................................................................................31
NET WORKING CAPITAL RATIO:.............................................................................................................32
Interpretation:...................................................................................................................................32
Current Ratio:........................................................................................................................................32
Interpretation:...................................................................................................................................32
Quick Ratio:...........................................................................................................................................32
 Interpretation:...................................................................................................................................33
Account Receivable Turnover:...............................................................................................................33
Interpretation:...................................................................................................................................33
Account Receivable Turnover:...............................................................................................................33
Interpretation:...................................................................................................................................34
Inventory Turnover:...............................................................................................................................34
Interpretation:...................................................................................................................................34
Sales to working capital:........................................................................................................................34
Interpretation:...................................................................................................................................35
Total Debt Ratio:....................................................................................................................................35
Interpretation:...................................................................................................................................35
Debt to Equity:.......................................................................................................................................35
Interpretation:...................................................................................................................................36
Gross Profit Margin:..............................................................................................................................36
Interpretation:...................................................................................................................................36
Net Profit Margin:..................................................................................................................................36
Interpretation:...................................................................................................................................37
Operating Income..................................................................................................................................37
Interpretation:...................................................................................................................................37
Findings:....................................................................................................................................................37
Conclusion…………………………………………………………………………………………………………………………………………….38
References…………………………………………………………………………………………………………………………………………….39
Acknowledgment

We would like to express our special thanks of gratitude to our teacher Mam Anam. She gave us
a golden opportunity to do this wonderful project of Strategic Management on APPLE
Company. She also helped us to complete our project .By doing this project we came to know
about so many new things about the company and our subject. We are really thankful to her.
Secondly I will also like to thank our parents and friends who helped us a lot in finalizing this
project within the limited timeframe and ALLAH almighty who always remain very kind to us.

Kainaat Marriam 7306-FMS/MBA/S16

Samina Mukhtar 7308-FMS/MBA/S16
Muqeet Muntaha Fatima 7310-FMS/MBA/S16
Zainab Riaz 7303-FMS/MBA/S16
Rukhsana Fazal 7302-FMS/MBA/S16
EXECUTIVE SUMMARY:

Apple is a technology company, which designs, produces and sells goods of the Computer,
Music and Mobile-phone Industries. It is differentiated by its brand-perception and
identification. Apple Inc.’s short-term goals are currently increasing the sales of the just
launched iPad. In the long-run, Apple aims for the top of the market, becoming the number one
leader. Apple Inc. has incorporated numerous features that are unique and well known in the
market today. We consider that there are several Apple products with several appealing features
such as: iMac, iPod, iPhone and iPad. These products represent a revolutionary era for the
development of Apple. By placing such products in the market, Apple Inc. has attracted a lot of
customers in one way or another. Highly advanced technology, simplicity and design, and the
sense of luxury are the main features integrated in these products. Moreover the comfort and
convenience that these products provide are very crucial. “Think Different” One of the main
reasons which inspired me to choose Apple Inc. is its unique, simple and luxurious image that
Apple has created in the market over the years. “Think differently” which is an inspiring motto,
made us believe that simplicity and creativity combined with luxury can lead to a successful and
profitable company, such as Apple. Another component that we found to be challenging for us
was to understand Apple’s goals, objectives and their secret of being successful. A very
important fact about Apple products today is that these products are globally spread. This has
created among us the idea that Apple products are no longer luxuries but real necessities due to
the technological developments. Moreover, what has motivated us most to select Apple Inc., is
the way we relate ourselves with its products. Each of us being an Apple consumer has built
trustworthiness relationship with the products that this company offers. Owning an iPod or
iPhone today definitely will make your life easy and simple.
INTRODUCTION:

Apple Inc. is an American multinational organization located in 1 infinite loop, Cupertino,

California 95014, in the middle of the Silicon Valley. It is focused on designing and developing
the personal computers, other related software products, and the electronic products such as MP3
players and iPods. Apple main products are iMac, iPod, iPhone, and its latest advanced product
is iPad, which is on the verge of creating another revolution after iPhone. Apple was founded in
1976 and since then Apple has been leading the way in innovating new products, however it has
encountered numerous ups and downs since then. Apple produced the first ever extremely
successful personal computer. It has been always on the forefront of innovating new products;
however it has often struggled to maintain the hold on the market share in the product line.
Lately, Apple has transformed its image from an inventive computer manufacturer to a fully-
fledged consumer’s electronic company.
Apple has to be one of the greatest success stories of all time. The beginnings of Apple started
with Wozniak assembling a simple built computer machine. It was in the summer of 1971
Wozniak 21 and Jobs 16 were introduced to each other by a mutual friend Bill Fernandez.
Wozniak had shown Jobs his simple built computer machine and this impressed Jobs to the point
Jobs believed he could sell it for a profit. It was here they would form a strong friendship
because they not only shared a passion for computers, but because they were both known as
outcasts and for the first time they had a great understanding, admiration and respect for each
other ability, personality and intellect. When the project became too big for the bedroom they
moved the project into Jobs family's garage, it was on a huge wooden work bench that served as
their first manufacturing base. The computers were hand built by Wozniak and first shown to the
public at the Home brew Computer club. After selling a number of the machines Apple was
established on April 1, 1976 and went public on December 12, 1980. Apple has maintained its
great success with its ability to understand what the consumer wants before the consumer even
knows what they want; Apple effectively creates wants by their constant creative innovation and
unique design which is stylish, user friendly and affordable. They have also been able to create a
brand in the high technology world just as Chanel has in the fashion world. People can easily
recognize an apple whether it's the I-Pod, the I-Phone, the Mac Air or the I-Pad. It has become a
product that defines one's identity in how they desire to be seen by society that is a person who is
highly innovative, intelligent, stylish and apart of the in crowd. This is pure marketing genius.
This marketing genius of Apple has seen this company outperform beyond the business world's
expectations. While so many companies are struggling to break even in the current recession
Apple is getting stronger by the day.
Vision Statement:
It is especially important for managers and executives in any organization to agree on the basic
vision that the firm strives to achieve in the long term. A vision statement should answer the
basic question, “What do we want to become?” A clear vision provides the foundation for
developing a comprehensive mission statement. It strives to make its customers masters of the
products they have bought. Apple doesn't simply make a statement. It lives it by ensuring that its
employees understand the vision and strive to reach it.

Vision Statement of APPLE

"Man is the creator of change in this world. As such he should be above systems and structures,
and not subordinate to them."

Mission Statement:

“What is our business?” is synonymous with asking the question “What is our mission?” An
enduring statement of purpose that distinguishes one organization from other similar enterprises,
the mission statement is a declaration of an organization’s “reason for being.” It answers the
pivotal question “What our business?” A clear mission statement is essential for effectively
establishing objectives and formulating strategies (David, 2011).
Mission Statement of APPLE
“Apple designs Macs, the best personal computers in the world, along with OS X, I Life, iWork,
and professional software. Apple leads the digital music revolution with its iPods and iTunes
online store. Apple reinvented the mobile phone with its revolutionary iPhone and App Store,
and has recently introduced its magical iPad which is defining the future of mobile media and
computing devices.”

Values
Apple Values are the qualities, customs, standards, and principles that the company believes will
help it and its employees succeed. They are the basis for what they do and how they do it. Taken
together, they identify Apple as a unique company.
These are the values that govern Apple’s business conduct:

 Empathy for Customers/Users

 Aggressiveness/Achievement
 Positive Social Contribution
 Innovation/Vision
 Individual Performance
 Team Spirit Quality
 Excellence Individual
 Reward Good Management

PESTL Analysis for Apple

Political Factors
As stated in news Apple Inc. has reportedly obtained 52% of its business from outside US in
2007. Due to the bad international relations, wars and terrorism might influence Apple Inc. in a
huge way, and also the organization has no control over these factors. Apple Inc. manufactures a
number of its parts and products from outside the US, like Czech Republic, Ireland, China,
Korea and Cork. The bad political relations between US and the other world have bad outcomes
for the Apple.

Economic Factors
By the global economic crisis had huge impact on Apple Inc, The inflation rate went high and so
did the unemployment rate in the country, and since Apple Inc. products were viewed as luxury
products, the customers started pending less on them. US dollar value keeps fluctuating, and thus
again which have a bad impact on Apple Inc. products, however the company has purchased
itself foreign currencies and thus, the economic effects on the company are minimized. Thus,
Apple Inc. revenue has increased in the global market.

Social Factors
Throughout the history of Apple Inc., two factors have been on the forefront of Apple Inc.
products, the quality and the design of the product. Thus, globalization plays a very important
role in Apple’s products. As the world cannot be imagined without the gadgets, thus Apple
products have marked their presence on the international market. Also, as the purchasing power
of the common has risen in various markets across the world the purchasing of luxury products
have gone up, for e.g. the iPhone, iPods and the latest technology iPad. Possessing these items is
considered as status symbols in many societies which have also increased the sales of Apple Inc.
products. Another big social influence to Apple Inc. products is the rapid growth of the music
industry, which have increased markets over the cyber space as well. The main virtual music
store is the iTunes. Thus, in all Apple products have benefitted from the social factors as it has
begun defining a modern individual lifestyle.

Technological Factors

Apple Inc. has invested largely in its product research and development field and thus, Apple
products are at the top of the new innovative products ranking. Apple Inc. has invested largely in
its product research and development field and thus, Apple products are at the top of the new
innovative products ranking. The technology has been fast changing in the world and the market
for it has become gigantic, which has added to more and more competition and thus, as soon as
technological change are concerned the product life cycle has been shortened drastically, which
the Apple Inc. takes the advantage of by introducing newer products in the market, which
ultimately lead the market.

Legal Factors

Nokia has filed various lawsuits against Apple Inc., claiming the violation of 13 additional
patents by iPhone, iPad and iPod touch, this apart from US complains covering 24 Nokia patents.
Also, in China Apple Inc. has been fighting the battle for its right to the iPad trademark.

SWOT analysis for APPLE

SWOT analysis stands for Strength, Weakness, Opportunity and Threat for a particular
organization, which can help in formulating a strategy for its business and can also help in
analyzing its internal environment (Strengths & Weakness) and external environment
(Opportunities & Threats).
Strengths

The first and foremost strength of Apple Inc. is its technological edge over its
competitors. IPhone have turned out to be a great success and has been associated with status in
many of the countries. ITunes has turned out to be a wonderful revenue generating source and
since it also sells with its own tool i.e. the iPod, thus, revenue has multiplied for Apple Inc.
Another strength for the organization is that for every software that Apple Inc. produces, it
introduces its hardware with it too, which leads to its expertise in both the industries. Apple Inc.
products are classified as luxury items, thus its products provide enough room for it, so that the
competitor products are no longer a competition. The another strikingly advantage over
competitor’s products, is the design of the Apple products, and which are also simple to use. The
brand loyalty of its product and its super dedicated research and development department are
also its major strengths.

Weaknesses
Weaknesses are the disadvantages that are hindrance in obtaining the business goals for
the organization. The poor relationship with the market than Microsoft is surely a disadvantage
to Apple Inc. Another point could be that the products introduced by Apple Inc. have very short
life cycle, which concludes that the research and development department has to be constantly
maintained, which requires huge capital. Apple Inc. has very low presence in the advertisements,
and also it has very small market occupation as compared to its main rival Microsoft. Thus, all
this leads to the fact that Apple Inc. gets very less business from its home country US, and major
of its business is from outside the US.

Opportunities
Opportunities can affect both the present as well as the future condition of an
organization. Apple Inc. opportunities are the introduction of more and more PC viruses, on
which Apple Inc. can capitalize on. The second opportunity is the population of the world is
growing at a rapid pace and thus, this opens the front for many new markets, also the purchasing
power of a common man has increased drastically, who can be pursued or impressed to buy the
luxury Apple products. The online sales of the organization are increasing and also, the bonds
and the partnership with the other organizations have been on the rise in the past few years.
Products such as iPhone have create a new set of potential customers altogether which can be
targeted in the future i.e. the young population who have a craze for any new technology gadget.

Threats
In the past few years, many competitors have come up for Apple Inc., especially in the
field of laptops, like Dell, Sony, HP, and Toshiba. Another threat could be that many of the
customers have started downloading the music for free instead of purchasing at iTunes. The
product expensiveness is itself a threat to the product, as substitutes at a lower price are always
available. Long lasting recession could also be a threat to its products. Windows 7 software is
gaining more market place after vista flopped and last but not the least, the technological
advances that have been taking place every single day, is a big threat to Apple Inc.

SWOT Matrix

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix is an important

matching tool that helps managers develop four types of strategies: SO (strengths-opportunities)
Strategies, WO (weaknesses-opportunities) Strategies, ST (strengths-threats) Strategies, and WT
(weaknesses-threats) Strategies.

TWOS Matrix for APPLE

Strengths Weaknesses

 Market leader in a range  Products not priced

of products and services
 Highly strong brand
image
 Financial strength
 Innovative and highly
sophisticated supply
chain
 High profit margins
 Large and loyal
customer base
competitively
 Narrow product range
compared to the rivals
 Products and services
incompatible with the
other brands

Opportunities SO WO

 Increasing demand for  Increase the focus on  Release a range of

the mobile gadgets and
technology
 Product diversification
 Make compatible
products
mobile devices, their
manufacturing and
marketing to profit from
1their increasing demand.
Focus on portability of
laptops; release models
products priced
competitively to attract
middle class customers.
 Create a larger product
range and enter into new
product areas and serve
 new customer segments.
that provide better
portability like
detachables.

 Use its financial clout

and the strength of brand
image to diversify into
new product areas and
generate sales and profits.
This will also help it
benefit from its existing
customer base and
customer loyalty.

 Partner with other

brands to produce
compatible products and
develop mutually
beneficial relationships.
This will help hack into
other brands’ customer
base

ST WT
Threats
 Develop a larger range  Release a range of
of products to grow its competitively priced
 Increased competition
customer base and reduce products to attract middle
 Rising costs of
the competitive pressure. class customers and
manufacturing
  Control costs of reduce the pressure from
 Jobs’ demise a major
manufacturing by competitors.
loss
focusing on supplier  Broaden the product
relationships and range and exploit the
establishing existing supply chain
manufacturing plants in capabilities to reduce
nations with lower labor manufacturing costs.
costs.
 Focus on cultural
change to retain the
competitive advantage
 created by Jobs

Strategies:
Apple Inc. use following strategies:

Integration Strategy:
Apple is vertically integrated. This is when one organization designs and manufactures
everything for the company; therefore all of the profits go straight to Apple. As a result, they
increase their income. There are also disadvantages to vertical integration. One example of this is
can be if the company fails to maintain their finances, they are the only people affected and will
consequently lose more money. Apple owns software and hardware for the company. ITunes is
used to connect the products and purchase various songs and apps via the iTunes store. Safari is
owned by apple which is just as popular as Microsoft Windows Explorer. The products are also
owned by the company. Apple is a great example of vertical integration because it is one of the
most popular forms.

Generic Strategy:
Apple’s generic strategy and intensive growth strategies directly relate to the company’s
strategies in pricing, marketing, and other areas of the business. As one of the most valuable
companies in the world, Apple shows that its generic strategy is a major determinant of
advantage against other firms like LG, Samsung, and BlackBerry. Also, Apple’s intensive
strategies for growth support the firm’s ability to maintain its strong position in the global
market. Apple’s generic strategy is broad differentiation. This generic strategy focuses on key
features that differentiate the company and its products from competitors. Through the broad
differentiation generic strategy, Apple stands out in the market. For example, emphasis on
elegant design combined user-friendliness and high-end branding effectively differentiate the
company. The broad differentiation generic strategy means that Apple always aims to set itself
apart from competitors not by price but by other key features beneficial to customers. For
example, Apple reaches to individuals and business organizations through the MacBook product
line. In this way, the generic strategy of broad differentiation supports the company in
maintaining its leadership and position as a high-end and high-value business.

Intensive strategy:
Product Development: Apple uses product development as its main intensive strategy
for growth. Product development requires that the company must offer attractive products to
grow its market share and performance. Apple implements this intensive growth strategy through
innovation in its research and development processes.
 Market Penetration: Apple uses market penetration as its second most significant
intensive strategy for growth. Market penetration involves gaining a larger market share by
selling more of the company’s current products. For example, Apple applies this intensive
strategy by selling more iPhones and iPads to its current target markets. In particular, the firm
achieves more sales by adding more authorized sellers in its current markets.

Diversification strategy:
Apple believes in diversification, Apple is busy in introducing new and innovative
products to grab the attention of the customers. But, Apple only does related diversification like
it introduces many phones, IPods, Laptops etc every year. Apple does not go for unrelated
diversification.

Porter’s Five Forces Model

Porter’s Five-Forces Model of competitive analysis is a widely used approach for
developing strategies in many industries. The intensity of competition among firms varies widely
across industries.
Porter’s Five Forces Model for APPLE
Porters Five force Model is a very powerful tool to understand the core of the power in a
business or in a company. The Porter Five Force Model for Apple Inc shown here

SUBSITUTE PRODUCTS

(HIGH)

 E-Book readers like the kindle fire and Nook.

 Lots of substitute models throughout the Phone PC, Tablet, Industry.
 Substitutes within Apple’s Product range, makes consumers difficult.

BARGAINING POWER OF BARGAINING POWER

SUPPLIERS OF BUYERS
 Apple has few key  Apple fanatics -Low
RIVALRY AMONGST SELLERS
suppliers who can bargaining power.
use this leverage to  Apple is in multiple industries-multiple  General Buyers-high
their benefit. competitors’ fierce battle. Bargaining power.
 Pressure from Music  Tablets: outright leader.
labels to increase  Personal Media-strong position.
costs.
 Apple’s high cash
reserves lock in
supplies. NEW ENTRANTS

 Threats from new manufactures of Phones, PC’s-LOW.

 Threats of existing competitors developing new products to match
Apple-High.
External Audit:
An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate
economic, social, cultural, demographic, environmental, political, governmental, legal,
technological, and competitive information.
External Factors Evaluation (EFE) for Apple

EFE Matrix
Key External Factors Weight Rating Weighted
Score

Opportunities

Increase in worms & virus on PCs. 0.15 4 0.60

Downloadable music and MP3 players are highly marketable 0.6 3 0.18

Large population(Gen X&Y) which are extremely individualistic 0.15 4 0.60

and name brand conscious
Increase in sales of laptops by 20 percent 0.04 3 0.12

Increasing sales of computers online by 25 percent 0.05 3 0.15

Creating more ties with Microsoft products 0.10 4 0.40

Threats

Increasing competition with music downloads 0.70 2 0.14

Intel’s future Pentium release 0.03 3 0.09

Dell and HP are major competitors 0.10 4 0.40

Dell does not invent but provides computers at a more cost 0.06 3 0.18
effective rate for customers
Recession price of Apple computers are high 0.04 2 0.08

Companies not seeing Apple as compatible with their software 0.15 2 0.30
 Total 1.00 3.24

As we seen the weighted score of EFE matrix is above average that is 3.24. It means Apple is
responding well to external opportunities and overcoming threats.

Competitive Profile Matrix (CPM):

The Competitive Profile Matrix (CPM) identifies a firm‟s major competitors and its particular
strengths and weaknesses in relation to a sample firm’s strategic position (David, 2011).

CPM for APPLE

CPM Apple Samsung Dell Nokia

Critical Success weight Rating Score Rating Score Rating Score Rating Score
factors
Store locations 0.10 4 0.40 2 0.20 2 0.20 3 0.30

Financial profit 0.12 4 0.48 2 0.24 2 0.24 2 0.24

Consumer loyalty 0.10 4 0.40 3 0.30 2 0.20 3 0.30

Market Penetration 0.11 3 0.33 4 0.44 2 0.22 3 0.33

Advertising 0.07 3 0.21 3 0.21 2 0.14 3 0.21

Product Variety 0.09 2 0.18 4 0.36 3 0.27 4 0.36

Market Share 0.11 2 0.22 3 0.33 2 0.22 3 0.33

Product Quality 0.08 4 0.32 3 0.24 4 0.32 2 0.16

Price 0.10 1 0.10 3 0.30 3 0.30 4 0.40

Competitiveness
E-commerce 0.06 4 0.24 2 0.12 2 0.12 1 0.06

Employee 0.06 4 0.24 2 0.12 3 0.18 3 0.18

Dedication
Totals 1.00 3.12 2.86 2.41 2.87
The competitive profile matrix reveals that Apple is performing very well amongst its
competitors. It has highest weighted score that is 3.12 while Samsung is second best performer
having rating 2.86. Dell and Nokia got 2.41 and 2.87 weighted scores.

Internal Factors Evaluation Matrix:

A summary step in conducting an internal strategic-management audit is to construct an Internal
Factor Evaluation (IFE) Matrix. This strategy-formulation tool summarizes and evaluates the
major strengths and weaknesses in the functional areas of a business, and it also provides a basis
for identifying and evaluating relationships among those areas.

IFE Matrix

Key Internal Factors Weight Rating Weighted

Score
Strengths
iTunes Music Store is a good source of revenue, especially 0.15 4 0.60
with the ipod and the availability on Windows platform

Apple’s niche audience provides the company with some 0.10 3 0.30
insulation from the direct price competition
Revamping desktop and notebook lines 0.10 3 0.30
Low debt---more maneuverable 0.06 4 0.24
Developing own software and hardware 0.14 3 0.42
Good Brand Loyalty 0.05 3 0.15
Web technology can be used to improve product awareness 0.10 4 0.40
and sales
Weaknesses
Dependency on new product launches 0.06 1 0.06
Weak presence in business arena 0.07 1 0.07
Slow turn around on high demand products 0.03 2 0.06
Weak relationship with Intel and Microsoft 0.10 1 0.10
Weak presence in markets other than education and 0.04 2 0.08
publishing
 Total 1.00 2.78

The IFE matrix of Apple shows that it has average weighted score that is 2.78. It means Apple is
performing well internally. Internally it is very strong and minimizing its weaknesses.

SPACE matrix:
The Strategic Position and Action Evaluation (SPACE) Matrix The Strategic Position and
Action Evaluation (SPACE) Matrix is four-quadrant framework indicates whether aggressive,
conservative, defensive, or competitive strategies are most appropriate for a given organization.
The axes of the SPACE Matrix represent two internal dimensions financial position (FP) and
competitive position (CP) and two external dimensions stability position (SP) and industry
position (IP). These four factors are perhaps the most important determinants of an
organization’s overall strategic position.

Financial Position Stability Position

Increment in net sales 6.0 Technological change -2.0

Increment in earning per share 5.0 Price range of competing products -3.0
Return on asset 6.0 Competitive pressure -3.0
Revenues 6.0 Barriers to entry into marke -4.0

Average financial position 5.50 Average stability position -3.00

Competitive position Industry position
Product quality -5.0 Growth potential 5.0
Customer loyality -4.0 Profit potential 6.0
Technological know how -4.0 Financial stability 5.0
Control over supplier and distributors -3.0 Ease of entry into market 6.0

Average competitive advantage -4.00 Average industry position 5.50

X-axis:
5.50 + (-3.00) = 2.5
Y-axis:
 5.50 + (-4.00) = 1.50

Interpretation:
The Space Matrix shows us that Apple lies in the 1 st quadrant. So, it should pursue
an aggressive strategy. Apple has a strong competitive position in the market with rapid growth.
It needs to use its internal strengths to develop a market penetration and market development
strategy. This can include product development, integration with other companies, acquisition of
competitors, and so on.

Financial stability

Conservative Aggressive

CA IS

Defensive Competitive

Environmental Stability
BCG Matrix:
When a firm’s divisions compete in different industries, a separate strategy often must be
developed for each business. The Boston Consulting Group (BCG) Matrix is designed
specifically to enhance a multidivisional firm’s efforts to formulate strategies.

BCG Matrix for APPLE

Product Market share Market growth Relative Market

share
IPhone 15.4% 27% 0.62

MacBook 9.3% 2% 0.46

IPod 5% -5% 0.25

Apple TV 1.05% 17% 0.07

High Low

Relative Market Share

Stars Question Marks

Market growth

Apple TV
IPhone
 CashCows Dogs

rate
MacBook iPad

Low

Interpretation:
Stars:
Apple’s IPhone comes in stars because it has 15.4 percent market share and 0.62 relative
market shares. The company is selling lots of these products and they bring them great profits.
For this category they should go for Market penetration, product development, diversification,
Integration and market development strategies.
CashCows:
Apple’s MacBook have high relative market shares but their growth rate is low that’s
why they comes in the category of CashCows. For this they should use product development and
diversification strategies but if these strategies did not work they should go for retrenchment and
divestiture strategies.
Dogs:
Apple’s IPad have low relative market share that is 5 percent and low market growth rate
that is -5% that’s why it comes in the category of dog. For this they should use defensive
strategies.
Question Marks:
Apple’s TV have low relative market share but its growth rate is high that’s why it comes
in this category. For this they should use market penetration, product development, market
development and divestiture strategies.

Internal External Matrix:

The IE Matrix is similar to the BCG Matrix in that both tools involve plotting
organization divisions in a schematic diagram; this is why they are both called “portfolio
matrices.”.
 Divisions Revenue Profit EFE IFE

Domestic 54% 52% 3.5 2.6

International 46% 48% 3.0 3.0

IE Matrix for APPLE

IFE Score

Strong Average Weak

3.0-4.0 2.0-2.99 1.0-1.99
I II III
3.0-3.99
High
EFE Score

International Domestic
IV V VI
Medium

2.0-2.99

VII VIII IX
1.0-1.99
Low
Interpretation:
As Apple’s International divisions comes in I quadrant and Domestic divisions comes in II
quadrant that’s why it should follow intensive and aggressive strategies. They should focus on
market penetration, market development, and product development. From the operational
perspective, a backward integration, forward integration, and horizontal integration should also
be considered.

QSPM matrix:

The Quantitative Strategic Planning Matrix (QSPM) The Quantitative Strategic Planning
Matrix (QSPM), which comprises Stage 3 of the strategy formulation analytical framework. This
technique objectively indicates which alternative strategies are best.

Key Internal Factors weight Start producing Expand production

wintel compatible into Asia
Strengths AS TAS AS TAS
iTune Music store is a good source of 0.15 1 0.15 3 0.45
revenue, especially with the ipod and the
availability on Windows platform
Apple’s niche audience provides the 0.20 4 0.80 3 0.60
company with some insulation from the
direct price competition
Good Brand Loyalty 0.20 4 0.80 3 0.60

Web technology can be used to improve 0.15 4 0.60 3 0.45

product awareness and sales
Weaknesses

Weak relationship with Intel and Microsoft 0.15 4 0.60 1 0.15

Weak presence in markets other than 0.15 2 0.30 4 0.60

education and publishing
SubTotal 1.00 3.25 2.85

Key External Factors weight Start producing Expand production

wintel compatible into Asia
Opportunities AS TAS AS TAS

Increase in worms & virus on PCs. 0.15 2 0.30 3 0.45

Downloadable music and MP3 players are 0.06 1 0.12 4 0.48

highly marketable
Large population(Gen X&Y) which are 0.15 1 0.10 4 0.40
extremely individualistic and name brand
conscious
Increase in sales of laptops by 20 percent 0.08 1 0.08 4 0.32

Creating more ties with Microsoft products 0.10 4 0.12 2 0.08

Threats

Intel’s future Pentium release 0.10 1 0.10 3 0.30

Dell does not invent but provides computers 0.06 1 0.06 3 0.18
at a more cost effective rate for customers
 Companies not seeing Apple as compatible 0.15 1 0.05 3 0.15
with their software
SubTotal 1.00 0.93 2.36

Sum total attractiveness score 4.18 5.21

QSPM shows that expand production to Asia are more attractive because it have 5.21 weighted
score while producing wintel compatible products have weighted score of 4.18. So, it should
expand its production in Asia instead of producing wintel compatible products. Finance/
Accounting Financial condition is often considered the single best measure of a firm’s
competitive position and overall attractiveness to investors. Determining an organization’s
financial strengths and weaknesses is essential to effectively formulating strategies.

Grand strategy Matrix:

Grand strategy matrix is very useful instrument for creating different and alternative strategies
for an organization.
We

Strong Market growth

 II I

Strong competitive position

ak competitive position

Apple

III IV
Slow market growth

As we seen Apple have rapid market growth and strong competitive position. So, it lies in the 1st
quadrant of Grand strategy matrix. That’s why they should focus on product development,
market development, and market penetration strategies. They can also go for related
diversification and vertical integration strategies.

Market segmentation of Apple:

Apple is targeting its segments on the basis of:

Demographical bases.
Geographical bases.

Behavioral bases.

Psycho graphical

Demographical bases (age, family size, life cycle, occupation)

Looking into Apple, the Demographical market segment is successful because they are
developing products on the age, life cycle, occupation of the people. They are distributing their
products into various places and the PCs are categorized on age, family size, for example they
would have more games and entertainment in the PCs for the kids and a professional PC with all
the latest software's.

Geographical bases (states, regions, countries)

Looking into the geographical bases of Apple they have established their business all over the
world like U.S., South America, Europe, Japan, and Australia.

Recently Apple chose to implement a vertical growth strategy and began expanding their own
retail stores. The company also sells its product via third-parties dealers, or via internet through
their own website or through the iTunes online music stores.

Behavior bases (product knowledge, usage, attitudes, and responses)

In this market segment Apple providing good product knowledge to the customers by advertizing
on search engines, T.V. as they have a very good brand image. Using this brand image they are
continuously coming up with new ideas and products and attracting the customers. Apple has got
a very good response rate as many of the customers are looking for new designs and innovative
products which Apple is successfully delivering.

Psychographic bases (lifestyle, values, personality)

Looking into Apple the psychographic market segment is successful because they are developing
products on the lifestyle of the people such as Mac book for the younger generation. Apple
having a very good brand image has very good value for its products as they are different and
innovative. Looking into the personality (style) sector Apple is providing their products with
different colors for the people who like fancy colors.
Marketing Segmentation on the basis of 4P’s:

Product:
Apple is committed to sell original, good looking products that have an easy-to-use
interface. The company offers a range of personal computing products, related devices and
various third party hardware-products. They specifically design iOS, OSX, iLife, iWork for
professionals, managers and executives. Itunes, iCloud, Apple pay are for students and
managers.

Price:
Apple target high earners because Apple price is known to be above average in the industry. The
company is using a differentiation strategy and focuses more on innovation, and quality. This
strategy is justifying their premium prices. Lately, however, their new technology and their high
cash flow allowed them to lower their price and to offer more discount to certain markets such as
the education market. This new pricing strategy may help Apple to compete better with the non-
Mac user market but might cause some issue with the brand image and recognition.

Place:
Apple's operating segments are comprised of U.S, South America, Europe, Japan, Australia and
Asia. Recently Apple chose to implement a vertical growth strategy and began expanding its
own retail stores. The company also sells its product via third-parties dealers, or via internet
through their own website or through the iTunes online music stores.

Promotion:
The best in the Apple Mac is that songs can be played only from iTunes and hence Apple
formed a strategic alliance with PepsiCo. The Pepsi iTunes music promotion calls for people to
use the winning code found under the Pepsi's bottle caps products to redeem songs from Apple's
iTunes music Store. This promotion strategy attracted youngsters all over the world. This
promotion has already been successful for both companies and increased the awareness of the
iTunes presence in the market.
Apple has a joint venture with Hewlett Packard. Apple has produced an iPod for PC users
and the success of this product was a good way for the company to capture non-MAC users.

POSITIONING MAP:
High price
  Apple
 Samsung

Low quality High quality

 Motorola HTC
 Nokia

Low price

 Perceptual maps help firms understand how customers view their products. Perceptual maps are
based on the buyer's perception this is challenging: what may be viewed as a quality product by
one buyer, may not be perceived as a quality product by another buyer. So, positioning mapping
of Apple shows that customers perceive Apple and Samsung as a company that provides high
quality and high price products. Customers are willing to pay them high prices because of the
high quality of the product. On the other hand, no customers want to pay high price for low
quality products.

Apple Organizational Structure

Apple’s organizational structure is one of the factors contributing to the company’s successful
innovation. A firm’s organizational structure can create opportunities for business growth.
However, it can also impose limits on how the firm develops. In Apple’s case, the organizational
structure is mainly a traditional hierarchy, with some key elements from other types of
organizational structure. The success of the company is linked to innovation and the leadership
of Steve Jobs, but its organizational structure is partly responsible for ensuring support for such
leadership. Now, under Tim Cook’s leadership, Apple has made some small changes in its
organizational structure to suit market and industry demands.
INCOME STATEMENT
INCOME
Period Ending 9/24/2017 9/24/2016

Total Revenue $ 215,639,000 100% $ 233,715,000 100%

Cost of Revenue $ 131,376,000 61% $ 140,089,000 60%

Gross Profit $ 84,263,000 39% $ 93.626,000 40%

Operating Expenses

R&D $ 10,045,000 5% $ 8,067,000 3%

Sales, General & Admin $ 14,194,000 7% $ 14,329,000 6%

Operating Income $ 60,024,000 28% $ 71,230,000 30%

Add: Income/expense items $ 1,348,000 1% $ 1,285,000 1%

Earnings before Income & Tax $ 61,372,000 28% $ 72,515,000 31%

Interest Expense $ 0% $ 0%

Earnings Before Tax $61,372,000 28% $ 72,515,000 31%

Income Tax $ 15,685,000 7% $ 19,121,000 8%

Net Income: Continuing $ 45,687,000 21% $ 53,394,000 23%

Oprations

Net Income $ 45,687,000 21% $ 53,394,000 23%

Interpretation:

1. Cost of Revenue increased at 2017 because of changing some of raw material.

2. Gross Profit decrease at 2017 reflection of the cost of revenue.
3. Operating Income decreases at 2017 because the cost R&D increased.
4. The Debt that Apple borrows comes with no interest so the lenders can get some
specification.
5. Net Income continuing operations slightly decrease at 2017.
6. Net Income slightly decreases because increasing the cost of Researches & Tax from
3.8-3.9.

FINANCIAL RATIOS:
 2017 2016

NET WORKING CAPITAL RATIO:

Current assets-Current liabilities $ 106,869,000/$79,006,000 $89,378,000/$80,610,000

=$ 27,863,000 =$ 8,768,000

Difference:
$ 19,095,000

Interpretation:
Working capital is a measure of both a company efficiency & its short term financial
health Apple networking capital usually increased by $ 19,095,000 to become $ 27,863,000 by
2017.

Current Ratio:
2017 2016

Current Assets/Current Liabilities =$ 106,869,000 =$ 106,869,000

$ 79,006,000 $ 80,610,000
= 1.35 =1.11

Interpretation:
Apple has the 1.35 ability to repay against the $1 loan. Comparing to 2016 the repaying
ability increased by 0.24 which means the company is growing.

Quick Ratio:
2017 2016
Current assets-Inventory =$ 106,869,000-$2,132,000 = $ 89,378,000-2,349,000
Current liabilities $ 79,006,000 $ 80,610,000
 = 0.23 =0.23

Interpretation:
Quick ratio measures the firm’s ability to pay off short term obligation without relying on the
sale of inventory. Apple has 0.23 quick ratio at 2017 the same % at 2016.That it is an indicator
about the stability of the firm.

Account Receivable Turnover:

2017 2016
Net sales/Avg.Gross Receivables
7 Times 8 Times

Difference:
-1 times

Interpretation:
This ratio indicates the firm’s receivable efficiency. Apples account receivable
turnover decreases by 1 times at 2017 from 8 times at 2016.But though its remains a high
percentage.

Account Receivable Turnover:

2017 2016
= 360/Account receivable turnover
 = 360/ $ 29, 299, 000 = 360/ $ 30, 343,
000
= 51 Days = 45 Days

Difference:
6 Days

Interpretation:
This ratio shows that Apple receive Its receivable every 51 days at 2017 simple
decline of performance comparing to 45 days at 2016.

Inventory Turnover:

2017 2016
= CGS/ Avg. Inventory
= $ 131,376,000 =$ 140,089,000
2240500 2240500
= 59 Times = 63 Times
Difference:
-4 Times

Interpretation:
The inventory turnover of Apple is 59 times in 2017 agilest 63 times at 2016.That is a
decrease but it remains a super high percentage though.

Sales to working capital:

 2017 2016
Net Sales/Avg. working Capital
= $ 215,639,000 =$ 233,715,000
27,863,000 8,768,000
= 7.1 = 3.3
Difference:
3.8

Interpretation:
Indicate company’s effectiveness in using its working capital Apples sales to working
capital increased by 3.8 to become 7.1 at 2017.

Total Debt Ratio:

2017 2016
Total liabilities/Total assets
= $ 193,437,000 =$
170,990,000
321,686,000 290,345,000
= 60% = 59%
Difference:
1%

Interpretation:
Total debt ratio shows, if the firms have more assets regardless of total debt then that
firm will easily pay off is debt. Apple ability to pay debt slightly decreases by 1% to become
60% at 2017.

Debt to Equity:

2017 2016
Total Debt/Total Equity = $ 75,427,000 = $ 80,610,000
128,249,000 119,355,000
= 108% = 104 %

Interpretation:
Debt to equity ratio shows the comparison to the equity this ratio as tells how much
firm has ability to pay its debt and if equity is more than the total debt of the firm so firm will
face low risk. Apple debt to equity ratio increases by 30% from 2016 to become 108%.And that
is not a good sign.

Gross Profit Margin:

2017 2016
= Gross Profit/Net Sales = $ 84,263,000 = $ 93,626,000
215,639,000 93,626,000
= 39.1% = 40.1%

Interpretation:
It tells that how much a firm will receive against $ 1 sales. Apple was earning
40.1% at 2016 decreases to 39.1% at 2017.Thats decreasing by 1%.

Net Profit Margin:

2017 2016
Net Profit/Net Sales = $ 45,687,000 = $ 53,394,000
215,639,000 233,715,000
= 21.2% = 22.8%
Interpretation:
This ratio shows how much each $1 of net sales is generated to Net Income. Apple is able
to generate to 21.2% net income from its net sale by decreasing 1.7% from 2016.

Operating Income
2017 2016
Operating Income/Net Sales = $ 60,024,000 =$ 71,230,000
215,639,000
233,715,000
= 27.8% = 30.5%

Interpretation:
This ratio shows how much each $1 of operating income is generated to net income. Apple
is able to generate 27.8% net income from its net sales by decreasing 2.6% from 2016.

Findings:
Question 1:
What services do you give to your customer?
The company’s product and services include iPhone, iPad , Mac , iPod , Apple watch, Apple TV.

Question 2:
Does the internet make market segmentation easier?
Yes, internet makes its too much easier.

Question 3:
How you manage resistance to change? Force them, educate them or rational reasoning?
Educate them

Question 4:
Does your firm use own Research & Development?
We use our R&D department.

Question 5:
Does the organization have written long term &short term goals?
Yes Apple has focused on long term as well as short term goals.

Question 6:
Does the organization systematically measure actual performance vs. goals?
Yes, organization must check the actual performance and targets or goals which have been set.

Question 7:
How you manage conflicts in the organization?
We manage the conflicts through communication, better co-operation and also allow freedom to
express.

Question 8:
Which business strategy do you use?
We are using generic and intensive strategies.

Question 9:
What is your current position in space matrix?
We are in 1st quadrant in space matrix and we are using aggressive strategies.

Where does Apple be found on BCG matrix?

Iphone is most widely used as compared to other products of Apple that’s why it is found in stars
where market share and market growth both are high.

Question 11:
What about Apple’s merger and acquisition?
Apple’s business philosophy is to acquire small companies that can be easily integrated into
existing company projects.

Question 12:
What are your advertisement strategies?
We are not advertise our products through adds but the Pepsi iTunes music promotion calls for
people to use the winning code found under the Pepsi's bottle caps products to redeem songs
from Apple's iTunes music Store. This promotion strategy attracted youngsters.

Question 13:
Do managers at all hierarchical levels plans effectively?
Yes all the managers at their positions performing well and effective.

Question 14:
Which approach you use? Top down or bottom up?
We are using bottom up approach as we involve all the employees in strategic formulation.

Question 15:
Are markets segmented effectively?
Yes market is segmented effectively

Conclusion
It is concluded from the strategic management analysis at APPLE Inc. that technological
industries are never easy to compete with. They have a lot invest at R&D and have to be
proactive in order to compete with their competitors in the industry. As for APPLE is concerned
they have been working so well as it is shown form their products. As Apple Inc. is increasing
also, those other businesses are increasing and trying to do something interesting for their own
good. APPLE needs to make a drastic change. They don’t need to wait for people buy their
products only when they are on sale but they need to focus more on the customer support and
improve the areas they already have problems.

References

http://alvinalexander.com/blog/post/mac-os-x/apple-business-philosophy-missionstatement
http://writepass.co.uk/journal/2012/12/strategic-analysis-swot-and-bcg-matrix-of-appleinc
http://blogs.hbr.org/fox/2013/01/apple-versus-the-strategy-prof.html
http://www.strategicmanagementinsight.com/swot-analyses/apple-swot-analysis.html
http://investor.apple.com/secfiling.cfm?filingID=1193125-12-444068
http://tech.fortune.cnn.com/2012/11/01/by-the-numbers-apples-fiscal-2012-annualreport
http://www.apple.com/supplierresponsibility/pdf/Supplier_Code_of_Conduct_V3_1.pdf
http://myassignmenthelp.info/assignments/marketing-assignment-essay-writing-analysisreview-
online-apple-swot-pestle-analysis