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Evaluating a Companys Resource,

Capabilities and Competitiveness. (Apple Inc. Case)

Evaluating a firms internal situation

How well is the firms present strategy working ? What are the firms competitively important resources and capabilities? Is the firm able to take advantage of market opportunities and overcome external threats to its external well-being? Are the firms prices and costs competitive with those of key rivals, and does it have an appealing customer value proposition?

Is the firm competitively stronger or weaker than key rivals? What strategic issues and problems merit front-burner managerial attention?
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How well is the firms present strategy working ?

Question 1: How well is the present strategy working?

The best way to start evaluating of how well companys present strategy is working is with a clear view of what the strategy entails.

2 Steps best indicators :


-The company is achieving its stated financial and strategic objectives - The company is an above-average industry performer

Other indicators :
-Growth in firms sales and market share
-Acquisition and retention of customers -Increasing profit margins, net profits and ROI -Growing financial strength and credit rating

-Positively viewed by shareholders and customers


-Leadership in factors relevant to market\industry success -Continuing improvement in operating performance
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Question 1: How well is the present strategy working?


4.1 Identifying the Components of a Single-Business Companys Strategy

Do the companys resources and capabilities have sufficient competitive power to give it a sustainable advantage over competitors?

QUESTION 2: Do the companys resources and capabilities have sufficient competitive power to give it a sustainable advantage over competitors?

Tangible Resources Physical resources Financial resources Technological assets

Organizational resources Company Resources


Intangible Resources Human assets and intellectual capital

Brands
External relationships Company culture and incentive system

QUESTION 2: Do the companys resources and capabilities have sufficient competitive power to give it a sustainable advantage over competitors?
How do we know that the company has a competitive power of resources and capabilities

4 Tests

Is the resource (or capability) competitively valuable?

Is the resource rareis it something rivals lack?

Is the resource hard to copy?

Can the resource be overcome by different types of resources and capabilitiesare there good substitutes available for the resource?
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Is the company able to seize market opportunities and overcome external threats?

QUESTION 3: Is the company able to seize market opportunities and nullify external threats ?

Using SWOT Analysis, which will involves

Drawing conclusions from the SWOT listings about the firms overall situation

Translating these conclusions into strategic actions by the firm that: Match its strategy to its internal strengths and to market opportunities Correct important weaknesses, and defend it against external threats.

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QUESTION 3: Is the company able to seize market opportunities and overcome external threats ?
4.2
The Steps Involved in SWOT Analysis: Identify the Four Components of SWOT, Draw Conclusions, Translate Implications into Strategic Actions

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Are the company s prices, costs and value proposition competitive ?

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QUESTION 4: Are the companys prices, costs and value proposition competitive ?
Signs of A Firms Competitive Strength:

Its prices and costs are in line with rivals.


Its customer-value proposition is competitive and cost effective. Its bundled capabilities are yielding a sustainable competitive advantage. 4.3 A Representative Company Value Chain

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QUESTION 4: Are the companys prices, costs and value proposition competitive ? Benchmarking and Value Chain Activities
Benchmarking:
Involves improving a firms internal activities based on learning other companies best practices. Assesses whether the cost competitiveness and effectiveness of a firms value chain activities are in line with its competitors activities.

Sources of Benchmarking Information


Reports, trade groups, analysts and customers Visits to benchmark companies Data from consulting firms

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On an overall basis, is the company competitively stronger or weaker than key rivals?

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QUESTION 5: On an overall basis, is the company competitively stronger or weaker than key rivals?
Competitive Advantage Indicators:
Ability to effectively and efficiently bundle resources and capabilities. Achieving a high rank on each key success factor.

Having a net competitive advantage over its rivals.

The Competitive Strength Assessment Process

Step 1 Step 2 Step 3

Make a list of the industrys key success factors and measures of competitive strength or weakness (6 to 10 measures usually suffice). Assign a weight to each competitive strength measure based on its perceived importance. Rate the firm and its rivals on each competitive strength measure and multiply by each measure by its corresponding weight.

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QUESTION 5: On an overall basis, is the company competitively stronger or weaker than key rivals?
4.4 A Representative Weighted Competitive Strength Assessment

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QUESTION 5: On an overall basis, is the company competitively stronger or weaker than key rivals?
Strategic Implications of Competitive Strength Assessment

The higher a firms overall weighted strength rating, the stronger its overall competitiveness versus rivals. The rating score indicates the total net competitive advantage for a firm relative to other firms. Firms with high competitive strength scores are targets for benchmarking. The ratings show how a company compares against rivals, factor by factor (or capability by capability). Strength scores can be useful in deciding what strategic moves to make.

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What strategic issues and problems merit front-burner managerial attention ?

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QUESTION 6: What strategic issues and problems merit front-burner managerial attention ?

Identifying Strategic Issues :


How to stave off market challenges from new foreign competitors. How to combat the price discounting of rivals. How to reduce high costs and pave the way for price reductions. How to sustain growth in light of slowing buyer demand. Whether to expand the firms product line.

Whether to correct the firms competitive deficiencies by acquiring a rival company with the missing strengths.
Whether to expand into foreign markets rapidly or cautiously. Whether to reposition the company and move to a different strategic group. What to do about growing buyer interest in substitute products.

What to do to combat the aging demographics of the firms customer base.

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Apple Inc. Case 2010

Apple Inc.

Vision

To be the most admired company in the world and the most loveable brand people ever use Every person around the global should taste at least 1 apple product

Mission

Apples business strategy leverage its ability, through the design


and development of its owb operating system, hardware, and many software applicatons and technologies, to bring to its customers around the world compelling new products and solutions with ease

of use, seamless integration, and innovative industrial design

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Apple Inc.
Goals
Take market share from competitors, such as Dell and Hewlett - Packard

Objectives
Attain double digit growth in terms of unit shipments through 2010 and then high single digit growth through 2012

Strategies
Introduce innovetive products at competitive prices to the market to convince investor s and consumers that apple offers a unique product over the competition Ease of compatibility between the iPod, iPhone, and iTunes via the App Store

Synchronize the digital electronics and computer market

Resolve Mobi le Me Web application failures to 0% by 2009

Achieve superior technological innovation

Maintain funds allocated to the R&D budget while establishing a $0 longterm liability balance

Pour large amount of operating budget into research & development. Closely guard secret behind companys technology.
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Apple Inc.
Apple was founded 1976 1978 Apple II is Launched iTunes is create 2003 2001 iPod is developed Macbook Pro and new Imac becomes first Apple computers to use intel chips 1998 iBook is released 1999 Machintosh is introduced 1984 Powerbook is released 1991 1985 Jobs leaves Steves Jobs returns to Apple as adviser and eventually takes CEO title once again 1997

iMac Release

App Store Launched 2008 2007 First iPhone Launched 2010 iPad is launched

iPad 2 is launched 2011

2006

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Apple Inc.
Question 1: How well is the present strategy working?
Strategies (stated)
Introduce innovative products at competitive prices to the market to convince investor s and consumers that apple offers a unique product over the competition Ease of compatibility between the iPod, iPhone, and iTunes via the App Store

Strategies
Apple launched one innovative product, named iPad which by that time it has no competitor (since Samsung still developing its G-Tab).

In 2010, App Store became more utilized since the iPad and iPhone 4 has been launched.

Pour large amount of operating budget into research & development. Closely guard secret behind companys technology.

The R&D budget is increasing every year. But, compared with to total operating expense, the percentage of R&D budget for 2010 is the same with 2009, which is 24%. Though the amount is increase by $449.

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Apple Inc.
Question 2: Do the companys resources and capabilities have sufficient competitive power to give it a sustainable advantage over competitors?
4 Tests Is the resource (or capability) competitively valuable? Though the Mac failed in the PC industry, Apples has its breakthrough by launching the iPad and iPhone 4 and became the #1 in its industry. Is the resource rareis it something rivals lack?

In the 2010, we could say that Apple resources, whether tangible (technology) and intangible (human & brand image) are rare.

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Apple Inc.
Question 2: Do the companys resources and capabilities have sufficient competitive power to give it a sustainable advantage over competitors?
4 Tests Is the resource hard to copy? Its not impossible for competitors to imitate the tangible resource, but the intangible resource (human & brand image0 would be difficult and need some time to be imitated.

Can the resource be overcome by different types of resources and capabilitiesare there good substitutes available for the resource? In time, there would be possibility for technology and human resource (labor) to be overcome. But, brand image required a long process and time to be substitute.

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Apple Inc.
Question 3: Is the company able to seize market opportunities and overcome external threats ?
In 2010, the revolutionary differentiated product became the most attractive variable for the company. While some product failure became the most unattractive variable.

SWOT ANALYSIS

STRENGTHS
-Revolutionary differentiated product -Charismasic visionary CEO -High loyalty customer -Patents -Fast Innovation Pace OPPORTUNITIES EXTERNAL -I Tunes -Tablet -Features and apps limitation

WEAKNESS

INTERNAL

-Some Product Failure -Low Market Share (MAC) -Content Provider Relations -Centralized decision

THREATS -Imitators -Rapid Technology Changes -Free Content Availability -Highly Competitive market New Entrants
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Apple Inc.
Question 4: Are the companys prices, costs and value proposition competitive ?

Supply chain management

Operations

Distribution

Marketing & Sales

Service

Procurement Technology Development & R&D HRM General Administration

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Primary Activities

How Does Apple Inc. Create Value For Customer

Supply chain management


Operation Distribution Marketing & Sales Service

Apple outsource high quality inventory from Japan and Taiwan


Using R&D , strategic alliance Shipment in large lot to minimize cost and assure quick delivery Focusing on premium price and international market to boost the sales Emphasize on customer feedback to improve quality

Supportive activities Procurement


Technology development HRM General administration

Outsource material from Taiwan and Japan


Large emphasize on quality than to quantity Good management with emphasize on quality work Effective planning with ability to coordinate and integrate activities across the system

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Apple Inc.
Question 5: On an overall basis, is the company competitively stronger or weaker than key rivals?

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Apple Inc.
Question 6: What strategic issues and problems merit front-burner managerial attention ?
Strategic Issues for Apples Future
Apple needs to maintain its growth in the siege of competitors
iPad successes will become a magnet for other company to build similar gadget Dont be lulled by the growth of iPad &

How to maintain its growth How to stave off new competitor? What Apple should do about the other product line, such as iMac & iPod ? How to maintain Apple resources? What to do with the product failure issue ?

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