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Strategic Management I
International Management Institute, Bhubaneswar


Apple Inc., originally Apple Computer, Inc., is an American multinational corporation headquartered in California that designs, develops, and

sells consumer electronics, computer software and personal computers.

The company was founded on April 1, 1976, and incorporated on January 3, 1977. The word "Computer" was removed from its name on January 9, 2007, to reflect its shifted focus towards consumer electronics. Its best-known hardware products - Mac line of computers, the iPod, the iPhone and the iPad. Its software includes the OSX and iOS operating systems, iCloud, the iTunes media browser, the iLife and iWorkcreativity and production suites.

Apple is the world's third-largest mobile phone maker after Samsung and Nokia. Fortune magazine named Apple the most admired company in the United States in 2008, and in the world from 2008 to 2012. However, the company has received widespread criticism for its contractors' labor practices, and for its environmental and business practices. As of August 2012, Apple has 393 retail stores in fourteen countries as well as the online Apple Store and iTunes Store. It is the largest publicly-traded corporation in the world by market capitalization, with an estimated value of US$626 billion as of September 2012. The Apple market cap is larger than that of Google and Microsoft combined. As of September 24, 2011, the company had 60,400 permanent full-time employees and 2,900 temporary full-time employees worldwide; its worldwide annual revenue in 2010 totaled $65 billion, growing to $108 billion in 2011.


VISION Man is the creator of change in this world. As such he should be above systems and structures, and not subordinate to them. MISSION Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and internet offerings.

High Competition Share of Dell and HP Microsoft and Intel-Leaders of Software CE Industry- Sony, Nokia, Samsung, Cisco, Motorola

In 1983 , growing invincibly & production demands was high. They move to STEWARDSHIP MANAGEMENT STYLE. John Sculley was elected president & CEO in 1983. In 1985 , Jobs ousted from the board. Reestablished Apple as pioneer in GUI. Unique features for PC & captured the attention of users. IBM clones, led to slow down of market share growth. Apple was decentralized in 1988. Separate division for product development & manufacturing Change in organizational structure cause problems between marketing and R&D. Process improvement initiatives Smart manufacturing and geared the company to a market pull then technology push.


Macintosh less expensive than LISA. IN 1985, departure of Jobs & Wozniak. IBM forceful enter into PC market & apple demand was depressed. Reengineering the organization in 1986. Vision was to target office computing. Sales were $1.96B to $5.3B in 1989.

Refused to license its OS to other computer manufacturer. Technology proprietary and exploit it only in its own products. Microsoft with windows, diffuses its technology by putting on IBM PC. Finally realized its mistake of superior technology. In 1991, participate in IBM/Motorola/Apple consortium. In 1996, Gilbert Amelio, replaced Spindler as CEO. Second Quarter loss was $740M. In 1997, stock fell to 12 year low Jobs was brought back as an advisor. He declined as CEO & remain CEO at PIXAR , a new hi-tech venture.

Apple employs a Product Differentiation Drawbacks as a result of their strategy include: Not appealing to Price Conscious Consumers Risk of Imitation by Competitors Risk of Change in Customer Taste


Market share: Apple has a very low market share according to S&P industry survey for 2009 Product variety: Apple offers a wide range of technological products, including iPads, iPods, iPhones, iTunes, PCs and more. Apple is perhaps the best known first mover company ever, as the firm has a 35-year history of being the first to introduce blockbuster, successful new products. Product quality: Apple meanly focuses on its products quality using the most recent technologies and innovations Costumer loyalty: The i-halo effect has been synonymous with Apple for the last years. In basic terms its definition is customers who buy an i-product, become hooked on Apples products and their ease of use. Control over suppliers and distributors: Apple already has a very efficient network of distributors and suppliers and intents to develop it further Profit potential: today Apples profit potential is at the same level as industry but according to the trend observed from 2008-2012 it shows that Apple will soon exceed the industry Growth potential: demand in computer hardware products is expected to increase Financial stability: Apple has minimum long-term debts and liabilities that shows its financial stability Resource Utilization: Apple makes reasonable management of its human and material resources


Differentiation Strategy Unique Features and characteristics Commands Premium Price High Customer Service Superior Quality Prestige Rapid Innovation Value Creation iTunes iMovie iCloud Innovation

Threat Of New Entrants:
LOW Bargaining Power of Suppliers: HIGH

Bargaining Power of customers: MODERATE

Competitive Rivalry: HIGH

Threat of Substitutes: LOW

STRENGTHS iTunes Music Store is an excellent source of revenue, especially with the iPod and the accessibility on Windows platform. Apple Computers have good brand loyalty and image by setting high standards for quality and use. Partnership with Intel Computers in 2006 Present (Intel's microprocessors) Strong Research & Development Department driving innovation, creating its own software (free of viruses) and hardware Creators of high tech technology such as iphone or imac Holds 5% market share and is 4th largest player in mobile phone market. 18.5% market share of global smartphone market Robust financial performance. (strengthens investors confidence and provides capital for future growth avenues) Low debtmore maneuverable. Entering into new product lines ex: Laptops to iPhones and iPads Excellent distribution network globally to make its products accessible online and stores The iOS has given it a lead as compare to its competitors

WEAKNESSES Weak relationship with Microsoft. (low product compatibility) Apples market share is far behind from major competitor Microsoft. Its high priced products and accessories make them inaccessible to many of customers It has less presence in B2B market, as compare to its competitors like Dell and HP. It can be seen that Apple mainly focuses on B2C so its losing large chunk of market Comes without expandable memory and the battery is fixed (in mobile products) Former CEO Steve Jobs died Coming off of the failure of two items apple tv and mac mini Patent infringement. Not shareholder friendly (did not declare or pay cash dividends in either 2011 or 2010) Product recalls.

OPPORTUNITIES Well recognized ,product differentiation unique design, easy to use products Complete hardware/software package Global smartphone market is on fire Increase in worms and viruses on PCs so the antivirus solution can be developed by Apple Possible ventures with other companies Downloadable music and MP3 players are highly marketable The online computers sales is rapidly increasing The laptop market growth is high Constant growth of PC and mobile phone industry Huge untapped market to expand to Growing demand for internet music and other online programs (cloud based services) Robust outlook for mobile advertising market Strong growth in smartphone segment. Open market in gaming console industry to compete with PS3 and Xbox Growing market of Green and energy efficient products

THREATS Economic recession can have a significant negative effect on the company due to higher prices of its products Rising popularity of Google Android and Windows ecosystems in the mobile and tablet space Intense competition from Dell, HP, Sony and Toshiba Dependence on specific suppliers Companies not seeing Apple as compatible with their software Downloading free music from other online source without paying cost is common it may impact the iTunes sales Microsoft launched Microsoft Windows 7 and 8 which are gaining market share The growing tablet market is competing with ipad Apple is involved in several legal actions High product substitution

POLITICAL It is reported that in 2007 52% of sales of Apple were from outside America. Bad international relations, wars and terrorism might influence Apple in a huge manner; moreover these are all factors Apple has no ability to control. Apple Inc. produces many of its parts and products outside the U.S., like Ireland, Czech Republic, Korea, China, and Cork. Political Conflicts between the U.S. and any of these states may have awful outcomes for Apple Inc. ECONOMIC The global economic depression might have immense impact on Apple Inc. The inflation rate is high, while consumers incomes didnt have significant changes, moreover the unemployment rate has increased, leading consumers to spend less, especially on luxury products, as Apple products might be viewed. Even though the U.S. dollar has lost value, Apple Inc. is not as endangered economically. The corporation has purchased itself foreign currency, to minimize the economic effects of inflation on Apple Inc. It needs to be said that the U.S. dollars depreciation has in fact increased Apples revenue in the international market.

SOCIAL Globalization includes the interaction of people worldwide, for which technology plays the main role. Todays World cannot be imagined without technological devices as Computers, mobile phones etc. Apple is the globally seen as the King of technology, not because of most usage, but quality and design. Another big social influence is the music industry, which over the last decade has become virtual and set its market to the cyberspace. Apple having developed the biggest virtual media store, iTunes, is well ahead any other competition of this direction. Web piracy might be a threat, but most governments punish those behaviors. All in all, Apples image also portrays the modern individuals lifestyle, combining functionality with design, leading to brand identification and loyalty. Therefore social influences have positive effects on Apple Inc. TECHNOLOGICAL The technology market for computers and mobile phones has become huge, adding more competition in the market. Also technology innovations and changes are almost as fast as light, therefore the products lifecycle is very short. Investing largely in Research and Product Development, Apple is on top of the market, regarding innovative products. This includes making the work for the competition to follow, but its still better because innovation is a big part of the brand and has shown to pay out.


Apple, is arguably the most successful company ever in many respects. But there are major financial risks with being the premier first mover in any industry. Rival firms across the globe are getting better and better at quickly duplicating successful Apple products and offering them at lower prices.

Success of Apples iPad, iPhone and Macs new versions, helped Apple to replace Microsoft as the worlds most valuable technology company in 2010. Apple thinks that there is yet room for improvement, to substitute the already created wonders.

Innovation never stops.


International Management Institute, Bhubaneswar