Apple 2006

Ellen SuprunJulie O’Halloran

Wojciech JagielloFinbarr KearneyKingsley Egwim

Introduction

1. External Analysis2. Internal Analysis3. Strategy 4. Assessment and Recommendations

Threat of Entry

BuyersSuppliers

Substitutes

Low• High capital investment• Commoditized market makes it difficult to differentiate• Substantial dominance of Wintel platform and low-cost large-scale players (Dell, Gateway, HP, IBM)•Oligopoly market

High• PCs are available in multiple configurations, performances and price ranges•Other firms offer as good products•Rivalry is very high

Low•PC and new applications High End-users are mostly loyal•Imperfect knowledge about price forming

High (components suppliers)• Most components are commoditized, however Intel, Motorola, IBM become dominant, that increases power of supplier

Porter’s Five Forces

Information Systems

Materials Management Human Resources

R&D Production Marketing and Sales Customer Service

The Value ChainSupport Activities

• Apple have always added value through R&D

• Failed R&D project with IBM

• Vertical Integration to outsourcing 1998 to reduced costs

• Premium Pricing

• Brand Loyalty• Retail Outlets• Low market

share in the corporate market place

Company Infrastructure

• Leadership• Culture

• Jobs and Wozniak• John Sculley • Mike Spindler• Gilbert Amelio• Return of Steve Jobs

Strengths

• Technology and R&D team

• Investors• Organizational culture• Brand Loyalty• Marketing• Partnerships

Weaknesses

• Lack of compatible software 1984• Strategy change inconsistent with the business

model – cutting costs• Failed investments• Leadership – changes and succession planning

Opportunities

• iCloud• New markets- expansion into mobile phones,

tablets, BRIC countries• Large corporate market segment

Threats

• Open architecture• Economic downturn• Competitors• Suppliers• Legal issues

Apple’s Competitive Strategy

• Differentiation Strategy• Core competencies – Innovative Culture– Team spirit (people)

• Marketing– Consumer Loyalty– Distribution network

Questionable moves

• Mac Clones• Niche market• Strategy change & Leadership problem• Partnership with IBM

Critical Success Factors• Leadership of Steve Jobs • Marketing and design• Innovation and new product development

The role of vertical integration in strategy

Dangers

Simplicity andquality

Not dependent on innovation

Preventing others from innovating

Higher costs of production and development

Benefits

Apple beingrelatively fragile

Importance ofstrong leader

Capturing values on every step

Complete user experience

The iPod Phenomenon

• Launched November 2001• Buy – Listen - Manage• Sold 42 million iPods by 2005 • 75% market share• iTunes: a justified loss leader• 2005 -39% Apple revenue

2006 to Date• Apple Computer-> Apple• 2007, iPhone, Apple TV• 2010, iPad• Ongoing Software Innovation (iCloud)

Recommendations

• Vision and leadership• Learn from mistakes• Corporate Social Responsibility• Stick to Core competencies– Design– Innovation and R&D

Any Questions?