Changes in the Dynamics of Pc Industry

Core Competency (CI1) orchard orchard apple tree tree digit, pullulate and merchandise numerous growth and serve up lines. They carry on their products to raising, consumer creative professional, business and government customers. While apple seems to display numerous products and conduct business on different segments, it is legitimate to wonder what the gild is really untroubled at? Too ofttimes sort is exactly what crushed orchard apple tree during the John Scully days. Cannibalization (CI2) Through January 2005, orchard apple tree has opened 102 retail stores.Although these launches atomic number 18 potentially beneficial, orchard apple tree stores argon hurting the resellers business and not all of them will survive. Considering that the phoners resellers still depend for more than 50% of its interior(prenominal) trades, the party is facing the risk of cannibalization and readiness deeply suffer. High Cash (CI3) wherefore is apple holding so more hard ex change? Having too much property in reserve might either mean that the keep phoner does not cheat yet how to allocate it or that they whitethorn decl atomic number 18 well-nigh risk concerns about future potential investment funds.Succession (CI4) orchard apple tree is cl wee one of the handful of companies where the fortunes are seen to be intricately tied to the person in charge. The atomic number 82 quality and the visionary talents associated with Steve Jobs are certainly contributed to the success of the ac ships company. So the upstarts of Jobs cancer surgery might lead to a succession problem and via media the companys future. I. CURRENT SITUATION A. CURRENT PERFORMANCE orchard apple tree chance ond a solid performance for the first quarter of 2005 compared to the same quarter 2004 with inviolable net sales in the Americas segment (+77%) in Europe (+63%) and in Japan (+18%).The Americas segment represents approximately 47% of the companys total net sales. The inc rease in net sales in the Americas, Europe and Japan was primarily driven by increase regard of the iPod and the consumer-oriented iMAC. Demand for the iBook products were especially highschool for the Americas, while peripherals and unfermented(prenominal) hardware were more ordinary in Europe. The retail segments net sales grew to $561 one million million million as compared to $273 million in the same period in 2004, this represents a remarkable 105% increase. B. SRATEGIC POSTURE Missionorchard apple tree strives for continuous good in our environmental, health and preventative management systems and in the environmental quality of our products, processes and services. orchard apple trees Guiding Principles O Meet or exceed all applicable environmental, health and rubber requirements. O Where laws and regulations do not provide adequate controls, Apple will adopt their own standards to protect human health and the environment. O Support and invoke sound scientific princ iples and fiscally responsible public insurance policy that enhance environmental quality, health and pencil eraser.O Advocate the adoption of prudent environmental, health and safety principles and practices by their contractors, vendors and suppliers. O Communicate environmental, health and safety policies and programs to Apple employees and stakeholders. O Design, manage and operate our facilities to maximize safety, promote energy efficiency and protect the environment. O turn over to create products that are safe in their intended physical exertion, conserve energy and materials and prevent pollution throughout the product life cycle including design, manufacture, workout and end-of-life management.O figure that all employees are aware of their role and responsibility to fulfill and sustain Apples environmental, health and safety management systems and policy. Goals O Innovation to a higher place e actuallything else. O Increase sales in the education segment. O Produce user friendly, good appearance products to pull out customers think Different and think digital. O Developing spick-and-span digital life behavior consumer, and professional computer software application O Investing in new products area such as rack-mount servers, RAID storage system and wireless technologies. O Provide a high quality sales and after sales support experience. scheme Trough the design and the development of its own operational system, hardware and many software application and technologies, Apple strives to bring to its customers compelling new products and solution with superior ease-of-use, seamless integrating and innovative industrial design. Apple on-goingly foc utilise on O Increasing marketing and advertising investment in order to improve product and brand sentience. O Vertical growth dodging expand the retail segment by opening more retail stores. (CI2) O Market opportunities think to digital music distribution and consumer electronic devices, inc luding iPod.O Implement a monetary value leadership schema to keep up with the competition and be more first-class honours degree-cost for the educational segment. O Continue to be the leader in innovation for new technology by employing a product differentiation strategy. Policies Employee diversity This policy is a key component and contribute to the success of the company. We respect these differences and threat them as an additional value that we in collective in the way we treat separate and approach our customers. Therefore, Apple apply that each employee is fully responsible for recogniseing and following this policy. Substance policy O Apple comply with applicable mettle legislation worldwide. O monitor and assess new scientific findings on the environmental impact of substances employ in Apple products. O educate our ruffow chain partners and drive innovations deep down our supply chain to find alternative materials that improve environmental performance. Produc t Take-Back and Recycling Policy O Producers should provide a means to facilitate environmentally friendly recycling of their products at the end of electronic products useful life.O Consumers should select a disposal method for end-of-life electronics products that does not adversely impact the environment. O Governments should develop a reasoned framework and public policies to promote appropriate end-of-life management, including environmentally friendly disposal and recycling. O Materials generated from the recycling of our products should be used as feedstock for new products whenever possible. II. CORPORATE GOVERNANCE A. BOARD OF DIRECTORS The Board consists of 6 members, of which 5 are external directors Board Member-Occupation Audit and Finance citizens committee Nominating CommitteeCompensation Committee pull up stakesiam l V. dwellbellChairman Intuit, Inc C Ccc Millard S. DexlerChairman and CEOJ. Crew C C Albert Gore, Jr. gradationer Vice President of the US C C Steve JobsCEO and Co-founderApple ComputerChairman and CEOPixar Arthur D. LevinsonChairman and CEOGenentech, Inc C Ccc Jerome B. YorkCEOHarwinton Capital Corporation Ccc cc=Chairperson C=Member *Audit and committees members are used to ensure feed O.K. and monitor instruction exe stingerion and compliance. Steve Jobs Co-founder of Apple in 1976, he has played an important role in the development of the personal computer.He alike co-founded NeXT Software, inc. and served as CEO until 1997 when NeXT was acquired by Apple. conductor since 1997 and currently CEO of Apple and Pixar Animation Studios, Jobs is viewed as a key character for the company. However his strong voice and personality in spite of appearance the company could go away him the power to sway the come along. (internal) (Advantage/Conflict? ) CI4 William V. Campbell Director of Apple since 1997, he was also the former CEO and president of Intuit, Inc. Mr. Campbell also serves on the board of directors of Opsware, Inc.His experience and knowledge in business, finance and technology might be valuable for the company, however, he is in direct competition with Apple in the sale of software such as Quickbook. (External) (Conflict) Millard S. Dexler Director of Apple since 1999, he has been Chairman and boss Executive ships officer of J. Crew Group, Inc. since March 2003. Previously, Mr. Drexler was Chief Executive ships officer of Gap Inc. from 1995 and President from 1987 until kinsfolktember 2002. (External) Albert Gore, Jr Director since 2003, he was a former Vice President of the United States of America.He has remained an active leader in technology, launching a public/private effort to wire every classroom and library in America to the Internet. Therefore, Gore plays a key role in the implementation of Apples products in the educational segment. (External) ( profit) Arthur D. Levinson Director since 2000, he has been President, Chief Executive Officer and a director of Genentech Inc. since Jul y 1995. Mr. Levinsons experience could benefit apple but his interest may be somewhere else. (External) (Advantage/Conflict? ) Jerome B. York Director since 1997, he is also a director of Tyco International Ltd. nd Metro-Goldwyn-Mayer, Inc. Previously, Mr. York was Chairman and Chief Executive Officer of MicroWarehouse, Inc. , a reseller of computer hardware, software and peripheral products and he also served as a ripened Vice President and Chief monetary Officer of IBM Corporation. Mr. Yorks experience in the computer perseverance might be a big pro for the company. (External) ( Advantage) The Board of Apple is composed of a very diverse group of professionals who bring valuable expertise in the areas of technology, biotechnology, finance, turnaround strategies, retail business management, etc.The backgrounds and current independent positions of these members provide a wealth of knowledge and a vicissitude of business perspectives for Apple. However the external activities of some of the members of the board might also be a source of conflict for the company. B. expire Management & Management Style 1) Fred D. Anderson-Executive Vice President and CFO 2) Timothy D. Cook-Executive Vice President, Worldwide Sales and Operations 3) Nancy R. Heinen-Senior Vice President, General Counsel and depository 4) Ronald B. Johnson, Senior Vice President, Retail ) Peter Oppenheimer, Senior Vice President of Finance and Corporate Controller 6) Jonathan Rubinstein, Senior Vice President, computer hardware Engineering 7) Philip W. Schiller, Senior Vice President , Worldwide Product Marketing picVertrand Serlet, Ph. D. -Senior Vice President, Software Engineering 9) Sina Tamaddon, Senior Vice President, Applications 10) Avadis Tevanian, Jr. , Ph. D. -Senior Vice President, Chief Sofware applied science Officer C. Management Style Despite the fact that the company claims to have a partnership management appearance, I personally believe that Steve Jobs is leading an ent repreneurial title and highly influence the company. CI4) III. EXTERNAL ENVIRONMENT SCAN A. SOCIETAL ENVIRONMENT 1) Political-Legal Forces O Different countries have different legislations and these in some ways restrict the companies or give opportunities to the company. O NAFTA, European Union and early(a) regional trade open doors to market in Europe, Asia, Latin America that twisting enormous potential. O Political uncertainties caused by terrorism activities are directly impacting the overall business of the company. O The company relies on access to patent and keen property obtained from third parties.The company might unknowingly encounter infringe issues with existing patents of others. O Beatles lawsuit against the company may negatively affect the companys reputation. O The company has to comply with the environment regulations such as environment safe disposal or recycling. 2) Socio-Cultural Forces O The computer and internet engagement is growing worldwide and is a good source of opportunities for the computer industry. O Customers had survive more experienced and computer literate. O Education has become a primordial issue for the new generation, which is a key factor for the companys business. 3) EconomicO In the past year, the industry has been affected by the slow economic and that resulted in low consumer spending. However the current economy shows some sign of improvement, consumer spending and investment might increase as well. O Due to namby-pamby economic conditions, the U. S. educational is encountering large budget deficits in many states. This factor has a negative impact over Apples sales in the educational segment. O Sales of products that include components obtained from foreign suppliers can be adversely affected by currency exchange rate fluctuations and by internationalist trade regulations (tariffs and antidumping penalties). ) Technology O Technology is evolving at a rapid pace today ,and people appreciate more & more advances in their systems and are switching over to new information appliances. O Internet availability and usage is growing and leads to good opportunities for the industry. O The traditional desk kick the bucket might become outdated by the entrance of new revolutionary products. O Increasing necessary for new technology in schools and professionals. B. TASK ENVIRONMENT Threat of mod Entrants O Medium to High In the PC market any firm that discovers a new technology that is efficient in terms of outlay & performance is an immediate threat to the industry.However, Established standards, start-up costs and established brands names (Intel, Windows) are difficult to overcome for a new entrant. Threat of substitute products O High The new forms of information appliance like Digital TV / HDTV Digital set- top nook & Internet screen phones are gaining change magnitude popularity this might hamper the growth of the PC industry as a whole. talk terms power of suppliers O High Sin ce the industry is highly dependent on component suppliers, a powerful supplier could exert pressure on the market, by supplying components at a higher expense to increase his profits.Since Apple is working only with few selected suppliers, the company is streak at a higher risk than the average. Bargaining power of buyers O Low Due to high number of other suppliers in the industry the customer has the options to take the cheapest and the best. Rivalry among competition O High Competition among the giants is fierce, everyone aiming for a larger market look at ,intensive charge cuts & changes. IV. INTERNAL ENVIRONMENT SCAN A. CORPORATE STRUCTURE Apple is organized along functional lines. Apple is structured primarily on a geographic basis.The companys reporting in operation(p) segment are comprised of 1. The Americas 2. Europe, Middle East and Africa 3. Japan 4. Other Asia-Pacific (Australia, Asia, and the subsidiary FileMaker, Inc. ) B. CORPORATE CULTURE O Commitment to inno vation and product quality O Dedication to hard work and education O Commitment to diversity and to empowering employees O Commitment to safety and conservation of the environment/energy Steve Jobs has a huge impact in the companys culture. Since Jobs return in 1997, the company has reinvented itself with an wander of different colors and styles of computers.The introduction of the Ipod and Itunes largely position the company as an innovative leader. C. CORPORATE RESOURCES 1. ) Marketing Mix a. ) Product Apple is committed to sell original, good looking products that have an easy-to-use inter font. The company offers a range of personal computing products, related devices and peripherals, and various third party hardware-products. In addition, the company offers software products (Mac OS X), server software and related solution professional application software and consumer, education and business oriented application software.Apple has been very innovative by finding new usages fo r its mac computer, such as desktop publishing and strong graphics/animation capabilities. The Macintoshs functionality for managing multimedia files from cameras, DV recorder and MP3 devices has been very popular and successful. The new introduction of Apples iPod and the iTune has revolutionize the digital music industry. b. ) Place Apples operating segment are comprised of O U. S. O South America O Europe O Japan O Australia. Recently Apple chose to implement a vertical growth strategy and began xpanding their own retail stores. (CI2) The company also sells its product via third-parties dealers, or via internet through their own website or through the iTune online music stores. c. ) Promotion In 2003, Apple formed a strategical alliance with PepsiCo. The Pepsi iTune euphony promotion calls for people to use the winning code found under the Pepsis bottle caps products to cede songs from Apples iTunes practice of medicine Store. This promotion has already been successful for b oth companies and increased the awareness of the iTune presence in the market.In 2003, Apple also announced a marketing partnerships With America Online that are aimed at driving iTunes use deeply into the mainstream. Apple and America Online have agreed to put iTunes buy this song buttons nigh to every song thats listed in AOLs music service, which its 25 million subscribers can access. Clicking the button will automatically launch the iTunes music nickelodeon and begin downloading the song billing will be handled through the customers existing arrangement with AOL. Apple has a joint venture with Hewlett Packard.Apple has crapd an iPod for PC users and the success of this product was a good way for the company to capture non-MAC users. The company also drew on endorsements from music stars. U2 singer Bono, rap creative person Dr. Dre and Rolling Stones singer Mick Jagger each gave a live endorsement of the iChat videoconferencing software. Singer Sarah McLachlan also appeared li ve to sing several songs and to talk about how she used the iPod. In 2005, Apple Computer has initiated a partnership with Wal-Mart that will soon see the iPod shuffle featured at Wal-Mart discount locations around the country. d. ) PriceApple price is know to be above average in the industry. The company is using a differentiation strategy and focus 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. (CI3) This new set strategy may help Apple to better compete with the non-Mac user market but might cause some issue with the brand characterisation/recognition. 2. ) Finance The fiscal results for the fiscal 2004 fourth quarter ended family linetember 25, 2004.For the year 2004, the Company reported net income of $276 million on revenue of $8. 28 billion compared to net income of $ 69 million on revenue of $6. 21 billion in 2003. Their net income has increased 400% Sales to the education market grew 11 percent, bringing its highest quarterly total for that market in seven years. Apple has a strong balance sheet with a lot of cash (CI3), their inventories have almost double compared to the year 2003. Apple short-term debt and long-term debt have been completely paid, which is a very good advantage for the company.Apples bodily function ratios are very good and improved a lot compared to year 2003. However their ROE and ROI ratios are still low compared to the industry. Income Statement Sep 04 Sep 03 Sep 02 Revenue 8,279. 0 6,207. 0 5,742. 0 Cost of Goods Sold 5,870. 0 4,386. 0 4,021. 0 Gross Profit 2,409. 0 1,821. 0 1,721. 0 Gross Profit Margin 29. 1% 29. 3% 30. 0% Net Income After Taxes 276. 0 69. 0 65. 0 Balance Sheet Sep 04 Sep 03 Sep 02 Cash 2,969. 0 3,396. 0 2,252. 0 Net Receivables 774. 0 766. 0 565. 0 Inventories 101. 0 56. 0 45. 0 Total catamenia Asse ts 7,055. 0 5,887. 0 5,388. 0 Total Assets 8,050. 6,815. 0 6,298. 0 Accounts Payable 1,451. 0 1,154. 0 911. 0 Short-Term Debt 0. 0 304. 0 0. 0 Other Current Liabilities 1,229. 0 899. 0 747. 0 Total Current Liabilities 2,680. 0 2,357. 0 1,658. 0 Long-Term Debt 0. 0 0. 0 316. 0 Total Liabilities 2,974. 0 2,592. 0 2,203. 0 Total Equity 5,076. 0 4,223. 0 4,095. 0 proportions 2004 2003 application Liquidity Ratios Current Ratio 2. 58 2. 89 1. 33 Quick Ratio 2. 3 1. 44 1. 1 Profitability Ratios Gross Profit Margin 29. 47% 27. 52% 20. 43% Net Profit Margin 5. 20% 1. 11% 4. 53% Return on Equity (ROE) 8. 8% 1. 63% 20. 3% Return on Investment (ROI) 8. 8% 1. 1% 19. 1% Activity Ratios blood Turnover 56. 2 110. 84 81. 4 Asset Turnover 1. 2 0. 9108 1. 8 Leverage Ratio 1. 62 2. 47 3. ) Research and Development Apple consider that R&D are critical for the activity of the company. therefore, they are willing to increase investment in R&D to keep a sustainable competitive advantage in the industry. According to the companys Annual Report in 2004 In order to remain competitive, the Company believes that increased investment in research and development (R&D) is necessary in order to sustain and extend its position in the markets where it competes.The Companys R&D spending is focused on delivering timely updates and enhancements to its existing line of personal computers, displays, operating systems, software applications and portable music players developing new digital life-style consumer and professional software applications and investing in new product areas such as rack-mount servers, RAID storage systems, and wireless technologies. bran-new products are a emergency in this industry and seems to be a priority for Apple. New products are not always a success, though.This might explain why Apple seems to be so hesitant in investing its high cash flow into new projects, the company might be afraid by the potential mischance of the outcome. (CI3) 4. ) Operation and Logis tics Apple heavily rely on third-parties in the manufacturing and logistics sector. Therefore, the companys overall performance is greatly dependent on the performance of its distributors. In order to have more control over the quality of the buying experience, Apple has done continual effort to become vertically integrated during these 2 passed years.Apple work only with suppliers that meet the criteria from their policy (involve commitment to environment, safety and diversity. ) At each period the company performs a detailed review on demand forecasts, inventory, product lifecycle status. 5. ) Human Resources Management (HRM) Apple has over 13,000 employees world wide. Apple believe that employees diversity is a key component for the company success. The company expects that all employee will respect the background or cultural differences of their peers.Apple offer great benefits to its employee such has competitive pay, and compensation, insurance coverage, bonuses, substantial product discount, stock leveraging and saving/investment plan. The company offers all-level of position such as internship, part-time and entry-level for college student. 6. ) Information Systems Apple has encountered a substantial success by introducing a new digital music device called iPod that can store 1,000 songs and copy a CD in 10 seconds. The continual heavy investment in R&D allowed the company to be on the edge of new technology.Online store distribution channel has been very powerful for the company. V. mill/TOWS compendium A. prepare outline Strengths Weaknesses 1. Ease of use 2. Established in the personal computer market3. High Corporate reputation 4. Control over the product (manufacture both the computers themselves and also the operating systems which they run)5. Leader in innovation and product differentiation6. Employee diversity 7. Strategic Alliance (HP)8. Joint venture with Pepsi9. Strong steer management10. Loyal customer institute11. Creative style 1. The ease of use has led to some image issues, with some business people regarding the Macintosh as a toy. . High inventory3. Distribution problems4. high prices5. not IBM compatible, though great strides have been made in connectivity the Macintosh is not transparently compatible. 6. Declining share in educational market7. Too many product lines Opportunities Threats 1. Internet2. festering industry3. Creating new software markets and selling the hardware into these markets. 4. Demand for innovation5. Employee benefit programs6. Growing educational market (In both higher education and schooling, the Macintosh ease of use and low maintenance costs are attractive. )7. Music downloads from Itune 1.Very intense competition among the industry2. Price competition3. discharge of market share4. probable litigations5. Budget deficits in education6. Technological and prices discontinuity7. Potential increase in supplys costs B. TOWS ANALYSIS SO1. Focusing on innovation and product differ entiation will contribute to the customers satisfaction (S5, O3, O4)2. The diversity of the employees and the employee benefit programs contribute to the high corporate reputation (S3, S6, O5)3. Joint venture with Pepsi and strategic alliance with HP respond to the demand for music download. S7, S8, O7) WO1. The growing educational market should increase Apples market share in this segment (W6, O6)2. The growing industry should allow the company to decrease prices (W4, O2) ST1. The high corporate reputation might suffer from the potential litigations. (S3, T4)2. Strong management might overcome the potential litigations. (S9, T4)3. Focus on innovation and product creative style might offset the low prices of competitors. (S11, T1, T2)4. Innovation will depend on the technological -prices conditions and changes. (S5, T6) WT1.The image issues concerning the ease of use of the machine might contribute to the overtaking of share. (W1, T3)2. The discontinuity in technology and prices mi ght create some forecasting problems, which could result in excess or shortage of inventory. (W2, W3, T6)3. Competition might take advantage of Apples high price. (W4, T1, T2)4. Apples high price might lower the amount of educational contracts (W4, T5)5. Not being IBM compatible might lead to loss in market share (W5, T3)6. The broad product line might be endangered by the technology and prices discontinuity. (W7, T6) VI.strategic ALTERNATIVES AND RECOMMENDED STRATEGY A. STRATEGIC ALTERNATIVES 1. ) Turnaround The company could stop the expansion of their own retail segment in order to maintain a healthy relationship with its third-party distributor and subdue lawsuit. This strategy would also reduce the risks and costs tied to the stores investment. Apple could use its high cash to implement a product development strategy within the market segment they are currently serving. The company could also keep selling its products at a premium price in order to maintain the companys reputa tion as an upmarket and innovative brand.PROS O Improve relationship with resellers. (CI2) O Reduce risks O The allocation of the high cash into a product development strategy might ultimately increase the revenue of the company(CI3) O The premium price might be profitable and the upscale image brand of the company is respected. CONS O No control over the quality of the buying experience procured by the third-party distribution (CI2) O Potential loss of market share because of the premium selling price O Broad product lines might lead to confusion and extra overhead costs. (CI1) 2. ) Pause and occur with CautionIn the Annual Report for 2004, the company saw an increase in revenue and profitability. The introduction of iPod or Itune items have largely contributed to the companys successful year. The retail segment growth has increased the brand awareness of the company but has led to some conflicts with the resellers. This strategy has to be taken with caution because Their lower p rice strategy is allowing the company to attract some non-Mac users. During the mid of this year (2005), the company could consider to primarily focus on the music segment market and the education segment.Apple could also implement a succession plan for the eventual departure of Steve Jobs. The companys growth strategy has to be taken with caution and compromises with resellers have to be done. PROS O Good financial results O More control over the quality of the buying experience (CI2) O Better brand awareness O Less confusion among core competency. (CI1) O Sufficient cash flow to support the discounted prices. (CI3) CONS O Cannibalization risk is still present (CI2) O The low prices might discredit Apples upscale brand image. 3. ) Vertical GrowthThe company could decide to do a preliminary integration, by expanding its own retail store. Apple could use its high cash to finance this investment. The stores are a critical way to leverage Apples brand and showcase young digital wares to affluent consumers. PROS O Total control over the quality of the buying experience (CI2) O High cash can support the investment for the retail segment (CI3) O Better brand awareness CONS O Dissatisfaction of the resellers(CI2) O Potential loss of revenue due to cannibalization (CI2) O The high cash investment is risky, and might have been allocated in a more safety way. CI3) B. RECOMMENDED STRATEGY Pause and Proceed The last fiscal year has seen improvement for Apple. Profits have increased and the focus has been on innovation, especially in the music segment market. Using the high cash to implement a price strategy appears to be a good idea to compete with the non-Mac users. (CI3) The brand image might slightly suffer from this strategy, therefore marketing incentive should be increased in order to sustain Apples reputation for high quality and innovative products. The retail segment growth should be implemented with a lot of caution.Apple needs to ease the pain of the reseller s by coming up with programs to encourage these longtime partners to help it discover goals it cant achieve on its own. (CI2) Apple should also primarily focus on the music segment market and the educational segment market in which they have good opportunities. This focus would allow Apple to be more competitive and profitable. (CI1) Least but not Last, the company should prepare a succession plan in response to the eventual departure of Steve Jobs. (CI4) VII. IMPLEMENTATION A. WHO? The top management should narrow their focus to two market segment. B. WHAT?Apples core competency should focus on the music segment market and the educational segment market in which they have good opportunities. (CI1) C. HOW? The company has to invest more into these 2 segments and cut some product lines that are not very profitable to the company. D. WHO? As Steve Jobs initiated, the company should keep focusing on a price strategy E. WHAT? By lowering the prices, the company will be able to be more competitive and increase market share. F. HOW? The company can use its high cash to support discounted prices. (CI3) G. WHO? The top management should decide to expand the retail store. H. WHAT?Improve the quality of the buying experience by having control over the salesperson and join forces with the resellers. (CI2) I. HOW? The company can use its high cash to invest in the retail store expansion. The company should also tightly work with the resellers by load-bearing(a) them through programs and bonuses. (CI2) (CI3) J. When? During mid 2005. K. HOW MUCH? The Companys current strong financial condition and low debt-to-equity ratio will provide the means to accomplish these implementation initiatives in the short-term. In the long-term these measures will be well worth the cost in increased revenue and market share.L. WHO? The board of directors and the top management should prepare a succession plan. (CI4) M. WHAT? The company has to deal with Steve Jobs eventual departure. N. H OW? Steve Jobs has to delegate some of his power to the top management and he should also implement some training programs. Tim Cook might be a good potential successor. (CI4) P. WHEN? Right now. VIII. MAINTENANCE AND CONTROL A. The companys strong financial position should allow the implementation of the strategies stated above. However the investment related to the retail segment growth is very costly and might be risky.Therefore, the company should O Increase gradually the opening of retail stores. O Assess performance by having Finance and Marketing reviewing the numbers monthly. O gunpoint and immediately address any negative trends The top management should periodically visit stores and gather feedback from line employees. They should also gather feedback from resellers to address expansion issue. B. The companys focus on the music segment market and the education segment market has to be tightly monitored. O Top management should measure on a weekly basis overall performanc e. Revenue, Profit, ROI) O Feedback forms should also be given to customers to maintain good relations and to spot market trends early. whole shebang Cited 10-Q for Quarterly Period Ended December 25, 2004 http//www. apple. com/investor/ Apple Governance http//www. apple. com/investor/ Apple Financial analytic thinking http//www. hoovers. com/ Diverse Articles on Apple http//www. businessweek. com Leave a react You must be logged in to post a stimulant. VISION STATEMENT Man is the creator of change in this world. As such he should be above systems and structures, and not subordinate to them. Explanation of visionApple lives this vision through the technologies it develops for consumers and corporations. It strives to make its customers masters of the products they have bought. Apple doesnt simply make a statement. It lives it by ensuring that its employees understand the vision and strive to reach it. It has put systems in place to enable smooth customer interaction. It has put objectives in place to continuously depart forward implemented strategies to fulfil these objectives and ensured that the right marketing, financial and operational structures are in place to apply the strategies. MISSION STATEMENT 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. scalawag 15 of 54 picpicpic The PC Industry We can glean Insight into the history and composition of the PC Industry from its eponymous title. In the late 1970s, as Wozniak and Jobs were starting Apple computer, personal computers were an emergent product. The following chart (Reimer) gives an overall view of the major(ip) market players since the mid-1970s. PC Share of Market 0% 10% 20% 0% 40% 50% 60% 70% 80% 90% one hundred%Year 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 ShareofMark et IBM SOM Apple II SOM Mac SOM Amiga SOM C64 SOM TRS 80 SOM By 1983, the market share of the Apple II fell to 8% while the PC had 26%. Market share of Macintosh peaked at slightly more than 10% in the early 1990s and has since tapered to mingled with 2-3%. The IBM PC and its clones became the standard due to the success of the open nature of the PC. This allows product developers to offer vastly more products for the platform. Some betoken that not licensing the Mac OS was a mistake.Bill Gates and Microsoft were encouraging Apple to license their OS in the early 1980s, because they were developing software for Apple and had much riding on the success of the company. When Apple did not license, Microsoft began developing their operating system, Windows. (Linzmayer, 169-75, 245-9) Page 16 of 54 picpicpic The Online Music Industry While Apple understandably dominates the online music industry, the battle for domination is not over. Although digital music sales are growing rapidly, the Recording Industry Assoc iation of America (RIAA) states that digital sales account for only 4% of all music sales. Borland) Analysts at Forrester (Bartiromo) and Gartner (Bruno) validate this. Apples sales are between 66% and 75% of downloads and 80% of music players. (Bruno) Apple is part to a suit alleging monopolistic practices concerning their market share dominance of players and downloads. (Grundner) The other players in the download market are (the revised) Napster, bumpkin Music, Rhapsody, and illegitimate file-sharing services. Portable music players competing with the iPod include those made by Creative, Samsung, iRiver, and Sony.A major point of fieldion between these services and player manufacturers is the control of a variety of incompatible Digital Rights Management (DRM) schemes. The Future of Apple Personal Computers A Shift in Strategy Apple has historically taken a remote different path than the traditional Windows and Intel combination. Microsoft provides the Windows operating syste m to separate downstream hardware producers such as Dell. Apple vertically integrated both the operating system software and hardware completely under Apple.A consumer running Microsoft Windows can choose from a myriad of systems based on the Intel processor, while a consumer running Apples OS X must purchase Apple hardware. Page 17 of 54 picpicpicpic Apple is adjusting this strategy by migrating their microprocessors from IBM and Motorola PowerPC to Intel. Analysts believe that the Intel-based Macintosh may be able to run Microsoft Windows applications by the end of 2006. (Burrows) In addition to switching processors, Apple positioned their computers as an immediate option for the traditional Microsoft Windows user.With Apple Boot Camp, users may now use Mac OS X or Windows on an Apple computer. (Sutherland) Figure 1 Apple Boot Camp Allowing Mac OS X or Windows By allowing users to run Windows on an Intel Mac, Apple reduced the switching costs for traditional PC users. Apple may s teal away customers that are willing to pay a premium for a system that runs both Windows and Mac OS X. Figure 2 IBM PowerPC mainframe, Intel Processor Core Duo / Pentium M Page 18 of 54 picApple continues to retain a strategic option to license its technology to clone makers such as Dell.Past attempts at licensing Apple technology (to IBM, Gateway, and others) failed on accord of Apples rigid demands. Many technology leaders (such as a 1985 letter by Bill Gates to Apple CEO John Sculley) criticized Apple for keeping a closed architecture. Apple cofounder Steve Wozniak criticizes this strategy, We had the most beautiful operating system, but to get it you had to buy our hardware at twice the price. That was a mistake. (Linzmayer, 245-57) Whether Apple would be willing to pursue this reversal of vertical integration is unclear.Although such a move would cannibalize a portion of Apples own hardware sales, it would also provide royalty-based revenue that could approach $1 billion ann ually. (Burrows) Jobs traditionally sided against licensing Apple technology. He referred to Mac clone producers as leeches and he personally killed Power Computing (a Mac clone producer) by terminating their license in 1997. (Linzmayer, 255) Apple in the Living Room Apples iPod and iTunes are a powerful combination that fosters a network style of increasing returns. (Barney, 124) By selling iPods, Apple increases the consumer demand for music from iTunes.By placing more musical choices on iTunes (including less popular songs that appeal to niche audiences), there is more demand for iPods. Apple had 70% of the effective music download market in early 2005. (Yoffie) Apple is shooting for the digital living room of the future. For example, Apple just rund a boom box portable version of the iPod. This iPod (the iPod Hi-Fi) comes with a remote control. Instead of forming a strategic alliance, Apple engineered the iPod Hi-Fi and designed it with high-fidelity features. (Burrows) Apple is clearly trying to develop a stronger core competency in the entertainment area.Page 19 of 54 picpic Figure 3 The Apple Hi-Fi Apple may also release an Apple-branded cell phone and iPod combination device by the end of 2006. (Burrows) This product would again position Apple as a second mover responding to addresss Treo and Verizons VCAST technology. Strategic Alliances and Entertainment Jobs had the early strategic vision to complement computing with picture show entertainment. After founding NeXT, he personally acquired a majority interest in the young movie company Pixar in February 1986. (Linzmayer, 219) Jobs went on to invest ? of his personal wealth into Pixar.In 1995, Pixar solidified its position within shake up movies with the debut of Toy business relationship. Grossing $358 million worldwide, it became the 3rd-largest grossing animated movie in history. (Linzmayer, 222) After this success, Jobs took Pixar public and negotiated far better terms with Disney. Later succ esses included Toy Story 2, Monsters Inc. , and Finding Nemo. Ironically, Jobs stated in the November 23, 1998Business Week, I Think Pixar has the opportunity to be the next Disney not replace Disney but be the next Disney. (Linzmayer, 222-4) The alliance between Pixar and Disney has remendous potential for economies of backcloth. As CEO of Apple and Disneys largest shareholder, Jobs is the strategic link between Disney, Page 20 of 54 picpic Apple, and Pixar. Opportunities include combining the animated movie expertise of Disney and Pixar, as well as sharing the content of Disneys ABC or ESPN networks over Apples digital offerings. (Burrows, Grover, and Green) A current example of the fusion between Disney, Jobs, Apple, and technology is video on the iPod. Disneys Desperate Housewives was one of the first television programs available for purchase and download to the newer video-enabled iPod.There are concerns about whether these synergies will come to fruition. There are fears that the personality and style of Jobs may conflict with Disney, and that Disney CEO Iger could be Amelioed driven out of office by Jobs in a manner similar to how Jobs drove Amelio out of the CEO post at Apple. (Burrows, Grover, and Green) EXTERNAL ANALYSIS Technological Environment Brand sensory faculty Style at a Premium Apples products are trendy and stylish. After Jobs returned in 1997, Apple retained designer Jonathan Ive to differentiate their computers from the typic beige box.Ives design of the iMac included clear colorful cases that distinguished Apple computers. (Linzmayer, 295-6) Apples iPod (with the trademark white ear buds and simple way of life wheel) commands a 15%-20% premium over other MP3 players. (Yoffie) Apple and Pixar limit the number of computer products and movies that they sell. Product differentiation with focused quality and style also extend to the Jobs Pixar Pixars executives focus on making sure there are no B teams, that every movie gets the be st efforts of Pixars brainy staff of animators, storytellers, and technologists. (Burrows, Grover, and Green) Page 21 of 54 picpicpicpicpic Figure 4 The Stylish Design of the iMac and Mac Mini Apple positions its Macintosh computers as higher quality and higher price. HP, Dell, and other PC manufacturers are pricing many systems under the $1,000 threshold. Apple is struggling to meet demand for its new MacBook Pro laptop despite a $1,900 price tag that is nearly twice that of garden-variety contends. (Burrows) Apple has only recently entered the low-end (below $500) consumer market with the Mac Mini. Although the Mac Mini is a base model with few features, it comes close in in a very small and distinctive package.Apple portrays this computer as Small is Beautiful. (Apple) Likewise, the iPod Shuffle was Apples first entry into the lower-end ($100 range) of flash- memory-based portable music players. Interoperability Although Apple competes directly with Microsoft for operating sy stems, the release of iTunes for Windows in 2002 was a key strategic move. This decision expanded the potential customer base to nearly all personal computer owners, even though Apple only has 2%-3% of all personal computer sales. (Yoffie) Conversely, Apple depends on Microsoft for a version of Microsoft Office.As the most widely used office suite of applications, Macintosh users rely on Office to correspond with companies that standardized on Windows. This is from a strategic alliance between Apple and Microsoft after Jobs returned in 1997. (Linzmayer, 290) Page 22 of 54 picpicpic Apples iTunes service has a technological hook (asset specificity) to Apples iPod. Although versions of iTunes exist for both Apple and Microsoft operating systems, the iTunes AAC file format prevents other portable music players (such as iRiver or Samsung) from playing purchased songs. (Yoffie) Technology and the Digital LifestyleApple not only dominates the music player market, its iLife suite provides consumers with easy-to-use software for music and video composition. With podcast a household word, Apples Garage roofy application makes the recording of podcasts and music very easy. (Boddie) Figure 5 The GarageBand Music and Podcast Application Page 23 of 54 picpic Regulatory Environment While introducing new technologies, there is a persistent threat of legal action by competitors. For example, Apple sued Microsoft in 1988 (settled in 1997 for an undisclosed amount) for perceived similarities between Microsoft Windows and Macintosh audiovisual aid works. Linzmayer, 172-4) Microsoft has generally been the focus for government antitrust charges (such as U. S. v. Microsoft) (US DOJ, 2006). Both federal and state governments assert that Microsofts dominance blocked fair competition within the software industry. This is an advantage for Apple, because its operating systems are a viable substitute for Windows. Furthermore, Microsofts continued support for Office for Macintosh reduces the perceived level of market monopoly and abuse. (Linzmayer, 290-1) Manufacturers will continue to trespass on Apples intellectual property.For example, the company tex9 released an open source music program called xtunes that was very similar to iTunes. In 2002, Apple took legal action against tex9, who then altered the program and renamed it sumi (pronounced, sue me). (Linzmayer, 300) Legal threats can surface from somewhat unusual sources. Apple Corps Ltd. is the London-based company that owns the rights to the music of the Beatles. Paul McCartney and Ringo Starr recently sued Apple over the use of the Apple logo in iTunes, claiming that it violated Apples agreement not to produce music under an apple-based logo. Associated Press) Research and development is a key component to Apples sustained competitive advantage. Apple is currently taking legal action against several popular technical web sites for releasing proprietary product research. Sites such as appleinsider. com have allegedly posted verbatim content from paperss protected by employee non-disclosure agreements. Page 24 of 54 picpicpic (McCullagh) Release of critical insider information could give Apples competitors a jump in producing rival products. Industry Analysis Using Porters Five Forces ModelApple operates in two primary industries Computing Hardware and Software Delivery of Entertainment and Media Apple has always been under intense competition within the computer, software, and entertainment industries. Looking to 2005 Every time that Apple had jumped into the lead in a product kin during the past two decades, it had had difficulty in sustaining its leadership position. (Yoffie) We use Porters Five Forces Model to understand why Apples industries are so competitive. Figure 6 Porters Five Forces Model Page 25 of 54 Threat of New Entrants Bargaining ower of Suppliers Threat of Substitutes Bargaining power of Buyers Level of Threat in an Industry picpic Figure 7 Summary of Industry T hreats (Computer Equipment and Entertainment Distribution) Type and Severity of Threat Organization Examples submission High Threat Verizon Streaming audio and video with V CAST. virago On demand online services to purchase music (similar to iTunes). Google They make everything. The Next Google New entrants with disruptive technology. Rivalry High Threat Microsoft Windows Operating System, Windows Media Player for playing music and video.Linux Competition to Mac OS X Operating System. Napster, Rhapsody Online music sources alternatives to iTunes Music Store. Dell, HP, Lenovo Alternate sources for computer hardware. iRiver, Samsung, Creative Small, stylish MP3 Players. DreamWorks Animated movies. YouTube. com Online video. Substitutes Moderate Threat XM, Sirius Satellite Radio for music. XBox, PS2 Entertainment Media, Media and Music. Various Internet Streaming Radio and Podcasts. Music CDs, DVD- Audio and SuperAudio CD Alternative means to acquire music. Broadcast, Cable, Satel lite, NetFlix, TiVo, TheatresAlternative sources for video. Suppliers High Threat Motorola, IBM, Intel, Samsung Suppliers of Processors and computer memory. Microsoft Strategic Alliance / Supplier of Office for Mac. The Big Five BMG, EMI, Sony, Universal, and Warner Sources of music. Will they raise prices and break the dollar per song model? Some in the record industry resent Apples distribution model. Apple reaps billions from selling its hit music player, but there are sparse profits from the songs being sold over the Net. (Burrows, Grover, and Green) Disney, ABC, NBC, CBS, Fox, Pixar, SonySuppliers of Television and Movies. Will they sign exclusive contracts with other online services? Note that this threat is reduced for Disney / Pixar. Buyers Moderate Threat Consumers and Illegal peer-to-peer file sharing Consumers share music using peer-to-peer networks without paying for music. Distributors Apple retailers may pressure for lower prices or better terms. For example, the r elease of the Apple Store in 2001 infuriated longtime independent Apple retailers that didnt appreciate Cupertino cannibalizing their sales. (Linzmayer, 300) Consumer Attitudes and BehaviorsConsumers or businesses may reduce spending on personal computers or non-essential (potentially high elasticity of demand) music players if they fear economic downturns. Consumer Refresh Consumers and businesses may continue to use previous-model iPods and Page 26 of 54 picpic Cycles Macs rather than upgrade to current iPods, iMacs, or OS Page 27 of 54 picThe total industry threat for the industry space that Apple occupies (computer equipment and distribution of entertainment) is a high threat industry. Apple must continue to pursue product differentiation (i. e. he style and ease-of-use of an iPod) and economies of scope (i. e. offering ABC television shows on iTunes) to maintain their sustained competitive advantage in this industry. Which External Threats are Most Significant Computer Hardwa re and Software Open Source software such as the Linux Operating System and Open Office applications threaten both Apple and Microsoft. The low (often, free) cost of the software may allow it to overtake Apple and Microsoft, especially in developing markets such as China. Music Products Major online retailers such as Amazon are considering entry into the online music market.With a wide internet presence and a household name, Amazon could present a formidable challenge to Apple. If the major record labels (Universal, Sony BMG, EMI, and Warner) negotiate better terms with new competitors to iTunes, Apple may be unable to provide some of the music content that they currently offer. The major music labels dislike Apples dollar per song pricing. They would prefer to earn higher profits with variable pricing. (Wingfield) With variable pricing, the most popular songs would be greater than $1, and less popular songs would be less than $1.Although the labels recently renewed their contracts with Apple, there may be provisions that allow future changes in the pricing model. (Wingfield and Smith) Suppliers The recent shift to Intel processors could present a significant threat to Apple. With only two companies (Intel and AMD) producing Intel-compatible processors, there is a strong potential for tacit tacit consent and oligopoly power between these suppliers. Apple purchasing must now directly compete with HP, Lenovo, and Dell. If shortages or Page 28 of 54 picpic exclusive agreements materialize, Apple could face problems with obtaining raw materials.Apple should consider additional sources such as Advanced Micro Devices (AMD). Figure 8 CPU Market Share Additional External Threats protection Apple software, like all large software products, has security vulnerabilities that hackers may exploit. A significant exploitation in the future could damage many businesses and households using Apple computers. This would affect future customer purchasing decisions. Apple enjo ys a competitive advantage, because their OS X is mature and stable due to its basis on BSD Unix. In fact, computer security folks back at FBI HQ use Macs running OS X. (Granneman) Page 29 of 54 picpicpicpicpicpicpicpicpicpicpicpicpicpicpicpicpicpicpicpicpicpicpicpicpicpicpicpicpicpicAds by Google complimentary Whitepaper Gain competitive advantage using predictive analytics www. sas. com/uk/retail SPSS Predictive Analytics Learn To Use Predictive Analytics In This Free SPSS White Paper. www. cognos. com/SPSS_analytics SWOT Analysis Diagrams Easy SWOT Diagram Software See Examples. Free Download www. SmartDraw. com picpicpicpicpicpicA Strategic Analysis of Apple Corporation DownloadPrintMobileCollectionsReport Document Report this document? Please tell us reason(s) for reporting this document Top of skeletal frame pic pic picSpam or junk picPorn adult content picHateful or offensive If you are the procure owner of this document and want to report it, please follow thes e directions to submit a copyright infringement notice. picCancel Bottom of appoint This is a private document. pic Info and Rating Reads 46,219 pic Uploaded 02/09/2009 Category School Work Rated picpicpicpicpic(28 Ratings) course information emailprotected com inc analyse strategy summary macintosh computers organisational objective (more tags) course information emailprotected com inc analyse strategy summary macintosh computers organisational objective avac strategic control business activities term strategy industries case profitibility economic relative ideas (fewer) Follow mahantesh123 picpicpicpicpicpicpicpicSections show allcollapse prev next administrator SUMMARY HISTORY OF APPLE The PC Industry The Online Music Industry The Future of Apple Apple in the Living Room EXTERNAL ANALYSIS Technological Environment Interoperability Technology and the Digital Lifestyle Regulatory Environment Industry Analysis Using Porters Five Forces Model SWOT Analysis Threats F inancial Analysis Stock Price Performance Profitability Measures Product Unit Sales 2002 Product Sales 2005 Product Sales Strategy Product Differentiation Strategic Alliances picShare & Embed Related Documents PreviousNext 1. pic21 p. pic18 p. pic18 p. 2. picp. picp. picp. 3. pic33 p. pic48 p. pic48 p. 4. picp. pic20 p. pic24 p. 5. pic7 p. pic20 p. pic4 p. 6. pic23 p. picp. picp. 7. pic1 p. pic60 p. pic1 p. 8. pic2 p. pic4 p. pic41 p. 9. pic1 p. pic1 p. pic45 p. 10. picp. pic3 p. pic3 p. 11. pic4 p. pic1 p. pic1 p. 12. pic1 p. picp. pic7 p. 13. pic19 p. picp. pic860 p. 14. pic5 p. pic1 p. pic17 p. 15. pic24 p. pic35 p. picMore from this user PreviousNext 1. pic26 p. pic4 p. pic3 p. 2. pic3 p. pic2 p. pic76 p. 3. pic29 p. pic25 p. pic6 p. 4. pic61 p. pic54 p. pic16 p. 5. pic121 p. pic121 p. pic4 p. 6. pic25 p. pic43 p. pic14 p. 7. pic5 p. pic7 p. pic43 p. 8. pic12 p. pic18 p. pic18 p. 9. pic31 p. picRecent Readcasters Add a Comment Top of Form pic pic Submit Characters 400 pi c pic Bottom of Form 0137984613 left a comment iryani_70 03 / 13 / 2010 Reply natasha100 left a comment awesum report-thanx -but just tel me how 2 download it? 03 / 02 / 2010 Reply queenouchka left a comment great report, please how to download? 02 / 24 / 2010 Reply BrianCMasi left a comment is reading Thanks for this.Your work helped guide me in completing my analytic thinking of the company. 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