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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?