Apple Incorporated

www.apple.com

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Proactive Consultants Group
Proactive Consultants Group
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which focuses on creating business
improvement and expansion
strategies.
• We offer these 5 key practice areas:
– Joint Ventures / Acquisitions
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 Strategic Analysis of Apple
Inc.
• Company Background (incl. vision,
mission, goals, objectives, business
model)
• Company Performance
• Management Characteristics
• Strengths, Weaknesses, Opportunities, &
Threats
• Industry & Competitor Analysis
• Identify major issues
• Introduce viable recommendations
• Provide realistic implementation plans
 Vision & Mission
• Product and service: The company’s primary
product lines were Macintosh products
(including desktops and portables), iPods,
iPhones, iTunes (including other music-related
products and services), peripherals (including
other hardware), and software, service, and
other sales.


• Vision: responsible for ensuring that all

operations of Apple ran efficiently and
smoothly, also could continue to be a vital,
innovative company in the face of a very
competitive environment.
 

• Mission: keep bring innovation products to the

market.
 Goals & Strategies


 Goal #1: To increase the demand from consumers

and keep pushing for innovation products
 ↓
 Apple business strategy leverages its ability, through
the design and development of its own operating
system, hardware, and many software applications
and technologies to its customers.
 Goals & Strategies
 Goal #2: To improve the company and turn its
performance around
 ↓
 Not only consistently pushed for innovative new
ideas and products but also enforced several
structural changes, including ridding the company
of unprofitable segments and divisions.


 Goal #3: To be the first company in this industry

 ↓
 Being the first company to introduce a concept or a
new product, then struggled to maintain control of
its market share in that product line.
 The Apple Timeline
1997 2000
Steve Jobs Steve Jobs
referred as announced he is
“interim CEO”. 1998 permanent CEO of
Proved to be a iMac Apple January 2007
landmark year Iphone first announced
for his company
1976 2003
Founded by iTunes
Steven Wozniak
and Steven Jobs.
They introduced
Apple I. 1999
1984 iBook
Macintosh 1993
-First PDA - June 2007
computer use Newton iPhone on sale
a 3.5-inch in United States
disk drive

Apple Mike Scott Markkula John Sculley Michael Spindler Gil Amelio Steve Jobs
CEOs

1983
Apple Lisa
Late 1997 Early 2001
1978 Begin selling direct PowerMac
Apple II launched 1991 to consumer over the
First Wed and by phone.
1977 Generation
Introduced Apple PowerBook 1994
II at local trade PowerMac May 2001 July 2004
show family of PCs Open retail stores 100 Million song sold
-First Macs 70% Market Share
incorporate
the PowerPC
chips October 2001
iPod
 Business Model
APPLE INC

Software Products

iTunes Other Softwares Macintosh iPod iPhone

Online Retail Carrier

Americas Europe Japan Asia Pacific

Customers
 Company Performance
(FY2007) PC
(in thousands)
No Ratios Apple PC Dell HP Acer Micorsoft
Industry
Profitability 1 Gross Profit Margin 33.97% 33.75% 19.09% 24.63% 10.26% 80.80%
Ratios
2 Operating Profit Margin 18.37% 15.02% 5.63% 8.64% 2.18% 37.23%

3 Earnings per share (basic) $4.04 1.95 $1.33 $2.76 $0.17 $1.44

Liquidity 1 Current ratio 2.36 1.49 1.07 1.21 1.34 1.45

Ratios
2 Quick Ratio 2.32 1.37 1.01 1.00 1.10 1.41

3 Working Capital 12,657,000 7,398,795 1,354,000 8,142,000 1,484,974 13,356,000

Leverage Ratios 1 Debt-to-assets ratio 0 0.16 0.02 0.09 0.68 0

2 Long-term debt-to-capital 0 0.08 0.09 0.11 0.18 0

ratio
3 Debt-to-equity ratio 0 0.09 0.10 0.13 0.22 0

4 Long-term debt to equity 0 0.09 0.10 0.13 0.22 0

ratio
5 Times-interest-earned - 40.28 76.44 31.17 13.23 -
ratio
Activity Ratios 1 Days of inventory 7.97 22.95 8.71 37.30 29.77 31.00

2 Inventory turnover 45.82 24.31 41.92 9.78 12.26 11.77

3 Average collection period 5.85 22.68 7.76 9.83 80.49 9.48

Management Characteristics
Apple‘s management history:


• In 1976, Steven Wozniak and Steven Jobs founded Apple

Computer.
• Michael Scott-- president; Mike Markkula--chairman of the board.
• In 1981, Markkula-- president and CEO.
• In 1983, John Sculley-- president and CEO.
• In 1985, Jobs left Apple.
• In 1993, Michael Spindler– CEO
• In 1996, Gil Amelio-- CEO.
• In 1996, Apple acquired Steve Jobs’s company.
• 1997-2000, Jobs "interim CEO"--permanent CEO.


Apple‘s skilled management team:



• Steven Jobs—CEO
• Peter Oppenheimer--senior vice president and chief financial
officer
 Corporate Culture & Values
• Apple, Inc. insists on its underlying
philosophy of innovation.
• They believed that the company’s
consistent achievement would depend
heavily on R&D, innovative products and
services, and competitive price.
• The company takes computers as its core
business.
– user-friendly product (higher quality, more
technological sophistication, greater ease
of use)
• Competence in design
– portable, stylish, affordable and powerful
 Organization Structure
Board
Of
Directors

CEO

SVP EVP
CFO COO

Corp
Cont Inve Info Inte orat Serv
roll stor rmat Supp
rnal e HR ice
er Trea rela ion ly Sale
Tax audi Deve Dept . &
sury tion syst chai s
t lopm Supp
s ems n
ent ort
Europ
e
Afric
Ameri a Retai Onlin
cas & Japan l e
(N&S) the
Middl
e
East
 SWOT Analysis
Strengths Weaknesses
Innovation Non-Prevalent of its PC like
Strong Partnership Support Dell and HP
Became third largest PC Problems with Functions for

maker in U.S both IPod and IPhone

Opportunities Threats
International Markets are
 Recession
growing More and Stronger

Competitors
CEO’s Health Problems


 Industry and Economic
Features
• Apple, Inc. is in the highly
competitive Personal Computers
industry along with Dell, Hewlett-
Packard, Acer and Lenovo to name
Economic Feature Apple's Attributes

Market Size & Growth Rate* $330B (2007), Growth Rate: 40% for the next 5 years

a few
Number of Rivals More than 10, but mainly dominated by Dell Inc, HP, Acer, Lenovo

Scope of Competitive Rivalry Global

Number of buyers Increasing digital lifestyle buyers

Degree of product differentiation Products of rivals becoming less differentiated and causing price competition

Product innovation Critical

Demand-supply conditions High Capacity to support the high demand

Pace of technological change Rapid Change

Vertical integration Yes

Economies of scale Exist (Lower cost per unit when high volume of production)

Learning/experience curve effects Strong

*Source: World PC Market Report. “eTForecast” < http://www.etforecasts.com/products/ES_pcww1203.htm>. Accessed on Oct 4th ,
2010.
 Driving Forces & Success
Factors
• Prevalent driving forces
– Increasing globalization
– Emerging new Internet
capabilities/applications
– New Buyers
– Technological change
– Manufacturing innovation
• Apple’s growth are attributed to their
technology, manufacturing and
distribution methods, as well as
clever marketing tactics.
Personal Computer Industry
Trends
• Globalization of personal computer
industry
• Manufacturing costs have decreased
• Consumers more likely to purchase
more than one device
• Brand loyalty
• Mobile computing is getting better
and faster
 Michael Porter’s 5 Forces on PC
Industry

Score= 4 Score= 4

Score
Score= 4 =5

Score= 1

O ve ra llPC In d u stry
A ttra ctive n e ss = 1 8 / 5
S ca le : 1 ( U n fa vo ra b le ) – 5 = 3 .6
( Favorable ) Quite Attractive
 Competitor Analysis
Strategic Group Analysis of PC
Industry

Source: Masi, Brian (2009). Strategic Analysis of Apple Inc [Electronic version]
Strategic Group Analysis of PC
Industry
 Weighted Competitive Strength
Assessment
    Apple Inc Dell HP Acer Microsoft
Key Success Factor / Importance Strength Score Strength Score Strength Score Strength Score Strength Score
Strength Measure Weight Rating Rating Rating Rating Rating
Quality/Product 0.15 9 1.35 8 1.2 8 1.2 8 1.2 9 1.35
Performance

Reputation/Image 0.05 8 0.4 9 0.45 10 0.5 7 0.35 10 0.5

Manufacturing 0.05 9 0.45 10 0.5 10 0.5 9 0.45 10 0.5
Capability
Technological Skills 0.15 10 1.5 9 1.35 9 1.35 9 1.35 10 1.5
Dealer Network / 0.1 10 1 10 1 10 1 9 0.9 10 1
Distribution
Capability
New Product Innovation 0.2 10 2 8 1.6 8 1.6 7 1.4 10 2
Capability
Financial Resources 0.05 7 0.35 8 0.4 10 0.5 6 0.3 9 0.45
Relative Cost Position 0.15 6 0.9 10 1.5 9 1.35 8 1.2 10 1.5
Customer Service 0.1 10 1 10 1 10 1 9 0.9 10 1
Capabilities
Sum of importance 1.0                    
weights
Weighted Overall   79 8.95 82 9 84 9 72 8.05 88 9.8
Strength Rating
                       
Rating scale: 1 = Very Weak; 10 = Very Strong                 
                       
Generic Strategy Analysis
 Major Issues / Problems

• Apple relies heavily on Steve

Jobs’ innovation of the
products and leadership
skill.
• Conflict between core
business and main
revenues.
• Poor Global Retail Strategy.
 Apple relies on Steve Job's
innovation of the products and
leadership skill.
Innovation Reputation
Market Internal mgt
Alternative (0.3) (0.2) Share (0.2) Total
(0.3)

A1: Build a
strong 0.3 0.2 0.9 1 2.4
(0.3x1) (0.2x1) (0.3x3) (0.2x5)
management
team
A2: Training 1.5 0.4 0.6
(0.3x2)
0.2 2.7
on innovation (0.3x5) (0.2x2) (0.2x1)

skillsStart
A3:
looking for 1.5 0.2 0.3 0.6 2.6
(0.3x5) (0.2x1) (0.3x1) (0.2x3)
Job’s
replacement
from→outside
Best alternative : Training on
innovation skills
 Recommendation &
Implementation for Training on
innovation skills
• Short-run: Collaborate with famous
design school /college all over the
world
 1st year- Cooperate with local design
colleges (ex: FIDM)
 3rd year- Go global and international
• Long-run: Succession planning
 5th year- Build a brand new Apple
College in Cupertino, CA
 10th year- New generation is ready to
replace Steve Job
 Conflict Between
Core Business & Main Revenue
 Problems: Conflict between core business and main
revenues
 Cause: Failure of maintain control of the exclusive
right to use its own technology, or of its market
share in PC product line. GUI vs. Windows 1.0
 Impact PC product are less popular and less
profitable than non-computer products.
 Non-computer products will have more
competitors.
•
Alternative 1 Proper protection. Creating patents
Alternative 2 Brand loyalty awareness
Alternative 3 Focus on Non-Computer Products
•
 Strategic Alternative
RecommendationS
Profit Market Company Ease of Cost Customer Total
(50%) Share Image Implement (5%) Service 100%
(20%) (10%) (10%) (5%)

4 3 4 4 4 3 3.75
A1

5 4 5 2 3 5 4.4
A2

A3 4 4 4 3 3 4.5 3.875
 Recommendation &
Implementation
Recommendation


 Short-run: Ads, Promotion

 Long-run: Customer Service, Quality Control, Tech-support


Implementation plan


 Marketing—More ads & promotion to young customers

 Build a database--developing 500 loyal customers within 2 years
 Properly deal with refund--keeping our customers from
going away
 Put an end to defect--winning customers' trust and loyalty
to products
 Create a strong project technical team--attracting 5000
loyal customers in 5 years
 Release IPhone system– let other non-Iphone cell phones
can use its system as well
 Poor Global Retail Strategy
Strategic Problem Cause Impact
Poor Global RetailApple retail stores Untapped potential
Strategy were only operating market share / Enter
in US, Italy, Japan, Market late vs
Recommendations Canada and UK. Competitors
1) Opening retail stores to other countries or tap into other
big foreign markets in Asia & West Europe
2) Connect with local government, specifically education to
replicate the similar relationship that Apple has in the U.S.
3) Partnership with local well-known electronics retail store
to have a Apple product section
 Strategic Alternative
RecommendationS
Problem (Poor Global Strategy)

Profit Potential Market

CostSize
InvolvedCompetitive Advantage
Barriers of EntryTotal

Criteria Weight (%) 25% 30% 20% 15% 10% 100%

Rating Score Rating Score Rating Score Rating Score Rating Score Total
Score
Opening retail stores to 5 1.25 5 1.5 3 0.6 4 0.6 2 0.2 4.15
other countries or tap into
other big foreign markets
in Aisa & West Europe
Connect with government, 4 1 5 1.5 1 0.2 3 0.45 2 0.2 3.35
specifically education to
replicate the similar
realtionship that Apple has
in the U.S.
Partnership with local well- 3 0.75 4 1.2 2 0.4 3 0.45 3 0.3 3.1
known electronics retail
store to have a Apple
product section
Scale 1 to 5 with
1 - Very unfavorable
2 - Unfavorable
3 - Neutral
4 - Favorable
5 - Very favorable
 Recommendation &

Implementation
R e co m m e n d a tio n
Plan
• S h o rt-ru n :
– Promotional packages
– Tsunami fund-raiser
– Contests
• Long-run:
– Create brand awareness
• Tying in with local culture
– Donating computers to school
Implementation plan


• Partnership with local mobile service carriers for Iphone to

create brand awareness 
• Selecting high business traffic locations for the retail store
– Example: Malls, shopping centers, downtown
• Providing discount for educational institutions and goverment
employees

•
References
• Acer Incorporated (2008). Acer Incorporated 2007 Annual Report [Electronic version].
• Apple, Inc (2007). Form 10-K Report [Electronic version].
• Bhatt, Arya. Shrma, Prateek. Kumar, Anjalika. Oougunsuyi, Olakunle. Panchal, Viren.
Putti, Amal(2008). Strategic Management Analysis Apple iPhone.
“Slidesshare.net” < http://www.slideshare.net/thatsprateek/apple-inc-strategic-
management-analysis> . Accessed on Oct 4th , 2010.
• Huzefa, A. N. Deepti, Dinesh Gaurav, Vinay, and Harmanjeet Singh. (2009). A
Strategic Anallysisof Apple Corporation. “Scribd.com” <
http://www.scribd.com/doc/11983566/A-Strategic-Analysis-of-Apple-Corporation>.
Accessed on Oct 5th , 2010.
• Marino, Lou. Hattaway, John. Jakcson, Katy B. (2008). Case 7: Apple Inc in 2008 in
Cases in Crafting and Executing Strategy. New York: McGraw-Hill/Irwin
• Masi, Brian (2009). Strategic Analysis of Apple Inc [Electronic version]
• Thompson, Arthur. Strickland, A.J., Gamble, John E. (2010). Crafting and Executing
Strategy. New York, New York: McGraw-Hill/Irwin
• Tydall, Ian (2008). Apple’s Competitive Strategy. “Meta Insights” <
http://metainsights.com/info/index.php?option=com_content&task=view&id=2&Itemid=
>. Accessed on Oct 6th 2010.
• World PC Market Report. “eTForecast” <
http://www.etforecasts.com/products/ES_pcww1203.htm>. Accessed on Oct 4th ,
2010
• Yahoo! Finance (2010), “Apple Inc Competitors” <
http://finance.yahoo.com/q/co?s=AAPL+Competitors>. Accessed on Oct 5th ,
2010.
•
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