Business and Marketing Analysis of Apple Inc.

Nick’s Comprehensive Homework Payam Ahmad

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Apple Inc. (Think different)

!!!KEY FACTS:

!Head Office Apple Inc.

Cupertino

California 95014

USA

Phone 1 408 996 1010

Fax 1 408 974 2113

Web Address http://www.apple.com

Revenue / turnover 65,225.0

(USD Mn)

Financial Year End September

Employees 46,600

NASDAQ National AAPL

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!!The background of Apple Inc.

Apple Inc. is the manufacturer, designer, marketer of personal computers, portable

digital multimedia contents (video & audio), and mobile communication devices. The

company also sells a variety of related software, services, peripherals, networking solutions,

and third-party digital content and applications. The company's portfolio of offerings

comprises Macintosh (Mac) computing systems, iPods line of portable digital music and

video players, iPhone handsets and iPad portable multimedia and computing devices. The

company primarily operates in the US. It is headquartered in Cupertino, California and

employs 46,600 employees. Apple Inc. offers its products worldwide through their branches

in different countries besides their online stores. Apple Inc. was founded by Steve Jobs in

1976 in United States and became the avant-garde in the e-music portable, mobile phone and

personal computer industry.

!MAJOR PRODUCTS AND SERVICES

Apple is a major player in the PCs, portable digital music players, and mobile devices. Some

of the key products and services of the company include:

!MAC products:

Mac Pro, Mac mini, MacBook, MacBook Air, MacBook Pro, iMac,

!Mac Accessories:

Magic Mouse, Magic Trackpad, Keyboard, Cinema Displays, Apple Battery Charger,

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!!Wi-Fi Base Stations:

AirPort Express, AirPort Extreme, Time Capsule

!Servers:

Xsan, Mac OS X Server, Mac OS X Snow Leopard, Mac Os X Mavericks

!Applications:

iLife, iWork, QuickTime 7, AppleWorks, Aperture, Final Cut Studio, Final Cut Server, Final

Cut Express HD, Logic Studio, Logic Express, Apple Remote Desktop,

!Major Products

iPod touch, iPod classic, iPod nano, iPod shuffle, iPad and iPad mini

iPhone:

iPhone 3GS, iPhone 3G, iPhone 4 G, iPhone 4 S, iPhone 5 C, iPhone 5 S,

iTunes:

Music, Movies, TV Shows, Audio books, Games, Applications, Podcasts.

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!!Vision of Apple Inc.

“We believe that we are on the face of the earth to make great products and that’s not

changing. We are constantly focusing on innovating. We believe in deep collaboration and

cross-pollination of our groups, which allow us to innovate in a way that others cannot.”

!!!!Mission of Apple Inc.

“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.”

!Revision Suggests:

Mission statement of Apple lacks the definition of customer market and costumer needs. As

the specifications of a good mission statement, it should be able to answer the following

questions:

• What do they do?

• How do they do it?

• Whom do they do it for?

• What value are they bringing?

!Page �4


But, what we can see in the mission statement of Apple is more like listing their products

without giving any information about the above questions.

!Porters’ Five Forces Analysis

Based on Porter’s five forces (Power of supplier, power of buyer, threats of new

entries, threats of substitutes, rivals) Apple Inc will be assessed as below:

!Power of supplier: The supplier bas some power because of their product uniqueness and

services they offer worldwide.

Power of buyers: It is not a serious threat to Apple because of the brand loyalty they have

made among their millions of costumers. In addition they can freely change the

price of their products because of their uniqueness and being differentiated, but they

should be careful that the price increase of their products not to be to much to be

afford or discourage their current consumers.

Threats of new entries: Actually, Apple is dominant over the E-industry, because their

products are unique and besides they are continuously differentiating their products

from its rivals.

Threats of substitutes: based on their products; iPod, there are many other portable music

players by Samsung and Sony

for iPad, there are many other tablets like Galaxy Tabs by Samsung

in case of iPhone, there are many similar products but the real competitor for Apple mobiles

are Samsung mobile phones.

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Rivals: Many companies and manufacturers try to be as different as Apple to get the higher

market share but Apple invest a lot on its Research and Development programs

(R&D) to be always the leader in uniqueness and innovation.

!SWOT ANALYSIS

Apple or "the company" is engaged in design, development and marketing of personal

computers,

media devices, and portable digital music players. The company also sells a variety of related

software, services, peripherals, networking solutions, and third-party digital content and

applications.

The Apple brand is well recognized amongst most consumers.The company's strong brand

enables it to command a premium pricing and create significant demand for its products such

as iMac, iPod, iPhone and iPad. Strong brand image gives the company an edge over regional

and global competitors. However, rising popularity of Android may affect the attractiveness

of Apple's iOS affecting the market share of Apple.

!Strengths Weaknesses

Patent infringement lawsuit may affect, financial condition and operating results, Strong,

brand image provides an edge over, competitors, Product recalls may harm Apple's

reputation, and add significant warranty and other expenses, Robust financial performance

strengthens, investors’ confidence and provides capital for future growth avenues, Focused

R&D driving innovation and, consolidating its market position

!Opportunities Threats

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Rising popularity of Google Android may affect its market share, Strong growth in

smartphone and tablet markets to boost Apple's revenues, Frequent absence of Steve Jobs to

impact high growth sustenance levels, Robust outlook for mobile advertising market provides

growth opportunity, Intense competition may affect revenues and profitability, Dependence

on specific suppliers may affect its operations.

!TOP COMPETITORS

The following companies are the major competitors of Apple Inc.

Dell Inc. Fujitsu Limited, Hewlett-Packard Company, International Business Machines

Corporation, Samsung Electronics Co., Ltd. Sony Corporation, Toshiba Corporation,

Research In Motion Limited, Nokia Corporation, Sony Ericsson Mobile Communications AB

Lenovo Group Limited, Motorola, Inc., Microsoft Corporation, Acer Inc, LG Electronics, Inc.

Oracle Corporation, and Google Inc.

!!IFE Matrix is an analytical technique which is more related to SWOT analysis of the firm.

IFE stands for the Internal Factor Evaluation. IFE Matrix evaluates the internal position of

the organization or its strategic intent. Strategy of the organization or mutual evaluation and

comparison of different strategic intentions can be evaluated with IFE Matrix. The intention

with the best result of overall weighted average should be chosen.

The table of internal factors (such as key 5S and 5W of SWOT)

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Assigns to each factor a weight in the range from 0.00 to 1.00 according to the

importance of the strengths or weakness - the sum of weights must be equal to 1.00

Rate factors as follows:

4 points - major S

3 points - minor S

2 points - minor W

1 point - major W

Multiply the weight and rating for each factor - the result is a weighted ratio

Sum of the weighted ratios of individual factors - result is an overall weighted ratio

Overall evaluation - resulting weighted ratio evaluates the internal position of the

organization or strategic intent. The best possible score is 4, the worst is 1. Average values are

around 2.5.

Internal Factor Evaluation (IFE) Matrix

Key Internal Factors! ! Weight

Rating!

Weighted Score

Strengths

iTunes Music Store is a good source of revenue, especially with the iPod and the availability of other operating systems like Windows platform

0.15 4 0.60

Apple’s niche audience provides the cop nay with some insulation from the direct price competition. 0.10 3 0.30

Revamping desktop and notebook lines! 0.10 3 0.30

Low debt- more maneuverable ! ! ! !! 0.60 4 0.24

Developing own software and hardware 0.14 3 0.42

Good brand loyalty 0.05 3 0.15

Web technology can be used to improve product awareness and sales 0.10 4 0.40

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!

EFE Matrix EFE as well as IFE is an analytical technique related to the SWOT analysis.

EFE is an acronym of the External Factor Evaluation. EFE Matrix evaluates the external

position of the organization or its strategic intent. This matrix of internal factors (such as key

5S and 5W of SWOT) assigns to each factor a weight in the range from 0.00 to 1.00

according to the importance of the strengths or weakness - the sum of weights must be equal

to 1.00

Rate factors as follows:

4 points - major O

3 points - minor O

2 points - minor T

1 point - major T

!Multiply the weight and rating for each factor - the result is a weighted ratio

Sum of the weighted ratios of individual factors - result is an overall weighted ratio

Weakness

Dependency on new product launches 0.06 1 0.06

Weak presence in business arena 0.07 1 0.07

Slow turn around on high demand products 0.03 2 0.06

Weak relationship with Intel and Microsoft 0.10 1 0.10

Weak presence in markets other than education and publishing 0.04 2 8

Total 1.0 2.78

Key Internal Factors! ! Weight

Rating!

Weighted Score

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Overall evaluation - resulting weighted ratio evaluates the internal position of the

organization or strategic intent. The best possible score is 4, the worst is 1. Average values are

around 2.5.

!

Key External Factors! Weight

Rating

Weighted score

Opportunities

Increase in worms and virus on PCs 0.15 4 0.60

Downloadable music and MP3 players are highly marketable 0.6 3 0.18

Large population (Gen X & Y) which are extremely individualistic and name brand conscious.

0.15 4 0.60

Increase in sales of laptops by 20 percent 0.04 3 0.12

Increasing sale of computers online by 25 percent 0.05 3 0.15

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!

Resource Based View

Resource Based View (RBV) is a method of analyzing and identifying a firm’s strategic

advantages based on examining its distinct combination of assets, skills, capabilities, and

intangibles the RBV’s underlying premise is that firms differ in fundamental ways because

each firm possesses a unique “bundle” of resources each firm develops competencies.

From the resource-based view, research and development (R&D) is another crucial

factor of success. Apple’s strategic foresight capability in combination with their ability to

bring innovations from concept to market – in order to meet customer’s wants and needs

through applying user centered design – is definitely one of their key success factors.

Besides, they obtain a huge portfolio of patents. However, other firms like Samsung or HTC

Creating more ties with Microsoft products 0.10 4 0.40

Threats

Increasing competition with music downloads 0.07 2 0.14

Intel’s future Pentium release! 0.03 3 0.09

Dell and HP are major competitors! 0.10 4 0.40

Dell does not invent but provides computers at a more cost effective rate for customers

0.06 3 0.18

Recession - price of Apple computers are higher 0.04 2 0.08

Companies not seeing Apple as compatible with their softwares 0.10 2 0.30

Total 1.00 3.24

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also have many patents as well as innovative power. Furthermore, Apple struggles with

technological issues, e.g. regarding the antenna (iPhone 4s) or battery life2 (iPhone 5s).

Therefore, Apple’s R&D capability will be rated as competitive parity.

Resources are all assets (tangible and intangible), firm attributes (reputation and

innovation), information, know-how controlled by a firm that enables to implement strategies

that improve its effectiveness and efficiency. Here we analyze the Apple based on RBV:

!Key Resources

!

!Most important actions a company must take to operate successfully to create and offer a

Value Proposition, reach markets, maintain Customer Relationships and earn revenues. Apple

as other companies do, based on its key activity and resources creates value proposition for

its costumers that briefly includes:

!

Tangible! ! Intangible

Physical Resource Human Resources Intellectual Resources

• Foxconn manufacturing plant in Huaian, China

(employees 35800) !• Apple Stores: sales

locations advertisement strategy =>

2013: Worldwide Sales approx. 171$ mil

• Software development teams: !

Highly skilled workers with experience, knowledge and creative problem solution skills Including creativity capability to develop easy use products with great design of software

• Brand (Product quality) !Value 98.3 $ billion4 • Patents (touch sensing

architecture)5 !• Partnerships (strategic

partnership with the Microsoft)

• !It produces Microsoft Office for the Macintosh)

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Key Activities

Apple store: (Tim Cook: “They are the face of Apple…”)1

•Retail sales concept, characterized by exclusive design

•Enabling customers the interaction/ testing of products that resulted in 395 million visitors in

2012.

Besides, creation of unique user experience is another key activity of Apple

!Key Partners

Businesses across the world companies create alliances to optimize their business models,

reduce risk or acquire resources. Apple is not an exception, and they are also making

partners:

!!Strategic alliance:

•Enabling extension of own capabilities

•Obtaining knowledge or even access to customers

!!AT&T - wireless provider:

•Carrier of the iPhone in the USA

•Just in 2011 over 7.6 million activations

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AT&T´s performed Key Activity: Distribution of the iPhone´s

Apple´s acquired Key resource: Voice and data network access2

!!!!Apple’s resource based view is a relevant model in analyzing its sources of a competitive

advantage as it is shown below:

!The Apple’s resource strategy can be briefly explained as below:

Apple Inc. in order to get its sustainable competitive advantage through first mover

advantage, brand reputation, and costumer loyalty.

Delta Frame framework and Resource Based View (RBV) are both extracted from Porters 5

forces. Each of these frameworks are used based on the marketing and structuring needs of

the organization or the company. RBV is designing the structure of the company based on the

importance of the sources to the firm. Delta framework, on the other hand is designing the

structure of the firm based on the care the firm does about its customers. In both cases, it is

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Resources which are costly

to copy

competitive advantage

use opportunities or

neutralize threats through resource


done based on the Porters five forces that analyzes the firm wholly in the market

environment.

!!GE McKinsey

In consulting engagements with General Electric in the 1970's, McKinsey & Company

developed a nine-cell portfolio matrix as a tool for screening GE's large portfolio of strategic

business units (SBU). This business screen became known as the GE/McKinsey Matrix and

is shown below:

The GE / McKinsey matrix is similar to the BCG growth-share matrix in that it maps

strategic business units on a grid of the industry and the SBU's position in the industry. The

GE matrix however, attempts to improve upon the BCG matrix in the following two ways:

• The GE matrix generalizes the axes as "Industry Attractiveness" and "Business Unit

Strength" whereas the BCG matrix uses the market growth rate as a proxy for industry

attractiveness and relative market share as a proxy for the strength of the business

unit.

• The GE matrix has nine cells vs. four cells in the BCG matrix.

Industry attractiveness and business unit strength are calculated by first identifying criteria

for each, determining the value of each parameter in the criteria, and multiplying that value

by a weighting factor. The result is a quantitative measure of industry attractiveness and the

business unit's relative performance in that industry.

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To get a better picture on product portfolio of Apple Inc. GE Matrix has also been used to

support the BCG. The product portfolio of company has been categorized into four parts,

(Only main products has been considered which forms the major part of business), as given

below:

1. iPhone

2. Desktops and Portables

3. iPod

4. iPad

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Business strength

!McKinsey’s 7S Framework

The 7s framework is a base management model that describes how one can effectively

organize a company. Besides, these factors determine the way in which organizations operate.

These model consists of two group of soft and hard:

Hard: Strategy, structure, and system

Soft: Skills, staff, style and shared values

Here in this part I evaluate Apple based on this 7 factors.

Strong ! Medium Weak

Market attractiveness

Smart phone market Apple Softwares High

Music Players iPods Personal Computers and MacBooks

iMacs and Peripherals Medium

Low

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1. Shared values: Apple based on its vision and mission has tried to provide people from

every man, woman, and child who are student, home users, educators and creative

professionals the best personal computer which is very easy to use through its innovation,

software and internet offerings.

2. Strategy: Strategy of Apple is to focused on its target customers (or market) that is niche

market.

3. Structure of Apple is functional by nature and it operates in different companies forming

a network.

4. System: Apple recognize best of its employees through its “Apple fellowship program”

awarding individual who made extraordinary technical or leadership contribution to

personal computing.

5. Staff: Total of 49.400 (2013) of employees including team of effective managers,

supervisors and CEO of company.

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Internal Analysis Financial Position (FP)

External Analysis Stability Position (SP)

Liquidity 7 Technological changes -1

Earnings per share 6 Price elasticity of demand -6

Sales 7 Competitive pressure -3

Revenues 7 Barriers to entry into Market -4

Return on equity 5

Financial Position (FP) Average 5,8 Stability Position (SP) Average -3,5


6. Style: Apple has achievement oriented leadership style. The path goal theory of Robert

House says that a leader can affect the performance, satisfaction and motivation of a

group by:

• Offering rewards for achieving performance goals

• Clarify paths towards their goals

• Removing obstacles to performance

Apple has good and affective leaders that walked around the office barefoot even after Apple

was a fortune 500 company.

7. Skill of any organization is its core competency and Apple has core competency in

innovation and in its R&D department. Apple invest more in R&D department than any other

company of the industry.

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Internal Analysis Competitive Position (CP)

External Analysis Industry Position (IP)

Market Share -6 Profit Potential 6

Product Variety -2 Growth Potential 6

Product quality -1 Financial Stability 5

Customer loyalty -1 Resource Utilization 5

Control over suppliers and distributors -3

Competitive Position (CP) Average -2,6 Industry Position (IP) Average 5,5


Space Matrix

The SPACE matrix is a management tool used to analyze a company. It is used to determine

what type of a strategy a company should undertake. The Strategic Position & Action

Evaluation matrix or short a SPACE matrix is a strategic management tool that focuses on

strategy formulation especially as related to the competitive position of an organization.

Liquidity: according to the current ratio Apple is one of the most reliable corporations within

the Industry with minimum investment risk

Earnings per share: the trend during the last years shows that Apple from 2008 to 2012 this

has been increased four times. In comparison to the Industry this ratio shows that Apple is

extremely shareholders friendly corporation, which indicates great internal strength

Sales: is far better from all Apple’s competitors

Revenues: Apple’s consolidated income statements and balance sheets note that Apple’s

revenues increased a whopping 52 percent in 2010, while its net income increased 70 percent.

Also, notice that Apple has zero long-term debt on its balance sheet

Return on equity: Apple is second among its competitor on return on equity

!Technological changes: the Company has been an innovator in the area of computer hardware

and telecommunications since its recovery

Price elasticity of demand: high prices of Apple’s products is a major weakness

Competitive pressure: the companies which Apple is competing with, are urban corporations

with dynamic strategies, both in computer hardware & telecommunication sector

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Barriers to entry into market: the extreme competence advantages of the already existing

companies in computer hardware sector, makes it very hard for new companies to enter the

market.

!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 Apple’s

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 Apple’s 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.

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• After illustrating the SPACE Matrix it is obvious that the company should follow

aggressive strategies. This means that Apple should implement backward, forward,

horizontal integration, as well as market penetration, market development, product

development and diversification (related or unrelated).

! !

!SPACE Matrix for Apple Inc !!!!!

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Apple summary of PEST Analysis

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Political factors

• The supply and manufacture of many critical components is performed by sole-sourced outsourcing partners in the U.S., Asia and Europe. Outsourcing partners in Asia perform final assembly of substantially all of the company’s hardware products. Manufacturing or logistics in these locations or transit to final destinations may be disrupted for a variety of reasons including, but not limited to, natural and man-made disasters, information technology system failures, military actions or economic, business, labor, environmental, public health, or Political issues. (APPLE INC., 2012)

• War, terrorism, geopolitical uncertainties, public health issues, and other business interruptions have caused and could cause damage or disruption to international commerce and the global economy, and thus could have a material adverse effect on the Company, its suppliers, logistics providers, manufacturing vendors and customers, including channel partners. The Company’s business operations are subject to interruption by natural disasters, fire, power shortages, nuclear power plant accidents, terrorist attacks, and other hostile acts, labor disputes, public health issues, and other events beyond its control. (APPLE INC., 2012)

Economic factors

• The global recession is having a serious impact on Apple's retail performance • The follow-on effects from global economic conditions on the Company’s

suppliers could affect the Company’s ability to obtain components. Therefore, the Company remains subject to significant risks of supply shortages and price increases. The Company expects to experience decreases in its gross margin percentage in future periods, as compared to levels achieved during 2012, largely due to a higher mix of new and innovative products with flat or reduced pricing that have higher cost structures and deliver greater value to customers and anticipated component cost and other cost increases. Future strengthening of the U.S. dollar could also negatively impact gross margin. (APPLE INC., 2012)

Social factors • The Company’s business requires it to use and store customer, employee, and business partner personally identifiable information (“PII”). This may include names, addresses, phone numbers, email addresses, contact, preferences, tax identification numbers, and payment account information. Although malicious attacks to gain access to PII affect many companies across various industries, the Company may be at a relatively greater risk of being targeted because of its high profile and the amount of PII managed. (APPLE INC., 2012)

Technological factors

• Apple R&D expense is increasing year by year. $1.8 billion for 2010, $2.4 billion, and $3.4 billion for 2012 which is a crucial manner in these days competition (APPLE INC., 2012)

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!Boston Consultant Group (BCG)

According to BCG matrix, all businesses are divided in to four categories, The Stars, The

Cash Cows, the Dogs and Question marks.

! Stars

These are the products or Businesses’ that are outperforming their rivals in the market,

having greater market share than their counterparts.

!Cash Cows

These are the products in which an organization normally enjoys market leader’s position

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CPM Apple Microsoft Dell Samsung Nokia

Critical Success factors Weight Ratin

gScor

eRatin

gScor

eRatin

gScor

eRatin

gScor

eRatin

gScor

e

Store Locations 0,10 4 0,40 3 0,30 2 0,20 2 0,20 3 0,30

Financial profit 0,12 4 0,48 4 0,48 2 0,24 2 0,24 2 0,24

Consumer loyalty 0,10 4 0,40 2 0,20 2 0,20 3 0,30 3 0,30

Market penetration 0,11 3 0,33 4 0,44 2 0,22 4 0,44 3 0,33

Advertising 0,07 3 0,21 4 0,28 2 0,14 3 0,21 3 0,21

Product variety 0,09 2 0,18 3 0,27 3 0,27 4 0,36 4 0,36

Market Share 0,11 2 0,22 4 0,44 2 0,22 3 0,33 3 0,33

Product quality 0,08 4 0,32 3 0,24 4 0,32 3 0,24 2 0,16

Price competitiveness 0,10 1 0,10 3 0,30 3 0,30 3 0,30 4 0,40

e-commerce 0,06 4 0,24 4 0,24 2 0,12 2 0,12 1 0,06

Employee dedication 0,06 4 0,24 3 0,18 3 0,18 2 0,12 3 0,18

Totals 1,00 3,12 3,33 2,41 2,86 2,87


having maximum market share but there are lower or no further opportunities for growth.

These products have reached maturity stage of their product life cycle and we don’t need

to invest further in to these products.

!Question Marks

Question Marks are the products in which our organization has relatively lower market

share

but there are lots of growth opportunities in the market.

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! Dogs

Dogs are the products in which the organization has lower market share than its

competitors and the market in which it operates is not very attractive as well. So, there are

lower or no growth opportunities even if we decide to invest further. These products may

generate sufficient cash to reach neither break-even point, so organization is neither

making any lose nor making profit. So, it will not be a sensible decision to invest further

in these products by business point of view.

!In our case the organization which is Apple Inc, it is a very successful company and

renowned worldwide for its product innovation and heavy investment in its R&D department

due to which apple is a pioneer and market leader in its field. The list of top 30 successful

Apple products is as under, Macintosh 128k, iMac , iPod ,Apple II ,iTunes Music Store,Mac

OS X ,LaserWriter, Titanium PowerBook G4,QuickTime ,iMac Core Duo ,iLife ,iBook ,

AirPort ,Mac mini , Final Cut Pro,Power Mac G5,AppleScript ,The Apple decal,Fifth-

generation iPod ,MacWrite and MacPaint,iTunes ,System 7,PowerBook 100

series ,Hypercard ,Mac II ,Power Mac G4 Cube, X Serve RAID ,Newton ,First-generation

Power Macs ,20th Anniversary Mac. So it will be quite hard to apply BCG matrix on apple

due to such large number of successful products.It has a very strong portfolio of highly

successful products and business lines which are at different stages of their respective product

life cycle.

! Stars

I have categorized iPhone and iPod in Star category which means they both need further

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investment in product development and there are greater opportunities available in the market

for growth. Latest figures reveal that the growth rate for iPods is currently 28% and for those

of iPhone’s its 48%.Apple enjoys 60% more market share in iPod than its closest rival

Scan disk in the market. In iPhone’s, Apple is not the market leader but has 28% market share

where manufacturer of Blackberry RIM has 41% market share. So, Apple is a challenger for

RIM with significant proportion of relative market share. Both iPhone and iPods are very

critical for Apples success in the long term. Organizations need Stars which will eventually

later become Cash Cows and will be critical for future cash flow generations for the

organization.

!Cash Cow

I have placed Apples iTunes digital downloading software as a cash cow. Apple clearly is a

market leader in this market segment with 82% market share, its closest rival is Napster with

only 3% relative market share. The huge difference of 79% shows that Apple has outplayed

all its counterparts in this market segment. Growth rate for iTunes is 7.6% which indicates

that it is a stable and mature product and it does not needs further heavy investments for

product development by Apple Inc. This stream of cash flow is essential for providing cash

for Question mark products.

!Question Mark

I have placed Mac Os X’s and Mac Software in Question mark category, there is a possibility

to capture further market share if provided with funds for product development and

Page �26


innovation, otherwise they will fall back in to Dog category. Apple has a comparatively

lower

market share in both market segments and there are further opportunities available as the

growth rate is quite high. Apple enjoys 31.7% market share for Mac Os X and 0.09% relative

market share while for Mac Software the growth rate is 32% and relative market share is

0.01%.These lower percentages may suggest that Apple should pay attention on development

of its other products and should divest from Computer market completely.

But market synergies exist between Apples computer business and its other product lines, so

divesting from computers might affect adversely for its other products. So any decision of

such kind should be made after careful thinking and keeping these factors in to account.

! Dogs

Apples Macs could be considered underdog category as Apple is not a market leader in

this market segment and does not enjoys majority percentage of relevant market share and

there are few chances of capturing further market share even further investment in product

development is done.

In order to check the place of every business we need two functions of relative market share

and market growth which is provided as follows:

!

Market Share

Brands ! Apple Samsung HTC

Market Share %15 %31.35 %4

Relative Market Share 1:2 1:1 1:9

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!

Market Growth Rate

So, the Apple Inc will be place at Star place with high market share and its fast rate of market

growth in the global market.

!Delta Framework

Delta model is a costumer centric focused on costumers’ economics. This model designed by

Dean Wilde and Arnoldo Hax. The main principles of this model are as follows:

1. Costumers as the center of the strategy.

2. Wining the competition is by achieving the costumer bonding not beating the

competitors.

3. Love is the base of strategy instead of war.

4. Product centric perspective is more constraining, so it is better to more encompass

customer, and suppliers.

5. Understand customers deeply. It should be noticed that strategy is applied on every

customer just once.

!!!

Brands 2012 Sales 2011 Sales Market Growth Rate

Apple 148.4 93.1 %59

Samsung 177.4 95.2 %86

HTC 39.2 44.6 -%12.1

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In this chart model for Apple, best product is the iOS based products and the online service

since it is more related to the differentiation of the products and their uniqueness. Moreover,

Apple in the related field is the first mover which by itself got a lot of advantages for it in the

market.

Customer solution is achieved through three ways: First way is considering the full

experience of the costumer from the time of acquisition of the product through complete life

cycle of the product. The second way is customer integration and the third way is offering

horizontal breath by satisfying whole customers’ needs. Here in our example, Apple

successfully, used the horizontal breath by offering a wide range of electronic products plus

all their related support services like updates, and online material feedings by iTunes and its

App Store.

System lock-in refers to restricted access of potential supplied to the incumbent firm’s

customers. In this case Apple is very successful because of offering unique products by

wholly new operating system. In this case the channel that Apple operates in many ways is

locked to its rivals.

Mission of the business as mentioned above is “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.”

The scope of besides is the worldwide electronic users. Core competencies of the business is

its uniqueness, dramatic differentiation from its competitors, and its support services

worldwide. For competitive positioning, Apple focuses on its activities that drive profitability

through developing its products and services based on the feedback they get form their

customers. Industry structure of Apple in its external factors for its attractiveness, is based on

the functions of customer satisfaction and customer friendly components of the business. For

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instance, the services that Apple introduced to the market like App Store, iTunes, Podcasts

and … are those factors that attracts customers. The mentioned components above give shape

to business strategic idea of the Apple that goes into innovation of the Apple and its

operational effectiveness in getting the goals of the company by targeting a wide range of

customers and users from whole the world that shaped the current format of the company.

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Business and Marketing Analysis of Apple Inc.

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