Nick’s Comprehensive Homework Payam Ahmad
!!
!!
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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Nick’s Comprehensive Homework Payam Ahmad
!!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?
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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
Nick’s Comprehensive Homework Payam Ahmad
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
!
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
Nick’s Comprehensive Homework Payam Ahmad
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
Nick’s Comprehensive Homework Payam Ahmad
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
!!!
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
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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
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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.
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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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