APPLE INC. (AAPL)

Strategic MgmtDr. Jun Xia

Chad HyattDohhoon Yoon

Joseph RuzvidzoKhizer Javaid

CONTENTS

Porters 5 Forces

Financial Analysis

Product Life Cycle

Value Chain Analysis

SWOT Analysis

VRIO Analysis

Company Strategies

BCG Portfolio Matrix & Recommendations

Mission Statement

"Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced iPad 2 which is defining the future of mobile media and computing devices."

Value Chain Analysis

Financial AnalysisProfitability Ratios

2008

2012

ROA% (Net) 14.93

28.08

ROI%(Operating) 35.39

55.79

Liquidity Ratios

2008

2012

Quick Ratio 2.07 1.24Current Ratio 2.46 1.5Leverage Ratios

2008

2012

Long TermDebt to Equity

0.17 0.52

Total Debt to Equity

1.24 0.37

Turnover Ratios

2008

2012

Total AssetTurnover

1 1.05

Receivables Turnover

7.46 10.13

Sales 35.96%

Costs 22.44%

Profits 43.85%

Compounded Annual Growth Rate 2008-2012

Porters 5 Forces

PLC- Product Life CycleThe Apple product life cycles indicates just how big the iPhone and the iPad will be over the next few years.It took the iPod five years to break the thirty million units per annum mark. The iPhone got there in four andthe iPad made it in year two of launch. Either way for Apple, four years of strong growth are evident fromproducts already in the lineup, both the iPhone and the iPad are set to hit the one hundred million units perannum mark in 2014. Despite the march of the Androids, the Apple growth story continues.

SWOTStrength

Software is Apple’ core OS X allow them to develop mobile device technologyStrong financial performanceCustomers’ interestRetail store

WeaknessHigh PricesMarket share subsidingDifferent CEOPatent breachesFlaws in new productsInconsistency with variety of OS

OpportunitiesHigh demand - IPad and IPhone 5ITV launchEmergence of the new provider of application processorsAdvancement of tablets and smartphones marketsProtection of patent against the other companies

ThreatsCurrents tax increaseChanges in technological rapidlyKey components - price pressure from SamsungFoxconn Workers’ pay raiseBreaches IP rightsAndroid OS growthOnline music market

VRIO AnalysisResource/Capability

Value Rare Inimitable

Organized to exploit this resource /capacity

SCA, TCA, CP

The Brand Yes Yes Yes Yes SCA

Supply Chain Management

Yes Yes Yes Yes SCA

Top Executives

Yes Yes Yes Yes SCA

International Product Distribution

Yes No No Yes TCA

Company’s Strategies1. Related Diversification Strategy

Software and computer technology Digital music market with the launch of the iPod and iTunes Mobile devices iPhone, iPad App Store the digital contents market

cf)                           Samsung Electronics, Samsung Card, Hotel Silla, Cheil Industries(fashion, apparel), Samsung Insurance

2. Product Extension (Line extension & Category extension)

Mac - MacBook Air, MacBook ProiPod – iPod Nano, Shuffle, TouchiPhone – iPhone 3G, iPhone4, 4S, iPhone 5iPad – iPad 1,2,3,4Apple TV, iTunes, iCloud

Company’s Strategies3. Vertical Integration

chip manufacturers, manufacturing, software standards, closed ecosystem, retail stores

product optimization cheaper parts, higher efficiency cost savings, high margin

Ex) To power the iPad, Apple has designed its own processor, called the A4. (Past: Intel chips for iMac and Macbook, Samsung chips for iPhone)

4. Three Generic Strategies – Differentiation

·     Powerful Ecosystem

·     Design Quality - iMac line was the first home computer to omit a floppy drive

·     Economies of Scale

BCG Matrix & Strategic Recommendation

?$ Cash

Cow Star

Question mark

Dog

Mar

ket S

hare

Large

SmallLow HighMarket Growth

Synergy

a. BCG Portfolio Matrix

b. Strategic Alliances with Microsoft

Recommendations: Maturity stage, Apple should lower costs as volumes have increased. Apple Inc. should continue its Global expansion through partnerships ex. China

Mobile deal increased Apple’s 1st Q revenues by 29%. Acquisitions and Mergers

Thank You

Questions?