Apple, Inc. Formulation Presentation March, 7 2008 Mathew Lugo, Brooks Johnston, Jessica-Anne...
-
Upload
roderick-hudson -
Category
Documents
-
view
212 -
download
0
Transcript of Apple, Inc. Formulation Presentation March, 7 2008 Mathew Lugo, Brooks Johnston, Jessica-Anne...
Apple, Inc. Formulation Presentation
March, 7 2008Mathew Lugo, Brooks Johnston, Jessica-Anne
Stoudemire, Kerri Barringer, & Ben Ponds
Executive Summary
Presented by: Kerri Barringer
Apple Profile
Products: Desktop computers, laptops, digital music players, software
Markets: High-end, technology-savvy users
Size: $8.3 billion in sales in 2004
Industry: Key Players:
Dell Hewlett-Packard Microsoft
Keys to success: Innovation Quality support services
Apple’s Mission & Vision
Mission: Apple is in the business of innovating, manufacturing, and marketing/selling computer hardware and software solutions, related peripherals, and communications equipment.
Vision: To be a leading
innovator of new technologies that change the way people go about their daily
General Sector of the External Environment
Presented by: Ben Ponds
Operating EnvironmentEconomic Factors
Intense growth – dependent on machines Demand for product services & support
Social Factors Wireless communication Powerful & portable devices
Political Factors Copyrights protection
Technological Factors Strong rivalries among top competitors Continuously changing products
Ecological Factors Pollution Corporate Social Responsibility
Summary Product support services Powerful & portable devices
Industry Analysis
Presented by: Matt Lugo
Porter’s Five Force’s Model
1. Rivalry Among Existing Competitors Innovation; First to enter the market
2. Substitute Products Competitors with similar products
3. Powerful Suppliers Forward Integration
4. Powerful Buyers Backward Integration
5. Threat of Entry Advanced Knowledge Capital Requirement
Competitor Profile: Hewlett Packard
Hewlett-Packard Company provides various products, technologies, software, solutions, and services worldwide.
Sector: Technology
Industry:Diversified Computer Systems
Products: Servers, Business Critical Systems & Software
Competitor Profile: Dell
Engage in the design, development, manufacture, marketing, sale, and support of various computer systems and services worldwide.
Sector: Technology
Industry: Personal Computers
Products: Desktops, Mobility Products, Software & peripherals
Competitor Profile: Microsoft
The world's #1 software company provides a variety of products and services, including its Windows operating systems and Office software suite.
Sector: Technology
Industry: Application Software
Products: Video game consoles, servers and storage software, and digital music players.
Apple’s Position within the Industry
Personal Computers Lack customer &
product service Competitors dominate
market
Multi-Media Peripherals Innovative; first to
enter the market
Apple needs to focus on product differentiation to avoid becoming a low-margin commodity, especially in terms of digital music and communications.
Value Chain Analysis
Presented by: Brooks Johnston
Value Chain Analysis
Supporting Activities: General Administration:
Identify new-product market opportunities & environmental threats, public image & corporate citizenship
Human Resource Management Recruit, train, motivate, challenge, and promote the
most talented employees Procurement
Good relationship with suppliers,
Value Chain Analysis
Primary Activities: Technology Development
Research & development leading to product and process innovations, timeliness of technology developments, encourage creativity
Operations Product design, productivity of equipment, effective quality
control systems Marketing and Sales
Identify customer segments, innovate sales & advertising, image of quality, favorable reputation, brand loyalty
Service Ability to provide replacement parts or tech support,
warranty/guarantee, quality of customer education & training
Core Competencies & Competitive Advantage
Procurement First computer software company to negotiate with
RIAA to allow consumers to legally download music online
Technology & Development Main objective is to be the leading innovator of new
technologies that change the way people live their daily lives
Marketing & Sales Identify specific customer segments and needs, develop
an image and reputation of quality, innovative advertising
Strengths Relative to Rivals
iPod & iTunes software revolutionized the music industry, worked with RIAA to develop deal
Considered the BMW or “cool” computer system to own
PC is a mature industry/product—Apple found new ways to spark demand
Successfully differentiate products
Brand Image and Recognition
Weaknesses Relative to Rivals
Apple’s market share is low as prices for windows-based machines fallApple has limited number of suppliers to obtain raw materialsApple uses third-party music content—potential to limit music or limit availability in the futurePromotional activities focus on core groups—misses the larger audience of PC’s for non-graphics based business and home usersCell phone vs. iPod
Industry Specific Competitive Advantages
Development of innovative new technologies
Dell grew successfully by eliminating the middle-man and selling direct
Microsoft is #1 software company
HP is currently the #1 PC manufacturer
Financial Analysis of Apple
Presented by: Kerri Barringer
Operating Income and Net Income
-600,000
-400,000
-200,000
0
200,000
400,000
600,000
800,000
1,000,000
2000 2001 2002 2003 2004
Years
Do
llar
s (i
n t
ho
usa
nd
s)
Operating Income
Net Income
Assets, Liabilities, Stockholder's Equity
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
2000 2001 2002 2003 2004
Years
Do
lla
rs (
in t
ho
us
an
ds
)
Total Assets
Total Liabilities
Total Stockholder's Equity
Net Profit Margin
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
2000 2001 2002 2003 2004
Years
Per
cen
t Apple
Dell
HP
Industry
Current Ratio
0
0.5
1
1.5
2
2.5
3
3.5
4
2000 2001 2002 2003 2004
Yea
rs
Apple
Dell
HP
Industry
Total Debt to Equity
-1.5
-1
-0.5
0
0.5
1
1.5
2
2000 2001 2002 2003 2004
Apple
Dell
HP
Industry
Revenues/Total Assets
0
0.5
1
1.5
2
2.5
2000 2001 2002 2003 2004
Yea
r
Apple
Dell
HP
Industry
SWOT Summary & Core Issue
Presented by: Matt Lugo
SWOT Summary
Strengths: Innovation; first to enter the market Product & Market Development
Weakness: Customer and Product Services
Opportunities: Strategic Alliances with leading communication firms
Threats: Forward integration Becoming a low- end commodity
Core Issue of Apple
Apple needs to focus on product differentiation to avoid becoming a low-margin commodity, especially in terms of digital music and communications.
Long Term Objective & Strategic Scenarios
Presented by: Ben Ponds
Long Term Objective
Technological Leadership Product Development Quality Support Services
5-year Expectations
By 2010 most cell phones will have mp3 capability.
High quality customer support services will be in great demand.
Future Scenarios for Apple
Best Case Leader in music capable cell phones Unsurpassed customer support
Worst Case Become a low-scale commodity Fail to integrate quality support services
Most Likely Continue to successfully differentiate out products Retain strong support and service operations
Possible Objective Shifts
Worst Case Scenario Competitive position
Best Case Scenario Productivity Public responsibility
Corporate Level Business Alternatives
Presented by: Brooks Johnston
Corporate Level Strategic Alternatives
Enter communications industry Establish relationship with cell-phone carrier
Expand customer service capabilities Add brick & mortar locations that focus on
training clinics to use Apple products, service their product problems, Apple “Geek Squad”, etc…
International Corporate-Level Alternatives
Global brick & mortar locations
Nearly 2.4 billion people living in China and India alone, accounts for 37% of the global population
Major areas of economic growth are in new-markets (China & India), and in product & service expansion
Strategic Alliances as Corporate-Level Alternatives
Establish relationship with cell phone carrier Entrenched in professional media creation
markets, provide fundamental intellectual property to be used in consumer oriented software
Acquisition & Restructuring Corporate-Level Alternatives
Apple is limited to the number of suppliers it can use to obtain raw materialsSome key components are subject to industry-wide availability constraints and pricing pressuresApple needs to find multiple component suppliersPossibly acquire suppliers
Keys to Success
International Country specific economic, social, political,
technological, and ecological factors
Strategic Alliances Challenge in negotiating contract terms &
copyright agreements
Acquisition and Restructuring Finding multiple component suppliers
Long-Term Objective: Technology Leadership
Enter communications industry: Focus on product development and
differentiation in areas of digital music and communication
Expand customer service capabilities: Global brick & mortar locations that focus on
quality support services (training and tech support)
Business Level Strategic Alternatives
Presented by: Jessica-Anne Stoudemire
Business Level Strategic Alternatives
Strategic Business Units Multimedia Devices and Software
iPod, iTunes, etc. Computers
iMac, iBook, etc. Computer Hardware Computer Software
Safari, iMovie, etc.
Generic Competitive Options
Differentiation
Focus Differentiation
Differentiation: Pros and Cons
Pros: Larger market than focus
differentiation
High customer loyalty
Reputation for innovative products
Cons: No cost advantage
Hard to sustain due to imitation
Could achieve greater differentiation with focused marketing
• Relevant Rival: Microsoft
Focus Differentiation: Pros and Cons
Pros: Ability to meet
targeted segment’s needs
Ability to adapt to segment’s changing needs or demands
High customer loyalty within segment
Cons: Less opportunities for
growth Targeted segment’s
demand has large impact on revenue
Non-focus oriented competitors can better compete in pricing
• Relevant Rival: Dell
Generic Competitive Option: Differentiation
Grand Strategies Market Development Product Development Innovation Strategic Alliances
Generic Competitive Option: Focus Differentiation
Grand Strategies: Concentrated Growth Concentric Diversification Strategic Alliances Product Development Innovation
Strategic Choice
In order to achieve the long term objective of technological leadership it is recommended that Apple establishes a strategic alliance with a leading communication provider