1. Apple 2006 Ellen Suprun Julie O’Halloran Wojciech Jagiello
Finbarr Kearney
Kingsley Egwim

2. Introduction External Analysis Internal Analysis Strategy
Assessment and Recommendations

4. Porter’s Five Forces Threat of Entry Buyers Suppliers Substitutes Low
High capital investment
Commoditized market makes it difficult to differentiate
Substantial dominance of Wintel platform and low-cost large-scale players (Dell, Gateway, HP, IBM)
Oligopoly market
Threat of
Entry
Buyers
Suppliers
Substitutes
Low
PC and new applications High End-users are mostly loyal
Imperfect knowledge about price forming
High (components suppliers)
Most components are commoditized, however Intel, Motorola, IBM become dominant, that increases power of supplier
Low
No Mac clone available
No competing product in the Mac market
High
PCs are available in multiple configurations, performances and price ranges
Other firms offer as good products
Rivalry is very high

5. The Value Chain Leadership Culture Company Infrastructure
Support Activities
Company Infrastructure
Information Systems
Materials Management
Human Resources
Jobs and Wozniak
John Sculley
Mike Spindler
Gilbert Amelio
Return of Steve Jobs
R&D Production Marketing and Sales Customer Service
Apple have always added value through R&D
Failed R&D project with IBM
Vertical Integration to outsourcing 1998 to reduced costs
Premium Pricing
Brand Loyalty
Retail Outlets
Low market share in the corporate market place

6. Strengths Technology and R&D team Investors Organizational culture
Brand Loyalty
Marketing
Partnerships
Page 5 – Microsoft 150million – 1997
Head of IT
Failed R&D:

7. Weaknesses Lack of compatible software 1984
Strategy change inconsistent with the business model – cutting costs
Failed investments
Leadership – changes and succession planning

8. Opportunities
iCloud
New markets- expansion into mobile phones, tablets, BRIC countries
Large corporate market segment

9. Threats Open architecture Economic downturn Competitors Suppliers
Legal issues
The majority of threats come from other companies including Nokia, Sony, and Google with their respective products. Smart phones are one popular example that stands to compete against the iPhone. The fact that these phones run on the 3G network also puts iPhone behind in the speed race. Although the economy is no longer in its volatile stages, the release of the iPhone is still in a time where people are cautious of spending money.

10. Apple’s Competitive Strategy
Differentiation Strategy
Core competencies
Innovative Culture
Team spirit (people)
Marketing
Consumer Loyalty
Distribution network

11. Questionable moves Mac Clones Niche market
Strategy change & Leadership problem
Partnership with IBM

12. Critical Success Factors
Leadership of Steve Jobs
Marketing and design
Innovation and new product development

13. The role of vertical integration in strategy
Simplicity and
quality
Complete user
experience
Capturing values
on every step
Benefits
Higher costs of production
and development
Not dependent
on innovation
Dangers
Importance of
strong leader
Apple being
relatively
fragile
Preventing others from innovating

14. The iPod Phenomenon Launched November 2001 Buy – Listen - Manage
Sold 42 million iPods by 2005
75% market share
iTunes: a justified loss leader
% Apple revenue
Complement: The indirect profits it generated through ipods outweighed the loss it made
High storage capacity, sleek design and appealing functionality
$50 Premium over other mp3 players
Leveraged logo in accessories market
$90million in iPod related services
iTunes: the first legal site for downloading music
Loss leader but resulted in sales increasing
Captures Value at every step:

15. 2006 to Date Apple Computer-> Apple 2007, iPhone, Apple TV
2010, iPad
Ongoing Software Innovation (iCloud)

16. Recommendations Vision and leadership Learn from mistakes
Corporate Social Responsibility
Stick to Core competencies
Design
Innovation and R&D

17. Any Questions?