Apple Case Analysis Issues and Outlook SWOT Summary External Analysis Internal Analysis Strategic Recommendations Mission Goals Strategic Action Plan

Issues and Outlook: 1993 and Beyond Is Apple successful? Past/current strategy? What are the main concerns/issues that confront Apple? Where is Apple headed in the future?

Comparative Market Share (%) by Revenue

Financial Snapshot: Revenue and Net Income (in $millions)

Breadth of Competitive Scope Apple’s Business Level Strategy Source of Competitive Advantage Cost Uniqueness Cost Leadership Differen- tiation Broad Target Market Breadth of Competitive Scope Focused Differen- tiation Focused Low Cost Narrow Target Market 89

External Analysis Influences from Remote Environment Influences from Competitive Environment Promoters of / Barriers to Change SWOT Summary Competitor Analysis

Analysis of the General Environment Demographic Economic Competitive Environment Political/Legal Global Technological Sociocultural 10

Industry Growth (in $billions)

Analysis of the Competitive Environment Threat of New Entrants Threat of New Entrants Bargaining Power of Suppliers Rivalry Among Competing Firms in Industry Bargaining Power of Buyers Threat of Substitute Products 23

Microprocessor Volume Installed Base - Millions of Units

Strategic Group Map Pre-Windows Premium Sun Apple Price Compaq IBM Clones Low Broad Narrow Strategic Focus - Differentiation

Strategic Group Map Post-Windows Premium Sun Apple Price Compaq IBM Clones Low Broad Narrow Strategic Focus - Differentiation

Internal Analysis Resource-based View Analysis of: Core Competencies Core Weaknesses Value Chain Analysis of: Value-enhancing Activities Value-diminishing Activities Promoters of / Barriers to Change

Human Resource Management Technological Development Value Chain Analysis Firm Infrastructure Human Resource Management Support Activities MARGIN Technological Development Procurement Service Inbound Logistics Outbound Logistics Marketing & Sales MARGIN Operations Primary Activities 59

SWOT Summary Strengths Weaknesses Opportunities Threats

Revised Mission/Intent Statement “Apple ………………………………..” Definition of Industry Description of Core Values Description of Basic Strategic Approach General Identification of Customer Base

Revised Mission To position Apple as the world leader in man-machine interfaces though the development of ergo- and cerebro-nomic software and interface devices required for electronic and electromechanical applications.

Goals Financial Strategic

Goals 20% ROS by 1994 40% Share of O/S Market by 1994 Develop 3 New Interface Devices by 1994 Achieve full interoperability with Intel and RISC microprocessors by 1993 Top 4 Software Vendors by 1993

Strategic Action Plan Strategic Action #1 Strategic Action #2 Details about specific value chain activities Resources required Expected benefits (re: a particular SWOT item) Strategic Action #2

Milk Mac No new manufacturing and R&D investment in existing hardware products Outsource next 3 years’ production to Malaysia: Send VP Mfg. and 3 Engineers on “Sourcing Mission” Benefit: Decrease COGS from 53% to 33%

Apple Core “Open system” O/S (a.k.a. Pink) not processor specific head-to-head with Windows increase installed base increase ISV applications Shift 80% of R&D budget to Core Benefit: Increase ROS from 5% to 20% (NOTE: O/S production has COGS average 19% percent of sales vs. 66% in hardware manufacturing.)

Apple’s Recent Actions 1993 Cut Mac prices 26% down from a 20-40% premium PowerPC with IBM and Motorola PowerMac PowerBook laptop Overseas expansion; Japan (2% to 15%) Newton (PDA) 1994 Layoffs and Mfg. Rationalization Pushed Pink H-P joined Apple and IBM Sculley resigns; Spindler is new CEO

1995 Attack educational and desktop pub markets License Mac O/S (aka Copeland) Record revenues; $69 million net loss Fujitsu starts price war in Japan 1996-98 Terminated Taligent and Kaleida Jobs and Woz are back Accepted $150 million from MSFT Intros iMac

Actual Results: 1991-97

Stock Price

Comparative Market Share (%) by Revenue

Revenue Comparison (in $millions)

Profit Comparison (ROS %)