Business and Marketing Analysis of Apple PDF
Business and Marketing Analysis of Apple PDF
Business and Marketing Analysis of Apple PDF
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Apple Inc. (Think different)
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KEY FACTS:
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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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The background of Apple Inc.
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
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
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MAJOR PRODUCTS AND SERVICES
Apple is a major player in the PCs, portable digital music players, and mobile devices. Some
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MAC products:
Mac Pro, Mac mini, MacBook, MacBook Air, MacBook Pro, iMac,
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Mac Accessories:
Magic Mouse, Magic Trackpad, Keyboard, Cinema Displays, Apple Battery Charger,
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Wi-Fi Base Stations:
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Servers:
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Applications:
iLife, iWork, QuickTime 7, AppleWorks, Aperture, Final Cut Studio, Final Cut Server, Final
Cut Express HD, Logic Studio, Logic Express, Apple Remote Desktop,
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Major Products
iPod touch, iPod classic, iPod nano, iPod shuffle, iPad and iPad mini
iPhone:
iTunes:
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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
cross-pollination of our groups, which allow us to innovate in a way that others cannot.”
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Mission of Apple Inc.
educators, creative professionals and consumers around the world through its innovative
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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:
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But, what we can see in the mission statement of Apple is more like listing their products
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Porters’ Five Forces Analysis
Based on Porter’s five forces (Power of supplier, power of buyer, threats of new
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Power of supplier: The supplier bas some power because of their product uniqueness and
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
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
Threats of substitutes: based on their products; iPod, there are many other portable music
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
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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
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SWOT ANALYSIS
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
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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
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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
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TOP COMPETITORS
Lenovo Group Limited, Motorola, Inc., Microsoft Corporation, Acer Inc, LG Electronics, Inc.
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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
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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
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.
Strengths
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Weakness
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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
4 points - major O
3 points - minor O
2 points - minor T
1 point - major T
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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
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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.
Opportunities
Downloadable music and MP3 players are highly marketable 0.6 3 0.18
Large population (Gen X & Y) which are extremely individualistic 0.15 4 0.60
and name brand conscious.
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Threats
Dell does not invent but provides computers at a more cost 0.06 3 0.18
effective rate for customers
Companies not seeing Apple as compatible with their softwares 0.10 2 0.30
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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
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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).
Resources are all assets (tangible and intangible), firm attributes (reputation and
that improve its effectiveness and efficiency. Here we analyze the Apple based on RBV:
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Key Resources
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Tangible! ! Intangible
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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
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Key Activities
•Enabling customers the interaction/ testing of products that resulted in 395 million visitors in
2012.
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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:
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Strategic alliance:
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AT&T - wireless provider:
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Apple’s resource based view is a relevant model in analyzing its sources of a competitive
use
opportunities or Resources competitive
neutralize threats through which are costly advantage
resource to copy
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The Apple’s resource strategy can be briefly explained as below:
Apple Inc. in order to get its sustainable competitive advantage through first mover
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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done based on the Porters five forces that analyzes the firm wholly in the market
environment.
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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
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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
3. iPod
4. iPad
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Strong ! Medium Weak
Business strength
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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.
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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,
2. Strategy: Strategy of Apple is to focused on its target customers (or market) that is niche
market.
a network.
Financial Position (FP) Average 5,8 Stability Position (SP) Average -3,5
4. System: Apple recognize best of its employees through its “Apple fellowship program”
personal computing.
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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:
Competitive Position (CP) Average -2,6 Industry Position (IP) Average 5,5
Apple has good and affective leaders that walked around the office barefoot even after Apple
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
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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
Liquidity: according to the current ratio Apple is one of the most reliable corporations within
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
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
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Technological changes: the Company has been an innovator in the area of computer hardware
Competitive pressure: the companies which Apple is competing with, are urban corporations
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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.
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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
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
Control over suppliers and distributors: Apple already has a very efficient network of
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
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,
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SPACE Matrix for Apple Inc
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Political • The supply and manufacture of many critical components is performed by sole-
sourced outsourcing partners in the U.S., Asia and Europe. Outsourcing partners
factors 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 • 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
factors 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 • 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
factors
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
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Stars
These are the products or Businesses’ that are outperforming their rivals in the market,
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Cash Cows
These are the products in which an organization normally enjoys market leader’s position
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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
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Question Marks
Question Marks are the products in which our organization has relatively lower market
share
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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
making any lose nor making profit. So, it will not be a sensible decision to invest further
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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
AirPort ,Mac mini , Final Cut Pro,Power Mac G5,AppleScript ,The Apple decal,Fifth-
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.
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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.
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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
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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.
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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
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Brands ! Apple Samsung HTC
Market Share
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Brands 2012 Sales 2011 Sales Market Growth Rate
So, the Apple Inc will be place at Star place with high market share and its fast rate of market
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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:
2. Wining the competition is by achieving the costumer bonding not beating the
competitors.
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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
Mission of the business as mentioned above is “Apple is committed to bringing the best
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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