Case Study Analysis: Apple Inc in 2015

Introduction

Apple Incorporation is an American multinational technology company headquartered in

California and is presently led by Tim Cook. The company has been founded by Steve Jobs,
Steve Wozniak and Ronald Wayne in 1976. The company was incorporated in 1977. After
suffering initial setbacks Apple Inc had its first success with the introduction of Macintosh in
1984. In 1985 a power struggle between Jobs and CEO John Scully resulted in removing Jobs
from managerial duties and resignation of Jobs from the Company. In 1997 Jobs was appointed
as interim CEO. On August 15, 1998, Apple introduced a new all-in-one computer reminiscent
of the Macintosh 128K: the iMac. The iMac design team was led by Ive, who would later design
the iPod and the iPhone. The iMac featured modern technology and a unique design, and sold
almost 800,000 units in its first five months.

During his keynote speech at the Macworld Expo on January 9, 2007, Jobs announced that Apple
Computer, Inc. would thereafter be known as "Apple Inc.", because the company had shifted its
emphasis from computers to consumer electronics. This event also saw the announcement of the
iPhone and the Apple TV. The company sold 270,000 iPhone units during the first 30 hours of
sales, and the device was called "a game changer for the industry". In July 2008, Apple launched
the App Store to sell third-party applications for the iPhone and iPod Touch. Within a month, the
store sold 60 million applications and registered average daily revenue of $1 million, with Jobs
speculating in August 2008 that the App Store could become a billion-dollar business for Apple.
By October 2008, Apple was the third-largest mobile handset supplier in the world due to the
popularity of the iPhone. In June 2010, Apple released the iPhone 4,which introduced video
calling, multitasking, and a new stainless steel design that acted as the phone's antenna. Later
that year, Apple again refreshed its iPod line of MP3 players by introducing a multi-touch iPod
Nano, an iPod Touch with Face Time, and an iPod Shuffle that brought back the buttons of
earlier generations. Additionally, on October 20, Apple updated the Mac Book Air laptop, iLife
suite of applications, and unveiled Mac OS X Lion, the last version with the name Mac OS X.

In October 2010, Apple shares hit an all-time high, eclipsing $300. On August 24, 2011, Jobs
resigned his position as CEO of Apple and was replaced by Tim Cook. On June 6, 2016, Forbes
released their list of companies ranked on revenue generation. In the trailing fiscal year, Apple
appeared on the list as the top tech company. It ranked third, overall, with $233 billion in
revenue.

Apple Inc Mission

Apple is committed to bringing the best personal computing experience to students, educator,
creative professionals and consumers around the world through its innovative hardware,
software and internet offering

Apple Inc Vision

We are committed in producing high quality products and providing high quality servicethus
setting high quality standards for other competitors

Apples Overall Competitive Strategy

The competitive strategy of Apple Inc that has provided the company edge over its competitors
is the application of strategies like:

Product differentiation
Innovation
Vertical integration.

Apple has employed a differentiation strategy in an attempt to meet the needs of a global market
by offering customers innovative new products and improved existing products. An important
part of their strategy involves meeting the needs of the evolving digital electronics and computer
markets.

This strategy of innovation has allowed Apple to be the frontrunner in new product introductions
and the improvement of existing products.

Apples business strategy controls its unique ability to design and develop its own operating
systems, hardware, application software, and services.
The strategy of Apple is evolving due to loyal customer base and ambitious leadership.

Key Elements of Apples Strategy in Computers, Media players and Smart

phones

The key elements of Apples strategy in their computer, personal media players, and smart
phones are unique styles, and features that attract consumers due to appearance. Apple
computers use technology and programs that are unique and offer a limited numbers of computer
models. This can be exemplified as:

Apple Computers are stylish; it has proprietary capabilities and has a limited product line.
Apple personal media players are perceived fashionable and have the music store
support.
Apple smart phones and tablets were first to introduce innovation, they are perceived
fashionable and has App store support.

Competitive Strength Assessment of Apple in Domestic Market

The Exhibit 3 in the case study is the US market share of leading computer vendors from 2010 to
2014. The table states that Apple stands third in the domestic market based on market share and
has gained momentum since 2010 as it has increased its market share from 8.8 in 2010 to 12.2 in
2014.

Apples Competitive position in media players, tablets and smart phones as

compared to Computers

Apples Media player, tablets and smart phones has held stronger position in their relative
markets as compared to its computers. As Apple media players held 78% market share in digital
music players in 2011. Apple tablets held 68% market share in tablets in 2012 and Apple smart
phone was second best selling smart phone in second quarter of 2012. In addition the Apple
smart phone has contributed to the success of entire smart phone industry, which grew from unit
sales of 1.7 bn in 2009 to 4.9 bn in 2011.
In terms of overall revenue of Apple as per the data in Exhibit 2 the net sales and unit sales has
shown an increase equal to smart phones and more than Ipad and Ipod. But in contribution to
overall revenue the computer stands third. This is due to the change in trend as more people are
nowadays shifting from computers to smart phones and tablets.

Based on the trend Apple should focus on Ipad in order to make it a major contributor in
companys overall performance.

Apple being a competitor in media players, computers, smart phones, watches

and tablet computers

Yes, for Apple, it does make sense to be a competitor in the computer, personal media player,
smart phone, and tablet computer industries. As there are similarities in Apples Value Chain
activities for its products:

Primary Activities (Supply Chain management, operation, distribution, sales and

marketing service)
Supporting Activities (R&D in products, HRM, General Administration)
Technology Innovation (Apps, Common operating systems-IOS/Mac/OS)
Customer Service and Purchasing

All these similarities help in the future growth of the company. And discontinuing any product
line should be based on the trend in the market as per the need and demand of consumers.

Apples Financial Performance in Past 3 years

Based on the data the profitability of the company has increased from 25 % to 40 % continuously
from 2006 to 2009. The graph also depicts that the revenue of the company have been increased
from 10 billion to 17 billion in due course of time which depicts that the company is
continuously growing with the total competitive advantage of the global international market.
The ratio analysis suggests that: The current ratio of the company is continuously increasing
showing the increase of current assets and decrease in current liabilities with some downturn in
the year of 2009.
Strategic Challenges Faced by Apple

Apple faces challenges in all its product lines due to increased competition. As in Computer
industry leading companies are ahead from Apple based on its sales due to their low cost and
user friendly interface. In Smart phone industry and tablets Samsung is closing gap on Apple in
terms of innovation.

Thus the major challenges faced by Apple are

Innovation
Cost reduction

Recommendations

Personal Computer

Product Customization
Lower Production Costs & Price reductions
More advertisements

Personal Media Player Industry

Innovation on product feature

Attractive advertisement

Smart Phone

Continue to lead in innovation

Make the iphone compatible with more carrier networks
Develop valuable new apps

Tablet Computers

Implementing the cost reduction strategy

Developing more portable and desktop computer compatible applications to ipad
Leading the innovative product