Apple Inc., formerly Apple Computer Inc.

, is an American multinational corporation with a focus on designing and manufacturing consumer electronics and closely related software products. Established in Cupertino, California on April 1, 1976, Apple develops, sells, and supports a series of personal computers, portable media players, mobile phones, computer software, and computer hardware and other hardware accessories (Ref1). Apple is engaged in design, development and marketing of personal computers (PCs), servers, communication devices, network solutions, portable digital music players, and related accessories, software and services. The companys portfolio of offerings comprises Mac computing systems, iPods line of portable digital music and video players, iPhone handsets, iPad portable multimedia and computing device, and servers. The companys software applications include Mac OS, iLife, iWork and internet applications such as Safari and QuickTime, among others (Ref2).

Aims and objectives :

In accordance to this example of Apple, we aim in studying the research of why some brands like Apple sell their products in higher price and also sell more in quantity than their competitors. And this research is based on traditional marketing and cult marketing to their profits success. The objectives are; Bringing out or exploring the strategic changes in the year 1997 of the company which changed the company into profitability and also paved way for the launch of Mac

The Apple did not rise up smoothly but had a very tough times. It was nearly in bankruptcy company until when steve realised or explored the the strategies in 1997 to bring back the company. In order to save the Apples future the Mac was developed and relaunched after the strategic changes, which was eventually a huge success. (Kahney ,2008 pg;38) Analysing Apple using the traditional 4 ps of traditional mix

The Apple company had ideas that also affects all areas of the four p analysis. The company strives for details which are not considered competition in the industry.for eg . Apple was the first company that gave attention to the detail of the design.

Analyse the cult marketing and emphasis on the apple as an cult brand

There is an strong name of cult brand for Apple ., for e.g. the company Harley Davidson also is on the same platform of riding the name of an cult brand which has lot of evangelists for the company ie fans for the brand which gives an value to the company.i have described the cult market and how Apple is recognised as cult brand and how it analyses by the cult market of its consumers. This theory is used in this case stusy of Apple.

To analysis the strategic position of the Apple in comparison with its competitors, we should first know the micro (internal) and macro (external) environment of the consumer electronic industry. 1

MACRO ENVIRONMENT 6Cs of any industry sector investigates the important factors that are affecting the industry and influencing the companies operating in that. 6C is an acronym for Customer, Company, Culture, Competition, Country and Currency factors of the external macro environment. (Ref3) Company: The electronics industry has revised its 2010 exports forecast upward, this time to growth levels that could more than make up for last years global downturn-caused plunge but it should also keep in mind that the a weak and unsteady recovery of the global economy it is doubtful whether the demand for electronic products could be strong (T 1.1O) (Chart 3) Apple's iPhone was outselling the Research in Motion BlackBerry, even though the iPhone had been in the market for only 15 months. When measured by revenues, Apple has become the world's third-largest mobile-phone maker, behind Nokia and Samsung. All this is happening just as mobile devices are poised to become the most important computing platform (T 1.12). Country: According to Porters diamond the country become associated with specific types of competitive advantages in particular industry (Ref3). Close relationships with other nations is very much important, example Mexico, due to its close relationship with the US has become a major centre for the production of computer and consumer products and in particular TVs and mobile phones (T 1.8). In Asia-Pacific there is a significant proportion of the population who are educated, resulting in considerable increase in disposal personal income. That would drive the demand for consumer electronics (T 1.9) (Chart IV) (Chart 1) (FT 3.4) Japan is famous for its electronics -- and so increasingly is South Korea. Because of the earthquake theres already been a clear impact in terms of the high-end electronics and a lot of the components for Japanese manufactured goods in China. The price of Japanese consumer goods for some items in low stock has risen quite rapidly already (T 1.7). Culture The consumer electronics industry is probably the most dynamic and the fastest changing industry in the world today. In addition, it is one that has a direct impact on every life in the world. In fact, if you look just at the global trend people will spend more money on consumer electronics than any other category of gift. It is the industry that is changing our lives (T 1.4). From the beginning, the employees of Apple learn the Apple way: Think Different. Its not written anywhere and there are few processes to follow, but they learn it, just the same. And it works, big time (T 1.6).

Competition Competition is the mechanism that helps more productive and efficient companies expand and take market share from less productive ones, which then go out of business or become more efficient. Large companies are pouring money into research and development at an unprecedented rate, in response to growing global competition. In many sectors profits are growing strongly and companies can afford to spend more on R&D (T 1.13). Now days competitors of Apple trying to figure out secret success of Apple. Basically Apple has no secret, the way of doing things are very simple. Apple is just offering the products which consumer requires eg: iPhone with number applications (T 1.14). Customer Nowadays consumer technology is becoming more complex with more functionality being constantly added to the core product. For example customers are expecting mobile phones with numbers of applications e.g.: digital camera, mp3 player, etc. (T 1.1). The Company has designed a range of products, services and programs not only for ordinary customers but also to address the needs of education customers, including individual laptop programs and education road shows. In addition, 2

the Company supports mobile learning and real-time distribution and accessibility of education related materials through iTunes (T 1.3). Currency Currency exchange rates are an important factor as well. The strength (or weakness) of the US dollar versus other currencies can directly affect a companys bottom line. Change in the exchange affects the price of imports, which also affect the inflation rate, through its effect on imported costs. For example, a fall in the exchange rate increases import prices and creates cost-push inflation (T 1.16). The change in market interest rates affects spending decisions by household and companies, economic activity and inflation. For instance, higher interest rates make it more expensive to invest and tend to result in lower expenditure for investment. It makes saving more attractive and tend to reduce consumption demand (T 1.18). Low interest rate put more borrowing power of the consumers that would impact on demand of Apple products. Growth in the sales of Apple has increase the enthusiasm of Apple investors to buy more share of Apple Inc. MICRO ENVIRONMENT Porters five forces analysis derive five forces that determine the competitive intensity and therefore attractiveness of a market. Porter referred to these forces as the micro-environment, to contrast it with the more general term macroenvironment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace (Ref3) Threats of New Entry The consumer electronic market, such as China, is prone to the threat of new entrants. In many countries the industry is highly regulated by government organizations, which will limit options for potential newcomers (T 2.2). Apple's iCloud may have required an enormous investment. It is understood to have built a data centre in North Carolina with an estimated cost of $1bn and measures half a million square feet (T 2.1). Apple commands a large portion of the global market for a key component it creates enormous barriers to entry for potential competitors. Competitors can obtain the component in limited quantities but at a higher price, therefore placing them at a cost disadvantage (T 2.3). Power of Suppliers Some companies use proprietary chip design which helps the PC manufacturer to switch suppliers of CPUs they have to switch to a new type of motherboard, which drives up switching costs. However the powers of chip manufacturer are high, they rely on PC manufacturer for a bulk of their business (T 2.4). Apple buys lots of components in large quantities which exercise significant leverage over suppliers. This leverage enables Apple to negotiate favourable terms and pricing. For instance, South Korean Fair Trade officials alleged that Apple struck a special deal with Samsung to obtain flash chips at below market rates. This favourable pricing means that Apple has a lower cost structure for its products relative to competing products. And all else equal, this lower cost structure results in higher margins for Apple versus competitors (T 2.6). Power of Buyers Large business governments and schools, which buy electronic goods such as computers in large volumes, have the power to bargain on price, quality and services. Personal computer buyers are price sensitive. However, buyers have less power when the switching costs and brand-loyalties are high. Thus, PC manufacturers can reduce a threat of buyer power by differentiating their products (T 2.7). For example: Apples unique operation system and its computers specifically targeted to publishing and designing industry prevent their buyers from switching to competitors products. Its sleek product design represented by iMac and iBook also acquired many fans and increased brand-loyalty (T 2.9). Threat of Substitute 3

Products in the near future will be data capabilities for satellite phones, which will allow people to not only stay in voice communication virtually anywhere, but also stay connected to the information superhighway (T 2.11). Xbox by Microsoft, has a DVD player, high-performance games, and a standard Ethernet network card for high-speed Internet connections without PC hardware, which is a substitute of PC especially for home users (T 2.10). Apple products have very low substitutes. Existing Rivalry Switching costs are one of the most important economic forces that affect market competition in electronic industries. Switching costs reduce market competition leading to higher prices, lower product and service quality, and lower customer welfare. In essence, regulation should require that communications service providers ensure that switching is fast, cheap, predictable and reliable and that consumers are able to switch with minimum difficulty and delay (T 2.12). The rivalry between mobile networks Apple Inc. and Google Inc. and the entrance of new players including Dell and HP both the networks boast popularity, but it does not mean that all buyers want to purchase through them alone. The UKs leading mobile phone operators have launched a belated initiative to try to stop Apple and Google securing the lions share of revenue generated from advertising on hand sets (T 2.13). Strategic Groups Apple is situated in its own strategic group within the Consumer Electronic industry, implying high R&D expenses by at the same time charging a premium price for its products. This isnt anything new or surprising as there was already defined that first, Apple obtains innovation leadership and therefore is part of that top-right bubble and second. As there is no other company pursuing a similar positioning strategy or can be located in Apples strategic group, real direct substitutes become obsolete. Apple doesnt want to adjust their strategic position in the matrix as it doesnt desire to move into another strategic group. The companys only objective is to maintain R&D and thereby keep up innovation and the same prices charged (T 4). (Ref 124). Resource Based View It is important to have an understanding of Apple Inc. strategic resources, both assets and capabilities as these are the things that determine the nature and strength of the internal and external Apple Inc. have. The resource based view emphasizes the internal capabilities of the organization in formulating strategy to achieve a sustainable competitive advantage in its markets and industries. The resource-based view of competition draws upon the resources and capabilities that reside within an organization, or that an organization might want to develop, in order to achieve a sustainable competitive advantage (Ref 3).

Physical

Financial

Tangible - Apple has opened more than 300 retail stores globally (Graph II). The introduction of Apple stores has provided the company with an important physical presence to act as both a sales location and an advertisement. The stores allow Apple to tightly control the image of the brand and provide excellent customer service. This resource is of incredible value to Apple and a success that is a relative rarity in the industry (T 5.1). -Because of 300 retail stores globally Apple Inc. revenues increased 52.02% compared to 2009 [(65225-42905)/42905] Revenues reflect a substantial increase in come from i-Phone sale (FT 3.5) -Increase in net come allow the Apple to invest in Research and Development cost, $1.78 million in the year 2010 (T 5.3). (FT 3.1)

Intangible Ability to expand - The company financial position by preparing the company for big investments to come, a shrewd business move if ever there was one (T 5.2). The company financial position helps the company to invest and expand its business all over the world.

Apple has a good credit crediting of AAA. A company with credit rating AAA means Credit is extremely high. It is the highest rating (T 5.4).

- High standard and range of equipments and technology. As Apple manages its business primarily on a geographic basis, its segments are America, Europe, Japan, the Retail segment and Others (comprising Asia-Pacific). This organisation already Operational indicates Apples widespread global operations and activities although the United States still represent Apples largest geographic marketplace with 56.1% (Graph I) of Total Revenue (T 5.5). - An organizational mega-skill becomes a core competency and therefore market advantage when three hurdles are crossed: * First, it produces a highly valued consumer benefit. Apple's easy-to-use products save time. Period. * Second, your mega-skill becomes far superior to that of current or potential competitors. Superiority results in unique benefits for which customers gladly pay price premiums. * Third, it is broad enough to help you win business in new markets. Apple used its resources to create novel music players and cell phones that helped grow its revenue from $19.32 million in FY2006 to $45.91 million in FY2010 (65.23-19.32) (T 5.7). (T 3.3). - Apple's MP3 players are the easiest to use because Apple software seamlessly links them to a computer library and the iTunes online store (where you can buy music), both of which recognize your device instantly. None of Apple's rivals has created anything as seamless, and each has fallen short in other areas. Another cool function of MP3 players: They can play music downloads from online stores, making song purchases a legal (T 5.9). One of Apples most important capabilities is their ability to develop and build highly integrative systems such as icloud with software designed specifically for the hardware it runs on. The closed system style of Apple is unique in the industry which typically relies on third-party software (i.e. Microsoft Windows running on a Dell computer). This capability comes from a combination of the design teams, software development teams, and hardware engineers employed by Apple. No other firm in the industry has a system like Apples and it would cost millions or billions of dollars to imitate, not regarding success. While other systems work for PC manufacturers they cannot achieve the same results as Apples integrated system (T 5.11).

Human

Apples incredible industrial design capability is a function of their innovative design teams, led by Jonathan Ive, senior vice president of industrial design, and the firms prioritization of design and outsourced production. Ive and the Apple design team hold many awards, with products being shown in permanent collections at various museums. This combination is valuable to Apple, rare among competitors, and difficult to imitate. (T 5.6). Apples software developers are carefully selected and talented programmers. Theyve produced industry award winning software and the highly regarded iterations of Macintosh OS X operating system. Theyve provided Apple with important products, but developers of their calibre are not rare within the industry, nor are they difficult to imitate. Other firms can developed staff as talented or hire them away from Apple (T 5.8).

Legal

As early as 1988, Apple sued Microsoft for stealing the look and feel of its Mac operating system. The case ended at the Supreme Court in 1994, and Apple lost (one of the main arguments was it had itself stolen the GUI from Xerox some "fifteen years earlier) and recently they are repeating the same mistake with Google (T 5.10). A companys internal resources are more fundamental in determining strategic action than its external resources. The operating within this view can hinder innovation by excluding possible genius ideas generated outside the workforce example the creation of the iPod (T 5.12).

System

Customer based - The strength of the iPad has pushed Apple ahead of Google for the first time as the most valuable brand in the world which has developed customer loyalty and high reputation. The company enjoys a strong brand image in all the geographical regions in which it operates. The increase in brand value resulted from the popularity of its iconic products, which enable people to manage and enjoy their lives, simultaneously (T 5.13). Distribution based - Apple Inc. ecosystem has morphed from a sad little high-tech shtetl into a global empire. Once known for defining the digital future but never fully capitalizing on it, Apple has been transformed into tech's most 5

influential hit-maker. Revenue increased 82% as at May 2011. Revenues reflect a substantial increase in income from iPhone sales and a significant rise in sales from America, European, Japan, Asia-Pacific and Retail segment (T 5.14). COMPETENCIES Strategic - Apple founder and current CEO Steve Jobs is an incredibly valuable resource to the firm. Being a great leader and having an excellent reputation, his unique vision and approach to business established Apple as an industry leader in the beginning and he saved the firm from a downward spiral when he returned in the mid-1990s .Under his guidance the firm has rebounded and excelled in many markets, often defining categories of products. To Apple Steve Jobs is a valuable, rare, inimitable, and non-substitutable resource (T 6.1). Functional IT departments would be seriously chastised were they to deliver systems that omitted basic functionality on the promise of future improvements. But the buzz being created by the likes of Apple creates an opportunity to discuss new ways of working with users to meet their changing expectations (T 6.2). Operational - Apple has outsourced all of its manufacturing processes to Original Equipment Manufacturer (OEM) partners in China, like Foxconn and Hon Hai Precision Industry while focusing on design internally. The relationships between Apple and their OEM partners are very close to provide Apple with excellent service and high quality products. Mutually beneficial business relationships are time-consuming and difficult to develop and maintain is of considerable value to Apple and puts them ahead of other manufacturers who may decide to outsource some production (T 6.3). Value Chain Value Chain of Michael Potter is a model which is useful analysis tool for defining a firms core competencies and the activities in which it can create value and competitive advantage (Ref 3). Apple Inc. has tried to control the system further by forward and backward mitigation. A greener Apple reduction in energy use in production and transportation to match trend in green business. Strong cash position allows a firm to internally finance expansion and development without cost of capital (T 7.1). When it comes to recruit any new employees, Apple use selective hiring processes to attract the talent. It also generous employee benefits program to retain industrial leading talents (T 7.2). Training programs like Train-the-Trainer human resources personnel at manufacturing facilities are shown how to educate assembly-line workers about Apple's Supplier Code of Conduct, occupational health and safety, prevention of work-related injuries, and workers' rights and obligations (T 7.3). The Company continues to develop new products and technologies and to enhance existing products that expand the range of its product offerings and intellectual property through licensing and acquisition of third-party business and technology (T 7.4). R&D expense increased 34% or $1.3 million to $1.8 million in 2010 compared to 2009 (FT 3.1). The Company continues to believe that focused investments in R&D are critical to its future growth and competitive position in the marketplace and are directly related to timely development of new and enhanced products that are central to the Companys core business strategy. As such, the Company expects to make further investments in R&D to remain competitive (T 7.4). Apple works closely with its key suppliers to benefit all parties involved. Apple is a member of the Electronic Industry Citizenship Coalition (EICC) and works to ensure fair treatment of workers in OEM factories. Apple has also developed its own Supplier Code of Conduct to govern the actions of its suppliers. These beneficial steps foster positive relationships with suppliers (T 7.5).

Apple has implemented sophisticated automated receiving systems to speed up the receiving process and reduce facility footprint and storage space requirements. Delegate raw materials acquisition Apple works with its OEM partners to delegate the raw materials acquisition process but provides some supervision for quality control purposes (T 7.6). Apple outsources production to third-party OEM partners to utilize their economies of scale while removing the burden of production management from the firm. The design and conceptualization of current and future products is done internally at Apple, utilizing industry-leading industrial design teams and engineering knowhow (T 7.7). To control the firms brand image Apple sells through first-party retail establishments and through authorized retailers. Apple Stores act as advertisements for the brand and provide a human point of contact between the firm and its customers. Authorized retailers are held to certain standards to protect Apples brand image. Direct shipmentApple.com online orders are shipped directly to consumers from storage facilities in China. This minimizes inventory build-up in more costly warehouse locations in the United States (T 7.8). The Company utilizes a variety of direct and indirect distribution channels, such as its retail stores, online stores, and direct sales force, and third-party cellular network carriers, wholesalers, retailers, and value-added resellers. Company continues to expand and improve its distribution capabilities by expanding the number of its own retail stores worldwide (T 7.9). Apple stores house the Apple Genius Bar where customers can talk with an Apple specialist known as a genius about problems with their device. This human interaction with a first party service provider builds a rapport with customers and offers a stark contrast to endless phone service calls (T 7.10). Included and extended warranty Apple offers an included 90 day warranty against defects and issues with its products. Customers can also purchase extended warranties through Apple Care to protect their product. It also gives free consultation to the customers who can bring in their device regarding issues problems with no commitment, whether it is in or out of warranty. The customer then has the option to pursue different avenues of resolving the issue without an upfront charge (T 7.11). Ansoff Matrix The Ansoff product /market growth matrix provides a simple way to generating four basic directions for corporate strategy. Ansoff matrix suggests that business intense to grow depend upon whether its new or existing product in new and existing market. Asoff matrix has four growth strategies Market Penetration, Market Development, Product Development and Diversification (Ref 3). Market Penetration The firms seek to achieve growth with existing product in their current market segment aiming to increase to increase its market share. The iPhone still has the advantage over its competitors, however, is in the number of apps that are available to users, which gives them flexibility to do more with their phones. The App Store from Apple now has over half a million apps available to download. The App Store opened in 2008 alongside the release of Apple's second generation iPhone, the iPhone 3G (T 8.1). During 2010, Net sales in the Americas segment increased $5.5 billion or 43.9% compared to 2009. This increase in net sales was driven by increased iPhone revenue, strong demand for iPad, continued demand for Mac desktop and portable systems,Europe: net sales in Europe increased $6.9 billion or 58% compared to 2009, significant increase in iPhone revenue . Europe Mac net sales and unit sales increased 32% and 36%, respectively, during the year due to strong demand for Mac Book Pro and iMac. During 2010, Japans net sales increased $1.7 billion or 75% compared to 2009. The Mac net sale increased by 8% driven by a 22% increase in unit sales due primarily to strong demand for Mac Book Pro and iMac. Net sales in Asia-Pacific increased $5.1 billion or 160% during 2010 compared to 2009. The significant growth in Asia-Pacific net sales was due mainly to increased iPhone revenue, which was primarily attributable to country and carrier expansion and continued growth from existing carriers (T 8.2) (T 8.3). (FT 3.4 & 3.5) (Chart V). Market Development 7

The firms seek growth by targeting its existing products to its new market segments. Apple reaches beyond its traditional base of younger customers. "Demographically, the world, especially in developed markets, is getting older, and it's probably where Apple is least penetrated. Elderly users are "a key source of growth for them in the future (T 8.8) Apples cloud strategy is based mostly around the desktop; the fact that it dropped the word Computer from its name just four years ago reflects the companys acknowledgement of the growing influence of mobility and cloud-based applications and services. To that end, the iOS devices, such as iPad and iPhone, already operate as cloud-based devices to a certain extent. While Apple does not explicitly share a specific cloud strategy for the future (T 8.9) Apple is developing a low-cost version of the iPhone as its battle with Google to control the Smartphone market heats up. Steve Jobs company is said to be working on a Nano version of its premium product which will be around half the size of the iPhone 4.Mobile carriers could sell on the product for about half the price of Apples main line of iPhones (T 8.10) Apple Computer has announced several new computers it hopes most people will be able to afford. The newest Macintoshes are dramatically less expensive than their-predecessors, putting Apple in close competition with IBMcompatible computers."Many people have told us that they wanted Macintosh, but price was a barrier," says John Sculley,(CEO Apple in 1980) chairman and CEO. "With this introduction, we can break down that barrier (T 8.11) Product Development: The firms develop new product targeted to its existing market segments. Apple has started to build smaller, 7-inch versions of its iPad tablet, timed to hit U.S. market very soon. If you wonder why in the world Apple would add yet another potentially cannibalizing product to its line-up of iPods, iPod Touches, iPads, laptops, and computers, realize that this device is likely a decoy (T 8.4) (Chart V) In 2007 apple introduced the revolutionary product that changes everything. People that thought that they were getting a new phone with multi-touch and a real Internet experience, but four years later, it turns out that what we got was a brand new, robust computing platform ipad which was new innovation in mobile computing (T 8.5) Apple and Microsoft have planned to work closely on leading-edge technologies for the Macintosh platform. Microsoft will develop and ship future versions of its popular Microsoft Office suite, Internet Explorer, and other Microsoft tools for the Mac (T 8.6) Apple CEO Steve Jobs and senior executives briefed journalists and independent software developers on their plans to open the iPhone SDK (software development kit) very soon to support the development of enterprise-grade applications (T 8.7) Diversifications: The firms grow by diversifying into new business by developing new products for new market. A first mover advantage exists where an organization is better off than its competitors as a result of being first to market new product/services. First mover is a monopolist, able to charge high price. APPLE iPod has proved to be very successful due to its diversification. At the release of iPods there was nothing on the market that was similar to it in terms of style and capacity of songs. So therefore it was different to both a cd player and minidisk (T 8.12) Apple uses the related diversification strategy to leverage its products and to encourage up-selling. Before the introduction of the iPod, Apple was only a computer company, selling Macs. Because Mac sales were not as good as expected, Apple diversified into mp3 players by introducing the 1st generation iPod. Risk is low during initial diversification because if one sector fails, the company can rely on the other sectors (T 8.13) Apple has diversified by - First there was the Mac line of computers, then Apple added the iPod, then the iPhone, and small over a year ago, the iPad. Over the past 10 years, Apple has gone from being a computer company to being a right consumer brand (T 8.14) Generic Strategies Business level strategy is concerned with a companys position in an industry, relative to competitors. Companies are challenged to select business level strategies to position themselves favourably and to establish a competitive advantage over industry rivals. Companies can choose one of four strategies from the generic strategy matrix based on the source of competitive advantage uniqueness or cost and breadth of competitive scope broad or narrow (Ref 3)

Apple applied to identify the options (which varies from tier to tier in the consumer electronic industry) how to compete to gain competitive advantage. Focus Low Cost The focus strategy concentrates on narrow segment and within that segment attempts to achieve either a cost advantage or differentiation. Technology giant, Apple is believed to working on a low-cost version of the iPhone in order to compete better with handsets working on Googles Android platform. Apple is working on the iPhone Mini, which is two third of the size of the existing iPhone and will come without a home key. It is also believed that the smaller device will be available with a "universal" SIM that allows users to switch between networks without exchanging SIM cards (T 9.3) The new MacBook replaces the 12-inch iBook and is the "little brother" of the 15-and 17- inch Intel MacBook Pros. But even though this little MacBook is considerably less expensive than its brethren, it still has many of the same cool features (T 9.4). As expected by many observers, Apple has launched a cheap version of its Macintosh PC, along with a tiny new model of its iPod music player. The existing iPods have already captured most of the market for high-end, high-capacity players. And so Apple is now turning its attention towards cheaper, low-capacity machines that use the small-capacity flash memory rather than the larger hard drives (T 9.5) Apple announced the iPad, which users can hold in their hands for reading and watching videos. Supply analysis means that the components of the lowest-priced iPad, which includes 16 GB of memory, cost only $499 retail price, on par with other Apple products including the iPhone 3GS (T 9.6) (FT 3.5) Focus Differentiation To find the market is to find out who is buying the products which the company wants to sell and focus advertising on them. This way it can attract directly into the people who would have a strong inclination to buy the product. Apple has done this by focusing in on trendy College kids as well as other hip, young demographics rather than the typical I am a PC PCs fit everyone and every business campaigns (T 9.10) Apple products are becoming more popular in China, despite that fact that they still represent a niche market As other PC makers have struggled against fierce price competition and a sluggish US consumer market, Mac sales have been growing at about three times the rate of the broader market over the past four quarters. With its lowest-priced iMac desktop priced higher than average at $1,199, and with its sleek new designs, Apple is betting that it can continue to grow by targeting the middle and top end of the style-conscious consumer market. In spite of its recent growth, Apple remains a niche player in the PC market, largely because it has chosen to ignore the high-volume business customers that account for a majority of PC sales (T 9.11) Differentiation A Differentiation strategy helps to add value by the uniqueness of the product which may allow the firm to charge a premium price for it (Ref 3) Steve Jobs transformed the former Apple Computer into the new Apple a consumer products company. It is no longer selling just the personal computer, which has become a commodity with retail price and profit margin dropping by the day. Today's Apple has moved into a completely new frontier, creating nifty, user-friendly products that consumers desire, such as iPod, Shuffle, iPhone. Jobs has essentially created a new blue ocean for Apple and make its competitors irrelevant. Without any real competition on the horizon, Apple could adopt a price-skimming strategy, charging premium price for products (T 9.8) Apple indicates that it is seeking to undermine BlackBerry maker RIM's position in the market, by offering iMessage, which allows people to send messages directly to other iPhones or iPads ? very like the BlackBerry Messenger feature which has proved hugely popular with teenagers and users in Middle Eastern countries (T 9.7) 9

Apples iCloud suite of services, as well as new apps such as iMessage and improvements to its Safari web browser, brings it into competition with companies large and small, from Googles online office suite, Docs, and Research in Motions BlackBerry Messenger app, down to start-ups such as Dropbox, an internet-storage service, and Instapaper, which allows users to save long web articles for later offline reading in a clean, text-only format (T 9.9) Cost Leadership This generic strategy calls for being the low cost producer in an industry for a given level of quality. The firm sells its product either at average industry prices to earn a profit higher than of rivals, or below the average industry prices to gain market share (Ref 3) No one will ever accuse Apple of being a bargain brand, but the company's iPad tablet may prove to be more affordable than the first generation of Android slates, particularly the Dell Streak and Samsung Galaxy Tab. Apple, a boom for bargain hunters? If the new Android tablet is tied to a 3G data contract, it will lower the up-front cost of the device (T 9.1) The big picture question of the day is whether Apple has done it again. With the original iPad, Apple crushed its rivals, taking more than 90 per cent of the tablet market in 2010 and selling more than 15 million units. Jobs predicted that 2011 will be the year of the iPad 2. Competitors will discover that Apple has a lot of inherent financial advantages, including being a low-cost leader. It is selling so much volume of its products that it can get discounts on parts and manufacturing services that no one else can get (T 9.2) From the Generic Strategy we can analysis that there is a huge market still left for Apple Inc. to capture. One of the options that the company has to capture the rest of the market is through AQUISITION. There are many companies in the market Apple can acquire. But the best company Apple should acquire is SONY. Suitabilty Suitability relates to the strategic logic of the strategy (Ref 3). The strategy is if the Apples operational circumstances, such as the acquisition of Sony will exploit Apple strengths as well as satisfy the goals of the Apple Inc. (T 10.1) As Merger will make them to share their secrets with the other company which they do not want to do. (T 10.2) Acceptability A strategy which is buying Sony is acceptability due to the acquisition will contribute to meeting the objective of increasing shareholder wealth such as profits, growth etc (T 10.3) and Steve Jobs himself does not like the concept of merging with other company. (T 10.4) Feasibility Apple has enough financial to buy Sony as well as Apple has access to technology, materials and intellectual skills. (T 10.5) When a company becomes as big as Apple is today, acquisitions become a way to grow quickly and increase synergy towards major corporate goals. Apple long ago stated its target of living room convergence with video, computer and music, all interactive with the Mac. Apple TV is the first element of that convergence. Steve Jobs has publicly stated that he admires Sony. Apple and Sony go way back in minor collaborations (T 11.1) Sony represents some great building blocks to make the transformation of Apple Computer into Apple, the electronics company. Owning Sony would combine the strengths of two great companies into a conglomerate that might blow the competition away. Sony has recently lost its way and needs focus to regain its former glory. Its value is down enough to make it a takeover target in the right situation. Look at the intersections of interest between the companies. Sony of course, owns PlayStation, which would give Apple the game franchise it lacks. Apple could use that block in building the electronic living room of the future. How would you like to run PlayStation games on a Mac or in HDTV format on your Sony theater HD video display? How about a Sony HDTV camcorder with a built-in hard drive built in 10

that records video in a format that would allow your Mac to use that video directly in the camera and then burn to a BluRay disk, without ever transferring the video into the computer. Electronic devices are commonly close but no cigar to doing the cool things that are so Apple. Sony needs that extra cool factor that they have lost sight of over the years, that instinct to know what customers really want is what Apple has in spades (121) Blu-ray is another Sony property that Apple can help Sony build on. Apple is one of the early adopters of the Blu-ray high definition video format and we will see Blu-ray disk drives in Macs very soon. The Apple falling on the Blu-ray side of the fence will help stop HD-DVD (Toshiba) and make Blu-ray the standard HD disk format. Apple is far and away the innovation leader in computer technology and Apple controlling Blu-Ray technology would send a powerful message; and dont forget the revenue stream from licensing Blu-ray (T 11.2) Sony TV sets are some of the best video displays in the market place. Like Apple, Sony tends to be the quality leader in its products. Apple could help Sony focus its R&D, spell that Steve Jobs, Mr. focus himself. The world class product design of Apple combined with Sony could create an entirely new design engine that might revolutionize our living rooms in 5 years time. Sony has been losing ground on its market share of big screen TV sets, perhaps Apple can help them design wise, especially with user interface and connect-ability. Sony holds a lot of patents (over 25,000 US Patents) that combined with Apple technology would be a powerful collaboration of synergy. Intellectual property alone makes the collaboration interesting, let alone the market and manufacturing implications. The international aspect of Sony and Apple would wear out Steves old jet, and allow him to buy a nicer brand new one. (Steve, you deserve it) This combination might help Apple sell Macs and iPods in Japan. Remember the halo effect. Sony pictures and music is an additional property that Steve might find useful, since hes Disneys largets individual shareholder anyway. With the entire Disney and Sony film library in the iTunes store, you have instant content, to make the lagging Apple TV device succeed (T 11.4) Some Sony products that are lagging could be discontinued such as Sonys lacklustre music players in favour of iPods sold through Sony distribution. Keeping in mind the Sony distribution channels are well established and have valuable marketing aspects Apple might well use to its advantage. Sony has a repair system in place to help with electronic repairs across the board. Some Sony assets could be sold off to help pay for the purchase (T 11.3) Sony might even favour a merger as well. Apple has a big fat bank account, a virtual mountain of cash and perhaps it is time to spend some of it to control. Apples operating margin was 28.19% for the fiscal year 2010. This was above the S&P 500 companies average of 7.26%. A higher than companies average operating margin may indicate efficient cost management or a strong pricing strategy by the company. The operating margin increased 83 basis points over 2009 which may indicate managements high focus on improving profitability. Return on equity (ROE) was 35.28% for fiscal year 2010 which was above the industry average of 4.5%. It indicates that Apple is efficiently using the shareholders money and generating higher returns than other companies in the S&P 500. Apple recorded revenue of $ 65.23 billion, reflecting an increase of 52.02% over last fiscal. The companys compound annual growth rate (CAGR) in revenue was 35.56% during 2006-2010. And also this was above the industry average of 12.74%, it is indicating that Apple performed above the average companies growth and gained market share over the last four years (FT 3.1,3.2,3.3,3.4,3.5)

Before selecting a new Chief Operating Officer for Apple Inc. to replace Steve Jobs it is very much important to know what kind of person Steve Job is, his association and connection with Apple Inc. 11

CEO of Apple exemplifies the influence and charisma extreme fans of Apple products (the so called apple fan boys) attribute to Steve Jobs. However, apparently he is disliked by others, exemplified by the existence of a we-hate-SteveJobs petition site (Ref 89). So, who is this person that creates such extreme emotions? Steve Jobs is a co-founder of Apple Company in 1976 (with a childhood friend Steve Wozniak) (90). He was forced to leave the company in 1985, after internal power struggles, and returned twelve years later. Meanwhile, he had very successfully led the Pixar animation studios (Ref 91) We will attempt to analyse his leadership skills, behaviour, effectiveness, his style and his traits based on the information available to us: Leadership Traits. He is known for his perfectionist attitude, even under adverse market condition demanding quick reaction. In 2000 when apple was hit hard, he still believed in the future of apple product line like iPod, iTunes and Macintosh, certainly because he was very much involved in minute details of the products, balancing micromanagement and vision. Jobs vision for Apple was a computer in the hands of everyday people (T 12.2) Job is a man who does not suffer from self-doubt, everything he does is imbued with absolute self-confidence. He is obsessive about Apple and it product, which he engages with a level of detail virtually unheard of among his fellow CEOs (T 12.5) Jobs is different from most of his peers in that he takes personal responsibility for what Apple makes and how those products feel to the user. Jobs directs the design process from start to finish, asking endless questions, expressing often conflicting opinions, unfailingly pushing the company toward better, more useful products (T 12.7) Steve Job was a very persistent person and it was most exemplified through his exit from Apple. He would not give up, but went on to start NeXT computers which would eventually by Apple Computers Inc. If Jobs was like most people, he would have given up and spent rest of his life being bitter about his loss (T 12.4). Steve Jobs has won lots of awards during his career with Apple such as 'Renegade of the Year' award in 2004. Steve Jobs was the first winner of this unusual badge of honour. Received his medal for entry into the California Hall of Fame, an institution meant to promote the state's history and culture. National Technology Medal from President Reagan in 1985, before founding NeXT. Jefferson Award for Public Service in 1987. Entrepreneur of the Decade by Inc. magazine in 1989 (T 12.1) Despite his cancer surgery (a success), Jobs remain enormously creative and energetic. He could still head Disney and be, as he is now, Apples guiding spirit (T 12.3) Leadership Skills The first Macintosh has been introduced after Steve return, the iMac, all-in-one computer and monitor. He also manages the money, the message, the deal. The computer industry has built up impress business chops and his company is peerless. He rebuilds the company financial position by preparing the company for big investments to come, a shrewd business move if ever there was one. They move followers to go beyond their self-interest for the good of their group, organisation or society (83). He is the one who broke the batch of the music industry with iTunes (84) (85). Job is very careful to avoid overexposure, preferring to speak only when he has products to promote. And also he is hugely respected and is rarely photographed outside of set Apple events (86) CEO Steve Jobs has always acted as the creative director and has helped to shape everything from product design and user interfaces to the customer experience at Apple's stores (83) Leadership Style and Behaviour What is charisma? In Dubrins book on leadership he suggests that charisma involves a relationship between the leader and the people being led (Ref 87). In September 1997, Steve Jobs (Steve) was appointed the 'interim CEO' of leading information technology (IT) company, Apple Computers (Apple), by the Apple board. Considering the fact that the company's board itself had ousted Steve in a coup in 1983, this development was watched with interest by media and industry observers. Steve's comeback was being seen as Apple's desperate attempt to survive one of its worst phases: losses for 1997 amounted to $ 1.6 billion (refer 12

Exhibit I for financial statistics). The company reportedly needed a charismatic leader who could steer it back to profitability and revive its fortunes (T 14.5). He is a gifted speaker with an uncanny ability to confound his employees and the public with an almost evangelistic delivery. He is able to captivate his employees and audience with the ability of an evangelist (T 14.6). In this respect we can observe that he possess the charismatic abilities that Dubrin demands by communicating his ideas using metaphors and analogies and storytelling (Ref 87) Job does not see only computers, iPhones, iPods, Mac, but far beyond. He is demanding both towards himself and towards his employees and constantly moving towards improvement in all spheres of his work. . He acts as a transformational leader, he is able to direct his people and make them do things which they have never done before, but these things are essential for the realization of Jobs vision and plan (T 14.7) Jobs perfectionism is seen through his vision of the company being not only a competitor, but the company which brings killing innovations into peoples home: he supposes that killing products bring killing profits. Concentration on a few products only is also followed by the concentration on their quality (T 14.8) Jobs seem to micromanagement at Apple. Jobs admit that there are an incredible amount of up to 100 individuals reporting directly to him. The designers are the most respected people in the Apple Inc. Everyone know that the designers speak for Steve because they have direct reporting to him. It is only at Apple where design reports directly to the CEO. As mentioned above, he is perceived as autocratic. The fact that so many individuals report to him directly is representative for his will and eagerness to hold all the strings in his hands. Job wants to have total control on everything by himself (T 14.1). Dubrin describes an autocratic leader as one who tells people what to do, asserting themselves, and serving as a model for team members (Ref 87). He also have some negative behaviour and style. He is very short temper. Steves bad temper has notoriously caused him to break important business relationships. For example: Steve ring an employee in the elevator at Apple, ring an assistant for having brought him the wrong brand of mineral water (T 14.2.). Because of his manipulative behaviour he is considered by some of his employees as autocratic. His behaviour in meetings for instance is described as being rude, authoritative and obnoxious and also because of his quest for perfection, Jobs has domineering presence which makes some of the employees fear him. This would let us assume that his consideration level is rather low (else he would care about peoples fear and try to counteract it) and his initiating structure level appears rather high. He has the ability to combine zeal and fear for his employees, who often state that they are afraid of him (T 14.3 & 14.4). Leadership Effectiveness In February, at age 27, Steve Job appeared on the cover of Time Magazine (Microsoft Chairman Bill Gates was supposedly infuriated Steve got there! He would only appear on Times cover two years later). He was depicted as a symbol of Americas young entrepreneurs (T 15.37) After his comeback to Apple Inc., the company has recorded the revenue of $65222 million during financial year ended September 2010, an increase of 963% over 1999. Increase in revenue effect a substantial increase in income from IPhone sales and third party digital content and applications from iTunes store which Jobs has created (T 15.1 & 15.2) (Financial Table 3.3) Jobs is the one who has defined the culture of Apple Inc. in its own way. Leadership drives a culture. Culture drives innovation and whatever else company is trying to achieve. Jobs focused on building a high performance culture by doing the following things well. He refocused the strategy which fits with the vision of the company (T 16.1). He eliminates passive aggressiveness and encouraged debate when new ideas were forming. He created thinking together culture which means people have to conflict up front, rather than have to counter passive aggressiveness on the back end (T 16.4) that strive force is the need to continuously innovate. This innovation drive stems from the original thought behind the company that wants to be the best in the industry (T 16.3). Apple has a culture of meeting on every Monday to review the whole business. They look at what they sold the week before. They look at every single product under development, products they are having trouble with, products where the demand is larger which they can make. All the stuff in development, they review. And they do it every single week (T 16.6).

13

Apple does not enforce any dress codes and encourages employees to dress comfortably (T 16.2). Apple houses have a power culture which can be seen from the fact that the management in the US controls all activities throughout the world. Evidence of this fact can be seen in the management of apple in china, which was entirely reshuffled after not being able to perform up to par (T 16.5). The time has come for Apple CEO Steve Jobs to step down. Steve is a business genius and the most innovative CEO. Apple changed the personal computer, music and mobile phone industries. But Steve is also critically ill. Having built Apple into the world's most valuable technology company, Apple has to think to replace a new CEO who is suitable for culture of the company. For recruiting a new CEO of Apple Inc. the company should do Job Description and the skills required for the position. A job description sets out the purpose of a job, where the job fits into the organisation structure, the main accountabilities and responsibilities of the job and the key tasks to be performed. The main contents of a job description are (Ref 88). Job Title: this indicates the role/function that the job plays within an organisation, and the level of job within that function. For Apple Inc. it will be Chief Executive Officer of Apple Inc. Planning: Overall company strategy, Strategic Plan, Operational Plan Management recruitment and development: Succession planning, in-house training, outside training, promotion from within, human resource plan, new positions, active recruiting Policy: Corporate policies, new policies, management input, review Standards of performance and performance reviews: Standards of performance, performance reviews, performance improvement plans Controls: Monthly reports, quarterly reviews, supplemental action programs Management morale: Involvement in planning, salary discussions, access to CEO, management turnover Product development: Overall strategy, quarterly priority meetings, status reports, new products, development expense Community relations: public relations, community participation Profitability and growth: Profit objectives, results compared to industry, sales objectives, dependency on single product/customer, market share, profitability by product line Relationship with board of directors: Communications, Reports by executive managers, Board complaints.

After forming the format for Job Description the next step will be to decide what type of person you need to fill the post. They should look what skills, competences, experience, qualification, attitudes and behaviour of potential CEO should possess. For this position there are few persons who are likely to be suitable for this position for example Tim Cook (COA for Apple), Michael Dell (CEO of Dell Comp), Phillip Clarke (CEO of Tesco), Sir Terry (Ex-CEO of Tesco) and Eric Schmidt (CEO of Google). Among these people Apple Inc. should consider Tim Cook as a new CEO. The other people lack some of the skills which are required for this position. Michael Dell who is the CEO of Dell Computers lack in interpersonal skills (T 17.2). As Interpersonal skills is very important as to succeed in management you need good interpersonal skills, you need to understand how to deal with other people (Ref 88). Phillip Clarke who is CEO of Tesco (T 17.3) and Sir Terry who is the Ex-CEO of Tesco both of them lack in technical skills (T 17.4). As technical skills is to perform various tasks and not be left on performing one single (Ref 88). Eric Schmidt who is the CEO of Google Computers lack in self-management skills (T 17.5). . As self-management skills is very important as it tell an employer whether or not your personality fits the personality of the company, the bosses, and the co-workers (Ref 88).

14

But Tim Cook has all the qualities which one requires from a CEO. He has been appointed twice as an acting CEO of Apple before. Tim Cook had first played the acting CEO role in 2004, when Steve Jobs underwent surgery, and then in 2009, when Jobs had to have a liver transplant. In January 2011, Steve Jobs left on another extended leave of absence due to medical reasons, leaving Tim Cook to yet again handle most of the duties of the CEO (T 18.1). When Steven Jobs was on his medical leave. During that time, Tim Cook improved the companys financial performance in the middle of an economic downturn (T 18.21). His expertise in logistics and operations has been credited as one of the crucial elements that have allowed the company to soar on the back of the iPhone and iPod (T 18.3). Cook is well liked, his personality is warm and the employees seem to find him a positive influence on the company and their work. He is often involved in Apples earnings calls. He is outspoken too (T 18.4). Cook doesnt shout or pound the table. The confidence that Apple needs to maintain in whoever ends up being his successor as CEO of the company, and its obviously something that Cook has already proven he possesses (T 18.5). The industry view of Cook is as an intelligent and capable leader. He demands and expects his subordinates to have the answers about both big and small business issues (T 18.1). (105). He is credited with creating a more efficient, productive operation at Apple. Cook pulled Apple out of manufacturing by closing factories and warehouses around the world. This helped the company reduce inventory levels and streamline its supply chain, dramatically increasing margins (T 18.1). (88). He also heads Apple's Macintosh division and plays a key role in the continued development of strategic reseller and supplier relationships, ensuring flexibility in response to an increasingly demanding marketplace (T 18.1). (88) Contemplating Jobs-less Apple, its hard to imagine that anyone could play the same role in the company that Jobs does now. Though promoting from within seems the obvious choice. Tim Cook been around since 1998 and he really understand what the Apple mission is all about. Since Cook was hired by Steve Jobs in 1998, he has built a trusting relationship with Jobs and has long played a key, behind-the-scenes role in steering Apple, alongside the tech giants colourful founder. According to C Harrison and P Burrows (Business week) (Ref 70) when Jobs was on medical leave Tim took the charge of the company he has made double market capitalization of Apple. Cook or anyone else for that matter is unlikely to be able to mirror Jobs presence. However, the industry view of Cook is an intelligent and capable leader for Apple. The consensus is that, under Cook, Apple will be in good hands.

15

APPLE Plc. Strategic Position and Choice, Leadership and HRM

Table1: 6Cs Note: (A = Apple specific) Factors Customer: 1.1 Behaviour of the customer 1.2 Significant middle class population (Asia-Pacific) Table (3.4) 1.3 Meet the needs of various customers (A) Culture: 1.4 Technology is Changing our lives 1.5 Technology Impact on new generation 1.6 Think different motto (A) Country: 1.7 Natural disaster - Japan 1.8 Close relationship with other nations (Mexico & US) 1.9 Home demand condition - USA (A) (F.T 3.4) (Chart I&IV) Ref 4 5 9 Factors Company: 1.10 Potential growth of industry (Chart III) 1.11 Short-age of electronic components 1.12 Mobile the most important computing platform (A) Competition: 1.13 Global competition sparks spree-R&D 1.14 Electronic consumer industry under the yoke of competition 1.15 Key industry find Secret of Apple" (A) Currency: 1.16 Exchange rate (low) 1.17 Interest rate (A) (High ) 1.18 Reduce consumer demand of Technology

Ref 6 7 8

10 11 14

31 32 33

12 13 28,5

15 16 29

Table2: Porters 5Forces Note: (A = Apple specific) # Forces Factors 2.1 High capital requirements -electronic + icloud (estimated$ 1 bln) 2.2 Govt restrictions/legislation 1 Threat of New Entrants 2.3 Commands a large portion of touch penal capacity 60% (A) 2.4 Switching cost - Supplier 2.5 Large no of suppliers 635 in China 2 Power of Suppliers 2.6 Strong Negotiation power (A) 2.7 Customers Price sensitive - Personal Computers 2.8 Sophisticated products 3 Power of Buyers 2.9 Technology prevent to switch to other products (A) 2.10 X-Box has a DVD player 4 Threat of Substitute 2.11 Satellite phones 2.12 Switching reduces market competition 5 Existing Rivalry 2.13 High/Aggressive competition (A) - Android market vs. iOS Table 3: Financial Analysis Tables 3.1 Competitive Analysis Apple 2010 2009 $ million $ million 65,225 42,905 (38,609) (24,999) 26,616 17,906 18,540 12,066 14,013 8,235 14,013 8,235 (1,782) 49,400 (1,333) 36,800 MS 2010 2009 $ million $ million 62,484 58,437 (9,888) (9,864) 52,596 48,573 25,013 19,821 18,760 14,569 18,760 14,569 (8,714) 89,000 (9,010) 93,000 Google 2010 2009 $ million $ million 29,321 23,650 (9,036) (7,338) 20,285 16,312 10,796 8,381 8,505 6,520 8,505 6,520 (3,762) 24,400 (2,843) 19,835

Ref 17, 52 18 30 19 20 21 22 23 34 24 35 25,26 27,28, 132

Strength LOW

MODERATE

LOW MODERATE HIGH

Dell 2010 $ million 52,902 (42,789) 10,113 2,024 1,433 1,433 (617) 96,000 2009 $ million 61,101 (49,375) 11,726 3,324 2,478 2,478 (663) 78,900

Revenue (38) Cost of Goods sold (38) Gross Profit (38) P/L before Tax (38) P/L after Tax (38) P/L for the Period (38) Research & Dev cost (38) No. of Employees (38)

3.2 Key Performance Indicator Gross profit margin % (28) Pre Tax Profit margin % (28) ROCE % (38) Return on total Asset (%)(38) Current ratio (28) Total Debt/Equity (28)

38.38 28.19 38.79 24.66 2.01 0.00

40.14 27.36 38.14 25.40 2.74 0.00

80.16 40.03 54.17 29.05 2.13 0.13

79.20 33.92 50.11 25.45 1.82 0.15

64.47 36.82 23.35 18.66 4.16 0.07

62.61 35.44 23.28 20.70 10.62 0.00

17.51 3.83 35.88 6.01 1.28 0.72

17.93 5.44 77.83 12.54 1.36 0.47

16

Solvency ratio (%)(38) P/E (38)

63.57 18.42

66.61 19.34

53.62 10.75

50.79 14.90

79.93 17.04

88.91 25.79

16.76 20.17

16.12 8.59

3.3 Apple Year to Year Analysis (Ref 38) 2010 Revenue ($000) 65,225 Sales growth (%) 52.02 Current Ratio 2.01 ROCE (%) 38.79 ROE (%) 35.28 EPS (Basic) 9.88 P/E 18.42

2009 42,905 14.44 2.74 38.14 30.54 5.94 19.34

2008 37,491 52.54 2.64 40.13 33.23 3.52 15.96

2007 24,578 27.25 2.37 34.45 28.51 2.05 37.73

2006 19,315 38.65 2.25 28.23 22.85 1.31 31.12

1999 6,134 3.25 2.77 21.78 20.22 4.2 N/A

3.4 Net Sales increase by operating segments (Ref 9) Net sales by operating segments: 2010 ($ 000) America 24,498 Europe 18,392 Japan 3,931 Asia-Pacific 8,256 3.5 Net Sales increase by products (Ref 9) Net Sales by products 2010 ($ 000) Total Mac 17,479 iPod 8,274 iPhone 25,179 Software and Service 2,573 Desktop (PC) 6,201

Change 29% 58% 75% 160%

2009 ($ 000) 18,981 11,810 2,279 3,179

Change 15% 28% 32% 18%

2008 ($ 000) 16,552 9,233 1,728 2,686

Change 26% 2% 93% 7% 43%

2009 ($ 000) 13,859 8,091 13,033 2,411 4,324

Change 3% 12% 93% 9% 23%

2008 ($ 000) 14,354 9,153 6,742 2,208 5,622

3.6 Sony Sales and Operating Revenue (Ref 122) Year ended March 31 2008 (Yen in million) Japan 2,056,374 (23.2%) U.S.A 2,221,862 (25.1%) Europe 2,328,233 (26.2%) Other 2,264,945 (25.5%) Total 8,871,414

2009 (Yen in million) 1,873,219 (24.2%) 1,827,812 (23.6%) 1,987,692 (25.7%) 2,041,270 (26.5%) 7,729,993

2010 (Yen in million) 2,099,297 (29.1%) 1,595,016 (22.1%) 1,644,698 (22.8%) 1,874, 987 (26.0%) 7,213,998

17

Chart I: Total Revenue (Country) (Ref 28)

Graph II: Growth of Apples App Store (Ref 5)

Chart III Global consumer electronics market size ($bn), 2009-14 (Ref 5) 2009 2010 2011 2012 Revenues ($bn) 681.10 716.4 753.7 792.9 Chart IV Consumer electronics market size by region ($bn), 2009 and 2014 (Ref 5) Region 2009 2014 Asia-Pacific 245.8 361.2 North America 162.8 170.2 Western Europe 96.0 102.4 Eastern Europe 72.9 95.2 Middle East and Africa 62.0 89.4 Latin America 41.5 58.8 Total* 681 877 Recent fiscal year end is December 2009. *Includes white goods. Chart V: Apple Inc Revenue by Category (Ref 135)

2013 834.1

2014 877.5

CAGR 5.2%

CAGR 2009-14 8.0% 0.9% 1.3% 5.5% 7.6% 7.2% 5.2%

Table 4: Strategic Groups (Ref 124)

18

Premium Group (innovation) Apple

MS, GOOGLE, DELL (T-3.1)

Table 5: RBV (F-T = Financial Analysis Table) Tangible Physical 5.1 More than 300 retail stores Global (Graph II) Financial 5.3 $1.78 million invest in R&D (F-T 3.1) Operations 5.5 Largest geographic market place USA (Chart I) Human 5.7 Skills & ability to perform effectively (F-T 3.3) Legal 5.9 Ability to buy music through iTunes Systems 5.11 Integrated system - icloud Customer based 5.13 High reputation (Brand equity) 47

Ref 9,36 38 39,124 41 9, 43 45

Intangible 5.2 Ability to expand 5.4 Good credit rating 5.6 Industrial Design Capability 5.8Talented Software Development Team 5.10 Mistake of suing Microsoft 5.12 Creation of the iPod 5.14 Large global geographic network/presence

Ref 37,83 53 40 42 44 46 48

Distribution based

Table 6: COMPETENCIES Strategic 6.1 Leadership and excellent reputation of Steve Jobs Functional 6.2 Excellent skills of individual departments Operational 6.3 Relationship with Original Equipment Manufacturer Table 7: Value Chain General Administration Human Resource Management Technology Development Procurement Inbound Logistics Operations Outbound Logistics Marketing and Sales

49, 133 50, 134 51

7.1 Solid infrastructure success behind Apple 7.2 Recruit highly talented employees 7.3 Programs Train-the-Trainer educate assembly line workers 7.4 High investment in R&D - $1.3 million to $1.8 million in 2010 (Financial Report 3.1) 7.5 Positive relationship with suppliers (EICC OEM) 7.6 Automated receiving system 7.7 Economies of scale in production 7.8 First-party retailer/authorised retailers 7.9 Direct and Indirect distribution channel

54 55 55 9 9 56 9 9 9

19

Service Table 8: Ansoff

7.10Apple Genius Bar. 7.11 Free consultation for their products

9 9

EXISTING PRODUCTS E X I S T I N G M A R K E T Market Penetration 8.1 Development of more apps 8.2 Geographically net sale increased 2010 in (America ,Europe, Japan ,Asia specific) (iPhone) (Financial Table 3.4 & 3.5) 8.3 Net Sales - increased by Product in 2010 (Financial Table 3.4 & 3.5) (Chart V)

Ref

NEW PRODUCTS Product Development 8.4 Apple pricing decoy 8.5 Revolutionary product-ipad 8.6 Apple & Microsoft joint force 8.7 Apple pushed iPhone for business

Ref

57,58 28 28

62 63 64 65

Market development N M E A 8.8 Key source of growth Elderly users W R 8.9 Consumers cloud market K 8.10 Developing a low cost market-Telecom (Macs) E 8.11 Geographically segmented Table 3.4 T Table 9: Generic Strategies COST B COST LEADERSHIP
M R O A D A R K E T

Diversification 59 60 61 61 8.12 First mover advantage-IPods 8.13 Multi-Product Strategy 8.14 Diversification of apple 66 9 67

Ref

UNIQUENESS DIFFERENTIATION 9.7 Offering iMessage for iPhone -iPod 9.8 Price-Skimming Strategy shuffle-iphone 9.9 App developers caught in iCloud storm FOCUSED DIFFERENTIATION

Ref

9.1 The Low-Price Leader - Android + 3G data 9.2 iPad 2 crushed its rivals FOCUSED LOW COST

119 120

116 117 118

N M A R R R O W

K E T

9.3 Apple planning Low-Cost version of the IPhone 9.4 MacBook replaces less expensive 12 inch iBook 9.5 Targets the low-end market-Pc, iPod music player 9.6 low cost component of iPod- supplier

109 110 111 112

9.10 Focus on Young Generation PC (FT-3.5) 9.11 Apple release products in China 9.12 Apple's Mac joins Windows generation

113 114 115

Table 10: Strategy Evaluation Matrix (SAF) Current Strategies and Strategic Options for Company Growth Factors for Decision Acquisition Mergers Making Suitability 10.1 - In history acquired lots of small 10.2 x Does not want to share their secrets to the companies (Ref 125) other party (Ref 33) Acceptability 10.3 - Secrets will not be shared (Ref 33) 10.4 x Steve Jobs does not like merger (Ref 125) Feasibility 10.5 - Strong Financial position (Ref 38) 10.6 - Strong Financial position (Ref 38) (Table 3.3) (Table 5) (Table 3.3) (Table 5) Table 11: SONY (The best choice) 11.1 Steve Jobs wanted to be SONY 11.2 Will give an extra edge PlayStations & Blu-ray Table 12: Leadership Traits (Steve Jobs) Adaptable to situation *None Vision 12.1 A dent in the universe Self-Confident 12.2 Imbued with self confidence Ownership and 12.3 From start to finish Responsibility Table 13: Leadership Skills (Steve Jobs) 13.1 create whole businesses for application Intelligent development 13.2 Leadership position with innovation Creative 13.3 High-end technology & fashionable design

126 127,131

11.3 Strong distribution channels all over the world 11.4 Sony+Disney = Competitive advantage

128 129

81 74 82

Persistent Achievement Oriented Tolerant of stress Energetic

12.4 Never give up easily - NeXT 12.5 Received lots of awards 12.6 High - Aggressive 12.7 Enormously energetic Apple + Disney

79 77,78 73 80

83 83 84,85

Avoid overexposure Knowledgeable

13.4 Speaks only when needed to promote products 13.5 Good technical skills

86 83

20

Table 14: Leadership Style & Behaviour (Steve Jobs) 14.1 Everyone Report direct to him 72,75 14.2 Short-temper 73 14.3 Manipulative behaviour 74 Autocratic 14.4 Creates a sense of fear among 74 employees

Charismatic

14.5 Initiative leader 14.6 Gifted Speaker 14.7 Transformational leader - creates valuable & positive change in the follower 14.8 Combination of Perfectionism and Vision

68 69 70 71

Table 15: Leadership Effectiveness: (Steve Jobs) Organization 15.1 963% growth (1999-2010) (Financial Table 3.3) 15.2 Company revenue from ($m) 6134 to 65,222 (1999-2010)

38 38

Leader

15.3 Americas young entrepreneurs

7 6

Table 16: Apple Inc. Culture 16.1 Strategy has to fit with the vision of the company 16.2 Thinking together 16.3 Continuous innovation Table 17: Comparison of person specifications 17.1 Tim Cooks Theory (Ref - 88) COA (Ref 92, 101) Experience of -12 years service at IBM & Compak CEO Financial
-Management and cost cutting Managing financial situation in economic crisis day to day activities of Apple -Effective Management of costs Multi -task ability Expertise in logistics and operations

107 107 108

16.4 Every Monday meeting 16.5 No formal dress code for the employees 16.6 Power culture US control

108 108 108

17.2 Michael Dell (CEO of Dell Comp) (Ref 93, 94)

-(1984-Till now) - Owned 14 percent of Dell Computers common stock, worth about $12 billion -"The guru of choice on ecommerce"

17.3 Phillip Clarke (CEO of Tesco) (Ref 95,96)

x- (March 2011 Till now) - Tesco strengthened its position in South Korea with a 958m acquisition of Homever, x- In charge of supply chain in 1998 and Chief Executive in charge of IT in 1999 - Ethics & Suppliers relationship Born and bred Tesco man - Relation oriented, Strong working relation with local management - Successfully transferring market experience to new market - Responsible for large IT change at Tesco, Move to India with wholesale cash carry - major investment in self-service checkouts, which now account for a quarter of all transactions

17.5 Eric Schmidt (CEO of Google (Ref 99, 100)

(2001 Jan 2011) - Building the corporate infrastructure to maintain the companys growth rate. - Innovation Focused Guy Erics formal education about technology - Well repute in company - ability to bring change onsidered is the unusual R& D strategy to turn out. Build AdWords, their searchbased advertising service) as well as buy (YouTube) x Development of strategies for the world's most successful Internet search engine company

Technical Interpersonal Leadership Problem Solving Decision Making Self-Management

- Calm & Quiet spoken manner x-Off-the-charts introvert Confident in doings things & decision making - Leading ability - His leadership style is built on collaboration Intelligent and capable leader - Crisis management ability - Extremely competitive risk-taker - Created a leadership board - Ability to close down non profit and did a very good job of making sector delegating decisions - Key role in development of strategies -Within Dell, Michael Dell was a hero

Table 18: Tim Cook (Skills) Experience of CEO 18.1 CEO experience of Apple - Twice Financial 18.2 Managing financial situation in economic crisis Technical 18.3 Expertise in logistics and operations Communication 18.4 Warm and outspoken Interpersonal References: 18.5 Confidence, calm and quite

101 102 92 103 104

Leadership Problem Solving Decision Making Self-Management

18.6 Participative Leadership style 18.7 Ability to solve problem 18.8 Credited with reinventing 18.9 Play key role in development strategies of resale

101 102 101 101

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