Apple Case Analysis
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Transcript of Apple Case Analysis
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Apple Case Analysis
• Issues and Outlook
• SWOT Summary– External Analysis– Internal Analysis
• Strategic Recommendations– Mission– Goals– Strategic Action Plan
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Issues and Outlook:1993 and Beyond
• Is Apple successful?
• Past/current strategy?
• What are the main concerns/issues that confront Apple?
• Where is Apple headed in the future?
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Comparative Market Share (%)by Revenue
0
5
10
15
20
25
30
1986 1987 1988 1989 1990 1991
IBM Apple
Packard-Bell Compaq
Dell
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Financial Snapshot:Revenue and Net Income
(in $millions)
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
1987 1988 1989 1990 1991
Revenue
Net Income
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Breadth of Breadth of Competitive Competitive
ScopeScope
Source of Competitive AdvantageSource of Competitive Advantage
BroadBroadTargetTargetMarketMarket
NarrowNarrowTargetTargetMarketMarket
CostCost
CostCostLeadershipLeadership
CostCostLeadershipLeadership
Differen-Differen-tiationtiation
Differen-Differen-tiationtiation
Apple’s Business Level Strategy
Focused Focused Differen-Differen-
tiationtiation
Focused Focused Differen-Differen-
tiationtiation
Focused Focused Low CostLow CostFocused Focused
Low CostLow Cost
UniquenessUniqueness
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External Analysis
• Influences from Remote Environment
• Influences from Competitive Environment
• Promoters of / Barriers to Change
• SWOT Summary
• Competitor Analysis
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Analysis of the General Environment
Political/Legal
Political/Legal
DemographicDemographic EconomicEconomic
TechnologicalTechnological
GlobalGlobal CompetitiveEnvironmentCompetitiveEnvironment
SocioculturalSociocultural
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Industry Growth(in $billions)
0
5
10
15
20
25
30
35
40
45
1982 1986 1990 1994
DesktopsPortablesServersTOTAL
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Threat of Threat of Substitute Substitute ProductsProducts
Threat of Threat of Substitute Substitute ProductsProducts
Threat of New
Entrants
Threat of Threat of New New
EntrantsEntrants
Threat of Threat of New New
EntrantsEntrants
Analysis of the Competitive Environment
Rivalry Among Rivalry Among Competing Firms Competing Firms
in Industryin Industry
Rivalry Among Rivalry Among Competing Firms Competing Firms
in Industryin Industry
Bargaining Bargaining Power of Power of BuyersBuyers
Bargaining Bargaining Power of Power of BuyersBuyers
Bargaining Bargaining Power of Power of SuppliersSuppliers
Bargaining Bargaining Power of Power of SuppliersSuppliers
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Microprocessor VolumeInstalled Base - Millions of Units
0
25
50
75
100
1988 1989 1990 1991
IntelMotorola
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Strategic Group Map Pre-Windows
Price
Premium
Low
Strategic Focus - Differentiation
Broad Narrow
Apple
IBM
Sun
Clones
Compaq
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Strategic Group Map Post-Windows
Price
Premium
Low
Strategic Focus - Differentiation
Broad Narrow
Apple
IBM
Sun
Clones
Compaq
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Internal Analysis
• Resource-based View Analysis of:– Core Competencies– Core Weaknesses
• Value Chain Analysis of:– Value-enhancing Activities– Value-diminishing Activities
• Promoters of / Barriers to Change
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SupportActivities
Primary Activities
Value Chain Analysis
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
oun
d
Log
isti
cs
Op
erat
ion
s
Ou
tbou
nd
Log
isti
cs
Mar
ket
ing
& S
ales
Ser
vice
MARG
IN
MARG
IN
MARGIN
MARGIN
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SWOT Summary
• Strengths
• Weaknesses
• Opportunities
• Threats
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Revised Mission/Intent Statement
“Apple ………………………………..”
• Definition of Industry• Description of Core Values• Description of Basic Strategic Approach• General Identification of Customer Base
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Revised Mission
• To position Apple as the world leader in man-machine interfaces though the development of ergo- and cerebro-nomic software and interface devices required for electronic and electromechanical applications.
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Goals
Financial• • •
Strategic• • •
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Goals
• 20% ROS by 1994
• 40% Share of O/S Market by 1994
• Develop 3 New Interface Devices by 1994
• Achieve full interoperability with– Intel and RISC microprocessors by 1993– Top 4 Software Vendors by 1993
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Strategic Action Plan
• Strategic Action #1– Details about specific value chain activities– Resources required– Expected benefits (re: a particular SWOT item)
• Strategic Action #2– Details about specific value chain activities– Resources required– Expected benefits (re: a particular SWOT item)
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Milk Mac
• No new manufacturing and R&D investment in existing hardware products
• Outsource next 3 years’ production to Malaysia:– Send VP Mfg. and 3 Engineers on “Sourcing
Mission”
Benefit: Decrease COGS from 53% to 33%
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Apple Core• “Open system” O/S (a.k.a. Pink)
– not processor specific– head-to-head with Windows– increase installed base– increase ISV applications
• Shift 80% of R&D budget to Core
Benefit: Increase ROS from 5% to 20%(NOTE: O/S production has COGS average 19% percent of sales vs. 66% in hardware manufacturing.)
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Apple’s Recent Actions
1994• Layoffs and Mfg.
Rationalization• Pushed Pink
– H-P joined Apple and IBM
• Sculley resigns; Spindler is new CEO
1993• Cut Mac prices 26%
– down from a 20-40% premium
• PowerPC with IBM and Motorola– PowerMac– PowerBook laptop
• Overseas expansion; Japan (2% to 15%)
• Newton (PDA)
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1995• Attack educational and
desktop pub markets• License Mac O/S (aka
Copeland)• Record revenues; $69
million net loss• Fujitsu starts price war
in Japan
1996-98• Terminated Taligent
and Kaleida• Jobs and Woz are back• Accepted $150 million
from MSFT• Intros iMac
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Actual Results: 1991-97
-$2,000
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
1991 1992 1993 1994 1995 1996 1997
Revenue Net Income R&D Cost of Sales
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Stock Price
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Comparative Market Share (%)by Revenue
0
5
10
15
20
25
1988 1989 1990 1991 1992 1993 1994 1995 1996
IBM Apple
Packard-Bell Compaq
Dell
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Revenue Comparison (in $millions)
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
1991 1992 1993 1994 1995 1996 1997
Dell
Compaq
Intel
Microsoft
Apple
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Profit Comparison (ROS %)
(20)
(10)
0
10
20
30
40
1991 1992 1993 1994 1995 1996 1997
Dell Compaq Intel Microsoft Apple