BBA 4001STRATEGIC MANAGEMENT

TAN WAH TIONG940928-14-5531201565

JUNE 2015

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1.0Content1

2.0Introduction to Apple Company2-5

3.0Body(a)Macro environmental analysis(b) Company analysis(c) Internal company analysis(d) External company analysis6-17

4.0Recommendations and conclusion18-20

5.0 Reference21

6.0Coursework22-26

2.0 Introduction to Apple CompanyApple Computers 30-year history is full of highs and lows, which is what we would expect in a highly innovative company. They evolved throughout the years into an organization that is very much a representation of its leader, Steven Jobs. Apple made several hugely successful product introductions over the years. They have also completely fallen on their face on several occasions. They struggled mightily while Jobs was not a part of the organization. Apple reached a point where many thought they would not survive. When asked in late 1997 what Jobs should do as head of Apple, Dell Inc.'s (DELL) then-CEO Michael S. Dell said at an investor conference: "I'd shut it down and give the money back to the shareholders. (Burrows, Grover, and Green).Well, times changed. Less than 10 years later, Business Week ranked Apple as the top performer in its 2012 Business Week 50. Apple attributes their recent success to robust sales of iPod music players (79 million in 2011). They are optimistic about the economies of scope with media giants, such as Disney and Pixar. Apple rarely introduces a new type of product. Thus, instead of being the pioneer, they are an expert second mover by refining existing products. Portable music players and notebook computers are examples. Apple increases the appeal of these products by making them stylish and more functional. They now appear poised to make significant strides in the home computer market and to creating a total digital lifestyle whereby the home is a multimedia hub.History of Apple Inc.:Apple Inc. formerly known as Apple Computer Inc. which provides corporate Server, MAC OS Systems and Operating System. Apples core product lines are the iPhone, iPod and Macintosh System. Steve Jobs and Steve Wozniak, The founder of Apple has created the Apple Computer on 1st April 1976 and integrated in the company on 3rd January 1977, in Cupertino California. It has driven the Computer manufacturing market for more than two decades. Mr. Steve Jobs who was expelled in 1985 was return as CEO of the APPLE Inc. in 1996 with new Ideas and corporate philosophy. With introduction of successful IPod Player in to 2001 Apple has again proved itself as a Market leader in consumer electronics. Latest era of extraordinary success of the company is in iOS based Apple products like I Phone, IPod slim, I Pad and now I Pad 2. Now a days Apple is a biggest technology corporation in the planet with the profits of more than $65 billion. It has about 49,400 employs all over the world. Fortune Magazine most Admired Company in United State in 2012 and in the world in 2012, 2009 and 2009.Apple has over 240 Store all over the world and the bifurcation of these store in different countries are as below.Vision Statement of Apple:Man is the creator of change in this world. As such he should be above systems and structures, and not subordinate to them.Explanation of Vision Statement:Apple lives this vision through the technologies it develops for consumers and corporations. It strives to make its customers masters of the products they have bought. Apple doesnt simply make a statement. It lives it by ensuring that its employees understand the vision and strive to reach it. It has put systems in place to enable smooth customer interaction. It has put objectives in place to continuously move forward; implemented strategies to fulfil these objectives; and ensured that the right marketing, financial and operational structures are in place to apply the strategies.

Mission Statement of Apple:Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.

3.0 Body(a) Microenvironment analysisTechnological Environment (Brand Awareness Style at a Premium)Apples products are trendy and stylish. After Jobs returned in 1997, Apple retained designer Jonathan Ive to differentiate their computers from the typical beige box. I have design of the iMac included clear colorful cases that distinguished Apple computers. Apples iPod (with the trademark white ear buds and simple track wheel) commands a 15%-20% premium over other MP3 players. Apple and Pixar limit the number of computer products and movies that they sell. Product differentiation with focused quality and style also extend to the Jobs Pixar Pixar's executives focus on making sure there are no B teams, that every movie gets the best efforts of Pixar's brainy staff of animators, storytellers, and technologists. (Burrows, Grover, and Green)Apple positions its Macintosh computers as higher quality and higher price. HP, Dell, and other PC manufacturers are pricing many systems under the $1,000 threshold. Apple is struggling to meet demand for its new MacBook Pro laptop despite a $1,900 price tag that is nearly twice that of garden-variety rivals. Apple has only recently entered the low-end (below $500) consumer market with the Mac Mini. Although the Mac Mini is a base model with few features, it comes encased in a very small and distinctive package. Apple portrays this computer as Small is Beautiful. (Apple) Likewise, the iPod Shuffle was Apples first entry into the lower-end ($100 range) of flash-memory-based portable music players.

InteroperabilityAlthough Apple competes directly with Microsoft for operating systems, the release of iTunes for Windows in 2002 was a key strategic move. This decision expanded the potential customer base to nearly all personal computer owners, even though Apple only has 2%-3% of all personal computer sales.Conversely, Apple depends on Microsoft for a version of Microsoft Office. As the most widely used office suite of applications, Macintosh users rely on Office to correspond with companies that standardized on Windows. This is from a strategic alliance between Apple and Microsoft after Jobs returned in 1997. Apples iTunes service has a technological hook (asset specificity) to Apples iPod. Although versions of iTunes exist for both Apple and Microsoft operating systems, the iTunes AAC file format prevents other portable music players (such as iRiver or Samsung) from playing purchased songs.

Regulatory EnvironmentWhile introducing new technologies, there is a persistent threat of legal action by competitors. For example, Apple sued Microsoft in 1988 (settled in 1997 for an undisclosed amount) for perceived similarities between Microsoft Windows and Macintosh audio-visual works. Microsoft has generally been the focus for government antitrust charges (such as U.S. v. Microsoft) (US DOJ, 2009). Both federal and state governments assert that Microsofts dominance blocked fair competition within the software industry. This is an advantage for Apple, because its operating systems are a viable substitute for Windows. Furthermore, Microsofts continued support for Office for Macintosh reduces the perceived level of market monopoly and abuse. Manufacturers will continue to trespass on Apples intellectual property. In 2002, Apple took legal action against tex9, who then altered the programme and renamed it sumi. Legal threats can surface from somewhat unusual sources. Apple Corps Ltd. is the London-based company that owns the rights to the music of the Beatles. Paul McCartney and Ringo Starr recently sued Apple over the use of the Apple logo in iTunes, claiming that it violated Apples agreement not to produce music under an apple-based logo.Research and development is a key component to Apples sustained competitive advantage. Apple is currently taking legal action against several popular technical web sites for releasing proprietary product research. Sites such as appleinsider.com have allegedly posted verbatim content from documents protected by employee non-disclosure agreements. (McCullagh) Release of critical insider information could give Apples competitors a jump in producing rival products.Economic AnalysisApples financial performance continued to strengthen over the last several quarters. In the most recent earnings announcement, Apple reported significant growth in net revenues driven by the strong performance of its iPod product line. Net sales for the 2nd quarter grew to $4.36 billion, which is a 34% increase over 2nd quarter 2012 results. Net income increased by 41% to $410 million. The iPod product line continues to drive the financial performance of the company. In the 2nd quarter alone, Apple sold 8.5 million iPods, representing a 61% increase over the 5.3 million units sold in the 2nd quarter of the prior year. Mac sales showed slight growth of only 4%. Apples year-to-date revenues total just over $10 billion and earnings total just under $1 billion. For the 3rd quarter, CFO Peter Oppenheimer stated, we expect revenue of about $4.2 to $4.4 billion which will push total sales above last terms annual numbers. (b) Company analysisApple operates in two primary industries: (I) Computing - Hardware and Software, (ii) Delivery of Entertainment and MediaApple has always been under intense competition within the computer, software, and entertainment industries. Looking to 2012...Every time that Apple had jumped into the lead in a product category during the past two decades, it had had difficulty in sustaining its leadership position. We use Porters Five Forces Model to understand why Apples industries are so competitive. Figure: Porters Five Forces ModelThreat of New EntrantsBargaining power of SuppliersThreat of SubstitutesBargaining power of BuyersLevel of Threat in an Industry

Figure: Summary of Industry Threats (Computer Equipment and Entertainment Distribution)Type and Severity of ThreatOrganization

Entry High ThreatVerizonStreaming audio and video with V CAST.

AmazonOn demand online services to purchase music (similar to iTunes).

GoogleThey make everything.

The Next GoogleNew entrants with disruptive technology.

Rivalry High ThreatMicrosoftWindows Operating System, Windows Media Player for playing music and video.

LinuxCompetition to Mac OS X Operating System.

Napster, RhapsodyOnline music sources alternatives to iTunes Music Store.

Dell, HP, LenovoAlternate sources for computer hardware.

iRiver, Samsung, CreativeSmall, stylish MP3 Players.

DreamWorksAnimated movies.

YouTube.comOnline video.

Substitutes Moderate ThreatXM, SiriusSatellite Radio for music.

XBox, PS2Entertainment Media, Media and Music.

VariousInternet Streaming Radio and Podcasts.

Music CDs, DVD-Audio and SuperAudio CDAlternative means to acquire music.

Broadcast, Cable, Satellite, Netflix, TiVo, TheatresAlternative sources for video.

Suppliers High ThreatMotorola, IBM, Intel, SamsungSuppliers of Processors and computer memory.

MicrosoftStrategic Alliance / Supplier of Office for Mac.

The Big Five - BMG, EMI, Sony, Universal, and WarnerSources of music. Will they raise prices and break the dollar per song model? Some in the record industry resent Apples distribution model. Apple reaps billions from selling its hit music player, but there are sparse profits from the songs being sold over the Net. (Burrows, Grover, and Green)

Disney, ABC, NBC, CBS, Fox, Pixar, SonySuppliers of Television and Movies. Will they sign exclusive contracts with other online services? Note that this threat is reduced for Disney / Pixar.

Buyers Moderate ThreatConsumers and Illegal peer-to-peer file sharingConsumers share music using peer-to-peer networks without paying for music.

DistributorsApple retailers may pressure for lower prices or better terms. For example, the release of the Apple Store in 2001 infuriated longtime independent Apple retailers that didnt appreciate Cupertino cannibalizing their sales. (Linzmayer, 300)

Consumer Attitudes and BehaviorsConsumers or businesses may reduce spending on personal computers or non-essential (potentially high elasticity of demand) music players if they fear economic downturns.

Consumer Refresh CyclesConsumers and businesses may continue to use previous-model iPods and Macs rather than upgrade to current iPods, iMacs, or OS

The total industry threat for the industry space that Apple occupies is a high threat industry. Apple must continue to pursue product differentiation (i.e. the style and ease-of-use of an iPod) and economies of scope (i.e. offering ABC television shows on iTunes) to maintain their sustained competitive advantage in this industry.(c) Internal company analysisStrengthOne of the strengths of Apple Company is iTunes Music Store is an excellent source of revenue, especially with the iPod and the accessibility on Windows platform. Besides, Apple Computer are expert inDeveloping own software and hardware and Apples niche audience provides the company with some lagging from the direct pricecompetition. In addition, it is giving aface-liftto desktop and notebook lines and technology can be used to improve product awareness and sales. Moreover, it is low debt company which is more maneuverable. Lastly, Apple Computers have good brand loyalty, strong research and developmentdepartment.

WeaknessesOne of the weakness of Apple Company is weak relationship with Intel and Microsoft. Besides, it has weak presence in business arena and the productlife cycleof Apple products are very small for that reasons revenues are more depend on launch of new products andservices. In addition, weak presence in markets other than education and publishing and cause slow turn around on high demand products. Furthermore, Apples market share is far behind from major competitor Microsoft and in past the relationship between Stevejobsand employee were not good which result in reputation loss.

(d) External company analysisOpportunitiesOne of the opportunities of Apple Company is increasing inworms and viruseson PCs so theantivirus solutioncan be developed by Apple. Besides, large population (Gen X&Y) which are extremely individualistic and name brand conscious and the ties of apple other companies are weak, Apple can develop good relationship for joint ventures. Furthermore, downloadable music and MP3 players are highly marketable and theonline salesof computer are increasing with rapid speed. Moreover, the laptop market growth is high; Apple Computers should focus to develop new models to cater the need of customers.ThreatsOne of threats of Apple Company is companies not seeing Apple as compatible with their software. Besides, AppleCompany is facing strongcompetitionfrom Dell, HP, Sony and Toshiba in laptop segment. In addition, downloading free music from other online source without paying cost is common it may impact the iTunes sales and it is very expensive as compared to other competitors such as Dell. Next, thelong lastingrecession may impact the sales of the company due to higher prices of the products and services. Microsoft launched Microsoft Vista, Windows 7 which is gaining market share. Lastly, the switching in technology is very fast

4.0 Recommendations and ConclusionRECOMMENDATIONSFor Company, I think Apple Company can lower the cost of products and maintaining the same quality standards. Besides, it can form joint ventures improve to more knowledge management. Furthermore, more number of retail stores for easy access and continuous innovation to expand its product For others, do not compromise on price for quality and choose the products based on individual needs. Lastly, the product that innovate must be unique and different.CONCLUSIONI feel that Apple must focus on several key aspects to continue to grow and succeed. They must continue a stable commitment to licensing, push for economies of scope between media and computers, and become a learning organization.Although it should continue, Apple may want to consider other forms of strategic alliances. An equity strategic alliance may offer Apple the opportunity to obtain additional competencies. An effective way for a company like Apple to accomplish this would be in the form of a joint venture.Furthermore, Apple should continue pushing the new line of media-centric products. Meanwhile, Apple should not lose focus on its computers. Macintosh computers were 59% of Apples sales in 2012. (Burrows)This very innovative company exploits its second-mover position. In the future, they will need to continue innovating to expand the boundaries of both media andcomputers.Besides, Apple apparently made a commitment to licensing. Although it should continue, Apple may want to consider other forms of strategic alliances. An equity strategic alliance may offer Apple the opportunity to obtain additional competencies. An effective way for a company like Apple to accomplish this would be in the form of a joint venture.In addition, Apple should continue push for economies of scope between media and computers, and become a learning organization, pushing the new line of media-centric products. This very innovative company exploits its second-mover position. In the future, they will need to continue innovating to expand the boundaries of both media and computers.This will allow the company to withstand a departure by Jobs. Based on the actions of the organization, we feel that the mid-term performance of Apple will be strong. This period allows Apple time to overcome their challenges if they move swiftly. For this reason, we feel that they will continue to succeed and will continue to outperform their peers.

5.0 Reference- www.google.com

- https://en.wikipedia.org

- http://www.slideshare.net/

5.0 Coursework

TAN WAH TIONG

940928-14-5531

201565

017-6853251

IMPACT OF GLOBALIZATIONToday, everything has changed. Globalization, the integrated internationalization of markets and corporations, has changed the way modern corporations do business. As Thomas Friedman points out in The World Is Flat, jobs, knowledge, and capital are now able to move across borders with far greater speed and far less friction than was possible only a few years ago. For example, the inter-connected nature of the global financial community meant that the mortgage lending problems of U.S. banks led to a global financial crisis in 2008. The worldwide availability of the Internet and supply-chain logistical improvements, such as containerized shipping, mean that companies can now locate anywhere and work with multiple partners to serve any market. To reach the economies of scale necessary to achieve the low costs, and thus the low prices, needed to be competitive, companies are now thinking of a global market instead of national markets. Nike and Reebok, for example, manufacture their athletic shoes in various countries throughout Asia for sale on every continent. Many other companies in North America and Western Europe are outsourcing their manufacturing, software development, or customer service to companies in China, Eastern Europe, or India. Large pools of talented software programmers, English language proficiency, and lower wages in India enables IBM to employ 75,000 people in its global delivery canters in Bangalore, Delhi, or Kolkata to serve the needs of clients in Atlanta, Munich, or Melbourne. Instead of using one international division to manage everything outside the home country, large corporations are now using matrix structures in which product units are interwoven with country or regional units. International assignments are now considered key for anyoneinterested in reaching top management. As more industries become global, strategic management is becoming an increasingly important way to keep track of international developments and position a company for long-term competitive advantage. For example. General Electric moved a major research and development lab for its medical systems division from Japan to China in order to learn more about developing new products for developing economies. Microsoft's largest research centre outside Redmond, Washington, is in Beijing. According to Wilbur Chung, a Wharton professor, "Whatever China develops is rolled out to the rest of the world. China may have a lower GDP per-capital than developed countries, but the Chinese have a strong sense of how products should be designed for their market." The formation of regional trade associations and agreements, such as the European Union, NAFTA, Mercosur, Andean Community, CAFTA, and ASEAN, is changing how international business is being conducted. See the Global Issue feature to learn how regional trade associations are forcing corporations to establish a manufacturing presence wherever they wish to market goods or else face significant tariffs. These associations have led to the increasing harmonization of standards so that products can more easily be sold and moved across national boundaries. International considerations have led to the strategic alliance between British Airways and American Airlines and to the acquisition of the Miller Brewing Company by South African Breweries (SAB), among others.

Four Responsibilities of business1.Economic responsibilities of a business organization's management are to producegoods and services of value to society so that the firm may repay its creditors andshareholders.2.Legal responsibilities are defined by governments in laws that management isexpected to obey. For example, U.S. business firms are required to hire and promotepeople based on their credentials rather than to discriminate on non-job-relatedcharacteristics such as race, gender, or religion.3.Ethical responsibilities of an organization's management are to follow the generallyheld beliefs about behaviour in a society. For example, society generally expects firms towork with the employees and the community in planning for layoffs, even though no lawmay require this. The affected people can get very upset if an organization's managementfails to act according to generally prevailing ethical values.4.Discretionary responsibilities are the purely voluntary obligations a corporationassumes. Examples are philanthropic contributions, training the hard-core unemployed, and providing day-care canters. The difference between ethical and discretionaryresponsibilities is that few people expect an organization to fulfil discretionaryresponsibilities, whereas many expect an organization to fulfil ethical ones.