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I-

Introduction

IIIIIIV-

Business strategy of Apple Inc


Issues Analysis of Issues

V-

Recommendations

"We value originality and innovation and pour our lives into making the best products on earth. ---- Tim Cook

Apple Inc. (formerly known as Apple Computer, Inc.) is an American multinational corporation that designs and sells consumer electronics, computer software, and personal computers. Established on April 1, 1976 in Cupertino, California, and incorporated January 3, 1977, the company was named Apple Computer, Inc. for its first 30 years.

The word "Computer" was removed from its name on January 9, 2007, as its traditional focus on personal computers shifted towards consumer electronics. As of July 2011, Apple has 364 retail stores in thirteen countries, and an online store. It is the largest publicly traded company in the world by market capitalization. The company is the largest technology company in the world by revenue and profit, more than Google and Microsoft combined.

As of September 24, 2011, the company had 60,400 permanent full-time employees and 2,900 temporary full-time employees worldwide; its worldwide annual revenue in 2010 totalled $65 billion, growing to $108 billion in 2011. Fortune magazine named Apple the most admired company in the United States in 2008, and in the world from 2008 to 2012. However, the company has received widespread criticism for its contractors' labour, and for its environmental and business practices.

Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices.

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.

Source : Wikipedia

Year 2012

Launched January 19 March 16

Model iBooks Author iPad (3rd gen.) Apple TV (3rd gen.)

Family Software iPad Apple TV Mac Pro MacBook Air MacBook Pro Retina

Discontinued current current current current current current

June 11

Mac Pro (Mid 2012) MacBook Air (Mid 2012) MacBook Pro (Mid 2012) MacBook Pro with

Display

MacBook Pro

current

Source : Wikipedia

2011
Net sales Net income Earnings per common share: Basic Diluted Cash dividends declared per common share Shares used in computing 0 0 28.05 27.68 108,249 25,922

2010
65,225 14,013

2009
42,905 8,235

2008
37,491 6,119

2007
24,578 3,495

15.41 15.15

9.22 9.08

6.94 6.78

4.04 3.93

earnings per share:

Basic Diluted Total cash, cash equivalents and marketable securities

924,258 936,645

909,461 924,712

893,016 907,005

881,592 902,139

864,595 889,292

81,570
Total assets 116,371

51,011
75,183

33,992
47,501

24,490
36,171

15,386
24,878

2011
Total long-term obligations (a) 10,100 Total cash, cash and

2010

2009

2008

2007

5,531

3,502

1,745

687

equivalents marketable securities Total assets Total

81,570 116,371 long-term 10,100 39,756

51,011 75,183

33,992 47,501

24,490 36,171

15,386 24,878

obligations (a) Total liabilities

5,531 27,392

3,502 15,861

1,745 13,874

687 10,347

Total equity

shareholders 76,615 47,791 31,640 22,297 14,531

(a) The Company did not have any long-term debt during the five years ended

September 24, 2011. Long-term obligations exclude non-current deferred revenue. Source : Apple annual report 2011

APPL Market Cap: Employees: Qtrly Rev Growth (yoy): Revenue (ttm): Gross Margin (ttm): EBITDA (ttm): Operating Margin (ttm): Net Income (ttm): EPS (ttm): P/E (ttm): PEG (5 yr expected): P/S (ttm): 591.34B 60,400

GOOG 218.31B 54,604

HPQ 38.04B 349,600

RIMM 3.88B 16,500

INDUSTRY 592.15B 106.70k

0.23
148.81B 0.44 55.82B 0.36 40.13B 42.55 14.83

0.35
43.16B 0.63 15.45B 0.31 11.11B 33.73 19.79

-0.03
124.04B 0.23 14.73B 0.08 5.23B 2.57 7.50

-0.43
16.34B 0.32 2.41B 0.05 -49.00M -0.10 N/A

0.24
148.81B 0.44 55.82B 0.33 N/A 42.55 14.85

0.64
3.97

1.00
5.06

1.19
0.31

-1.44
0.24

1.13
3.98

GOOG = Google Inc. HPQ = Hewlett-Packard Company RIMM = Research In Motion Limited Industry = Personal Computers

Innovation Business strategy leverages ability to make own OS, hardware and software Heavy investments in R&D and marketing and sales key to success of innovative products Delivery of third party digital content and applications through iTunes Store High quality sales and post sales service experience

Enjoys fanatical brand loyalty through creation of an Apple culture Creation of Apple Stores Retail stores in key cities Encourage customers to play and explore with technology that company offers

Expert sales staff : Apple provides Apple Mac-expert retail floor staff to selected resellers' stores Strategic alliances with other companies to cobrand or distribute Apple's products and services Retail staff are helpful, informative, and let their enthusiasm show without being brash or pushy

Complete package : products complement and complete each other Apple is a young and hip brand. Myriad of products Media buzz: with leaked rumors Apple keeps customers excited about new products

Sales to educational institutes : creates customers even before they know it Outsourcing unpleasantness : concentrates on building a good product and outsources servicing etc.

Consistency : Consistently high quality products

focuses on the emotions Apples brand personality is about lifestyle; imagination; liberty regained; innovation; passion; simplicity and the removal of complexity from people's lives; hopes, dreams and aspirations; and power-tothe-people through technology.

The very successful Apple retail stores give prospective customers direct experience of Apple's brand values The company maintains a "monolithic" brand identity - everything being associated with the Apple name, even when investing strongly in the Apple iPod and Apple iTunes products.

Production difficulties

Huge amount of cash


Declaring a special dividend to stockholders Technology acquisitions Market expansion Large scale acquisition across geography

Products prices
Loss of potential customers

Market shares on PC industry


Restricted group of customers Too original (compatibility problems with some software)

Scaling all operations to meet global demand


Meeting demand with flawless execution

Rapid expansion in China and developing economies


Requiring incremental product improvements

Next Product Form Factor: Apple TV


Competitors: LG, Samsung Current content producers and distributors

Steve Jobs was an emblematic figure Fixing Social Networking


Improvement in Apples social services -- Ping, Game Centre Apple's social strategy to be determined Complicated relationship with Facebook: integration into the iPhone iOS

Focusing on innovation rather than litigation


Continue judging when to sue and when to settle Need to stop patent madness

SWOT (1)
Strengths Innovative products, high investment in R&D Ubiquitous services in the music market: I-tunes, I-tunes ping (social network designed for music addicts) An Apple community Strong image: young, dynamic, innovative, design Diversified products and services for each segment Globalized Weaknesses

I- Introduction II- Business strategy of Apple Inc III- Issues IV- Analysis of Issues V- Recommendations

Fragility of the products Strategy too much focused on the US market Apple is far behind the leaders on the PC market Patent infringement Need for a charismatic leadership

SWOT (2)
Opportunities Progress in technology Smartphones market Consumers want increased synchronization between products New distribution networks Increasing impact of design and innovation on consumers behavior Emerging markets Threats

I- Introduction II- Business strategy of Apple Inc III- Issues IV- Analysis of Issues V- Recommendations

Price gets more weigh in customers decision Growing complexity of products : people need to adapt Consumers volatility & strong competition Global Crisis

External environment - PESTEL


Opportunities Politics Economics Socio-Demographics
Policies encouraging consumption (ex: go policies) Increasing demand on the market Increase of equipment rate Consumer more experienced Population growth Casual use of Etechnologies New techniques and new products Increasing problems with electronic equipments Environmental approvals New rules in terms of music or videos downloads

I- Introduction II- Business strategy of Apple Inc III- Issues IV- Analysis of Issues V- Recommendations

Threats
Impact of taxes on sales Differenciations between countries Economic world crisis Apple high prices despite the recession No concerns with products provenance New social needs Internet power Be reactive Technology is evolving at a rapid pace

Technologicals

Environmentals Legals

Global warming: waste of electricity Non legal website to download music or videos

STARS

QUESTION MARKS

iPhone
iPod iPad

Mac OS X;
"Mountain Lion" iTV

APPLE

CASH COWS iTunes

DOGS Apple Mac

Attractivenes s Factors X Cost Position Differentiation Response Time Financial Strength Human Assets Public Approval TOTALS

Weight

IPHON E

IPAD

IPOD

IMAC

LAPTO ITUNES P

PRO ITV CES SOR

0.20 0.20 0.20 0.20

6 7 7 7

7 8 6 8

7 8 7 7

5 6 6 6

6 7 7 8 6 7 6 7

6 5 5 5

5 6 4 4

0.10 0.10

6 7

7 6

7 6

6 6

6 6 6 6

5 6

6 6

1.00

Weigh

t
Cost Position Differentiati on Response Time Financial Strength Human Assets Public Approval TOTALS

IPHO NE

IPAD

IPOD

IMAC

LAP ITUNE PROCE SSOR TOP S

ITV

0.20
1.2 1.4 1.6 1.2 1.6 0.7 0.6 7.1 1.4 1.6 1.4 1.4 0.7 0.6 7.1 1 1.2 1.2 1.2 0.6 0.6 5.8 1.2 1.4 1.2 1.2 0.6 0.6 6.2 7 1.4 1.6 1.4 1.4 0.6 0.6 5.3 1.2 1 1 1 0.5 0.6 5 1 1.2 0.8 0.8 0.6 0.6

0.20
1.4

0.20
1.4

0.20
1.4

0.10
0.6

0.10
0.7 1.00 6.7

Attractiv eness Factors Competiti on Bargainin g Power Substitut es/ New Entrants Economi c Financial Sociopolitical TOTALS

Weight

IPHO NE
8 8

IPAD

IPOD

IMA C
7 5

LAPTOPS

ITUNES PROC ITV ESSO R


6 4 6 5

0.10 0.20 0.25

6 7

4 6

7 2 5 7 6 2

0.15 0.25 0.05


1.00

9 8 7

7 8 7

7 8 7

6 6 6

6 6 6 7 6 6

4 5 5

4 4 5

Attractiv eness Factors Competit ion Bargainin g Power Substitut es/ New Entrants Economi c Financial Sociopolitical TOTALS

Weight

IPHO NE

IPAD

IPOD

IMA C

LAPTOPS

ITUNES PROC ITV ESSO R

0.10
0.8 0.6 1.4 0.4 1.2 0.7 1 0.7 1 0.2 1.4 0.6 0.8 0.6 1

0.20
1.6

0.25
2 1.75 1.05 2 0.35 7.15 6 1 1.05 2 0.35 1.75 0.9 1.5 0.3 6.15 5.9 1.5 0.9 1.5 0.3 5.05 0.5 0.9 1.75 0.3 1.75 0.6 1.25 1.25 0.6 1

0.15 0.25 0.05


1.00

1.3 5 2 0.3 5 8.1

0.25 0.25 5.25 4.7

Business strength Industry attractivene ss Strong Average


IPHONE ( Invest grow )

Week
IMAC & (Selective investment) PROCESSOR S (Harvest /

High
Medium

IPAD ( Invest & grow ) IPOD ( Invest & grow )

LAPTOPS (Selective investment)

divest)

Low

ITUNES (Selective investment)

ITV (Hasrvest /divest )

Value

chain analysis

The most strategically relevant would be Legal Services. All individuals are expected to comply with Apples Business Conduct Policy and principles and with all applicable legal requirements. Apples Business Conduct Policy and principles apply to employees, independent contractors, consultants, and others who do business with Apple. Intellectual property is sacred to Apple. The Company continues to develop new technologies to enhance existing products and to expand the range of its product offerings Total research and development expense was $2.4 billion, $1.8 billion and $1.3 billion in 2011, 2010 and 2009, respectively. Apples history is richwith cutting-edge technology development

Custom components that are not common to the rest of these industries. Companys hardware products are manufactured by outsourcing partners primarily located in Asia. the sole-sourced suppliers of components.

Production
Apple achieved unparalleled performance via 64-bit architecture, integrated distinctive styling with the multicolored translucen t iMac cases, and r edefined intuitive operation with the iPod

Customer Service Focus on providing innovative, high-quality products and services and on demonstrating integrity in every business interaction Increasing their customer base by delivering technically superior products and aggressively pursuing hardware and software updates.

Outbound Logistics Competition and Trade Practices Kickbacks Endorsements Side Deals or Side Letters

Marketing & Sales cannibalization of a loyal consumer base Apples Principles of Business Conduct Apples success is based on creating innovative, high-quality products and services and on demonstrating integrity in every business interaction. Apples principles of business conduct define the way we do business worldwide. These principles are: Honesty.

Respect.
Confidentiality. Compliance..

Meeting the demand excess demand initially might add to products credibility but later tends to harm brand image PC share problemApple has restricted group of customers as its products are not compatible with those of other brands Concentrate on products which are doing well

Flawless execution across supply chain Shortage of even one component can stall the production process Further rapid expansion in China and developing countries is required Market access more important that continuos innovation in these countries

Selling to corporate clients Flexibility

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