Apple 2006

1. Apple 2006 Ellen Suprun Julie O’Halloran Wojciech Jagiello Finbarr Kearney Kingsley Egwim

2. Introduction External Analysis Internal Analysis Strategy Assessment and Recommendations

4. Porter’s Five Forces • Low • High capital investment • Commoditized market makes it difficult to differentiate • Substantial dominance of Wintel platform and low-cost large-scale players (Dell, Gateway, HP, IBM) • Oligopoly market Threat of Entry • Low • PC and new applications High End-users are mostly loyal • Imperfect knowledge about price forming Suppliers Buyers • High(components suppliers) • Most components are commoditized, however Intel, Motorola, IBM become dominant, that increases power of supplier • High • PCs are available in multiple configurations, performances and price ranges • Other firms offer as good products • Rivalry is very high Substitutes

5. The Value Chain • Leadership • Culture Support Activities Company Infrastructure Materials Management Information Systems Human Resources • Jobs and Wozniak • John Sculley • Mike Spindler • Gilbert Amelio • Return of Steve Jobs R&D Production Marketing and Sales Customer Service • Apple have always added value through R&D • Failed R&D project with IBM • Premium Pricing • Brand Loyalty • Retail Outlets • Low market share in the corporate market place • Vertical Integration to outsourcing 1998 to reduced costs

6. Strengths • Technology and R&D team • Investors • Organizational culture • Brand Loyalty • Marketing • Partnerships

7. Weaknesses • Lack of compatible software 1984 • Strategy change inconsistent with the business model – cutting costs • Failed investments • Leadership – changes and succession planning

8. Opportunities • iCloud • New markets- expansion into mobile phones, tablets, BRIC countries • Large corporate market segment

9. Threats • Open architecture • Economic downturn • Competitors • Suppliers • Legal issues

10. Apple’s Competitive Strategy • Differentiation Strategy • Core competencies • Innovative Culture • Team spirit (people) • Marketing • Consumer Loyalty • Distribution network

11. Questionable moves • Mac Clones • Niche market • Strategy change & Leadership problem • Partnership with IBM

12. Critical Success Factors • Leadership of Steve Jobs • Marketing and design • Innovation and new product development

13. The role of vertical integration in strategy Simplicity and quality Complete user experience Capturing values on every step Benefits Higher costs of production and development Not dependent on innovation Dangers Importance of strong leader Apple being relatively fragile Preventing others from innovating

14. The iPod Phenomenon • Launched November 2001 • Buy – Listen - Manage • Sold 42 million iPods by 2005 • 75% market share • iTunes: a justified loss leader • 2005 -39% Apple revenue

15. 2006 to Date Apple Computer-> Apple 2007, iPhone, Apple TV 2010, iPad Ongoing Software Innovation (iCloud)

16. Recommendations • Vision and leadership • Learn from mistakes • Corporate Social Responsibility • Stick to Core competencies • Design • Innovation and R&D

17. Any Questions?