apple --Creating a sustainable competitive advantage is one of the hardest things for any firm to achieve. This would require a company to do at least one thing better than all the other companies with the same products. One company that has established a sustainable competitive advantage is Apple.
PRERNA MAKHIJANI ROLL NO. 29 PGDM IB Q7. Analyse performance from 1981 (decade wise). What are the current and emerging challenges? 1980s In this decade starting from early 80’s, Apple had been making steady progress. By the end of the decade their net sales grew by almost six times and they even more than doubled their employees. Apple invested huge amounts into research and development of their PC Macintosh which did give good results. They also managed to maintain a very high gross margin on their products which varied between 49-53%. Apple did not expand into international territory and most of their sales came from the domestic market itself. During this decade, the market value of Apple doubled, thereby also increasing the stock prices of the shares as well. 1990s This was a tumultuous decade for Apple. They began well in the early 90s, carrying forward the success of the earlier decade with sales growing by three times. Apple continued heavy investments in its research and development programmes, especially in the OS development. Apart from this, the company’s profits also doubled. Due to the growing business Apple recruited heavily and increased the workforce almost three times. Apple also started to expand internationally exploring new territories and by 1991 45% of their sales were away from home. Despite all this their gross margins reduced. But by mid 1990s, Apple started to dwindle for a number of reasons. For the first time since inception they made heavy losses, their gross margin reduced to 10% and their market value hit rock bottom. This was despite the fact that their sales kept on increasing. By 1998, after Steve Jobs was reinstated, the company started getting a grip on their financials. Even though they did not make large volume of sales, Jobs managed to get the company out of losses and put it back on track to recovery. By the turn of the century, Apple was profitable again, with profitability and market share increasing. This was due to the launch of iPod and iTunes which helped save Apple from a disaster. 2000s After a consolidative start in the early 2000s, Apple witnessed phenomenal success in this decade. Most of it is attributed to the launch of iPod in 2001. Apple experimented with various revenue models for themselves apart from hardware itself. By 2007, the company launched iPhone which changed the game for smartphones all together. Subsequently they launched the iPad. Apart from this, they improvised on their OS and focused on laptops. By 2009, Apple’s net sales increased five times and it made more than eight times the profit it did at the start of the century. Apple had to invest heavily in research and development and continued doing so. Their workforce also increased in folds and almost half of their sales came from other countries, especially the emerging markets. Apple’s market value increased and it is currently one of the most valuable companies in the world. Currently it is sitting on a stash of $98 billion and has a market capitalization of $400 billion, with its share prices surging to $600. PRERNA MAKHIJANI ROLL NO. 29 PGDM IB Current Challenges: 1) Steve Jobs – Demise of the iconic CEO has caused considerable amount of flutter in the industry and people are speculating the moves of Tim Cook. The problem was that Jobs made himself irreplaceable and the company though well organized revolved around him. 2) AT&T – Their bad services in a lot of areas in the US is draining down the goodwill of Apple from its users. 3) Computers – Apple iPads are soon going to make Macbook Pro obsolete soon. The future will be more mobile, faster, smaller and better. 4) The App Store – There is too much scrutiny by Apple on the kinds of apps that are available. This might become unsustainable soon. 5) Security – Even though Apple OS is not affected much by malware, they still need to be on the watch for any vulnerability. 6) Mobile Me – This iPhone interface to the Mac has web apps which are essentially of no use. Apple does not need to invest in these. 7) Back Ups – Most back-ups for Apple products are local. This is a major problem in case of data loss. 8) Apple TV – Apple TV has proved to be a failure. It needs major functional and services changes in order to attract buyers. 9) Arch Rivals – Apple has grown too big to be challenged by anyone. This will make them complacent. 10) About box credits – Due to the fear of headhunting, Apple’s designers are not given credits. This might cause dissatisfaction in the workforce. Q8. What are your recommendations regarding these challenges and why? 1. Steve Jobs. Timothy Cook, the new CEO needs to get into the role quickly. Although he can never replace the celebrity CEO, but still it is important for him to think about the future of Apple and quickly design a road map for the same. The optimistic view is that Jobs has structured it to run like his other company, Pixar, which manages to turn out hit after hit, year after year, without a charismatic celebrity leader. 2. AT&T. The service provider has been a cause of concern for Apple users as the service provided by AT&T is not of best standards. Since it is Apple’s sole provider, Apple needs to look into it. The good news is that AT&T desperately needs the iPhone that Apple can extract far better terms from them than it ever could from Verizon. The company should review AT&T's plans and work out the kinks. Meanwhile, however, AT&T's service problems are draining Apple's good will. 3. Computers. Gruber thinks he's seen the future of computers, and it is the iPad. "It's really, really good," he gushed. If you are sitting on a couch and you need a computer, most people are going to reach for the iPad, not the MacBook Pro. And that puts Apple into uncharted territory. For PRERNA MAKHIJANI ROLL NO. 29 PGDM IB the first time since the original Mac replaced the Apple II, it has two overlapping computer products. And although it took a few years for the corpse to grow cold, the Apple II basically died the day the Mac arrived. 4. The App Store. There are two schools of criticism about the iPhone App Store: The most vocal critics say that it is totally going in the wrong direction and should be doing what Google does with the Android Marketplace -- offer users the option of downloading apps that aren't vetted and approved. The other school says that Apple is going in the right direction, but is hurtling at great speed a few degrees off course. There's never before been a tightly controlled system with 150,000 apps. This might prove to be really unsustainable in the future and Apple should reconsider the tight control it has over App store. 5. Security. Microsoft put a lot of effort into building strong malware protection into Windows 7 because its operating system is under constant attack. Apple users don't fret nearly as much about Mac OS X malware because there is so little of it. But Apple has a sluggish response to its own publicly disclosed vulnerabilities. For example, it took Apple 75 days to respond to a hole in Open SSL -- the open-source encryption system that is supposed to protect credit card data from getting loose on the Internet -- even though the vulnerability was made public last September. Apple is the last vendor to respond, when it ought to be the first. Of the companies that use Open SSL -- and Microsoft pointedly does not -- Apple is the biggest. 6. Mobile Me. It's great for syncing your iPhone to your Mac, but there is no point of Mobile Me's Web apps. If you're at your computer, you use Mail and Calendar. If you're out and about, you're supposed to use the iPhone. The Web apps are essentially redundant and they should be redesigned so that they can serve more useful purposes. 7. Back Ups. Data loss is a tragedy, and Apple is particularly vulnerable because -- unlike Google -- the primary storage on their systems is local. Ultimately the long-term solution is to be in the cloud, but that puts Apple on poor footing compared with Google. So Apple needs to come up with a better solution that Google for online storage. 8. Apple TV. It's primarily about watching movies and TV shows through the iTunes store, with the result that there's a worse selection on Apple TV than there is at any local video store. Therefore Apple needs to strengthen its collaboration with a few specialized companies and devise a more sustainable revenue model. 9. Arch Rivals. A company needs direct rivals to stay hungry, but when they get big enough they tend to run out of them. Apple's closest rival in smart phones, is Google (which will rake in the Web ad riches as Android succeeds), and Palm, whose WebOS would be good for Apple – so that Palm to does well. But not too well. PRERNA MAKHIJANI ROLL NO. 29 PGDM IB Q6. Analyse how is Apple`s competitive advantage sustainable in P.C., MP3, iTunes, smart phone and iPad? Creating a sustainable competitive advantage is one of the hardest things for any firm to achieve. This would require a company to do at least one thing better than all the other companies with the same products. One company that has established a sustainable competitive advantage is Apple. 1) It is harder and harder to beat Apple with its deep integration between apps, OS and devices. It is reported that iCloud will be offered for free initially, and at some point users will be charged $25 annually for subscription of the service. That’s another way to get another recurring revenue stream just like MobileMe service. 2) Apple has finally locked-in deals with big record labels Warner, EMI, Sony, and Universal. With 30% of revenue from iCloud’s music offering with the major labels, 12% with those holding the songwriting rights, and the remaining 58% for Apple to keep. That’s a good profit margin. Not only it is helping with the bottom line, it is further strengthening the Apple fortress with all these integration. 3) Apple’s horizontal integration strategy across devices and channels and vertical integration strategy from chip design to software and retail is creating a truly sustainable competitive advantage that is hard to replicate. For that reason alone, its valuation skyrocketed. This is a brilliant example of classic business strategy theory at work. 4) Every single Apple products complement (compete) and complete each other. Get an iPod, and you can download content via iTunes and access them though iCloud and use that to move content to iPad or other devices. This sort of control over the entire user experience or process, from hardware to software, strengthens customer loyalty and provides lock-in. You cannot leave Apple once you’re in. It is becoming the consumer equivalent of IBM for business. 5) Where Apple really stands out is in marketing. The company simply seems to understand what will get people excited about its products, and then it executes on that vision. The company does not talk much about features or technology, but about how the computer will make your life better. 6) Apple has created a sustainable competitive advantage for itself with the iTunes platform. Earlier iTunes allowed users to download songs for iPod. Now, iPhone and iPad are also integrated with iTunes for apps download. The iTunes platform and its tight integration with Apple products are so powerful that Walmart has decided to exit the digital music. iPhone and iPad, now contribute nearly 70% of Apple’s revenue. 7) What Apple can and does sustain is an intangible competitive advantage: friendliness. Based upon its design philosophy of making technology simple and easy to use, Apple has positioned itself as the friendly brand of personal technology. Apple products are extremely user friendly and make technology accessible to everyone. The intangible brand essence is perceived by customers as creating superior value and thus serves as an obstacle to competition. Overall, Apple still possesses competitive advantages, of which some can even be considered as being sustainable. However, with increased efforts of its competitors, Apple is under pressure of PRERNA MAKHIJANI ROLL NO. 29 PGDM IB preserving these advantages. To remain in a leading position, Apple must focus on their core competencies and carry on introducing cutting-edge products. Q4. Explain Apple`s resources and core competencies & how they were developed? Which of the above are Apple`s competitive resources & critical capabilities & why? Core competencies and distinctive competencies of Apple A company’s core competencies describe something that a company does best internally. In the cases of Apple, this includes the following capabilities: Innovation and engineering excellence: technological developments and inventions Creativity and design: high-end marketing, product design HRM policy: HRM department and employees contribute effectively to company’s success When core competencies constitute aspect that a company does well compared to its competitors, they become distinctive competencies- firm specific strengths that allow a company to differentiate and/or lower costs. As we can see in the above illustration, these stem from a company’s resources and capabilities and shape its strategies, ultimately leading to a competitive advantage and resulting in superior profitability. So the following resources and capabilities can be regarded as Apple’s distinctive competencies: Human resources: highly skilled workforce (soft skills, experience, knowledge, initiative, etc.) Technological resources: superior information technology (intranet, extranet) Engineering and technical development capabilities: short product-to-market cycles and innovation/functionality of products Creativity capabilities: design of software and hardware Apple’s engineering and technical development capabilities as well as creativity capabilities are most important factors and are Apple’s competitive resources. This is because Apple’s ‘out of the box’ technology and innovative design of its products was an outstanding achievement for Apple which attracted consumers from all parts of the world and its products became pioneer for innovative technology. These products possessed entertainment characteristics that attracted more and more customers. Also, Apple’s superior innovation is the most important source of competitive advantage for the company in the long run. PRERNA MAKHIJANI ROLL NO. 29 PGDM IB Apple’s most important resources and capabilities are Steve Jobs, the CEO, and the integrated system of hardware and software that the firm has developed and successfully marketed to derive value. Steve Jobs brought Apple back to tremendous success following a decline in relevance and heads the continued creation of billions of dollars of value. While Apple’s designers, programmers, and engineers each represent key resources the ability of the firm to exploit their abilities to create their entire software/hardware ecosystem is the firm’s key capability. Taken each individually, the resources only represent competitive parities and temporary advantages. The combination is their key capability that has established a sustainable and ongoing competitive advantage and above average performance within the industry. Steve Jobs Apple founder and current CEO Steve Jobs is an incredibly valuable resource to the firm. 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 was a valuable, rare, inimitable, and non-substitutable resource. Apple Stores –Retail Locations 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. Apple tops many retailers in in- store sales, generating $4,032 per retail square foot per year, beating other retailers like Tiffany & Co. at $2,666 and Best Buy at only $930. This resource is of incredible value to Apple and a success that is a relative rarity in the industry. Matching success and impact like the Apple store model is difficult for other firms to achieve. Past experiments like Gateway stores have failed, while Sony Style stores founder in mediocrity. Relationship with OEMs Apple has outsourced all of its manufacturing processes to 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. Industrial Design Capability Apple’s incredible industrial design capability is a function of their innovative design teams, led by senior vice president of industrial design, and the firm’s prioritization of design and outsourced production. This combination is valuable to Apple, rare among competitors, and difficult to imitate. Talented Software Development Teams Apple’s software developers are carefully selected and talented programmers. They’ve produced industry award winning software and the highly regarded iterations of Macintosh OSX operating system. They’ve provided Apple with important products, but developers of their caliber are not rare within the industry, nor are they difficult to imitate. Other firms can develop staff as talented or hire them away from Apple. PRERNA MAKHIJANI ROLL NO. 29 PGDM IB Tailored Hardware/Software Systems One of Apple’s most important capabilities is their ability to develop and build highly integrative systems 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 Apple’s 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 Apple’s integrated system. Research and Development: As the personal computer industry is characterized by rapid technological advances, Apple’s ability to compete successfully is dependent on its ability to ensure a continuing and timely flow of competitive products and technology to the market. Apple believes in maintaining or increasing the pace of innovation and product development as the best way to respond to current economic and market conditions. R&D enhances speed of innovation which is consistent with the company’s overall strategy and goal to remain the most innovative personal computer company. Q2. Analyse the P.C. industry for its attractiveness based on value net. Consider key dominant features and industry driving forces. Threat:5 Threat:2.5 Attractiveness:1 Attractiveness:3.5 PRERNA MAKHIJANI ROLL NO. 29 PGDM IB The industry is moderately attractive overall. The established players have a history of success and innovation, but competitors who fall behind the fast moving technological curve, or cannot compete efficiently on price or differentiate effectively are eliminated. The power asserted by buyers and the dominance of suppliers puts strain on the industry’s profits. While new entrants are possible, the cost in dollars and time of successful branding are a hindrance. While some users may move most of their computing activities to truly mobile devices like smart phones personal computers are likely to remain a tech staple for the foreseeable future Complementors: For Apple’s various products, it came up with softwares and app stores like iTunes, iTunes music store, Apple app store, etc. These Complementors were of great use for the people using Apple’s products since they made the consumers’ lives easier as these complementors provided lot many functions to the consumers. But in contrast to this it was a loss leader for the company as it used to get only a dime of revenue collected per song and majority of the revenue went to music label that owned it. Value net: Apple has a very unique value net. It has pioneered the PC industry with its innovative products and because of the same it has a huge base of customers all over the world. All the five, i.e. customers, company, suppliers, competitors and complementors are related to each other, with company being connected to rest of the four. For Apple, its major competitors were Dell, HP, Nokia, RIM, etc. These competitors were a driving force for Apple, which in turn played a major role for helping Apple to become an outstanding company. The complementors are participants from which customers buy complementary products or services, or to which suppliers sell complementary resources. They are mirror image of competitors. On the demand side, they increase buyers’ willingness to pay for products; on the supply side, they decrease the price that suppliers require for their inputs. In essence, Jobs had created a razor-and-blade business, only in reverse: Here, the variable element served as a loss leader for a profit-driving durable good since Apple was left with only a dime of revenue collected per song. Some of the key dominant features are: Market Size Scope of Competitive Rivalry Stage in Life Cycle Number of Companies within the Industry Customers Technology/Innovation Product Characteristics Scale Economies Learning and Experience Effects Capital Requirements Industry Profitability PRERNA MAKHIJANI ROLL NO. 29 PGDM IB Q5. Comment on Apple`s diversification so far (from P.C. to ipod, istore, iphone and ipad) with respect to Ansoff`s matrix 7 comment on common thread, if any? Apple has diversified immensely since its inception and has emerged to be the leader in the PC industry because of its unique design and timely innovative products/services. Same can be explained with the help of Ansoff’s matrix. The Ansoff’s Product-Market Growth Matrix is a marketing tool that allows marketers to consider ways to grow the business via existing and/or new products, in existing and/or new markets – there are four possible product/market combinations. This matrix helps companies decide what course of action should be taken given current performance. Market Penetration Market penetration occurs when a company enters/penetrates a market with current products. The best way to achieve this is by gaining competitors' customers (part of their market share). Other ways include attracting non-users of your product or convincing current clients to use more of your product/service, with advertising or other promotions. Market penetration is trying to drive an existing product deeper into an existing market. Apple penetrated the market with its current products/services in the current market in order to increase its market share and attract non-users towards its products/services. For the same, Apple came up with iTunes and App store as complementary services for its products. These services were of immense use for the consumers because of they were user friendly hence, easy to use. Product Development: A firm with a market for its current products might embark on a strategy of developing other products catering to the same market. The same strategy Apple implemented for its new product development in the existing market. This was done to gain new customers for its products and hence, new product development became a crucial business development strategy for Apple to stay competitive. Apple came out with its new products/services like iPad, iCloud and brought in lot many changes in the Mac OS. Apple introduced new OS X in 2001 which was based on UNIX. This costed Apple roughly $1 billion to develop. Later in 2007, Apple came up with a new version PRERNA MAKHIJANI ROLL NO. 29 PGDM IB called Leopard which ran on more than half of all Mac computers by 2010. Apple not only developed a new product but also managed to attract consumers away Windows XP. Product development is just as risky as market development, perhaps more so because more capital will probably be needed in research and development. Apple had two notable products that failed to live upto expectations. One was Mac Mini and the other was Apple TV. Mac Mini failed due to limited memory and few expansion options. Market Development: An established product in the marketplace can be tweaked or targeted to a different customer segment, as a strategy to earn more revenue for the firm. For market development and to increase its revenue, Apple had a huge potential in emerging markets like China and India. Even though there was an intense competition in these markets from the ‘white box’ PCs, Apple’s differentiation strategy helped it develop its products/services in these emerging markets. Also, more than a million first generation iPhones were sold in the grey market, which reflected the demand for Apple products in other markets of the world. Diversification: Diversification involves launching a new product in a new market. Apple started originally as “Apple Computers”, best known for its Macintosh personal computers. Later it shifted towards a digital hub strategy which was initiated by the debut of the iPod in 2001, followed by the iPhone in 2007, then the iPad in 2010. This diversified the company from making computers to producing lot many other digital products. The ‘common thread’ for all the Apple’s products/services was the company’s innovation and unique designs which differentiated Apple products/services from other competitors and gave the company competitive advantage over other companies. The following PLC diagram shows the diversification of Apple’s products so far and their stages in the diagram. PRERNA MAKHIJANI ROLL NO. 29 PGDM IB Q1. Update the case to date. 2010 After announcing the Ipad in Jan 2010, on April 3, 2010, the iPad was launched in the US and sold more than 300,000 units on that day and reaching 500,000 by the end of the first week. In May of the same year, Apple's market cap exceeded that of competitor Microsoft for the first time since 1989 On June 7, 2010 the iPhone 4 was announced, which Apple says is its "'biggest leap we've taken" since the original iPhone alongside, On September 1, 2010, alongside the release of the new line of iPod devices for the year, Apple released a completely redesigned Apple TV. The new device is 1/4 the size, runs quieter, and replaces the need for a hard drive with media streaming from any iTunes library on the network along with 8 GB of flash memory to cache media downloaded. Apple also reduced the price of the device to $99. 2011 In October 2010, Apple shares hit an all-time high, eclipsing $300. Additionally, on October 20, Apple updated their MacBook Air laptop, iLife suite of applications, and unveiled Mac OS X Lion, the latest installment in their Mac OS X operating system. On January 17, 2011, Jobs announced in an internal Apple memo that he would take another medical leave of absence, for an indefinite period, to allow him to focus on his health. Chief operating officer Tim Cook took up Jobs' day-to-day operations at Apple, although Jobs would still remain "involved in major strategic decisions for the company." Apple became the most valuable consumer-facing brand in the world. In June 2011, Steve Jobs surprisingly took the stage and unveiled iCloud. iCloud is an online storage and syncing service for music, photos, files and software which replaced MobileMe, Apple's previous attempt at content syncing. It has been argued that Apple has achieved such efficiency in its supply chain that the company operates as a monopsony (one buyer, many sellers), in that it can dictate terms to its suppliers. Briefly in July 2011, due to the debt-ceiling crisis, Apple's financial reserves were greater than those of the US Government On August 24, 2011, Jobs resigned his position as CEO of Apple. He was replaced by Tim Cook and Jobs became Apple's chairman. Prior to this, Apple did not have a chairman and instead had two co-lead directors, Andrea Jung and Arthur D. Levinson, who continued with those titles until Levinson became Chairman of the Board in November On October 4, 2011, Apple announced the iPhone 4S, which includes an improved camera with 1080p video recording, a dual core A5 chip capable of 7 times faster graphics than the A4, an "intelligent software assistant" named Siri, and cloud-sourced data with iCloud One day later, on October 5, 2011, Apple announced that Jobs had died, marking the end of an era for Apple Inc. PRERNA MAKHIJANI ROLL NO. 29 PGDM IB On October 4, 2011, Apple unveiled the iPhone 4S, which was released in the United States, Canada, Australia, United Kingdom, France, Germany, and Japan on October 14, 2011, with other countries set to follow later in the year. This was the first iPhone model to feature the Apple A5 chip, as well as the first offered on the Sprint network (joining AT&T and Verizon Wireless as the United States carriers offering iPhone models). The iPhone 4S was priced at $199 for the 16GB model, $299 for the 32GB version, and $399 for the new 64GB version, all with a two-year contract. The prices for unlocked iPhone 4S are $649 for 16GB model, $749 for 32GB, and $849 for 64GB. On October 29, 2011, Apple purchased C3 Technologies, a mapping company, for $240 million. C3 is the third mapping company Apple has purchased so far. By the end of 2011, a number of smartphone vendors will have placed some very big bets on their latest smartphones. Research In Motion just released a new slate of BlackBerry devices which it will push aggressively to businesses and consumers. And Microsoft – hand in hand with Nokia and some other hardware manufacturers – will begin to make a second large drive for its Windows Phone platform. A wide variety of manufacturers – including HTC and Samsung – will also continue to produce a few handsets loaded with Google Android. Based on data, some Android manufacturers such as Samsung will continue to gain and hold market share, while RIM and Nokia will likely struggle to find their footing. As with everything in the fast-moving world of tech, though, unforeseen events could shift the mobile market in a whole new direction 2012 On January 10, 2012, Apple acquired Anobit, an Israeli hardware company that developed and supplies a proprietary memory signal processing technology that improves the performance of flash-memory used in iPhones and iPads for $390 million. On January 19, 2012, Apple's Phil Schiller introduced iBooks Textbooks for iOS and iBook Author for Mac OS X in New York. This was the first major announcement by Apple since the passing of Steve Jobs, who stated in his biography that he wanted to reinvent the textbook and education. The 3rd generation iPad was announced on March 7, 2012. It includes a Retina display, a new CPU, a five megapixel camera, and 1080p video recording. APPLE decided to part with some of the $100 billion or so of cash that lines its coffers. On March 19th 2012 the tech behemoth announced plans to start paying a quarterly dividend—its first since 1995—and to buy back billions of dollars of its shares. Beginning sometime in July, Apple will cough up the first of its quarterly dividends, which are set at $2.65 a share Q3. How did Apple position itself initially in 1976, 1981 and thereafter? Did apple have KSF for the P.C. industry when it started? Does apple have it now? What is Apple`s competitive position today? Trace changes in competitive positioning in previous years (Major Changes) PRERNA MAKHIJANI ROLL NO. 29 PGDM IB Positioning Apple was founded by Steve Jobs and Steve Woznaik on April’s Fool Day. The Company ‘Apple Computer’ positioned itself as an easy to use computer making company following the release of Apple- II in the market. Apple was positioned as an industry leader selling more than 100,000 Apple-II by the end of 1980 The positioning of the company changed drastically in 1981 when IBM entered the PC market. It lost most of its market share to IBM PC’s which emerged as the new standards for the industry. Its income fell 62% between 1981 and 1984. Apple has taken a major leadership position in the PC, portable music and tablet market. It has been providing a complete solution for the consumers and thus it has created a position for itself that makes it nearly impossible for other companies to compete head on. Current Apple's successful position results not only from its operating system, applications environment, and user interface, with its ability to simply manage a person's digital assets, but also from Apple's direct role in providing content for the user: music, movies, and applications for dedicated mobile devices such as the iPhone and iPod touch, and New generation I pads. Major changes in positioning Mac in 2001 came with real advantage for consumers who were becoming entrenched in digital lifestyle. It was the preferred ‘hub’ to control, integrate and add value to digital devices. It continued to commit to the education market while its new products focused of home lifestyle. The shift towards the hub strategy was coupled with the debut of IPod in 2001, followed by IPhone in 2007, then I Pad in 2010. The product lines led apple on a path towards positioning itself as a ‘full- fledged’ digital convergence company. The positioning was rightly reflected in the decision to change the company’s name from Apple Computer to Apple Inc. in 2007. Key Success factors In 1980’s Technology related key success factors Scientific research expertize: Apple devoted 9% of sales to research and development Manufacturing related key success factors Apple in 1980’s, as compared to its competitors, offered its customers a complete desktop solution, including hardware, software and peripherals that allowed them to plug and play. Apple also stood out for typically designing its products from scratch, using unique chips, drives and monitors. PRERNA MAKHIJANI ROLL NO. 29 PGDM IB Other key success factors Favorable reputation and image with buyers. Apple’s Macintosh had a favorable image that allowed Apple to sell it at a premium price. Access to financial capital, By 1990 Apple had $ 1 billion in cash and was one of the most profitable PC industry in the world Present: Apple has numerous strengths that make it a successful and competitive company. Technology Related KSF’s Apple fosters a research intensive office environment and is constantly releasing products with the current trends and styles as seen through its latest iPod and IPad. Apple is one of the biggest innovators in the computer and portable music industries, being first to bring new and creative ideas to the market. Its operating system is developed in house, leaving it free from the tangles of the dominant Microsoft operating systems. This gives apple a very large degree of control over its product in the physical appearance, specifications, and overall usability. Apple’s Innovation and expertise software products including itunes and Apple App store which were key factors behind success of its products. Marketing related KSF’s Merchandising skills: the products developed by Apple have ‘halo effect’ especially the Ipod and it is believed that merchandising and add on products available in the market makes the customer spend more for the product. Clever Advertisements: Through its multimillion dollar marketing campaigns such as the successful ‘Think Different’ add and recent advertisement of IPhone ‘If you don’t have and IPhone, You don’t have and IPhone’ Distribution related KSF’s The company has its own retail outlets. The first retail outlet was opened in Mclean, Virginia, in 2001. It has more than 280 stores in 10 countries. The Apple’s retail strategy is a huge success. Other KSF’s Favorable image and reputation in the market: The Company enjoys a premium position with a reputation of a firm which continuously changes the market trend with new innovative and revolutionary products.
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