Apple inc. in
2010
GROUP 1
PROBLEM STATEMENT
What should Apple Inc. do, amidst
growing competition and challenges,
to thrive and maintain its status as a
successful full-fledged digital
convergence company?
OBJECTIVE
To be able to look for solution/s that
will enable Apple Inc. to maintain its
competitive advantage
Brief description of the
case
The company started off as “Apple
Computer” by Steve Jobs and Steve
Wozniak, a pair of 20-something college
dropouts in 1976. Jobs then went to work
and transformed “Apple Computer” into
“Apple Inc.” with innovative and
technologically sophisticated non-PC
products in 2000’s. By 2010, the company
also viewed itself as a “mobile device
company.”
Brief description of the
case
Apple became the fourth- largest PC vendor in the
US market with an 8% share by the end of 2009. Its
market capitalization went to $220 billion in spring of
2010 through multi-million dollar marketing
campaigns such as the successful “Think Different”
ads and catch slogan. Apple promoted itself as a
hip alternative to other computer brands. It also
highlighted its computers as the world “greenest lineup of notebooks”. The goal of Apple is to
differentiate its products amid intense competition in
the PC and mobile device industry.
Areas of consideration
STRENGTHS
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Pioneer of innovative and high-tech quality
products like iPod, iPhone, iPad and Mac
Globally recognized brand name
Large segment of loyal customer of “Apple
culture”
Strong research and development
Department
Retail stores providing the eye-catching
products and experience of Apple’s
Software
Innovative culture
High quality and user experience
Revolutionary products
Appealing designs
WEAKNESSES
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Lower market share
Products are expensive compared to
Microsoft and other competitors
Reliance on suppliers for MP, App, and
Memory
iTunes: Low margin
iPhone: Lacking features
Less market presence overseas
Content provider relations
Technological Limitations
Areas of consideration
OPPORTUNITIES
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Good relationship through joint venture
with other big Companies coupled to
bring out new hits
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Constant growth of PC and mobile industry
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More international expansion
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Increasing demand of online music and
other applications like cloud based
services
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Growing market of “Green” and energy
efficient products
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Capitalize on iPhone, iPhone, and iPad
growth
iTunes and app store
Strong growth of mobile advertising
market
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THREATS
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Competition in technology with other PC
industry giants like Dell, HP, Lenovo and
mobile industry giants like Nokia, Motorola
and Samsung
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Expensive products as compared to other
competitors such as Dell, Nokia, Microsoft
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High product substitution effect in the
innovative and competitive technology
market
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Incompatibility with windows platform
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Imitators
Rapid technology changes
New Entrants like Google
Dying Mp3 market
Piracy and free content availability
Highly competitive and saturated market
The rise of Android OS
Alternative courses of
action
The Apple Inc.’s identified markets are: PC market
(Macintosh), phone market (iPhone) and other digital
device markets (iPod Touch and iPad).
 The first alternative course of action is international
expansion like looking into the China and other
developing countries.
Pros: China has 616 million mobile subscribers, there
are a lot of opportunities and possibilities that Apple
Inc. can do with that population of mobile subscribers.
Cons: International expansion would mean high
expenses and costs.
Alternative courses of
action

One of Apple Inc.’s competitive advantages is its
Research and Development rapid innovation. The
second alternative course of action is based on this
competitive advantage. It is to increase its budget
allocation on its R&D.
Pros: With the rapid changes in technology in this
contemporary society, it is logical for Apple Inc. to
increase its budget allocation on its R&D. Furthermore,
one of the core strengths of the company is rapid
innovation, an increase of budget on its R&D would
ensure that this core strength would still remain as one.
Alternative courses of
action
Cons: The Apple Inc. may decrease its budget on one
or some of its value chain link like sales, marketing, and
advertising in order to give in to the increase of the
budget allocation on its R&D.
 Capitalize on iPhone, iPad, and iPod growth
Pros: The brand is already strong. It is trusted and
widely known
Cons: Expensive development
 Employ on Market expansion and penetration
Pro: Retail store strategy is effective and iTunes
worldwide content is already popular
Con: Competition
recommendation
With the given alternative courses of action,
increasing its budget allocation on its
Research & Development is the best course
of action for Apple Inc. It would ensure that
Apple’s products be ahead of other
competitors’ products. This would also retain
the company’s reputation for rapid
innovation. Continuous innovation in
technology and its products would allow
Apple Inc. to continue its momentum.
Action plan
WHAT
WHO
WHEN
Date gathering on
Finance
Finance Department
ASAP
Adjust budget
allocation
Top Mgt and Finance
Dept
ASAP
Explore possible
partners for R&D
Top Mgt and R&D
ASAP
Continuous innovation
R&D
in technology and in
its products
ASAP
Set timelines and
deadlines for
innovations
ASAP
Top mgt
conclusion
Apple Inc. is a leader in global product innovation. Over
the years, the company has introduced one of a kind
technological advancement. However, due to the rapid
changes in technology, some of Apple’s contemporaries
are becoming at par with them. Thus, it is only logical for
Apple Inc. to increase its budget allocation on its
Research and Development. Further innovation and
improvement of their products will not only maintain their
competitive advantage but it will also boost their market
penetration.