Apple Case Analysis
• Issues and Outlook
• SWOT Summary
– External Analysis
– Internal Analysis
• Strategic Recommendations
– Mission
– Goals
– Strategic Action Plan
Issues and Outlook:
1993 and Beyond
• Is Apple successful?
• Past/current strategy?
• What are the main concerns/issues that
confront Apple?
• Where is Apple headed in the future?
Comparative Market Share (%)
by Revenue
30
IBM
Packard-Bell
25
Apple
Compaq
Dell
20
15
10
5
0
1986
1987
1988
1989
1990
1991
Financial Snapshot:
Revenue and Net Income
(in $millions)
$7,000
Revenue
Net Income
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
1987
1988
1989
1990
1991
Apple’s Business Level Strategy
Source of Competitive Advantage
Breadth of
Competitive
Scope
Cost
Uniqueness
Broad
Target
Market
Cost
Leadership
Differentiation
Narrow
Target
Market
Focused
Low Cost
Focused
Differentiation
External Analysis
•
•
•
•
•
Influences from Remote Environment
Influences from Competitive Environment
Promoters of / Barriers to Change
SWOT Summary
Competitor Analysis
Analysis of the General Environment
Demographic
Global
Technological
Economic
Competitive
Environment
Political/
Legal
Sociocultural
Industry Growth
(in $billions)
45
40
35
30
25
Desktops
Portables
Servers
TOTAL
20
15
10
5
0
1982
1986
1990
1994
Analysis of the Competitive Environment
Threat of
Threat of
New
New
Entrants
Entrants
Bargaining
Power of
Suppliers
Rivalry Among
Competing Firms
in Industry
Threat of
Substitute
Products
Bargaining
Power of
Buyers
Microprocessor Volume
Installed Base - Millions of Units
100
75
Intel
Motorola
50
25
0
1988
1989
1990
1991
Strategic Group Map
Pre-Windows
Premium
Sun
Apple
Price
Compaq
IBM
Low
Clones
Broad
Narrow
Strategic Focus - Differentiation
Strategic Group Map
Post-Windows
Premium
Sun
Apple
Price
Compaq
IBM
Low
Clones
Broad
Narrow
Strategic Focus - Differentiation
Internal Analysis
• Resource-based View Analysis of:
– Core Competencies
– Core Weaknesses
• Value Chain Analysis of:
– Value-enhancing Activities
– Value-diminishing Activities
• Promoters of / Barriers to Change
Value Chain Analysis
Firm Infrastructure
Human Resource Management
Technological Development
Primary Activities
Service
Marketing
& Sales
Outbound
Logistics
Operations
Procurement
Inbound
Logistics
Support
Activities
SWOT Summary
•
•
•
•
Strengths
Weaknesses
Opportunities
Threats
Revised Mission/Intent Statement
“Apple ………………………………..”
•
•
•
•
Definition of Industry
Description of Core Values
Description of Basic Strategic Approach
General Identification of Customer Base
Revised Mission
• To position Apple as the world leader in
man-machine interfaces though the
development of ergo- and cerebro-nomic
software and interface devices required for
electronic and electromechanical
applications.
Goals
Financial
•
•
•
Strategic
•
•
•
Goals
•
•
•
•
20% ROS by 1994
40% Share of O/S Market by 1994
Develop 3 New Interface Devices by 1994
Achieve full interoperability with
– Intel and RISC microprocessors by 1993
– Top 4 Software Vendors by 1993
Strategic Action Plan
• Strategic Action #1
– Details about specific value chain activities
– Resources required
– Expected benefits (re: a particular SWOT item)
• Strategic Action #2
– Details about specific value chain activities
– Resources required
– Expected benefits (re: a particular SWOT item)
Milk Mac
• No new manufacturing and R&D
investment in existing hardware products
• Outsource next 3 years’ production to
Malaysia:
– Send VP Mfg. and 3 Engineers on “Sourcing
Mission”
Benefit: Decrease COGS from 53% to 33%
Apple Core
• “Open system” O/S (a.k.a. Pink)
–
–
–
–
not processor specific
head-to-head with Windows
increase installed base
increase ISV applications
• Shift 80% of R&D budget to Core
Benefit: Increase ROS from 5% to 20%
(NOTE: O/S production has COGS average 19%
percent of sales vs. 66% in hardware manufacturing.)
Apple’s Recent Actions
1993
• Cut Mac prices 26%
– down from a 20-40%
premium
• PowerPC with IBM
and Motorola
– PowerMac
– PowerBook laptop
• Overseas expansion;
Japan (2% to 15%)
• Newton (PDA)
1994
• Layoffs and Mfg.
Rationalization
• Pushed Pink
– H-P joined Apple and
IBM
• Sculley resigns;
Spindler is new CEO
1995
• Attack educational and
desktop pub markets
• License Mac O/S (aka
Copeland)
• Record revenues; $69
million net loss
• Fujitsu starts price war
in Japan
1996-98
• Terminated Taligent
and Kaleida
• Jobs and Woz are back
• Accepted $150 million
from MSFT
• Intros iMac
Actual Results: 1991-97
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$0
-$2,000
1991
1992
Revenue
1993
1994
Net Income
1995
R&D
1996
1997
Cost of Sales
Stock Price
Comparative Market Share (%)
by Revenue
25
IBM
Packard-Bell
20
Dell
Apple
Compaq
15
10
5
0
1988
1989
1990
1991
1992
1993
1994
1995
1996
Revenue Comparison (in $millions)
$30,000
Dell
Compaq
Intel
Microsoft
Apple
$25,000
$20,000
$15,000
$10,000
$5,000
$0
1991
1992
1993
1994
1995
1996
1997
Profit Comparison (ROS %)
40
Dell
Compaq
Intel
Microsoft
Apple
30
20
10
0
(10)
(20)
1991
1992
1993
1994
1995
1996
1997