Apple Inc.

Core Competencies & Competition Strategies

Abdullah Adlouni Hee Myoung Park Amanda Pereira Sujin Rye Jeffrey Trinh

Apples History
1976: Founded by Steve Jobs and Steve Wozmiak 1977: Incorporated as Apple Computer, Inc. 1980: Became public and PC industry leader 1984: Introduced Macintosh

1985: Jobs resigned and founded NeXT

1997: CEO, Gilbert Amelio, bought out NeXT and Jobs returned

2001: Opened first retail stores and released the iPod

Apples History
2003: Introduced iTunes Store 2006: Began producing Intel-based computers and market cap surpassed Dell 2007: Renamed as Apple Inc. and introduced the iPhone 2010: Released the iPad 2011: Introduced the iTouch, Jobs died, and Tim Cook became CEO 2013: Released iTunes Radio

Apple Today

Thirty years ago, Apple introduced the Macintosh with the promise to put the creative power of technology in everyones hands. It launched a generation of innovators who continue to change the world. This 30-year timeline celebrates some of those pioneers and the profound impact theyve made.

Apple Today
CEO: Tim Cook

No. of Full-time Employees: 80,300

Market Cap: $485.23 billion Direct Competitors: Samsung, Google, HP

Overview: SWOT Analysis

STRENGTHS
Customer loyalty Expanding closed operating system Brand reputation/recognition Retail stores Strong marketing and advertising teams

WEAKNESSES
Relatively high price Incompatibility with different OS patent infringement

OPPORTUNITIES
Growth of tablet and smartphone markets iTV launch The new provider of application processors Create a budget smartphone for a younger age and the developing market. THREATS Rapid technological change Price pressure from Samsung over key components change in management The growth of windows and andriod OS

Strengths
Dominance of Apple & Samsung Global handset industry share (%)
100% 50% 0%

Customer loyalty combined with expanding closed operating system

apps, software and products that are interlinked and support each other

Brand reputation/recognition Retail stores

Apple Samsung All other

RATIO OF PROFITS TO MARKET SHARE 3.12% Apple (2013 Q1 market share was 18% with 57% profit share = 0.57/0.18) 1.30% Samsung 0.41% All other

Strong marketing and advertising teams - Emotional branding

Weaknesses
Relatively high price compared to its competitors devices
Incompatibility with different OS Boot Camp (software) iOS jailbreaking Patent infringements

Opportunities

Growth of tablet and smartphone markets iTV launch The new provider of application processors
Samsung: the only provider

Create a budget smartphone(iPhone 5C) for the developing market and younger age

Threats
Rapid technological change Price pressure from Samsung over key components Change in management Android OS, Windows phone growth

Overview: Porters 5 Forces

Threat of New Entrants

Global R&D spending rankings, 2013

Threat of Substitutes

Bargaining Power of Suppliers

Bargaining Power of Buyers

Rivalry Among Existing Firms

2013 Market Shares

Financial Ratio Analysis

What are we analyzing?
Apples tangible financial resource Cash Ability to invest internally and retain human capital Revenue & Operating Income

Growth over time Assets

Cash
Cash (in 000s)

16 14 12 10 8 6 4 2 0 Cash 2011 2012 2013 2011 2012 2013

Revenue & Net Income

Revenue & Net Income
180,000,000 160,000,000 140,000,000 120,000,000 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 0 Revenue (in 000's) Net Income (in 000's) 2011 2012 2013

2013 2012

2011

Asset Growth
Total Assets

250000000 200000000 150000000 100000000 50000000 2011 0 Assets 2011 2012 2013 2012 2013

Value-Chain Analysis
Definition: A strategic analysis of an organization that uses value creating activities
Used to determine a firms competitive position creating value that exceeds the cost of production Value is the amount that buyers are willing to pay for what a firm provides them and is measured by total revenue

Value-Chain Analysis

Apples Strategy
Apples company strategy is to leverage its unique ability to design and develop its own operations system, hardware, application software, and services to provide its customers new products and solutions with superior ease-of-use, seamless integration and innovative industrial design.

General Administration
Strong Core Values
Strong executive team
Tim Cook, CEO Angela Ahrendt, SVP of Retail and Online Stores

Technology Development
Apple continues to be a leader in innovation and brand management Heavy investment into R&D Ability to retain resourceful human capital

Procurement

Marketing & Sales

Utilizes big data analysis to appeal to consumers Possesses exclusive distribution channels through highend retail fronts Maintains partnerships with large brands to promote brand awareness

Discussion Questions
1. What part of the value chain is most important to Apple? And what can they do to improve on it? 2. What can Apple do to strengthen customer loyalty? 3. Is Apple really innovative relative to its competitors?

Recommendations
We would recommend that Apple focus on: Research and Development In Store Retail Experience Expand Market Presence