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(1997)
Introduction
Apple Inc. (Apple), incorporated on January 3, 1977. Manufacturing and marketing mobile communication and media devices, personal computers. During 1997 Apple experienced declines in net sales, units shipped, and share of the personal computer market.
Cont.
Net sales for 1997 were $7.081 billion compared to $9.833 billion only the year before which was 28% decrease in net sales. Market share dropped to 4%, the smallest market share in Apple's history. Steven job hold the title of acting CEO at that time.
SWOT Analysis
Strengths Jobs return Maintain loyal customer base Strategic alliances R&D / Innovation Name recognition Strong cash position Weaknesses Financial losses Market share losses
Threats
IFE Matrix
Internal Strategic Factors Weight Rating Weighted Score
Strengths:
Jobs return Maintain loyal customer base Strategic alliances R&D / Innovation Name recognition Strong cash position 0.10 0.05 0.10 0.05 0.10 4 3 3 4 4 0.40 0.15 0.3 0.2 0.4
0.15
0.45
Weaknesses:
Financial losses
0.25 0.20
1 1
0.25 0.20
TOTAL SCORES
1.00
2.35
Interpretation (IFE)
The IFE total weighted score is 2.35 as per (Annexure: A) which is less than the average score of 2.5, indicate that the company has weak internal position, which mean that the company is unable to properly utilize their strengths and they are unable to minimize their weaknesses.
EFE Matrix
External Strategic Factors Opportunities
On-line selling is the new marketing tool High demand for PC Public acceptances Affordable New markets 0.20 0.10 0.20 0.10 0.10 4 3 3 1 2 0.8 0.3 0.6 0.1 0.2
Weight
Rating
Weighted Score
Threats
Competitors Home market flat
TOTAL SCORES 1.00
2.80
Interpretation (EFE)
The EFE total weighted score is 2.80 which is above the average score of 2.5, indicate that the company is responding in a good way to existing opportunities and threats in its industry. In other words, the firms strategies take advantage of existing opportunities and minimize the potential adverse effects of external threats.
Interpretation(CPM)
From the result of the CPM we found that the score of the Apple company is 2.25 as compared to its major competitor Microsoft which has rate score on CPM table is 3.55 which interpret that the apple company in 1997 was very weak as compared to the Microsoft.
Problems
Minor Problems
Uncertainty of the strength of reseller and distributor loyalty due to decreased demand and sales of Macintoshes. Problems with the cloners that lead to a cannibalization of Apple's own sales. Constant turnover of the top management.
Major Problem
The major problem which was faced by the apple company in 1997 is the decline in the sales with a loss of $161million and the decrease in the share value from 11% to 4% in the market due to the launch of new product Macintoshes.
Alternative Strategies
TOWS Analysis
Strengths S
S1:Steven Jobs return S2:Maintain loyal customer base S3:Strategic alliances S4:R&D / Innovation S5:Name recognition S6:Strong cash position
Weaknesses W
W1:Financial losses(1997 &1996 $1.8 billion) W2:Market share losses
Opportunities O
O1:On-line selling is the new marketing tool O2:High demand for PC Public acceptances O3:Affordable O4:New markets S6O5 W1O5 W2O2
Threats T
T1:Competitors
TOWS Analysis
S6T1: By utilizing strong cash position due to the infusion of the Microsoft can
Cont...
S6O5:The strength strong cash position which come from the Microsoft
who purchase the minority shears of the apple company can be easily
utilize to take advantage from the new market available.(Market development)
W2T2: One of the weaknesses of the apple company market shear losses due to its one of the product for which the home market is flat. If the
company sells that product line for which the product line is flat and
concentrate on the core product in which they made profits. (Retrenchment)
SPACE Matrix
Financial position(FP)
Cash flow: 2
Industrial position(IP)
Growth potential: 2
1
3
Profit potential:
Financial stability :
2
5
Competitive position(CP)
Stability position(SP)
-3
-2 -6
Market shares:
Product quality: Control over distributer :
Barriers to entry:
Competitive pressure: Technological changes:
-2
-3 -3
SPACE Matrix
Conservative FS
+6 +5 +4 +3 +2
Aggressive
+1
CA
-6 -5 -4 -3 -2 -1 -1 -2 -3 -4 +1 +2 +3 +4 +5 +6
IS
Defensive
-5 -6
Competitive ES
Interpretation(SPACE)
The result of SPACE matrix shows that the company directional vector is located in the defensive (3rd) quadrant, so the company is in average position in the industry which interpret that the apple strengths are less effective on the opportunities available in the market, Overcome internal weaknesses, and avoid external threats. Therefore market penetration and the retrenchment strategy are specific to the apple in this condition.
BCG Matrix
Relative Market Share Position High 1.0 Medium .50 Low 0.0
High +20
Industry Sales Growth Rate
Stars II
Question Marks I
Medium 0
Dogs IV
Interpretation(BCG)
As per the point of Apple company on the Boston Consulting Group (BCG) Matrix is in the cash cow because the industry sales growth rate is medium and the relative market share position is also medium
IE Matrix
IFE Weighted Scores
4.0 4.0 3.0 2.0 1.0
II
III
VI
VIII
IX
1.0
The IFE score is 2.35 and EFE score is 2.8 so the apple company laid down in region V which can be described as Hold and maintain stage. Market penetration strategies are the appropriate strategies for this division.
Quadrant II Market development Market penetration Product development Horizontal integration Divestiture Liquidation Quadrant III Retrenchment Concentric diversification Horizontal diversification Conglomerate diversification Liquidation
1. 2. 3. 4. 5. 6. 7.
Quadrant I Market development Market penetration Product development Forward integration Backward integration Horizontal integration Concentric diversification Quadrant IV Concentric diversification Horizontal diversification Conglomerate diversification Joint ventures
1. 2. 3. 4.
Competitive
0.30
1.00
0.6
0.6
Key Internal Factors Management Marketing 0.20 0.20 2 3 0.4 0.6 3 2 0.6 0.4
Finance/Accounting
Production/Operations Research and Development Computer Information Systems Total:
0.10
0.20 0.10 0.20 1.00
2
3 2 2
0.2
0.6 0.2 0.4 4.5
4
3 3 3
0.4
0.6 0.3 0.6 5.5
Conclusion
The result shows that, Market penetration valued 4.5 and retrenchment valued as 5.5. After going through all these matrixes I found that retrenchment and market penetration are the most useful strategies for Apple Company, and by applying QSPM on these two strategies, I found that retrenchment is valued more as compare to market penetration. Apple Company should adopt retrenchment strategy because of the decrease in sales in which losses are recorded about 28% and the market shears loss its value from 11% to 4% so for this Apple Company has to sell off the some of its product line that is Macintosh.