Description
Case analysis
Key points
Strength
Opportunities
weakness
(Please consider the highlighted part as mentioned above) Key points & Summary:
Apple Computer was founded by Steve Jobs and Steve Wozniak, their mission was to bring an easy-to-use computer. Their first computer was the Apple II, which was a simple computer that consumers could use straight out of the box. The company’s main competitive advantages are marketing, innovative hardware design, technical elegance and research and development. Market Trend & competitors: The PC industry is an industry that is always evolving and reinventing them in order to achieve more market share. In the past 20 years the PC industry has changed a great deal, even though Apple pioneered the first usable personal computer, IBM was the company that brought PCs into the mainstream. In the 1980s, most PC buyers were business managers who were inexperienced first-time buyers. By the 1990s consumers became more knowledgeable and a variety of alternative channels emerged The competitive environment in the PC industry is determined by which company holds the most market share. In the case of Apple, their competitors are all Intel PC manufacturers, therefore Apple offers the alternative to customers who do not want to buy a Intel• based computer. The top three pc vendors were Dell, Hewlett-Packard and Lenovo, all of which accounted for 40% of all PC shipments. Dell centers their business model on directsales and built-to-order manufacturing. This model helped Dell to reduce costs and maintain high margins while undercutting prices. Since Apple competitors all function under the same operating system platforms, their main advantage over Apple are their pricing strategies which help them to offer more competitive prices. Apple has to compete more intensely because they are the alternative product; this means they have to attract customers by promoting the benefits that their products offer as opposed to their competitors. Marketing has to be an integral part of Apple competitive advantage because the company always positions their products as high quality premium products which are worth the extra money because they will deliver the value. An intense competitive environment is usually created when certain products have the same or similar value. Apple competitors are not dominant in the PC industry because product differentiation among Intel manufacturers is not strong enough to create a dominant product. Every few years there is a new leader in the pc market, first it was IBM which was succeeded by Dell and now Hewlett-Packard which is the largest PC manufacturer is
considered to be the leader in the PC industry. In this industry the competition is aggressive among all manufacturers because all want to increase their market share and with the changing technology it is important for manufacturers to develop new features that will attract customers to buy their products. One of the reasons many customers are attracted to Apple is because of their innovative designs, this is attributed to the fact that while most manufacturers cut spending by reducing R&D Apple is committed to their R&D. Channels of distribution also give a company a competitive advantage; Apple has practice horizontal and vertical integration to a greater extent that any other PC company, with the exception of IBM. Apple designs, build and sell their own products. Their retail stores and online store account for a majority of the company revenue, the ability to have different channels of distribution gives the company a competitive advantage. Until 2006, Apple always had placed itself against the Intel PCs, this is when CEO Steve Jobs made the decision to include Intel chips in all of Apple products; this is what he called the second major transition in Apple history. His decision to switch to Intel chips was based on the fact that the PowerPC chip line had failed to match Intel performance, in low-power applications. The PowerPC blocked advances in laptop performance, since laptops accounted for 43% of Apple revenue Jobs decided it was time for a switch. The shift to Intel chips presented another challenge because independent software vendors (ISVs) would need to rewrite all of their applications to run efficiently on the new computers. Apple produced an Intel-compatible version of their operation system OS X, along with compatible versions of proprietary software titles. The third transition of Apple is considered to be the launch of the iPod along with iTunes Music Store. The iPod claimed 75% of its market in 2005 after 4 years of its launch. Apple is going to continue evolving in the PC industry and setting standards for other PC makers, they have been able to achieve this through their commitment of R&D. This company makes their own PCs with their own hardware and operating system, it also makes devices that work with their product and it runs an online music service which provides contents needed to run those devices. Apple is a pioneer in their industry, a company that has seen their ups and downs and has been able to evolve over the years and even though they don’t hold a commanding share of the market they have a commanding presence and many companies are always looking out to see what is going to be their next innovation. This company will have the biggest impact on the PC industry if it continues to provide high quality-premium products and continues to reinvent
? Clear and insightful mission statements empower start-up companies to achieve impossible:
Apple Computer was a classic example of a company which truly believed, understood and acted on their mission statement. Mission statements are essential for any successful businesses, because they provide reference points for owners to make decisions, and they also provide guidelines for employees to define what are productive and non productive behaviors. Therefore, clear and insightful mission statements help entrepreneurs to manage their limited resources more effectively and efficiently. On the other hand, if mission statements were misinterpreted, it would cause much devastation in companies. The Apple’s mission statement is “to bring an easy-to-use computer to every man, woman and child”. This played a crucial role in the history of the company. It helped Apple achieve early success between 1976 and 1980. Until a powerful alliance appeared in 1981, IBM, Microsoft and Intel worked together and invented open operating system computers. It allowed thousands of programmers to write applications for the PCs. This added enormous value for end users. Most importantly, the PCs’ users could exchange files with other users regardless of brands, excepted Apple’s computers. It changed Apple’s strategic position from offering easy-to-use computers to offering state-the-art expensive non user friendly machines. It drove the company into crisis for almost 17 years. Why that long? During the crisis period, a number of CEOs (including Steve Jobs) tried many different approaches to turn the company around. However they all seemed to overlook on one very important problem. Apple was no long be true to their mission statement anymore. Losing the identity of its own caused the company to lose 1.6 billion in 1997. In 1997, the co-founder who wrote the mission statement, Steve Jobs came back to rescue Apple from the crisis. This time he successfully reallocated all the resources and effort to deliver their mission statement. He reinterpreted and broke down the mission statement into piece and made sure the company could deliver what it said. The first part of the statement was “to bring their products to their customers”. Steve Jobs launched an online store and Apple retail chain stores around the world. It allowed Apple to control and manage their sales, catering to multiple customer groups directly.
The second part was “easy-to-use computer”, he reinterpreted computers as digital devices in the new era of the PC industry. This created a lot of space for Apple to step into many industries and inspired them to invent innovative products. The last part of the mission statement was “every man, woman and child will use their products”, he realized that people chased after technology era was long gone. In the new era, PC companies had to create technology which was suitable to people. Therefore, he made sure every product (hardware and software) does eventually solve end users’ problems and improve their life experienc es. In other words, he focused on delivering value propositions to customers, and avoided developing state-of-the-art technology which had little use for end-users like the old Apple did.
? Avoiding direct competitions and reframing playing fields are the secrets for success
In 2000, as most the PC makers focused on cost cutting and offering completive prices , Apple refused to engage in the intense price war within industry. They continued charging premium prices for their products, and their revenue and growth outpaced/ surpassed the industry average. The secret was that Steve Jobs reframed the industry from a traditional PC’s manufacturing paradigm to one off digital entertainment. This allowed Apple to step outside the competition zone and attack from the fringe. ?Apple makes its own hardware (iBooks and iMacs), it makes the operating system… It also makes the consumer-electronics devices that connect all those things (the rapidly multiplying iPod family), and it runs the online service that furnishes content to those devices (the iTunes Music Store). If you join together Microsoft, Dell and Sony into one big company, you would have something somewhat the diversity of the Apple technological biosphere… Apple is essentially operating its within own closed miniature techno-economy.” ? INDUSTRY ANALYSIS: External analysis using porter’s five forces model The industry has a fast growth. Everyday new and innovative products flood the markets. From mobile phones to laptops there is a new product advertised almost every week. The major players of the industry are Dell, HP, Apple, Acer
and Lenovo. There is a high entry barrier due to the standardization of the PC components. If any new players wish to come into this business, they need to have a differentiated strategy form the existing companies. Also, a high learning curve exists which means the customers take time to get accustomed with the new product. The existing brand names make the entry barriers high. ? Bargaining power of suppliers: Suppliers for this industry are powerful. There are only a handful of companies like Intel and Microsoft which manufactures microprocessor and operating systems (OS). These suppliers are hard to switch due to dominant production of such components. There is always a threat of forward integration by the suppliers since the products manufactured by these suppliers are highly sophisticated.
SWOT Analysis:
Strengths: (i) The designs are uniquely created to capture the customers’ eyes. (ii) Apple Computer is one of the oldest hardware manufacturers that control over the product by manufacturing both computers and their operation system. It is known that Apple has a high quality product which makes Apple different than its competitors. (iii) Apple knows how to diversify, from computers to ipods, and slimmer notebooks. They never fail to catch up with the latest technology and creating different images that attracts new consumers and keeps their existing consumers coming back for more. (iv) Products are designed ergonomically and stylishly, for example, the Ipod Nano, its slim design fit easily the consumer's pockets and it is also light weight enough to be carried around. (v)Apple comes out with many different products to suit to the everyday demands of people for example the itouch or ipone. An iphone enables consumers to enjoy music, watch videos, surf the web and make phone calls, all these can be done by just a device. (vi) Aggressive campaigns and commercials are advertised through media with interesting and intriguing visuals. (vii) Apple had constantly been creating new easy-to-use products since decades ago. (viii) The website provides the customers with guided tours of every product that they offer. (ix) Its stock price is the highest in the personal computer industry. Apple is financed mostly by its equity. In fact Apple does not have any debt, so investors would bear less risk by holding Apple’s stocks. The company is loaded with extra cash that is ready to acquire any firm that could help enhance the value of the company. The key learning from apple is that companies who fight against direct competitions have a good chance to lose it all. Mostly because of their often predictable actions . However, when companies can change the rules of the competition, everything will become unpredictable. Thus, the chance of winning increases drastically.
doc_178285584.docx
Case analysis
Key points
Strength
Opportunities
weakness
(Please consider the highlighted part as mentioned above) Key points & Summary:
Apple Computer was founded by Steve Jobs and Steve Wozniak, their mission was to bring an easy-to-use computer. Their first computer was the Apple II, which was a simple computer that consumers could use straight out of the box. The company’s main competitive advantages are marketing, innovative hardware design, technical elegance and research and development. Market Trend & competitors: The PC industry is an industry that is always evolving and reinventing them in order to achieve more market share. In the past 20 years the PC industry has changed a great deal, even though Apple pioneered the first usable personal computer, IBM was the company that brought PCs into the mainstream. In the 1980s, most PC buyers were business managers who were inexperienced first-time buyers. By the 1990s consumers became more knowledgeable and a variety of alternative channels emerged The competitive environment in the PC industry is determined by which company holds the most market share. In the case of Apple, their competitors are all Intel PC manufacturers, therefore Apple offers the alternative to customers who do not want to buy a Intel• based computer. The top three pc vendors were Dell, Hewlett-Packard and Lenovo, all of which accounted for 40% of all PC shipments. Dell centers their business model on directsales and built-to-order manufacturing. This model helped Dell to reduce costs and maintain high margins while undercutting prices. Since Apple competitors all function under the same operating system platforms, their main advantage over Apple are their pricing strategies which help them to offer more competitive prices. Apple has to compete more intensely because they are the alternative product; this means they have to attract customers by promoting the benefits that their products offer as opposed to their competitors. Marketing has to be an integral part of Apple competitive advantage because the company always positions their products as high quality premium products which are worth the extra money because they will deliver the value. An intense competitive environment is usually created when certain products have the same or similar value. Apple competitors are not dominant in the PC industry because product differentiation among Intel manufacturers is not strong enough to create a dominant product. Every few years there is a new leader in the pc market, first it was IBM which was succeeded by Dell and now Hewlett-Packard which is the largest PC manufacturer is
considered to be the leader in the PC industry. In this industry the competition is aggressive among all manufacturers because all want to increase their market share and with the changing technology it is important for manufacturers to develop new features that will attract customers to buy their products. One of the reasons many customers are attracted to Apple is because of their innovative designs, this is attributed to the fact that while most manufacturers cut spending by reducing R&D Apple is committed to their R&D. Channels of distribution also give a company a competitive advantage; Apple has practice horizontal and vertical integration to a greater extent that any other PC company, with the exception of IBM. Apple designs, build and sell their own products. Their retail stores and online store account for a majority of the company revenue, the ability to have different channels of distribution gives the company a competitive advantage. Until 2006, Apple always had placed itself against the Intel PCs, this is when CEO Steve Jobs made the decision to include Intel chips in all of Apple products; this is what he called the second major transition in Apple history. His decision to switch to Intel chips was based on the fact that the PowerPC chip line had failed to match Intel performance, in low-power applications. The PowerPC blocked advances in laptop performance, since laptops accounted for 43% of Apple revenue Jobs decided it was time for a switch. The shift to Intel chips presented another challenge because independent software vendors (ISVs) would need to rewrite all of their applications to run efficiently on the new computers. Apple produced an Intel-compatible version of their operation system OS X, along with compatible versions of proprietary software titles. The third transition of Apple is considered to be the launch of the iPod along with iTunes Music Store. The iPod claimed 75% of its market in 2005 after 4 years of its launch. Apple is going to continue evolving in the PC industry and setting standards for other PC makers, they have been able to achieve this through their commitment of R&D. This company makes their own PCs with their own hardware and operating system, it also makes devices that work with their product and it runs an online music service which provides contents needed to run those devices. Apple is a pioneer in their industry, a company that has seen their ups and downs and has been able to evolve over the years and even though they don’t hold a commanding share of the market they have a commanding presence and many companies are always looking out to see what is going to be their next innovation. This company will have the biggest impact on the PC industry if it continues to provide high quality-premium products and continues to reinvent
? Clear and insightful mission statements empower start-up companies to achieve impossible:
Apple Computer was a classic example of a company which truly believed, understood and acted on their mission statement. Mission statements are essential for any successful businesses, because they provide reference points for owners to make decisions, and they also provide guidelines for employees to define what are productive and non productive behaviors. Therefore, clear and insightful mission statements help entrepreneurs to manage their limited resources more effectively and efficiently. On the other hand, if mission statements were misinterpreted, it would cause much devastation in companies. The Apple’s mission statement is “to bring an easy-to-use computer to every man, woman and child”. This played a crucial role in the history of the company. It helped Apple achieve early success between 1976 and 1980. Until a powerful alliance appeared in 1981, IBM, Microsoft and Intel worked together and invented open operating system computers. It allowed thousands of programmers to write applications for the PCs. This added enormous value for end users. Most importantly, the PCs’ users could exchange files with other users regardless of brands, excepted Apple’s computers. It changed Apple’s strategic position from offering easy-to-use computers to offering state-the-art expensive non user friendly machines. It drove the company into crisis for almost 17 years. Why that long? During the crisis period, a number of CEOs (including Steve Jobs) tried many different approaches to turn the company around. However they all seemed to overlook on one very important problem. Apple was no long be true to their mission statement anymore. Losing the identity of its own caused the company to lose 1.6 billion in 1997. In 1997, the co-founder who wrote the mission statement, Steve Jobs came back to rescue Apple from the crisis. This time he successfully reallocated all the resources and effort to deliver their mission statement. He reinterpreted and broke down the mission statement into piece and made sure the company could deliver what it said. The first part of the statement was “to bring their products to their customers”. Steve Jobs launched an online store and Apple retail chain stores around the world. It allowed Apple to control and manage their sales, catering to multiple customer groups directly.
The second part was “easy-to-use computer”, he reinterpreted computers as digital devices in the new era of the PC industry. This created a lot of space for Apple to step into many industries and inspired them to invent innovative products. The last part of the mission statement was “every man, woman and child will use their products”, he realized that people chased after technology era was long gone. In the new era, PC companies had to create technology which was suitable to people. Therefore, he made sure every product (hardware and software) does eventually solve end users’ problems and improve their life experienc es. In other words, he focused on delivering value propositions to customers, and avoided developing state-of-the-art technology which had little use for end-users like the old Apple did.
? Avoiding direct competitions and reframing playing fields are the secrets for success
In 2000, as most the PC makers focused on cost cutting and offering completive prices , Apple refused to engage in the intense price war within industry. They continued charging premium prices for their products, and their revenue and growth outpaced/ surpassed the industry average. The secret was that Steve Jobs reframed the industry from a traditional PC’s manufacturing paradigm to one off digital entertainment. This allowed Apple to step outside the competition zone and attack from the fringe. ?Apple makes its own hardware (iBooks and iMacs), it makes the operating system… It also makes the consumer-electronics devices that connect all those things (the rapidly multiplying iPod family), and it runs the online service that furnishes content to those devices (the iTunes Music Store). If you join together Microsoft, Dell and Sony into one big company, you would have something somewhat the diversity of the Apple technological biosphere… Apple is essentially operating its within own closed miniature techno-economy.” ? INDUSTRY ANALYSIS: External analysis using porter’s five forces model The industry has a fast growth. Everyday new and innovative products flood the markets. From mobile phones to laptops there is a new product advertised almost every week. The major players of the industry are Dell, HP, Apple, Acer
and Lenovo. There is a high entry barrier due to the standardization of the PC components. If any new players wish to come into this business, they need to have a differentiated strategy form the existing companies. Also, a high learning curve exists which means the customers take time to get accustomed with the new product. The existing brand names make the entry barriers high. ? Bargaining power of suppliers: Suppliers for this industry are powerful. There are only a handful of companies like Intel and Microsoft which manufactures microprocessor and operating systems (OS). These suppliers are hard to switch due to dominant production of such components. There is always a threat of forward integration by the suppliers since the products manufactured by these suppliers are highly sophisticated.
SWOT Analysis:
Strengths: (i) The designs are uniquely created to capture the customers’ eyes. (ii) Apple Computer is one of the oldest hardware manufacturers that control over the product by manufacturing both computers and their operation system. It is known that Apple has a high quality product which makes Apple different than its competitors. (iii) Apple knows how to diversify, from computers to ipods, and slimmer notebooks. They never fail to catch up with the latest technology and creating different images that attracts new consumers and keeps their existing consumers coming back for more. (iv) Products are designed ergonomically and stylishly, for example, the Ipod Nano, its slim design fit easily the consumer's pockets and it is also light weight enough to be carried around. (v)Apple comes out with many different products to suit to the everyday demands of people for example the itouch or ipone. An iphone enables consumers to enjoy music, watch videos, surf the web and make phone calls, all these can be done by just a device. (vi) Aggressive campaigns and commercials are advertised through media with interesting and intriguing visuals. (vii) Apple had constantly been creating new easy-to-use products since decades ago. (viii) The website provides the customers with guided tours of every product that they offer. (ix) Its stock price is the highest in the personal computer industry. Apple is financed mostly by its equity. In fact Apple does not have any debt, so investors would bear less risk by holding Apple’s stocks. The company is loaded with extra cash that is ready to acquire any firm that could help enhance the value of the company. The key learning from apple is that companies who fight against direct competitions have a good chance to lose it all. Mostly because of their often predictable actions . However, when companies can change the rules of the competition, everything will become unpredictable. Thus, the chance of winning increases drastically.
doc_178285584.docx