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Group 9 - Business Strategy Apple Case

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on 26 October 2012

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Transcript of Group 9 - Business Strategy Apple Case

Apple's Timeline 1976 1978 1980 1984 1985 1990 1993 1996 1997 Tim Cook
2011 Steve Jobs 1 2 3 4 5 iTunes
Music Store
Users Increased
iPod Sales Free Software Low Price
Per Song Reinvest
R&D Choice Rigid Flexible High
Sales Volume More
Content High Profit Business Model Analysis - Music players Three Generic Strategies - Analysis Competitors MP3 Download sites “virtual MP3 player”
MP3 Downloads Offers free streaming music z Threat of New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers Threat of Substitute Products or Service Tablets(iPad-Mini)
Cellular phones
Fixed line telephones Many options for hardware components Provider
No lock in with Network Providers Existing Competitors
Economies of scale
High Capital Investment
Complex and expensive distribution network
Trust factor
Low switching costs
Low Product Differentiation Industry
Competitors Competitors with good brand value
Good Quality products Founded Apple II IPO Macintosh Sculley Mac Classic Spindler Amelio Illegal downloads Paid FREE iPhone Best Product Differentation Low Cost Total Customer Solutions System Lock-In -"A Think Different" Brand

-"Touch and Feel Experience " through Apple's retail store strategy

-Digital Hub Strategy through
-seamless integration.

-State of art, cutting-edge product

-Customer brand-loyalty Competitive Advantages of Apple’s competitive position in MP3 players Value Proposition: Apple Brand
“Open approach” - Windows and Mac
Design and variety
iPod accessory “ecosystem” Apple’s competitive position in MP3 players Threats to Apple iPod’s competitive position: Smart device industry
Cannibalization Strategic Positioning of Apple iPhone Patent Wars Sustainability Analysis -VRISA Framework iHome gives you unique control over your household electronics and appliances. The user friendly platform wirelessly connects to all equipment and allows you to manage them through your Apple devices. Living has never been easier and more comfortable. Value Proposition Stable
Elegant design
Brand loyalty starts here
Proprietary standards
Easy mouse-driven interface
Effective advertising Advantages of Macintosh IBM’s game changer: open standard, virtuous cycle
Intel’s specialism: rapid innovation
Microsoft’s game changer: huge market growth
Apple’s interface advantage succesfully copied
Jobs forced to leave Problems of Apple II / Macintosh Vertical integration
Complete solution
Elite product
Internally and externally consistent
Not dynamically consistent (niche area in growth market) Sculley’s strategy, 1985 Emulate IBM
Mac Classic
Intel chips
License for OS
Not internally consistent (straddling)
Not externally consistent (no counter to PC) Sculley’s strategy, 1990 Cost cutting
Failed to deliver new OS
IBM deal broke down
FAIL! Spindler’s strategy, 1993 More cost cutting
Return to elite product
15 product lines
No answer to Windows 95 Amelio’s strategy, 1996 Lack of focus
Eroded competitive advantage
Standards opened

Apple needs to do a better Job(s)... Apple's problem > 50% of industry profit with < 4% market share The iPhone Era Renaissance for phone industry

Revolutionized digital data handling

Customer Target Segment -Professional and Hip

State-of art technology - Siri

Star performer Five Forces Analysis- PC Industry 2012 Threat of New Entrants Bargaining Power
of Suppliers Bargaining Power
of Buyers Threat of Substitute
Products or Service 2003 2001 2008 2010 How sustainable is Apple’s competitive position in PCs? Innovation
Perceived as ‘hip’
Both hardware and software control Economies of scale
Capital requirement
Strong brand names
Market maturity
’White boxes’
Selling Highly competitive
‘War' price
Globalization Industry Competitors Knowledgeable PC customers
High price sensitivity
Low switching costs Microprocessor
Operating system
Application availability Hardware component suppliers Smartphones
Tablet computers
Sony play station Medium Medium High High High Low Defining the Apple PCs competitive
advantages: Value chain for Apple PC's External:
Apple tribe
Apple store

Internal: Value chain analysis System lock-in Best product Total customer
solution Proprietary standard Mac Medium High Low Low Strategic positioning of Apple product High PC Manufacturers The Followers The Followers : The Phenomena Five Forces Analysis- Smartphone Industry 2012

Expansion through affordable products

Target international markets

Potential Threat from other Tablets

Fierce competition

Product Distinction i-Pad THE NEXT BIG THING Future Outlook Threats Group 9
Anta | Djordje | Gintare
Neha | Pieter Business Strategy. IMBA 2013 Steve Jobs solved the fundamental problem of Apple... Firm infrastructure: culture, horizontal hierarchy Human resource management: training to ‘think’ like Steve Jobs Technology development: high investment into R&D, in-house design Procurement: small number of suppliers, strong relationship (long term contracts) Inbound logistics: Microprocessors and other hardware components Operations: OS, Focus, Quality testing, Outsourced to China and Taiwan Outbound logistics: Distribution system Marketing and Sale Branding,
Apple stores,
Online stores,
Small retailers Service: Small number of suppliers, strong relationship (long term contracts) ... but the solution is not permanent
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