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Apple

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by

Sara Newman

on 10 December 2013

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Transcript of Apple

Key Issues
How to sustain current success:
What would happen now that Steve Jobs is gone?
Historical Overview

1976
1978
1980
1981
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1985
Historical Overview
Historical Overview
Questions?
1990
1993
1995
1996
1997
1998
2001
2010
2007
2011
2008
Recent Product Performance
(Net Sales in Millions)
Recent Industry Events
Recent Industry Events
Market Share for PC Manufacturers
Would Apple remain dominant in the mobile device market?
Key Issues
Apple's Value Chain
Firm Infrastructure
HR Management
Technology Development
Procurement
"Entire Ecosystem of Suppliers" who support business operations
"To obtain stellar products and services within tight time frames, at a cost that represents the best possible value to our customers and shareholders"
Apple's Goal
High Internal Standard of Quality
Aggressive Legal Position
ARM microprocessor designers bought to gain greater control of mobile devices
Invested in memory producers to secure output at the best prices
"I will spend every penny of Apple's $40 billion in the bank, to right the wrong. I'm going to destroy Android, because it's a stolen product..."
Lawsuits for smartphone design and intellectual property rights
"If something sucks, I tell people to their face"
Emphasis on industrial design, simplicity and elegance
Culture of Secrecy
"Closed Door Policy"
Dummy positions for new hires
Key cards required for access
Breaking confidentiality resulted in termination
Management
Steve Jobs
Tim Cook
Brought company back from the verge of bankruptcy
1997
-$1 billion loss
1998 $309 million profit
Streamlined supply chain in 1998
Responsible for Apple's volume growth
New CEO
Trust
Jonathan Ives
Steve Wozniak
Lead designer behind iMac, iPod, iPhone, and iPad
Given full control over the design process
Key influence in Apple even after employment ended
Founded Apple
Employees
Employed over 75,000 people worldwide
"Rewarding, but often difficult"
Secrecy increased bond between employees
"The general idea is this: You are part of something much bigger than you. The ideas you talk about in the hall, the neat tricks you figured out in CSS, the new unibody machining technique, that's part of your job, something you are paid to do for Apple's success, not something you need to blog about to satisfy your ego. Don't f--- it up for everyone."
R & D Spending
(% of sales)
High focus on innovation put Apple ahead of competitors
Learning Curve:
2012: competitors working on first tablet model while Apple on third generation
Inbound Logistics
Multiple Sources for Components
Utilize OEM (Original Equipment Manufacturers) for component acquisition and production
https://batchgeo.com/map/92ad350a9800f91f03b3862c64f3593f
Operations
Outbound Logistics
Content Marketing
Direct and Indirect Distribution Channel
Utilize OEM's economies of scale
Delegate production management to concentrate on other activities
Retail Stores - Apple Stores
Online Stores
Third Party Cellphone Network Carriers
Wholesalers
Value Added Resellers
Specifically Design Packaging
Reduces materials and waste
Reduces emissions during transportation
Marketing & Sales
Apple "Special Events"
Apple Store
Get consumers to not just see but directly use and experience Apple software and products
Service
Genius Bar
Frequent Software Updates
Although increasing, Apples market share still lower than competitors
Digital Media proving to be increasing success for Apple
iPhone cannibalized iPod sales
Competitive Forces
Supplier Power
Uses Vertical Integration
Don't rely on third-party suppliers
Apple buys large quantities of components
Purchases flash chips from Samsung at below market rates
Cultivates long term relationships with suppliers
Low Moderate
Buyer Power
Low Moderate
High Brand Loyalty
Allows for premium price strategy
"Digital Hub"
Creates unique product offering
Threat of Entry
Low
High Barriers to Entry
Low access to distribution channels
"Digital Hub" provides differentiation
Economies of scale present
Supplier relationships give Apple absolute cost advantage
High capital requirements
Retaliation a threat - design & intellectual property lawsuits
Threat of Substitutes
Low Moderate
Brand Loyalty High
Premium price strategy proves consumers are not price sensitive
New Product Introduction Frequent
Lowers price of existing generation products
Apple practices self-cannibalization
iPhone : iPod
iPad : Traditional PC
Temporary advantage of lead time
Complements
Part of Apple's Strategy
Success of iMac due to compatibility with peripherals for the first time
iPod sales driven by iTunes
iPhone and iPad dependent upon App Store
78,000 vs. 304,000 units
Industry Rivalry
High
High Concentration
Economies of Scale Present
Product Differentiation Moderate
Demand is Cyclical
A small number of powerful companies dominate
Consumers recognize differences associated with brand
New generations create new demand
"Digital Hub" creates complements within product line
LOW
Threat of Entry
Overall
Low-moderate
UNATTRACTIVE
Industry Rivalry
Supplier Power
Buyer Power
Substitutes
LOW
MODERATE
LOW
MODERATE
LOW
MODERATE
HIGH
Mission/Objectives
1978
"Bring an easy to use computer to market"
2012
Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices.
Strategy
Premium Price & Differentiation
Design, branding and user experience
Target market not price sensitive
Intellectual property rights hinders imitation
Retail Strategy
Apple stores
Capitalize on product compliments
Digital Hub Strategy
2001
Began with Macintosh
Recognized digital lifestyle of consumers
Macs were "hub" to integrate, control and add value to devices
2011
Focused on "home consumers"
Introduction of iCloud
Offered seamless synchronization across multiple Apple devices
Macintosh with "Intel Inside" ran Windows applications
2006
Valuable?
Brand Strength
Product Design
New Product Development
Strategic Management
Financial Strength
Rare?
Difficult to
Imitate?
Non-
Substitutable?
Competitive
Advantage?
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Digital Hub
Hardware and Software
X
X
X
VRIN Analysis
X
X
Major Strategic Issues
Losing Lead Time with iPad
Need to address production of content vs. consuming content
Maintain Differentiation with Digital Hub
Samsung and HTC have deals with Dropbox
Apple Bookstore
Accused of price fixing
Changing Legal Stance - Intellectual Property

Cook takes more flexible approach but aware of consequences
"very important that Apple not become the developer for the world"
Strategic Scope
Broad Product Scope
Manufacturing
X
X
X
X
X
Alternatives
iPad
iCloud
Bookstore
Intellectual
Property
Release new generation with style changes
Modify CPU to enhance ability of iPad
Settle outside court
Proceed with litigation
Continue strong protection
Risk imitation from competitors
Increase storage limit to compete with Dropbox
Market exclusivity with all Apple products
or
or
or
or
Recommendations
iPad
iCloud
Bookstore
Intellectual
Property
Release new generation with style changes
Modify CPU to enhance ability of iPad
Settle outside court
Proceed with litigation
Continue strong protection
Risk imitation from competitors
Increase storage limit to compete with Dropbox
Market exclusivity with all Apple products
or
or
or
or
Epilogue
Released "iPad Air" and "iPad Mini"
Additional features mostly cosmetic
Released iPhone 5
Sold 2 million units within the first 24 hours of pre-ordering
Requires consumers to repurchase certain compliments
iCloud remains with free-storage limit
MobileMe users had extension of 20 free GB - ended fall 2013
Epilogue
Price Fixing Guilt
Incriminating emails between Steve Jobs and James Murdoch
Another trial to assess amount of damages to be paid
Intellectual Property Wars
Samsung admitted guilt in Apple patent infringement case
Considering purchase of Intellectual Property from Blackberry
Epilogue
Expansion into the East
Tim Cook announced China is expected to become largest market
iPhone 5c best seller in Japan
iPhone sales in India up 400%
Continued Innovation
Acquired a patent for augmented reality system
A7 represents changing CPU
iPhone 5c - first iPhone made of plastic
Released new iOS7 software
Sara Newman, Kylie Tripp, Tyson Wagaman
Strength in premium price category - Apple sold 91% of PCs $1000+
2003
Buyer Power
Full transcript