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Apple, Inc.

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by

Yun Shin

on 29 April 2014

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Transcript of Apple, Inc.

Conclusion and Recommendations
Apple still has a strong market stand and name value, and should put efforts on maintaining its market position.

At the same time, it needs to aggressively expand its market in China with a collaboration with China Mobile.

The strong financial resource of Apple will provide advantage of its domestic and international activities.

History of Apple, Inc.
Steve Jobs, Steve Wozniak and Ronald Wayne incorporated Apple Computer on April 1, 1976
Apple 1 Introduced in 1976, first ever Apple computer
In 1984, Macintosh was introduced
In 1985, the creator of the company, Steve Jobs was fired. Shortly following his firing he was then rehired in 1997.
IMac introduced in 1998
In October of 2001, IPod makes its debut
Jobs Creates Mac OS X, released in March 2001
Apple launches itunes store in 2003
Apple releases IPhone on June 29th, 2007
In January of 2010, IPad is revealed.

Internal Factor Evaluation (IFE) Matrix
Strengths
Little Debt in Financial Structure.
Geographic Diversification.
Strong Production and Development Capacity.
Worldwide System to Ship Products around the World.

Weaknesses
Stalled Profit Growth.
Concerns Regarding Lost Vision after Steve Jobs.
Defensive Management.

Space Matrix
Space Matrix: indicates whether aggressive, conservative, defensive, or competitive strategies are most appropriate for a given organization

Financial Position:
Increase of $1.5 billion from 2012-2013
Decrease in net profit margin
Industry Position:
Increase in revenue and sales
Apple has profit potential due
Decrease in Samsung’s smartphone market share
Stability Position:
Strong Brand name and recognition
Strong supplier base in Asia
Competitive Position:
High customer loyalty
415 retail stores in 13 countries

QSPM Matrix
Current Strategy: Maintaining current reputation and appealing to loyal customers: TAS Total of 5.56
Attractive: Increase of new products, geographic diversification, and increase of iTV launch
Not Suitable: 2013 tax increases and high product prices
Alternative Strategy 1: Further expanding into China through a partnership with China Mobile: TAS Total of 5.63
Attractive: Diversity of mobile devices, features, and accessories
Not Suitable: Increase of tablets and online music market
Alternative Strategy 2: Unrelated diversification-partnership with an automobile company: TAS Total of 5.50
Attractive: New market increases number of customers and marketing
No Suitable: Everyday product use for individuals and businesses


Philip Dodd
Zachary Kaul
Artem Pyryev
Yun-Kyeong Shin
Berenice Suarez

History of Apple
History of Apple
Apple, Inc.
Apple’s Product Mix
Portable Computers
iPhone
iPod
iPad
Servers
Accessories
Developer
iTunes
Wi-Fi Based Stations

Apple’s Product Mix

Apple’s Mission and Vision Statement
“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 has reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced iPad 2 which is defining the future of mobile media and computing devices.”

“Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.”

Apple’s Current Strategy
Increase market share and increase customer base

New Innovation

Delegation of responsibilities. Team responsibilities rather than individual efforts

External Factor Evaluation (EFE) Matrix
Opportunities
Expand in China.
Partnerships and Acquisitions.
Twitter.

Threats
Samsung’s Presence in Asia.
Cheaper Cell Phone Carriers: New Competitors.
Rising Wage in China.

Competitive Profile Matrix (CPM)
Porter’s Five Forces
Rivalry Determinants
Industry Growth.
Barriers to Entry
Economies of Scale.
Determinant of Supplier Power
Supplier Concentration.
Determinants of Buyer Power
Buyer Concentration vs. Firm Concentration.
Determinants of Substitution Threats
Relative Price Performance of Substitutes.

Porter’s Generic Strategy
Differentiation
Wide Variety of Products.
Different Styles and Designs.
Innovating Products and Quality.
Diversity and Exclusiveness.

SPACE Matrix: Conclusion
Apple: should pursue an Aggressive Strategy
Meaning: Apple is a strong firm that has achieved major competitive advantages in a growing and stable industry

Grand Strategy
Apple falls into the Quadrant I of the Grand Strategy Matrix:
Growing Market and a Strong Competitive Position
Smartphone and Tablet Market
Components of Quadrant I include: Product Development, Market Penetration, and Forward Integration

Growing Market/Strong Competitive Position
Growing Market:
Smartphone Market:
7.3% year-over-year growth from 2012-2013
Forecasted year-over-year market growth expected to increase to 18% from 16.9%
Tablet Market:
2010: 17 million tablets sold; 2012: 128 million tablets sold
2013: Tablet sales expected to increase by 53%
Apple sales: 2010: 7 million tablets sold; 2012: 58 million tablets sold
Strong Competitive Position
Apple owns over 40% of U.S. smartphone market and 54% of tablet market
$170 billion cash reserve

Grand Strategy
Product Development:
Continual update of software for Apple products
Release of new Apple products under same name
i.e. Apple iPad, iPad 2, iPad 3, iPad Mini, iPad Air
iPhone 4, iPhone 4S, iPhone 5, iPhone 5S/5C

Market Penetration:
Introduction of iPhone 5C
iPad Mini
Increased advertising budget up to $1 billion in 2012
Alternative Strategies in Grand Strategy Matrix
Partnership with China Mobile
Forward Integration: FITS
300 million potential customers through China Mobile

Partnership in Automobile Industry
Unrelated Integration: DOES NOT FIT
Falls in Quadrant III and IV

Financial Ratio Analysis
Liquidity
Current Ratio
Quick Ratio


Leverage
Debt-to-Total-Assets Ratio
Debt-to-Equity-Ratio
Long-Term Debt-to-Equity Ratio
Times-Interest-Earned Ratio





Financial Ratio Analysis
Activity







Profitability






Product Positioning
Apple sells high quality products at high prices in comparison to the competitor companies.
iPhone, iPad, iPod, Mac, iTunes considered highest quality in the industry because of the structure, function, and brand identity
“Why are Apple products so expensive? His answer -- that Apple doesn't want to sacrifice quality for price -- served mainly to reinforce his argument that Apple values great products over all else,” Tim Cook ("Apple ceo explains," 2013).

Increase in smartphones sales from 33.8 million phones sold in comparison to 26.9 sold in the year-ago quarter.
Innovation in structure, design, and features with their unique retina display, Touch ID fingertip scanner and Siri.

Increase in tablets sales from 14.1 million in comparison to 14 million in the year-ago quarter.
Leader in the 7-inch tablet category by increasing the market share from 12.6% to 41.2% of their iPad Mini between the third and fourth quarter of 2012.

Product Positioning
High quality and high price is the best option due to that the quality, name and brand identity of the products will decrease in level if sold at a low cost.

Customer satisfaction and company reputation are the most important factors for Apple’s success.


Balance Scorecard
Financial: The company maintains revenue by focusing on lower labor costs and meeting the demand of the market
diversify the streams of revenue, maximize profitability, minimize operational costs, and providing financial forecasts
Customer: The company studies the industry and achieves responsibility to fulfill their customer’s needs and wants.
check competitive prices, seek middle class, provide excellent customer service, work efficiently, become leaders of the industry
Learning and Growth: Provide necessary resources for the changing internal and external environment factors as well as adaptability.
increasing number of experienced and creative employees, instill TEAM-oriented environment, employee training, daily meetings
Business Process: Further improves business processes with efficient data collection and a strict product life cycle.
IT service improvements, study of competitors, alternative strategies, efficient delivery and manufacturing processes are needed.

Financial Ratio Analysis
Growth







Net Sales by Operating Segment Net Sales by Product
Full transcript