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Apple Case Analysis

Apple Case Analysis. Issues and Outlook SWOT Summary External Analysis Internal Analysis Strategic Recommendations Mission Goals Strategic Action Plan. Issues and Outlook: 1993 and Beyond. Is Apple successful? Past/current strategy?

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Apple Case Analysis

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  1. Apple Case Analysis • Issues and Outlook • SWOT Summary • External Analysis • Internal Analysis • Strategic Recommendations • Mission • Goals • Strategic Action Plan

  2. Issues and Outlook:1993 and Beyond • Is Apple successful? • Past/current strategy? • What are the main concerns/issues that confront Apple? • Where is Apple headed in the future?

  3. Comparative Market Share (%)by Revenue

  4. Financial Snapshot:Revenue and Net Income(in $millions)

  5. Apple’s Business Level Strategy Source of Competitive Advantage Cost Uniqueness Cost Leadership Differen- tiation Broad Target Market Breadth of Competitive Scope Focused Differen- tiation Focused Low Cost Narrow Target Market

  6. External Analysis • Influences from Remote Environment • Influences from Competitive Environment • Promoters of / Barriers to Change • SWOT Summary • Competitor Analysis

  7. Analysis of the General Environment Demographic Economic Political/Legal Competitive Environment Global Technological Sociocultural

  8. Industry Growth(in $billions)

  9. Analysis of the Competitive Environment Threat of New Entrants Threat of New Entrants Rivalry Among Competing Firms in Industry Bargaining Power of Suppliers Bargaining Power of Buyers Threat of Substitute Products

  10. Microprocessor VolumeInstalled Base - Millions of Units

  11. Strategic Group Map Pre-Windows Premium Sun Apple Price Compaq IBM Clones Low Broad Narrow Strategic Focus - Differentiation

  12. Strategic Group Map Post-Windows Premium Sun Apple Price Compaq IBM Clones Low Broad Narrow Strategic Focus - Differentiation

  13. Internal Analysis • Resource-based View Analysis of: • Core Competencies • Core Weaknesses • Value Chain Analysis of: • Value-enhancing Activities • Value-diminishing Activities • Promoters of / Barriers to Change

  14. Value Chain Analysis Firm Infrastructure Human Resource Management Support Activities MARGIN Technological Development Procurement Service Inbound Logistics Marketing & Sales Outbound Logistics MARGIN Operations Primary Activities

  15. SWOT Summary • Strengths • Weaknesses • Opportunities • Threats

  16. “Apple ………………………………..” Definition of Industry Description of Core Values Description of Basic Strategic Approach General Identification of Customer Base Revised Mission/Intent Statement

  17. Revised Mission • To position Apple as the world leader in man-machine interfaces though the development of ergo- and cerebro-nomic software and interface devices required for electronic and electromechanical applications.

  18. Financial Strategic Goals

  19. Goals • 20% ROS by 1994 • 40% Share of O/S Market by 1994 • Develop 3 New Interface Devices by 1994 • Achieve full interoperability with • Intel and RISC microprocessors by 1993 • Top 4 Software Vendors by 1993

  20. Strategic Action Plan • Strategic Action #1 • Details about specific value chain activities • Resources required • Expected benefits (re: a particular SWOT item) • Strategic Action #2 • Details about specific value chain activities • Resources required • Expected benefits (re: a particular SWOT item)

  21. Milk Mac • No new manufacturing and R&D investment in existing hardware products • Outsource next 3 years’ production to Malaysia: • Send VP Mfg. and 3 Engineers on “Sourcing Mission” Benefit: Decrease COGS from 53% to 33%

  22. Apple Core • “Open system” O/S (a.k.a. Pink) • not processor specific • head-to-head with Windows • increase installed base • increase ISV applications • Shift 80% of R&D budget to Core Benefit: Increase ROS from 5% to 20% (NOTE: O/S production has COGS average 19% percent of sales vs. 66% in hardware manufacturing.)

  23. 1994 Layoffs and Mfg. Rationalization Pushed Pink H-P joined Apple and IBM Sculley resigns; Spindler is new CEO 1993 Cut Mac prices 26% down from a 20-40% premium PowerPC with IBM and Motorola PowerMac PowerBook laptop Overseas expansion; Japan (2% to 15%) Newton (PDA) Apple’s Recent Actions

  24. 1995 Attack educational and desktop pub markets License Mac O/S (aka Copeland) Record revenues; $69 million net loss Fujitsu starts price war in Japan 1996-98 Terminated Taligent and Kaleida Jobs and Woz are back Accepted $150 million from MSFT Intros iMac

  25. Actual Results: 1991-97

  26. Stock Price

  27. Comparative Market Share (%)by Revenue

  28. Revenue Comparison (in $millions)

  29. Profit Comparison (ROS %)

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