7. EXTERNAL ANALYSIS
Threats of
potential
entrants Low
Bargaining
Power of
Suppliers High
Bargaining
Power of
Buyers High
Rivalry
among
Competitors
- High
Threats of
Substitutes Low
Resources and
Capabilities
Dominated by
Few Players
Price sensitive
customers
Price
competition
Strong Presence
High Demand
for supplier’s
product
Undifferentiated
products
Slow industry
growth
Can not replace
Computers
Necessary
component in
the final product
Low switching
costs between
brands
Lack of
differentiation
SmartPhones
Few substitute
of supplier’s
product
available
Low Brand
Loyalty
Short Product
Life cycle
Tablets
High Capital
requirements
Need product
differentiation
Access to
distribution
channel
Customer loyalty
PDAs
Palmtops
8. INTERNAL ANALYSIS:
VALUE CHAIN ANALYSIS
General Administration
A Greener Apple
Strong cash position
Human Resources
Management
Selective hiring process
Generous employee benefits
program
Technological Development
Research and development
Patent filing
Procurement
Positive relationships with
suppliers
Inbound
Logistics
• Automated
receiving systems
• Delegate raw
materials
acquisition
Operations
• Design
• Conceptualization
Outbound
Logistics
• Stylist packaging
• Apple Stores
• Authorized
retailers
• Direct shipment
Marketing &
Sales
• “Get a Mac” Ads
• Retail
locations/Flagship
stores
• Secretive and
selective unveilings
Services
• Apple Genius
• Included and
extended warranty
• Free consultation
11. BUSINESS STRATEGIES
Differentiation
Cost Leadership
Rarely adopted
Focus
• Strong Differentiating
factor
• Devoted fans –
„Applellites‟
• Niche segment
• Premium customers
• Product differentiation
• Innovative Products
Business Strategy
Both Focus and
differentiation
• Customer service
• Personnel differentiation
Forte of leadership
12. BUSINESS STRATEGIES
DISRUPTIVE INNOVATION
• New innovations that unexpectedly bring an
established market to an end
• Viewed As Top Disruptive Innovator
• Future business transforming Technologies
BLUE OCEAN STRATEGY
• Creation of new market spaces
• Efforts to ensures long-term growth
• iTunes: allowed customers to download
songs legally via internet
13. BUSINESS STRATEGIES
NETWORK EFFECTS
• 2-sided network effects
• Intra-Personal Network Effects
• Direct network effects
SWITCHING COSTS
• Convenience of using products together
• Customers with more than one device in the Apple
ecosystem
• iCloud service adds to the switching costs
• Switching cost per iOS user ranges between $122 and
$301
14. CORPORATE LEVEL STRATEGY:
DIVERSIFICATION
• 1976-1996 (low level
diversification)
– Apple II to Macintosh
– Concentration on
computer related
industry
– Sole reliability on single
product line
– Putting company at risk
, due to intense
competition.
16. M&A AND ALLIANCES
MERGERS & ACQUISITIONS
• Apple acquired 26 minor software firms prior
to 1997
•Apple acquired only 11 companies after Steve
Jobs return in 1997.
• Believe in in-house capability building.
• Risk of infecting company’s culture and
values.
STRATEGIC ALLIANCES
• Apple has been actively involved
strategic alliances from the beginning.
17. Strategic Issue 1MARKET SHARE OR PROFIT
MARGIN?
Existing Strategy – Premium Product Prices – High
profit margin
Expand New Markets - Nielsen Research - BRIC
region‟s high potential Growth
Factors Affecting the Decisions
Price perception
Pricing system
Difference
Profit margins
sacrifice
Cannibalization
of sales
Huge market for
Apps
Dilution of brand
Recommendations
If cannibalization rate is low, then launch the low end
products for only BRIC markets
If cannibalization rate is high, then stick to the current
strategy of premium prices and high profit margin
18. Strategic Issue 2HIGH CASH RESERVES AND SUPPLY
CHAIN ISSUE?
Supply
Chain
issues
More than
$130 billion
as cash
reserves
Deploy this
huge cash
reserves to
vertically
integrate the
supply chain
19. Future TV plan for Apple
Synchronized
Intuitive
Personalized
TV industry at glance
US TV industry alone of $72 billions
from advertisement and $103 billions
from cable and satellite.
The major competitors are
•
•
•
Fast
Apple‟s Advantage for TV
•
•
•
Can use “SIRI” in place of
remote control
The iCloud can be use for
storing real time television data
Leverage on existing customer
base
Google „s play TV
Amazon „s online streaming
Microsoft‟ Xbox as video delivery
. Disruptive technologies generate new innovations that unexpectedly bring an established market to an endSustaining innovation, pioneered by established companies, ensures their competitive status in a market by enhancing and improving existing products’ performance in an expected way that customers valueHowever, disruptive innovation usually originates from newcomers, upsets the market status by fundamentally altering the way customers think about product performance because it exceeds their expectations in an unexpected way
