Apple

EXECUTIVE SUMMARY

Apple was formed in 1976 by Steve Wozniak and Steve Jobs. After some disastrous losses in the 1980’s and 1990’s to their main competitor, IBM, Apple was able to re-invent the entire company. When Jobs returned to Apple in 1996, he took an expanded role and not only continually pushed for innovative ideas and products but also compelled several structural changes. Jobs also got rid of profitless divisions and departments.

Apple has been able to gain market share quicker than the competition mainly due to the “halo effect” from the iPod. The halo effect is the idea that continued sales of iPods to Windows users will eventually translate into increased Mac sales. Other factors that have contributed to Apple’s growth include: entry into fast-growing low-cost PC market with the introduction of the Mac mini, wide product range with growing mobile market, ability to offer market nearly virus free operating system platform, and continued concentration of the pressure for a digital lifestyle.

Apple has continued to add new and innovative products to the market including Apple TV, the iPod and iPhone. They have been able to capture different segments of the market through their broad differentiation strategy. Apple has developed products along with marketing campaigns to appeal to the masses.

In order to continue with rapid growth both on American soil and beyond, they will have to focus on distinguishing themselves with top of the line products and services. Apple has seen success and growth in the past two year in the architecture, engineering, and construction industries. The Mac has the capabilities, applications, and software preferred by professionals in these sectors. This is something for the company to grasp on to and plan for marketing to these industries.

Finally, there seems to be a trend toward the notebook computer and away from desktops PC’s. Apple should continue to develop and focus on their own version of the laptop in order to keep up with this trend. Notebook sales have been very strong and represent a large contribution to income.

COMPANY MISSION STATEMENT

Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and will enter the mobile phone market this year with its revolutionary iPhone.

CORE COMPETENCIES AND DISTINCTIVE COMPETENCE

A core competence is defined as, “a proficiently performed internal activity that is central to a company’s strategy and competitiveness.” Apple’s core competence would be its innovation and risk taking in its products. They are known for their underlying philosophy of the improvement of existing products as well as the product design itself.

A distinctive competence is defined as, “a competitively valuable activity that a company performs better than its rivals. A distinctive competence represents a competitively untouchable resource strength. Apple’s distinctive competence would have to be its strong brand name. The Apple success began in the 1970’s with the Apple II and continues today with the iPod.

While there is an increase in the number of MP3 players available today, the iPod will not easily be dethroned. The Apple iPod has gained success not just due to iTunes, it is the ease of use and the entire iPod experience. Just as Q-Tip has become synonymous with cotton swab, so has iPod become the new name for the MP3 player.

MANAGEMENT TEAM

The CEO of Apple is Steve Jobs. Jobs co-founded the company in 1976. He also co-founded Pixar Animation Studios, which creates animated films. Pixar films have won 20 Academy Awards and have recently merged with The Walt Disney Company.

The Chief Operating Office, Timothy D. Cook, is responsible for all of the company’s worldwide sales and operations, including management of the supply chain, sales activities, and service and support in all markets and countries. Cook also plays a key role in reseller and supplier relationships. Prior to his career with Apple, Cook has also worked for Compaq and IBM.

Peter Oppenheimer is Apple’s Senior Vice President and Chief Financial Officer. Oppenheimer overseas the controller, treasury, investor relations, tax, information systems, internal audit and facilities functions. He joined Apple in 1996, coming from ADP, where he was CFO of the four strategic business units. Prior to his career with ADP, Oppenheimer spent six years in the Information Technology Consulting Practice with Coopers and Lybrand where he managed financial and systems engagements for clients in the insurance, telecommunications, transportation and banking industries.

SWOT ANALYSIS

Apple’s strengths include their knowledge of the customer base, high quality products, brand name, innovation, product diversification, and the products’ ease of use. The iPod has given the company access to a whole new series of segments that may purchase other Apple brands. Brand has proven to be very important for Apple. They have a loyal group of consumers that advocate the brand and also help to procure new customers.

One of Apple’s noted weaknesses is that its operating system for its Macintosh line of computers, while better than DOS and Windows in many ways, is restricted to the Macintosh personal computers; therefore, it does not run many of the common business applications that are readily available to DOS and Windows. Another issue for Apple has been battery life in the iPod and the Nano possibly having a faulty screen, and a high price.

Opportunities for Apple include iTunes incorporated into the mobile phone, as well as other strategic alliances that involve the iPod and the automotive industry.

Finally, the threats to Apple are the high level of competition. Apple will have to continue to work hard on marketing and research and development to retain its current position and continue to grow. Also, product substitutions are always a threat. While it is difficult at this point to envision a substitute for the iPod, there is definitely something in the works.

PORTER’S