Strategic Management: Apple

The Strategy of the most valuable company in the world

by: Mehmet Hasani

APPLE Inc.

Presentation Content

§  Company Profile §  Main Competitors by Business Fields §  Sales Mix of Apple Core Products §  Market Share by Tablet & Smartphone Vendors §  Business Model Canvas §  SWOT-Analysis §  Porter's five forces on APPLE §  Strategy Integration Model §  Key to Success

25 Juni 2015 Strategic Management - Apple Slide 2

Company Profile (1)

25 Juni 2015 Strategic Management - Apple Folie 3

Founded:1976 by Steve Jobs • Steve Wozniak • Ronald Wayne Key People: Arthur D. Levinson (Chairman) • Tim Cook (CEO) • Luca Maestri (CFO) Industry: Computer hardware • Computer software • Consumer electronics • Digital distribution Products: iPhone • iPad • Mac • iPod • Apple TV • Apple Watch • OS X • iOS• iLife • iWork Services: Apple Store • Mac App Store • iOS App Store • iTunes Store • iBooks iCloud Number of locations: 453 Apple retail stores in 16 countries Number of employees: 92,600 Revenue: US$ 182.795 billion (2014) Operating income: US$ 52.503 billion (2014) Net income: US$ 39.510 billion (2014) Total assets: US$ 231.839 billion (2014) Total equity: US$ 111.547 billion (2014)

Enterprise value: US$ 743.080 billion (2014)

APPLE PRODUCT TIMELINE (till 2010)

Company Profile (2)


have no “real“ official statement for the mission/vision of the Enterprise §  Here are some quotes from Tim Cook (CEO) to the mission & vision of Apple Mission & Vision statement Tim Cook §  We believe in simple, not the complex productd, which can be used intuitively. §  We believe that we need to own and control the primary technologies behind the products we make. §  We participate only in markets where we can make a significant contribution. §  We don’t settle for anything less than excellence in every group in the company, and we have the

self-honesty to admit when we're wrong and the courage to change. §  We believe in deep collaboration and cross-pollination of our groups,

which allow us to innovate in a way that others cannot §  We believe in saying no to thousands of projects so that we can really

focus on the few that are truly important and meaningful to us.

WEB Megatrends §  Collaborative Working: Colaborate the iOS, OSx and Watch OS . . . §  Big Data: Handle data from the Apple ID • Health kit . . . §  Internet of Things: Apple TV • Apple Watch • Home Kit • Health kit . . . §  Open Inovation: make SWIFT Open source • Home Kit • Health kit . . .

Main Competitors by Business Fields


§  In the aspect of PERSONAL COMPUTERS §  MacBook (Pro, Air) §  iMac (5K) §  Mac Pro (Mini)

§  In the aspect of TABLET

§  iPad §  iPad mini

§  In the aspect of SMARTPHONES

§  iPhone 6 §  iPhone 6 plus

§  In the aspect of ENTERTAINMENT AND APPLICATIONS §  iOS, OS X §  iTunes, AppStore §  Apple TV §  Car Play

§  In the aspect of MOBILE PAYMENTS §  Apple Pay

VS.

VS.

VS.

VS.

VS.

Sales Mix of Apple Core Products


68%

12%

10%

3% 5%

2%

u  iPhone u  iPad u  Mac u  iPod u  iTunes, Software & Services u  Accessories

0

10

20

30

40

50

60

70

80

Q1 '07

Q2 '07

Q3 '07

Q4 '07

Q1 '08

Q2 '08

Q3 '08

Q4 '08

Q1 '09

Q2 '09

Q3 '09

Q4 '09

Q1 '10

Q2 '10

Q3 '10

Q4 '10

Q1 '11

Q2 '11

Q3 '11

Q4 '11

Q1 '12

Q2 '12

Q3 '12

Q4 '12

Q1 '13

Q2 '13

Q3 '13

Q4 '13

Q1 '14

Q2 '14

Q3 '14

Q4 '14

Q1 '15

Sales of Products (in millions)

Sales revenue

ratio (Q1’15)

§  The three core products (iPhone 68%, iPad 12%, MAC 10%) have a reveneu share from 90%** §  Within 4 years* the number of sold iPhones increased 358% to 74.47 million pieces** §  The iPad increased 192% to 21.42 million sold pieces** and become the market leader* §  33% growth recorded the MAC to 5.5 thousend sold** computers.*

* Q1‘2011 - Q1‘2015 ** Q1‘2015

Market Share by Tablet & Smartphone Vendors


0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Q2 '11

Q3 '11

Q4 '11

Q1 '12

Q2 '12

Q3 '12

Q4 '12

Q1 '13

Q2 '13

Q3 '13

Q4 '13

Q1 '14

Q2 '14

Q3 '14

Q4 '14

Q1 '15

Apple Samsung Amazon Asus Lenovo Other

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Q2 '11

Q3 '11

Q4 '11

Q1 '12

Q2 '12

Q3 '12

Q4 '12

Q1 '13

Q2 '13

Q3 '13

Q4 '13

Q1 '14

Q2 '14

Q3 '14

Q4 '14

Q1 '15

Apple Samsung LG* Lenovo* ZTE* Huawei* Sony* RIM* HTC* Nokia* Xiaomi* Others

Market share by TABLET VENDORS §  market share is decreasing 34% (Q2‘11 – Q1‘15)

§  market share is distributed to new competitors §  Samsung is the biggest competitor 19% (Q1’15)

§  is still the market leader with 27% (Q1’15)

§  iPad Turnover: $ 8.9 billion à 11,8 % from the total Turnover $ 75.5 bill (Q1’15)

Market share by SMARTPHONE VENDORS §  market share is fluctuating between 15% - 18% §  Samsung is the actual market leader with 24,5% (Q1‘15)

§  Samsungs market share is decreasing §  iPhone Turnover: $ 51.18 billion à 68% from the total

Turnover $ 74.5 billion (Q1’15)

Apple

Google

Microsoft

US$ 247 Billion US$ 173.65 Billion

US$ 115.5 Billion

the world's most valuable brand (Q1 2015)

Business Model Canvas


h#p://api.ning.com/files/4iqR7n6daXUgClZnZEcI145Xp91y67e0OGUpGsdF7sFysifKFNJiRhvDDx9WrRRObWMRxTt7SQ0DbrVhilOqhNYRv1UHp4h/BusinessModelCanvas_Apple.jpg

SWOT-Analysis on Apple


§  Customer loyalty combined with expanding closed ecosystem

§  Apple is a leading innovator in mobile device technology

§  Strong financial performance §  Brand reputation §  Retail stores §  Strong marketing and advertising teams

STRENGHTS

§  High demand of iPad and iPhone §  Emergence of the new provider of

application processors §  Growth of tablet and smartphone markets §  Obtaining patents through acquisitions §  Strong growth of mobile advertising market §  Increasing demand for cloud based services

OPPORTUNITYS §  Rapid technological change §  Strong dollar §  Android OS growth §  Samsung Galaxy Phone growth §  Competitors moves in online music market

THREATS

§  High price §  Incompatibility with different OS §  Decreasing market share §  Patent infringements §  Further changes in management §  Defects of new products §  Long-term gross margin decline

WEAKNESSES

h#p://www.strategicmanagemenJnsight.com/swot-‐analyses/apple-‐swot-‐analysis.html

Porter's five forces on APPLE (1)


1. Bargaining power of CUSTOMERS §  keeps switching costs high by keeping critical products features same and easily transferable among

devices, i.e. contacts, calendar , pages, numbers, iCloud, iPhone, iMovie, iOS ... §  to increase Apple‘s stickiness, the company carefully broadens ist innovative product flow. (from iPod to

iWatch, but always on iOS)

low

Competitive rivalry

within an INDUSTRY

Bargaining power of

CUSTOMERS

Bargaining power of

SUPPLIERS Threat of new ENTRANTS

Threat of Substitute

PRODUCTS

Porter's five forces on APPLE (2)


2. Bargaining power of SUPPLIERS §  reduced the power of chip makers by designing its own chips §  reduced the power of manufactures, like Foxconn, by buying manufacturing equipment and only allowing

the equipment to be used for Apple products §  reduced the power of distributors by taking over retailers and product services through the Apple Store 3. Threat of new ENTRANTS §  Apple has a strong brand image, innovation and customer service – making it difficult for new entrants to

compete against §  Tim Cook‘s supply chain expertise is a great defense against low end disruption from new entrants. New

entrants will have difficulty matching of beating the supply chain cost structure 4. Threat of Substitute PRODUCTS §  Mitigates the effect by selectively making products which might ultimately replace the MacBook or the

iPhones. E.g. wearables and simple, cheaper version of the MacBook

5. Competitive rivalry within an INDUSTRY §  has avoided price-based competition thus far by staying away low end markets where price is the main

differentiator §  Products never go on sale by generating a superior product to Android phones and rival tablets it

compete based primarily on quality, service and unique ecosystems.

medium

medium

medium

low

Strategy Integration Model

§  The Strategy of Horizontal integration: §  Shorter Product Life Cycles are the first step to offer existing customers to buy new Product

with the latest technology §  New creative designes and new Innovative Technologies attract existing costumers also new

customers to enter the world of Apple products à must-have-factor §  Enter new regions and countries to deliver the Products to enter new customers §  Enter new Markets which are comparable with the existing Product Line to offer new Services

and Products à Home kit • Health kit • Apple Watch • ...

§  The Strategy of Vertical Integration: §  Offer Services as the App Store, Mac App Store or Watch App Store to sell Apps with a profit

share for apple and 3rd party developers. §  Owner of an Apple Product have to use Apple Products/Services eg. To manage Music u need

iTunes à Apple expect that the customer by his music tracks via iTunes à Closed-Eco-System §  Introduce Apple Retail Stores with 3rd party accessories and Apple products for a closer

customer relation and a excellent support with a grade experience


Key to Success

Strategic Management - Apple Folie 13

NEW PRODUCTS INNOVATIVE + HIGH VALUE PROPOSITION

APPLE “FANTASTIC“

HIGH CUSTOMER SATISFACTION

CUSTOMER LOYALTY

https://oneboldmove.com/wp-content/uploads/2013/10/Loyalty.jpg

References Company Profile: https://en.wikipedia.org/?title=Apple_Inc. http://www.finanzen.net/aktien/Apple-Aktie Mission & Vision http://examples.yourdictionary.com/best-examples-of-a-vision-statement.html http://alvinalexander.com/blog/post/mac-os-x/apple-business-philosophy-mission-statement

Competitors form Apple: http://www.forbes.com/sites/timworstall/2013/09/06/apples-real-competitor-is-apple-itself-and-its-just-bought-that-competition/ http://www.statista.com Business Model Canvas: http://businessmodelhub.com/photo/apple-business-model-canvas SWOT-Analysis on Apple http://www.strategicmanagementinsight.com/products/swot-analyses/apple-swot-analysis-2014.html Market analysis on Apple: http://www.statista.com http://de.statista.com/statistik/daten/studie/327274/umfrage/quartalsumsatz-von-apple-nach-produktgruppe/ Porters Five Forces http://de.slideshare.net/sophlee/using-porters-5-forces-on-apple Figures: Apfel: http://www.it-inftech.de/wp-content/uploads/2014/01/apple_bite2.jpg happy customer: http://blog.sogosurvey.com/wp-content/uploads/2012/05/sogosurvey1.gif Loyalty: https://oneboldmove.com/wp-content/uploads/2013/10/Loyalty.jpg Apple Timeline: www.techtimely.files.wordpress.com/2011/03/timeline-of-apple-milestones-and-key-product-launches.png Business Model Canvas: http://businessmodelhub.com/photo/apple-business-model-canvas


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