Strategic Management Presentation - Apple Inc

Source: Apple

““Apple is committed to bringing the Apple is committed to bringing the best personal computing experience to best personal computing experience to

students, educators, creative students, educators, creative professionals and consumers globally professionals and consumers globally

through innovative hardware, software through innovative hardware, software and Internet offerings.” and Internet offerings.”

Mission StatementMission StatementMission StatementMission Statement

• Frontrunner in the PC revolutionFrontrunner in the PC revolution• Transformed PC industry with 1Transformed PC industry with 1stst

MacMac• Expansion in consumer Expansion in consumer

technologytechnology• Continued innovation in tech Continued innovation in tech

industryindustry

• Frontrunner in the PC revolutionFrontrunner in the PC revolution• Transformed PC industry with 1Transformed PC industry with 1stst

MacMac• Expansion in consumer Expansion in consumer

technologytechnology• Continued innovation in tech Continued innovation in tech

industryindustry

Apple Inc.Apple Inc.Apple Inc.Apple Inc.

• 19761976:: Steve Jobs and Steve Wozniak Steve Jobs and Steve Wozniak founded Apple Computer, Inc. founded Apple Computer, Inc.

• 19801980:: Apple converts to public Apple converts to public ownership. ownership.

• 19821982:: Apple becomes first personal Apple becomes first personal computer company to reach $1 billion in computer company to reach $1 billion in annual sales. annual sales.

• 19761976:: Steve Jobs and Steve Wozniak Steve Jobs and Steve Wozniak founded Apple Computer, Inc. founded Apple Computer, Inc.

• 19801980:: Apple converts to public Apple converts to public ownership. ownership.

• 19821982:: Apple becomes first personal Apple becomes first personal computer company to reach $1 billion in computer company to reach $1 billion in annual sales. annual sales.

Source: Apple

Key DatesKey DatesKey DatesKey Dates

• 19851985:: John Sculley assumes CEO role John Sculley assumes CEO role

• 19971997:: Steve Jobs is named interim CEO Steve Jobs is named interim CEO

• 19981998:: The all-in-one iMac is released The all-in-one iMac is released

• 20002000:: Jobs as CEO, more tightly Jobs as CEO, more tightly focused Apple, Inc.focused Apple, Inc.

• 19851985:: John Sculley assumes CEO role John Sculley assumes CEO role

• 19971997:: Steve Jobs is named interim CEO Steve Jobs is named interim CEO

• 19981998:: The all-in-one iMac is released The all-in-one iMac is released

• 20002000:: Jobs as CEO, more tightly Jobs as CEO, more tightly focused Apple, Inc.focused Apple, Inc.

Source: Apple

Key DatesKey DatesKey DatesKey Dates

TodayTodayTodayToday

• Apple has 36,800 employees as of Apple has 36,800 employees as of 20092009

• Net profit increased from 14.6% in Net profit increased from 14.6% in 2007 to 15.6% in 20092007 to 15.6% in 2009

• EPS doubled since 2007 to $6.29EPS doubled since 2007 to $6.29

• Positive future financial expectationsPositive future financial expectations

• Apple has 36,800 employees as of Apple has 36,800 employees as of 20092009

• Net profit increased from 14.6% in Net profit increased from 14.6% in 2007 to 15.6% in 20092007 to 15.6% in 2009

• EPS doubled since 2007 to $6.29EPS doubled since 2007 to $6.29

• Positive future financial expectationsPositive future financial expectations

Apple Stock – 1 YearApple Stock – 1 Year

Opportunity StatementOpportunity StatementOpportunity StatementOpportunity Statement

Apple Inc. currently operates in highly competitive and Apple Inc. currently operates in highly competitive and highly technological driven consumer electronics / highly technological driven consumer electronics / computer industries. There exists opportunities to computer industries. There exists opportunities to further leverage the intellectual capital and brand further leverage the intellectual capital and brand

image along with new digital business strategies to image along with new digital business strategies to create new sources of sustainable competitive create new sources of sustainable competitive

advantage within Apple Inc.advantage within Apple Inc.

Apple Inc. currently operates in highly competitive and Apple Inc. currently operates in highly competitive and highly technological driven consumer electronics / highly technological driven consumer electronics / computer industries. There exists opportunities to computer industries. There exists opportunities to further leverage the intellectual capital and brand further leverage the intellectual capital and brand

image along with new digital business strategies to image along with new digital business strategies to create new sources of sustainable competitive create new sources of sustainable competitive

advantage within Apple Inc.advantage within Apple Inc.

Significance to LeadershipSignificance to LeadershipSignificance to LeadershipSignificance to Leadership

• Discovery of untapped resourcesDiscovery of untapped resources

- More dedicated and loyal customer More dedicated and loyal customer basebase

- Higher profit marginsHigher profit margins

- New sources of Sustainable New sources of Sustainable Competitive AdvantageCompetitive Advantage

• Discovery of untapped resourcesDiscovery of untapped resources

- More dedicated and loyal customer More dedicated and loyal customer basebase

- Higher profit marginsHigher profit margins

- New sources of Sustainable New sources of Sustainable Competitive AdvantageCompetitive Advantage

Expected OutcomesExpected OutcomesExpected OutcomesExpected Outcomes

• Greater customer shareGreater customer share

• Increase in profit marginsIncrease in profit margins

• Sustainable competitive advantageSustainable competitive advantage

• Greater customer shareGreater customer share

• Increase in profit marginsIncrease in profit margins

• Sustainable competitive advantageSustainable competitive advantage

Research MethodologyResearch Methodology

• Secondary ResearchSecondary Research

• Quality ResearchQuality Research

- Environmental Scanning & Environmental Scanning & MonitoringMonitoring

- Peer Reviewed Journal ArticlesPeer Reviewed Journal Articles

Situational AnalysisSituational AnalysisInternal FactorsInternal Factors

Leadership | Corporate CultureLeadership | Corporate CultureOperations | Marketing | Finance | HRMOperations | Marketing | Finance | HRM

LeadershipLeadership



• Steve JobsSteve Jobs–Co-Founder/CEO/DirectorCo-Founder/CEO/Directoro1976-1985/1996-Present1976-1985/1996-Present

• College dropoutCollege dropout• PerfectionistPerfectionist• Founded company with Founded company with

Steve WozniakSteve Wozniak

Source: Reuters


• Peter OppenheimerPeter Oppenheimer–CFO/Senior VPCFO/Senior VPo1996 - Present1996 - Present

• Former CFO of Former CFO of Automatic Data Automatic Data Processing, Inc. Processing, Inc. (ADP)(ADP)

• IT Consulting firmIT Consulting firmSource: Reuters


• Timothy CookTimothy Cook–COOCOOo1998 - Present1998 - Present

• Previously VP Previously VP Corporate Materials Corporate Materials for Compaq for Compaq Computer Corp.Computer Corp.• COO for Intelligent COO for Intelligent ElectronicsElectronicsSource: Reuters

Corporate CultureCorporate Culture


Corporate CultureCorporate Culture

• ““Work hard, play hard” mentalityWork hard, play hard” mentality

• World’s Most Admired CompanyWorld’s Most Admired Company

Source: CNN: Money; ICMRIndia; Apple Insider

OperationsOperations


Organizational StructureOrganizational Structure

• Non-traditional Non-traditional - Team and department divisionsTeam and department divisions- Very informal and non-hierarchical Very informal and non-hierarchical

• Jobs still very much in controlJobs still very much in control

Source: The Wall Street Journal; ICMRIndia; Apple Insider

OperationsOperations

• Corporate headquarters in Cupertino, Corporate headquarters in Cupertino, CACA

• Most manufacturing in ChinaMost manufacturing in China– Supplier code of conductSupplier code of conduct

Source: Apple

• More than 200 stores More than 200 stores worldwideworldwide

Operations

Source: Apple

Sales BreakdownSales Breakdown

2009 Sales2009 Sales

Source: Apple

Sales BreakdownSales Breakdown

2009 Sales by Operating Segment2009 Sales by Operating Segment

Source: Apple

MarketingMarketing


MarketingMarketing

Four P’sFour P’s

1.1. ProductProduct

2.2. PricePrice

3.3. PlacePlace

4.4. PromotionPromotion

Marketing - ProductMarketing - Product

• Apple Inc’s product strategy is:Apple Inc’s product strategy is:

– Supply superior ease-to-useSupply superior ease-to-use

– Seamless integrationSeamless integration

– Innovative industrial designInnovative industrial design

Source: Apple

Marketing - ProductMarketing - Product

• Two main types of products:Two main types of products:–HardwareHardwareoPersonal computersPersonal computersoPortable devicesPortable devices

– SoftwareSoftwareoiTunesiTunesoFinal Cut ProFinal Cut ProoLogic StudioLogic StudioSource: Apple

Marketing - PriceMarketing - Price

• Value based pricing modelValue based pricing model

• Variable pricing for iTunesVariable pricing for iTunes

• Fixed pricing over allFixed pricing over all

““We don’t know how to make We don’t know how to make a $500 computer that’s not a a $500 computer that’s not a piece of junk”piece of junk”

- - Steve JobsSteve JobsSource: Apple

Marketing - PlaceMarketing - Place

Distribution:Distribution:

– Sales ForceSales Force

– Third party wholesaleThird party wholesale

Source: Apple

Marketing - PlaceMarketing - Place

Distribution Channels:Distribution Channels:–ResellersResellers– Large distributionLarge distribution–On line storesOn line stores–No FranchisesNo Franchises

Source: Apple

Marketing - PromotionMarketing - Promotion

Promotional techniquesPromotional techniques

– ““Test drive a Mac” 1983Test drive a Mac” 1983

– iPod as contemporary artiPod as contemporary art

–Celebrity involvement Celebrity involvement

Source: Apple

Financial AnalysisFinancial Analysis


Financial NewsFinancial News

• April 20, 2010: Apple announced fiscal April 20, 2010: Apple announced fiscal 2010 Q2 results:2010 Q2 results:

- Revenue of $13.5 billionRevenue of $13.5 billion

- Quarterly profits of $3.07 billionQuarterly profits of $3.07 billion

• Stock price $252.36/shareStock price $252.36/share

• Holds over $40 billion of cash reservesHolds over $40 billion of cash reserves

Source: World of Apple; BusinessWeek; Hoovers

Short-Term Solvency RatioShort-Term Solvency Ratio

Current Ratio =Current Ratio =Source: Hoovers

Short-Term Solvency RatioShort-Term Solvency Ratio

Quick Ratio = Current Assets - Inventories

Current LiabilitiesSource: Hoovers

Long-Term Solvency RatioLong-Term Solvency Ratio

Debt to Equity Ratio =Total Liabilities

Shareholders EquitySource: Hoovers

Efficiency RatioEfficiency Ratio

Receivables Turnover =Net Credit Sales

Avg. Accounts Receivable

Source: Hoovers

Profitability vs. RevenueProfitability vs. Revenue

Source: Hoovers; Argus Research Company

Financial SummaryFinancial Summary

• Strong RatiosStrong Ratios

• Positive predictions for financial Positive predictions for financial

growthgrowth

• Profit margins leveling outProfit margins leveling out

Human ResourceHuman ResourceManagementManagement


Human Resource Human Resource ManagementManagement

1.1. RecruitingRecruiting

2.2. HiringHiring

3.3. TrainingTraining

4.4. Retaining Retaining

HRMHRMRecruitingRecruiting

• OnlineOnline

• UniversitiesUniversities

• InternshipsInternships

• Apple Store Leader ProgramApple Store Leader Program

Source: Apple

HRMHRMHiringHiring

•Online applicationOnline application

•Interview ProcessInterview Process

•Equal Employment OpportunityEqual Employment Opportunity

•Affirmative ActionAffirmative Action

Source: Apple

HRMHRMTrainingTraining

• New Technology

• Career Advancement•“Customers aren’t the only ones who get to discover new things at the Apple Retail Store. Every location provides regular training, which counts as work time, to keep you up to date on the latest Apple and third-party products. You can also get training to help you move ahead as a Genius, Creative, or Manager — or to transition to one of those tracks from your current position.” - Apple

Source: Apple

HRMHRMRetainingRetaining

• Fun, innovative work environmentFun, innovative work environment• Possibility for career advancementPossibility for career advancement• Great BenefitsGreat BenefitsoHealth and Life InsuranceHealth and Life Insurance

Source: Apple

HRMHRMRetainingRetaining

• Tuition AssistanceTuition Assistance

• Product DiscountsProduct Discounts

• Commuter ProgramsCommuter Programs

• ““Working at Apple is a whole different thing. Working at Apple is a whole different thing. Because whatever you do here, you play a Because whatever you do here, you play a part in creating some of the best-loved part in creating some of the best-loved technology on the planet. And in helping technology on the planet. And in helping people discover all the amazing things they people discover all the amazing things they can do with it. You could call it work, or you can do with it. You could call it work, or you could call it a mission. We call it a blast.” could call it a mission. We call it a blast.” - - AppleAppleSource: Apple

Situational AnalysisSituational AnalysisExternal FactorsExternal Factors

Competition | Technology | Customers Competition | Technology | Customers Macro-economic FactorsMacro-economic Factors

CompetitionCompetition


Direct CompetitionDirect Competition

• A product or brand that A product or brand that competes in the same industry competes in the same industry or product categoryor product category–Hewlett – Packard Hewlett – Packard –DellDell– IBMIBM

Source: Hewlett-Packard; Dell; IBM

Direct CompetitionDirect Competition

• Microsoft Microsoft – The employee empowermentThe employee empowerment– ““At Microsoft, we believe that At Microsoft, we believe that

diversity enriches our performance diversity enriches our performance and products and…differences and products and…differences become increasingly important.”become increasingly important.”

Source: Microsoft

Indirect CompetitionIndirect Competition

• Product that provides an alternative Product that provides an alternative activity that one might choose over activity that one might choose over using Appleusing Apple–Video Games Video Games – Television Television –Digital Video Disc (DVD) Digital Video Disc (DVD)

TechnologyTechnology


TechnologyTechnology

• Industry TrendsIndustry Trends

– Tablet PCTablet PC

– Internet capabilitiesInternet capabilities

–Battery lifeBattery life

–CompatibilityCompatibility

CustomersCustomers


CustomersCustomers

• VolatileVolatile• Lack of perceived differentiationLack of perceived differentiation• FUD (Fear, Uncertainty, and Doubt)FUD (Fear, Uncertainty, and Doubt)• Discrepancy with early & late Discrepancy with early & late

adoptersadopters

MacroeconomicMacroeconomicFactorsFactors


Macroeconomic FactorsMacroeconomic Factors

• Moore’s LawMoore’s Law

• Current economic climateCurrent economic climate

• Natural disastersNatural disasters

Source: Intel; Businessweek

SWOT AnalysisSWOT Analysis

StrengthsStrengths

• Strong cash baseStrong cash base• Intellectual capitalIntellectual capital• Technology leaderTechnology leader• Brand imageBrand image• Charismatic leadershipCharismatic leadership• iTunes StoreiTunes Store

WeaknessesWeaknesses

• Lower profit marginsLower profit margins• Dividends rarely paidDividends rarely paid• Lack of succession planningLack of succession planning• Presence in business arena Presence in business arena • Underdeveloped customer Underdeveloped customer

relationships relationships

OpportunitiesOpportunities

• Digital business strategiesDigital business strategies• Customized user experienceCustomized user experience• Strengthen brandStrengthen brand• Expand strategic allianceExpand strategic alliance• Global expansionGlobal expansion

ThreatsThreats

• TechnologyTechnology• Volatile customersVolatile customers• CompetitionCompetition–GoogleGoogle

Sources of Competitive Sources of Competitive AdvantageAdvantage

Sustainable Competitive Sustainable Competitive AdvantageAdvantage

Advantage the corporation has over Advantage the corporation has over their competition that is unique and their competition that is unique and valuable and not easily duplicated.valuable and not easily duplicated.

Sustainable Competitive Sustainable Competitive AdvantageAdvantage

• Digital business strategyDigital business strategy• Strategic allianceStrategic alliance• Intellectual CapitalIntellectual Capital

Leadership RecommendationsLeadership Recommendations

Viable Alternatives | Minor RecommendationViable Alternatives | Minor RecommendationMajor Recommendation | Future StudyMajor Recommendation | Future Study

Spiritual ImplicationsSpiritual Implications

Viable AlternativesViable Alternatives


Viable AlternativesViable Alternatives

• Customer reward programCustomer reward program• Innovation focusInnovation focus• Sales promotion / discountsSales promotion / discounts

MinorMinorRecommendationsRecommendations


Minor RecommendationsMinor Recommendations

• Global expansionGlobal expansion–Open more storesOpen more stores

• Succession planningSuccession planning• Operational efficiency Operational efficiency

MajorMajorRecommendationsRecommendations


RecommendationRecommendation

• iAppleiApple-Creates Creates database database for customersfor customers-Personal Personal homepage on homepage on apple.comapple.com


• iAppleiApple– Tracks purchasesTracks purchasesoiTunesiTunesoApp storeApp storeoApple storeApple storeoAuthorized re-sellersAuthorized re-sellers

– Product recommendations Product recommendations


• iAppleiApple

- Social networkingSocial networkingoInteract with other customersInteract with other customersoCustomer service portalCustomer service portal

– iPhone / iPod / iPad AppiPhone / iPod / iPad App



• iPhone InitiativeiPhone Initiative–Open phones to every carrierOpen phones to every carrieroApple experience for allApple experience for all

• Connected to iAppleConnected to iApple- Every user now in databaseEvery user now in databaseoCustomer profileCustomer profile


• iPhone InitiativeiPhone Initiative–Growing knowledge of each Growing knowledge of each

customercustomeroIncreased customer shareIncreased customer share

- Paying for apps/musicPaying for apps/music- Automatic sync with only MacAutomatic sync with only Mac- Offer iPhone for freeOffer iPhone for freeoLifetime valueLifetime value


• AppleUAppleU–Rebranding of one-to-one programRebranding of one-to-one program– Product training with Mac SpecialistProduct training with Mac Specialist–Utilize intellectual capitalUtilize intellectual capital• Educate customers about any Educate customers about any Apple productApple product

– Increased customer shareIncreased customer share

Future StudyFuture Study


Future StudyFuture Study

• Pursuing stronger strategic alliances Pursuing stronger strategic alliances with software companieswith software companies

• Taking Apple into the business worldTaking Apple into the business world• Greater shareholder focusGreater shareholder focus• Social media integrationSocial media integration




1.1. Socially Ethical PracticesSocially Ethical Practices

2.2. Diversity and Equal EmploymentDiversity and Equal Employment

3.3. Environmentally ConscienceEnvironmentally Conscience


• Socially ethical practicesSocially ethical practices– Titus 2:7-8Titus 2:7-8o““Show yourself in all respects to be Show yourself in all respects to be a model of good works, and in your a model of good works, and in your teaching show integrity, dignity, teaching show integrity, dignity, and sound speech that cannot be and sound speech that cannot be condemned, so that an opponent condemned, so that an opponent may be put to shame, having may be put to shame, having nothing evil to say about us.” (ESV)nothing evil to say about us.” (ESV)


• Diversity & Equal EmploymentDiversity & Equal Employment–Acts 10:34Acts 10:34o““So Peter opened his mouth and So Peter opened his mouth and said: ‘truly I understand that God said: ‘truly I understand that God shows no partiality’” (ESV)shows no partiality’” (ESV)


• Environmentally ConscienceEnvironmentally Conscience– Psalm 115:15-16Psalm 115:15-16o““May you be blessed by the Lord, May you be blessed by the Lord, who made heaven and earth! who made heaven and earth! The heavens are the Lord’s The heavens are the Lord’s heavens, but the earth he has heavens, but the earth he has given to the children of man” given to the children of man” (ESV)(ESV)

Final QuestionsFinal Questions

Would we work for this company?Would we work for this company?

Would we invest in this company?Would we invest in this company?

Works CitedWorks Cited

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Arends, Brett. "7 Reasons Apple Shareholders Should be Cautious." Yahoo! Finance - Business Finance, Stock Market, Quotes, News. The

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SEC Filings., secfilings.com/myalers.aspx?welcome=true>

Hoovers., www.hoovers.com/company/apple.inc/rtjcci.html>

Argus Research., www.argusresearchcompany.com/appleinc

Business week., www.businessweek.com

Question Question AnswerAnswer