Apple Inc.

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INTRODUCTION

APPLE'S INC. is an American multinational corporation that designs and markets consumer electronic, software and personal computers. The mission statement of Apple is “Apple designs Macs, the best personal computers in the world, along the OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPod’s and iTunes online store. Apple reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices.” The vision of the company is “To make a contribution to the world by making tools for the mind that advance humankind.”      Apple operates 300 retail stores in ten countries; they also have an online store where hardware, software products are sold. Apple products include Mac (desktop computers /laptops), iPod, iPhone, iPad, iTunes, and other products.

Some ways that Apple uses the Web:

• To advertise their products (Mac, iPod, iPhone, iPad, iTunes,  and other products).

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• To see their products.

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• To have other services to assist you.

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• To have videos to help you set up your Apple 

        products.

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• To download data software, updates for Apple

        products.

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• To communicate with other Apple users around the world.

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• To contact them for further information.

Introduction (cont.)

Apple is a consumer based industry. The success or failure depends upon how well the products are received by the customers. SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats.Strengths and Weaknesses are internal factors that affect company’s success or failure. Opportunities and Threats are external factors the impact the company’s growth. SWOT analysis is performed on each segment individually. It also states and evaluates how well the product meets the consumer's needs and comparing itwith the competitors and focusing on the current and future market.

Strengths:

• Brand – is extremely important. Apple is one of the most established and healthy IT brands in the world, and has a very loyal set of enthusiastic customers that advocate the brand. Such powerful loyalty means that Apple not only recruits new customers, it retains them. This means they come back for more products and services from Apple, and the company also has the opportunity to extend new products to them, for example the iPod.

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• Design and Innovation – Apple’s design teams’ primary motivation is to make intuitive products that will allow users to be up and running without having to read instruction books. They set the standard for designing hardware and software products. Apple computers are experts in developing their own software and hardware products.

Strengths (cont'd):

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• Retail – In addition to having their online iTunes store, Apple has opened an additional online store called the App Store. These online stores are strengths in that they allow Apple to maintain a continual stream of revenue rather than having to wait solely upon new product development.

Weaknesses :

• Faulty products – It is reported that the Apple iPod Nano may have a faulty screen. The company has commented instantly that a batch of its product has screens that break under impact, and the company is replacing all faulty items

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• Very proprietary and controlling – Apple would not open their operating system to outsiders to develop hardware to work with other company products, keeping hardware sales to itself.

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• To much reliance on CEO Steve Jobs.

Opportunites:

• Technological Innovations – Apple has the opportunity to develop its iTunes and music player technology into a mobile phone format. A version of Apple's iTunes music store has been developed for the phone so users can manage the tracks they store on it. New technologies and strategic alliances offer opportunities for Apple.

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• Extend new products to loyal customers – Expanding loyal customer base with the release of iPod and the iPhone and later the iPad.

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• Podcasts – are downloadable radio shows that can be downloaded from the Internet, and then played back on iPods and other MP3 devices at the convenience of the listener. The listener can subscribe to Podcasts for free, and ultimately revenue could be generated from paid for subscription or through revenue generated from sales of other downloads.

Threats:

• Competition – The biggest threat to IT companies such as Apple is the extremely high level of competition in the technology markets. Since they are a successful company, they attract competition from Dell, HP, Sony, and Toshiba. Apple puts emphasis on researching and developing and marketing in order to retain its competitive position. The popularity of Apple’s iPods’ and Macs’ (computers) are subject to demand. If economies begin to weaken, it will affect demand negatively.
• Substitute products – There is a high substitution effect of products in the innovative and fast moving IT consumables market. Technology is changing rapidly in the markets. Just yesterday it was CD’s, now its iPod’s. Tomorrow’s technology might be entirely different.
• Low prices of the competitors – Apple price itself out of the personal computer industry, which is a big problem. This leads to competitors selling their product at a lower price than an apple product.
• Technical advancements – Microsoft launched Microsoft Vista, Windows 7 which is gaining market share.

APPLE'S CULTURE

The culture of Apple was based on the fact that individuals who are self-motivated will do more work if they do not have a manager/supervisor examining their every action. The unique structure of Apple had allowed it to grow and react more quickly to changes than its competitors. The reason for this quick response is because it is easier to get a project started if there are only a few people to obtain approval from. Apple initially grew fast, because decisions were made at the lowest possible level.

• Corporate/Company Culture:

Apple has a startup level urgency when the direction comes from Steve. If you have a project that Steve is not involved in, it will take months of meetings to move further. If Steve wants it done, it will be done as fast as possible. The best way to get any work done was to say it’s for Steve and you would probably have it the same day.

• Design:

For Apple, design is everything. Steve Jobs strongly believes this. When you have a leader that knows and believes in the impact of design, it is easier to make everyone else follow. When the entire company focuses on the design of a product, the result is breathtaking products. This is exactly how Apple does it; they strive for perfection. If at any point in time they make a mistake with a product, or if it’s not perfect in its own unique way, it’s simple, they would not let it go to the public.

APPLE'S STRUCTURE

The organizational structure of Apple was focused on placing decision making in the hands of the people in the field. Apple was doing exceedingly well and had gotten the attention of many people around the world because the company was performing extremely well and was very responsive to changes that were made. However, after years of success, Apple found themselves in a financial nightmare. Apple suffered problems specifically in the accountability of spending and in economic decision-making. With employees making decisions at different levels of the organization, it is difficult for the corporate office to keep track of spending and purchasing.

Organisational Structure of Apple's Inc

ENVIRONMENT

The environment in Apple is one that changes really quickly.

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• Economic Environment

     Apple is not the market leader of the computer industry although, it is only 7%. In the computer industry Apple has many competitors, like Dell, HP, Sony and Toshiba. Due to the economic crisis, Hong Kong has a very high inflation rate. People will not want to purchase such an expensive product like Macbook, but with an increase on their income level might just change their mind. It will increase the willingness of the public to purchase the Apple products.

• Technological and Information Environment:

      Apple has many well-known software programs, like iOS and iWork. All of them are particularly designed for the Mac computers, there are the comparative advantage of Apple. Apple also make good use of the technology to develop many multi-functional products, and improving the existing programs.

BUSINESS STRATEGY

 Apple’s business strategy is to “Think Different”. 

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Apple’s ability to align marketing strategy and 

business strategy with product development

leaves competitors in the dust. Their strategy is

product differentiation and strategic alliances.

• Product Differentiation:

Product differentiation is a viable strategy, especially if the company uses theoretical distinctions for product differentiation.  Those that are relevant to Apple are product features, product mix, and their reputation. Apple prides itself on its innovation. Apple established a reputation as an innovator by offering some easy-to-use products that cover a broad range of segments.

A company’s differentiated product will appear more attractive comparing to substitutes, thus reducing the threat of substitutes.  If suppliers increase their prices, a company with a differentiated product can pass that cost to its customers, thus reducing the threat of suppliers. A company attempts to make its strategy a sustained competitive advantage.  For this to occur, a product differentiation strategy that is economically valuable must also be uncommon, difficult to imitate, and the company must have the organization to take advantage of this.

• Strategic Alliances:

                        There is economic value in strategic alliances. In the case of Apple, there was the opportunity to manage risk and share costs, facilitate tacit collusion, and manage uncertainty.  It would have been applicable to the industries in which Apple operated.  Tacit collusion is a valid source of economic value in network industries, which the computer industry is.  Managing uncertainty, managing risk, and sharing costs are sources of economic value in any industry.  Although Apple eventually realized the economic value of strategic alliances, it should have occurred earlier.

VALUE CHAIN

                The value chain highlights specific activities in the business where competitive strategies and information systems will have the greatest impact. The chain analyzes the firm as a series of primary and support activities that add value to a firm’s products or services. Primary activities are directly related to production and distribution, whereas support activities make the delivery of primary activities possible.

Primary Activities

Support Activities

COMPETITIVE STRATEGIES

There are four types of Competitive Strategies:

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• Low Cost Leadership

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     This strategy involves the firm winning market share by appealing to customers. This is achieved by having the lowest prices in the target market segment, or at least the lowest price to value ratio. To succeed at offering the lowest price while still achieving profitability and a high return on investment, the firm must be able to operate at a lower cost than its rivals. There are three main ways to achieve this:

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• The first approach is achieving a high asset turnover.
• The second dimension is achieving low direct and indirect operating costs.
• The third dimension is control over the supply/procurement chain to ensure low costs.

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• Differentation

        A differentiation strategy is appropriate where the target customer segment is not price-sensitive, the market is competitive or saturated, customers have very specific needs which are possibly under-served, and the firm has unique resources and capabilities which enable it to satisfy these needs in ways that are difficult to copy. These could include patents or other Intellectual Property (IP), unique technical expertise, talented personnel, or innovative processes. Successful brand management also results in perceived uniqueness even when the physical product is the same as competitors. This way, Starbucks could brand coffee, and Nike could brand sneakers. Fashion brands rely heavily on this form of image differentiation.

• Focus on market Niche

•  Marketing niche strategy based on customer needs and wants are the most sustainable – this usually arises when the mass-market product does not produce the item required.
• Marketing niche strategy can also be created if there are social and cultural differences within a single community that may require that changes may be required to be made to a product or service. This regularly gives rise to a niche market.
•   Marketing niche strategy is also created through exclusive rights – such as brands, trademarks, patents etc. For example under the main brand a niche brand can be created to serve special customer needs e.g. Marketing niche strategy is also achieved through adopting particular delivery channels.

• Strengthen Customer and Supplier Intimacy

     Customer and supplier intimacy strategy uses information systems to develop strong ties and loyalty with customers and suppliers. Strengthening customer and supplier intimacy can be an extremely effective strategy in itself. Through making transactions and conditions in general, easier and more user friendly for customers and suppliers, the intimacy of the firm and customer/supplier will increase. This offers great incentive for both customer and supplier to continue doing business with the firm. Customer intimacy is a concept from marketing, which describes the ability of a supplier to become accepted and known as the regular partner with its customer. Customer intimacy is the largest source of your growth, sustainable competitive advantage, and profit. Strengthen Customer and Supplier Intimacy: apply information systems to tighten long-term relationship and create brand loyalty with customers and suppliers, including increasing switching costs.

The Strategies that affect Apple Inc. are:

•          Differentiation
•          Focus on Market Niche
•          Strengthen Customer  and Supplier Intimacy

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•  Differentiation

                    Apple Inc. can use differentiation as a competitive strategy to fight the competitive forces, since they have a range of products that stand out against all other products in the electronic industry. For example Apple's design skills or Pixar's animation prowess is one way of showing that this company sis different. This business approaches the non-price sensitive customer and delivers exactly what the customer need.  

• Focus on Market Niche

    Apple Inc. can also use this competitive strategy since, this company uses high ‘modern-day’ technology that assist the ‘modern-day’ man in every aspect of life. Apple designs products with a unique style that will satisfy the customer that wants a particular feature which the mass product will not entail. 

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• Strengthen Customer and Supplier Intimacy

Apple Inc. can also use this strategy since, they are a well-known organization and although they may be a part of brand loyalty, in order to fight other competitive forces, they may need to keep in touch with their customers and even suppliers. This method helps both customer and supplier to keep doing business with the firm and also assist in company growth, sustainable competitive advantage and increase in profits.

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There are three types of information systems that affect Apple Inc. ability to effectively execute the specific strategies:

•          Transaction Processing Systems
•          Management Information Systems
•          Decision Support Systems

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• TRANSACTION PROCESSING SYSTEMS (TPS): 

        Transaction processing systems (TPS) automate the handling of data about business activities or transactions. The analysis and design of TPS, means focusing on the firm’s current procedures for processing transactions, whether those procedures are manual or automated. The goal of TPS development is to improve transaction processing by speeding it up, using fewer people, improving efficiency and accuracy, integrating it with other organizational information systems or providing information not previously available. Therefore, this is a suitable information system that will assist Apple Inc. to effectively execute the competitive strategies discussed above.

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• MANAGEMENT INFORMATION SYSTEMS (MIS):

       A management information system (MIS) is a system that provides information needed to manage organizations efficiently and effectively. Management information systems involve three primary resources: technology, information, and people. It's important to recognize that, the most important resource is people. Management information systems are distinct from regular information systems in that they are used to analyze other information systems applied in operational activities in the organization. Hence, management information systems can be used in Apple Inc. to assist in effectively executing the competitive strategies identified above.

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• DECISION SUPPORT SYSTEMS (DSS):

A decision support system (DSS) is a computer-based information system that supports business or organizational decision-making activities. DSSs serve the management, operations, and planning levels of an organization and help to make decisions, which may be rapidly changing and not easily specified in advance. A properly designed DSS is an interactive software-based system intended to help decision makers compile useful information from a combination of raw data, documents, personal knowledge, or business models to identify and solve problems and make decisions. Typical information that a decision support application might gather and present are:

·         Inventories of information assets (including legacy and relational data sources, cubes, data warehouses, and data marts),

·         Comparative sales figures between one period and the next,

·         Projected revenue figures based on product sales assumptions.

Therefore, this type of information system is definitely needed in a business such as Apple Inc.