Apple Case

1. What are the chief elements of Apple’s overall competitive strategy? How well do the pieces fit together? Is the strategy evolving?

Apple has done a good job on innovating new technics and products to the market. They initially focus on the computer industry after Steve Jobs returned to the board in 1997. Apple expands its service product lines to the media player, mobile phone, tablet, iTune and App Store step by step to create a close connection of Apple experience to their customers. By introducing new their OSX and iOS operating system, Apple combines all their products and services together that incubate an Apple system life style. As technology development, mobile devices have greater capacity to provide better game experience and vision quality that could only on the desktop in the past. Apple continues introducing marvel products that can solve people’s problem or make life more comfortable.

2. What are the key elements of Apple’s strategy in computers, personal media players, tablet computers, and smartphones? Have its strategies in its core businesses yielded success? Explain.

Apple computer sales in its premium price and high graphic handling capability is trying to catch experts and high computing hunger people. The low learning curve and easy to use are the most important attraction for K-12 schools student to use as their first computer. Because all Apple products are work together without any setting and have best performance, the iPhone, iPod and iPad are also helped the Mac’s sale. Despite the external design of iPod and iPhone, the software and online store are the keys of success. The iOS and iTunes are highly decreased the management complexity of the songs and song purchasing method that totally changed the music industry.

 Apple has very limited product lines and models that make perfect products. The appearances of Apple products are produced with their patterned DNA helping customers to recognize Apple’s fashion products.   

3. What does a competitive strength assessment reveal about Apple’s computer business, as compared to the leaders in the computer industry? Use the methodology in Table 4.4 to support your answer. Does it appear that the company’s competitive positions in personal media players, tablet computers, and smartphones are stronger or weaker than its position in computers?

Based on weighted competitive strength assessment analysis, Apple has high strength on quality performance, reputation, technological skill, product innovation capability, and financial resource. The customer service is awesome in the U.S. and some cities outside the U.S., but the service is not good where doesn’t have cement and brick Apple store. The primary weakness is dealer network compare to the top rivals.

    Of the smartphone, media player and tablet computer strength assessment, the innovation capability seems a little bit weaker against to the rivals. The smartphone, tablet and media player have much better strength on dealer network, and customer service than its computer business compares to its competitors.

4. Does it make good strategic sense for Apple to be a competitor in the computer, personal media player, smartphone, and tablet computer industries? Are the value chain activities that Apple performs in computers, personal media players, tablet computers and smartphones very similar and “compatible” or are there very important differences from product to product? Which of the four products lines – computers, tablet computers, personal media players, or smartphones – do you think is most important to Apple’s future growth and profitability? Why?

It has made good sense for Apple to be a competitor in the computer, personal media player, smartphone, and tablet computer industries. The easy to use operating system and powerful graphic computing are the strategies for Apple to gain market share in the computer industry. Despite those two strategies in the computer industry, the mobile phone, tablet and media player have its fashion styles appearance and innovation technology functions that made Apple became the top one or two player in the market.

There are some technologies and software development involved in all Apple’s product lines. For instance, the retina screen was first adopted on iPhone 4 then expanded to all product lines. The multi touch screen technic, aluminum unibody manufacturing process and operating system are similar in most product lines. The most significant difference is operating system in the computer segment and portable device segment that have entirely different operating method.

Smartphone would be the most important product line for the future growth. Since the smartphone and tablet computer becoming popular, and globe computer market shrinks, computer product line and media player sales might slow down or even go negative. Smartphone has the best potential growth in developing countries including Brazil, Russia, India, and China.

5. What is your assessment of Apple Computer’s financial performance the past three years? (Use the financial ratios in the Appendix of the text as a guide in doing your financial analysis.)

	2011	2010	2009
Net Sales	108,249	65,225	42,905
Net Growth	43,024	22,320	5,414
Revenue Growth	65.96%	52.02%	14.44%
Cost of Sales	64,431	39,541	25,683
Gross Profit Margin	40.48%	39.38%	40.14%
Operating Income	33,790	18,385	11,740
Operating Profit Margin	31.22%	28.19%	27.36%
Net Income	25,922	14,013	8,235
Net Profit Margin	23.95%	21.48%	19.19%
Total Asset	116,371	75,183	47,501
ROA	22.28%	18.64%	17.34%
Shareholders' equity	76,615	47,791	31,640
ROE	33.83%	29.32%	26.03%

Apple has grown explosively on 2010 and 2011 that had double their revenue within two years. Growth profit margin keeps on an average 40% in these three years that shows Apple performances excellent job on cost control that doesn’t affect by their sales boom. Both operating profit margin and net profit margin were growing fast, and high percentage compared to its rivals, Hewlett-Packard and Dell, at 5%~10% on operating profit margin and 3%~7% on net profit margin. The same on a return on asset and return on equity ratios that show Apple were growing so fast and improving its management ability to generate more profit.

6. What recommendations would you make to allow Apple to strengthen its position in its most important markets? What steps should it take to ensure that the iPad becomes a major contributor to the company’s overall performance?

Apple can try to communicate to more dealer and contributors to acquire exposure rate on the Internet and in stores. To support more carriers’ network system gives it the opportunity to invade into new markets over the world. It is the biggest problem that Apple couldn’t sell its phone to the customers of China’s largest telecom company.

            For the iPad market, Apple should keep leading the innovative product. Continuing the cost down strategy on manufacturing and management process to generate higher profit in the long run. Developing more portable and desktop computer compatible apps to iPad that attract customers to get one instead of traditional computers.