STRATEGIC MANAGEMENT

Project Report
On

Name Roll Nos. Apple Inc.

Suma Jana 09

Badal Khona 27
Group NO. 5

Rohit Mehta 35

Neel Parikh 38

Nikita Shah 54

Sagar Keshri 62

Professor-In- Charge: Tonia Mehra

 Introduction.

Apple Inc. is an American multinational corporation that designs and

markets consumer electronics, computer software, and personal computers.

The company's best-known hardware products include the Macintosh line of computers,
the iPod, the iPhone and the iPad. Apple software includes the Mac OS X operating
system; the iTunes media browser; the iLife suite of multimedia and creativity software;
the iWork suite of productivity software; Aperture, a professional photography
package; Final Cut Studio, a suite of professional audio and film-industry software
products; Logic Studio, a suite of music production tools; the Safari internet browser;
and iOS, a mobile operating system.

As of May 2010, Apple is one of the largest companies in the world and the most
valuable technology company in the world, having surpassed Microsoft.

Established on April 1, 1976 in Cupertino, California, and incorporated January 3,

1977, the company was previously named Apple Computer, Inc., for its first 30 years,
but removed the word "Computer" on January 9, 2007, to reflect the company's ongoing
expansion into the consumer electronics market in addition to its traditional focus on
personal computers.] As of September 2010, Apple had 46,600 full time employees and
2,800 temporary full time employees worldwide and had worldwide annual sales of
$65.23 billion.

Apple has established a unique reputation in the consumer electronics industry. This
includes a customer base that is devoted to the company and its brand, particularly in
the United States.

Bibliography www.slideshare.com, www.scribd.com, www.authorstream.com, www.insidecrm.com.

 History
➢ 1976–1980: The early years.

Apple was established on April 1, 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne

➢ 1981–1985: Lisa and Macintosh.

Steve Jobs began working on the Apple Lisa in 1978 but in 1982 he was pushed from
the Lisa team due to infighting, and took over Jef Raskin's low-cost-computer project,
the Macintosh.

➢ 1986–1993: Rise and fall.

The Macintosh Portable was designed to be just as powerful as a desktop

Macintosh, but weighed 17 pounds with a 12-hour battery life.

➢ 1994–1997: Attempts at reinvention.

The Newton was Apple's first foray into the PDA markets, as well as one of the
first in the industry.

➢ 1998–2005: Return to profitability.

On August 15, 1998, Apple introduced a new all-in-one computer reminiscent of

the Macintosh 128K: the iMac. The iMac design team was led by Jonathan Ive,
who would later design the iPod and the iPhone.

➢ 2005–2007: The Intel transition.

The MacBook Pro was Apple's first laptop with an Intelmicroprocessor. It was
announced in January 2006 and is aimed at the professional market.

➢ 2007–present: Mobile consumer electronics era

The Mac, iPad, and iPhone now form the core of Apple's business.
Bibliography www.slideshare.com, www.scribd.com, www.authorstream.com, www.insidecrm.com.,

www.oppapers.com

OBJECTIVES AND GOALS

• Over the next 3-4 years Apple would like to increase their product accessibility
(new stores).

• Increase their market share by 30%

• Eliminate the need for new products in order to raise sales.

VISION STATEMENT

“Man is the creator of change in this world.

As such he should be above systems and

structures, and not subordinate to them.”

 MISSION STATEMENT

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

educators, creative professionals and consumers around the world through its
innovative hardware, software and internet offerings.”

Bibliography www.slideshare.com, www.scribd.com,www. authorstream.com, www.insidecrm.com.,

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PORTER’S FIVE FORCES

MODEL
PC MP3 player/online music Mobile Products
services

Low Low Low

- Economies of Scale: - Since iPod nano launched, some - Economies of Scale:

R&D is especially a big competitors such as Rio and High demand in R&D and
part of the cost of Olympus had preferred to stop. marketing (today’s cell
producing (R&D cost in phones come with a lot of
computers hovers at - Economies of Scale: iPod has 80% add-ons like camera,
12% of sales by the of market share and Apple contracted voice recorder,
U.S. industry)1. with Samsung to buy 40% of its flash speakerphone, MP3
memory production which is two player and FM receiver.
- Product Differentiation: times more expensive than a hard They also have built in
Apple’s PC has its own drive2. memories to record and
operating system and retain voice and pictures
the unique design. - Product Differentiation: iPod has its and facility to download
own music store like iTunes which them to a computer).
- Cost Advantage: High allows customers download music
demand particularly in conveniently. The complete set of - Product Differentiation:
Threat iPhone has add-on
proprietary technology. iPod, iTunes and the accessories for
of Entry iPod. functions with technology
from their own PC and
- Cost Advantage: High demand in MP3 player.
proprietary technology. Apple has
several patents for iPod and - Cost Advantage: High
favorable access to raw materials by proprietary technology
the contract with Samsung. and favorable access to
 raw materials.

High Moderate High

- There are relatively - There are various competing firms - There are relatively large
few competing firms such as Samsung, Sony, i-River, etc., number of competing
Threat compared to other but iPod has almost 80% of the firms such as Samsung,
industries, but Microsoft market share. LG, Motorola, etc., but the
of
has most of the market latest market data from
Rivalry share. - But if it does not keep the products analyst firm Canalys
innovative, the other company’s estimates that Apple took
- Lower priced PC products which are lower in price than 28% share of US smart
makers like Dell have iPod can be a significant threat in phone market in 4th
been growing in the anytime. quarter of 20073.
market.

Low Moderate Low

- Many types of - The substitutes for MP3 player can - Mobile phones can be
Threat products such as PDA, be a CD player, MD player, radio, substituted by home
of DVD player, and etc.; but cheaper and easier access phones, internet
Substitu calculator can exist as a to MP3 files has been making messengers, etc., but the
tes substitute for PC, but customers leave from the other music main convenience of
these can substitute players. mobile phones which is
only one or two the portability cannot be
functions of PC. easily substituted.

Moderate High Low

- The major suppliers - The suppliers for raw materials and - Today’s phone has a lot
are of raw materials and labor can be the threat, but the of functions in addition to
the labor which is highly supplier who holds the main calling/receiving so there
proprietary in profitability is the song writers, are many kinds of
technology and has the singers and players. suppliers for the camera,
power to impact price. MP3 players, Video
- Another big threat is the illegal free players, memories, etc.
Threat - Besides the threat of music download websites or P2P file-
of the labor which includes sharing sources. Easy and cheap - Apple which is already in
Supplier the technicians, there access to MP3 files can encourage the industry of PC and
s are relatively various the MP3 player market, but on the MP3 mostly deals with
suppliers for the raw other hand, this can be the threat to internal mediates and
materials. iTunes. suppliers.

Moderate Low Low

- The number of buyers - The number of buyers is continually - The number of buyers is
is huge and growing as increasing and they keep demanding even huger than the PCs.
new technologies are new and updated products. Also the buyers keep
introduced at a fast increasing with the new
pace. - The internet speed and the music market of other
Threat file providers are developing and developing countries.
of these environments encourage the
buyers - Apple differentiated by MP3 buyers.
creating its own
operating system and - iPod has relatively loyal customers.
unique design, but other
companies like Dell or
HP differentiate by
lower price marketing.

Bibliography www.slideshare.com, www.scribd.com,www. authorstream.com, www.insidecrm.com.,

www.oppapers.com

SWOT Analysis Apple

Strengths:

• Apple is a very successful company. Sales of its iPod

music player had increased its quarter profits to $320
(June 2005). The favorable brand perception had also
increased sales of Macintosh computers. So iPod
gives the company access to a whole new series of segments that buy into
other parts of the Apple brand. Sales of its notebooks products is also very
strong, and represents a huge contribution to income for Apple

• Brand is all-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 a powerful loyalty means that Ample not only recruits
new customers, it retains them i.e. 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.

Weaknesses.
• It is reported that the Apple iPod Nano may have a faulty screen. The company
has commented that a batch of its product has screens that break under impact,
and the company is replacing all faulty items. This is in addition to problems with
early iPods that had faulty batteries, whereby the company offered customers
free battery cases.

• There is pressure on Apple to increase the price of its music download file, from
the music industry itself. Many of these companies make more money from
 iTunes (i.e. downloadable music files) than from their original CD sales. Apple
has sold about 22 million iPod digital music players and more than 500 million
songs though its iTunes music store. It accounts for 82% of all legally
downloaded music in the US. The company is resolute, but if it gives in to the
music producers, it may be perceived as a commercial weakness.

• Early in 2005 Apple announced that it was to end its long-standing relationship
with IBM as a chip supplier, and that it was about to switch to Intel. Some
industry specialists commented that the swap could confuse Apple's consumers.

Opportunities.
• Apple has the opportunity to develop its iTunes and music player technology into
a mobile phone format. The Rokr mobile phone device was developed by
Motorola. It has a colour screen, stereo speakers and a advance camera
system. A version of Apple's iTunes music store has been developed for the
phone so users can manage the tracks they store on it. Downloads are available
via a USB cable, ands software on the handset pauses music if a phone call
comes in. New technologies and strategic alliances offer opportunities for Apple.

• 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.
• The biggest threat to IT companies such as Apple is the very high level of
competition in the technology markets. Being successful attracts competition,
and Apple works very hard on research and development and marketing in order
to retain its competitive position. The popularity of iPod and Apple Mac are
subject to demand, and will be affected if economies begin to falter and demand
falls for their products.

• There is also a high product substitution effect in the innovative and fast moving
IT consumables market. So iPod and MP3 rule today, but only yesterday it was
CD, DAT, and Vinyl. Tomorrow's technology might be completely different.
Wireless technologies could replace the need for a physical music player.
Bibliography www.slideshare.com, www.scribd.com,www. authorstream.com, www.insidecrm.com.,

www.oppapers.com

PEST ANALYSIS

• PEST is the best technique for scanning of

macro level environment which include political,
economic, social and technological factors.

➢ Political Factors:
• Political factors are the rules, regulation, constraints and condition made
by government. Organization doing business in country must be agreed
upon the term and condition enforced by Government.
• Some examples of political factors includes:
- Taxes on product and services
- Employment laws
- Tariffs
- Trade
- Political Stability
- Government policy on economy.

➢ Economic Factors:
• Economics factors are important to know the purchasing power of people,
stability of economy. Fluctuation in economy impact prices of product and
services organization offers to their customers. These issues are
important in third world country because during recession and depression
demand goes down.
• Some examples of economic factors are
- Higher the interest rate lowers the investment.
- Economic growth in terms of GDP
 - Inflation rate
- Exchange rates.

➢ Social Factors:
• Organizations must evaluate social factors of the country before starting
business. Social factors include relationship, ethnic groups, religion, age
distribution and others.
• For example
- If marketers does not knows the social values of woman in society and
start advertising campaign of woman undergarments.
• - Offering products for young people at a place where the majority of
people are above 40 years.

➢ Technology factors:
• Technology is now become the part of majority of organization.
Technology is driving the business and improves quality and reduces time
to market of product and services. In industry where the technology
change with fast pace make it difficulty for the organization to adopt due
to cost and human resource issues.
• Some examples of technology factors are:
- Research & Development activity
- Automation
- Technology incentive
- Rate of technology change
- Technological shifts

Bibliography www.slideshare.com, www.scribd.com,www. authorstream.com, www.insidecrm.com.,

www.oppapers.com,www.freeessays.com
11 Effective Strategies Apple Uses to Create Loyal Customers

When shoppers sleep outside of stores just to be one of the first to buy an iPhone, it's
obvious that Apple Inc. is a company that enjoys fanatical brand loyalty. However, this
brand success is not a result of dumb luck or forces beyond Apple's control; it's part of
a well-thought-out plan to deliver strong products and to create an Apple culture. Find
out more about these and other strategies that Apple employs to achieve its
tremendous customer loyalty.

1) A Store Just for Apple: Apple has historically been troubled by big-box sales
staffers who are ill-informed about its products, a problem that made it difficult for
Apple to set its very different products apart from the rest of the computing
crowd. By creating a store strictly devoted to Apple products, the company has
not only eliminated this problem but has made an excellent customer-loyalty
move. Apple stores are a friendly place where Mac and PC users alike are
encouraged to play with and explore the technology that the company offers.
This is a space where Macheads can not only get service but also hang out with
others who enjoy Apple products just as much as they do. By creating this
space, Apple encourages current and new customers to get excited about what it
has to offer.

2) Complete Solutions: Apple's products complement and complete each other.

Buy an iPod, and you can download music via iTunes. For the average user,
most Mac programs are produced by Apple. This sort of control over the entire
user process, from hardware to software, strengthens customer loyalty. Apple
users generally don't have to stray to find products and solutions they want.

3) Are You a Mac?: Let's face it, Apple is a hip brand. It pushes a strong
identification with everything young, up-to-the-minute and smart. Consider
 Apple's I'm a Mac campaign. The Mac guy is smooth and confident, while PC
appears uptight and old. Once you've become smooth, would you want to go
back to uptight?

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4) Varied Products: Many consumers may not be ready to buy an Apple computer,
but they're willing to give gadgets like the iPod or iPhone a try. By selling
products with lower entry costs, it creates an opportunity for new users to be
introduced to Apple. If these users enjoy their gadgets, they're more likely to
consider buying an Apple computer in the future.

5) Media Fodder: Media outlets, especially bloggers, love to write about Apple.
Why? Because Apple makes it so easy. With leaked rumors about new
developments, its very own expo and mysterious shutdowns of its online store,
Apple gift wraps news stories that are just begging for speculation and hype. By
perpetuating this cycle of media frenzy, Apple keeps its customers excited about
buying new Apple products now and in the future.

6) Education Sales: By selling its products to schools and universities, Apple turns
classrooms into showrooms. If students go through school using Apple products,
they become comfortable with the interface and familiar with the superior
performance the brand offers. By creating this early exposure, Apple captures
customers before they even know that they are customers.

7) Products That Deliver: Apple carefully considers what consumers are looking
for, so its products are a result of both extensive research and strong design.
This meticulous planning is a large contributor to Apple's high customer-
satisfaction rates. It's plain and simple: Robust and easy-to-use products not
only make your customers happy, but also make them want to buy more
products from you in the future.
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8) Outsourcing Unpleasantness: With Apple products, the average consumer's

interaction with the company is likely to be low. Unless something goes wrong,
you don't have any reason to speak with an Apple customer-service
representative. Of course, the iPhone presented an opportunity that could have
made Apple much more involved, similar to administering iTunes for the iPod.
With a phone, interaction becomes multifaceted. You have to consider billing
errors, quality of wireless service, contracts and a number of other factors that
often lead to customer frustration. With the iPhone, Apple was wise to stick with
building a good product and letting AT&T handle the service.

9) Consistency: All of Apple's products have the same basic architecture. Because
of this consistency, customers who already own Apple products have a good
idea of what they'll be getting before they make a purchase. They know that it
will be easy to adapt to new hardware, and this makes them more open to
making a repeat purchase.

10) New Innovations: Although the architecture of Apple products is consistent, its
portfolio is not. The company offers consumers a number of different ways to
enjoy its products. By giving customers an opportunity to employ Apple in their
living rooms, pockets and offices, Apple makes it easy to stay loyal to a brand
they already like.
 11) Attractiveness: From packaging to aesthetic design to user-interface
experience, Apple makes its products accessible and attractive. Bright colors, a
smiling icon and slick-looking hardware remind customers every time they use
Apple products that what Apple offers is appealing.

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 Recommendations

Strategy 1

• Open six computer retail stores (not just peripheral and accessories). Apple
currently has stores opened throughout the United States with only peripheral
and accessories for their computers. Adding the hardware should generate more
hands-on awareness and use already established locations.

• This will increase product accessibility for those who wish to view items other
than just accessories and increase awareness of the originality of Apple’s
products.

• 2 percent increase over the next 2 years in sales representatives for the
computer hardware.

Strategy 2

• Contract music spokesperson to attract the upcoming generation who are

attending high school and college. This will invoke a sense of style and linking
apple with a distinctive and memorable top 10 hit. This will stay in the customer’s
awareness and influence future purchase decisions.

• Contracting one music spokesperson estimated $6 million.

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Strategy 3

• Add more features to current products for greater Wintel compatibility. Features
such as iTune software compatible with windows based computers, Office
programs loadable from PC installation disk (This would require a software
agreement with Microsoft). In late October 2003 Apple released an iTune
software package that is PC ready.

• It will increase the United States market share at least 30 percent for the next 2-
3 years.

• $50 million is the estimated cost for Research and Development.

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