exampple apple
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2011 University of St. Thomas, Opus College of Business
Apple: Strategic Management Case StudyHank, Kakie, Sandy, Abdi & El Haddi
Strategic Management, UST Executive MBAFall 2012
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Misdirection
Core Values Revealed
No External Agencies
= No Disclosure= What Life?
Internal Teams
1. 2.3.
4. Innovation5. Research
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Created 600,000 Jobs in the US
New announcement by Tim Cook
Assembled in the USA
By itself, Apples iTunesand App stores make more money than The New YorkTimes; Simon & Schuster, which publishes the best-selling Steve Jobs biography;
Warner Bros. film studios, which owns the popular Batman film franchise; and TimeInc., the largest magazine publisher in the U.S. Combined.
-Edmond Lee - Bloomberg
Recent News: Jobs by Jobs
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Apple, Inc.
Now Founded 1977 HQ Cupertino, Ca. The Mother ship Largest U.S. company ever
72,000 Employees 34 Patent Applications in October 80% of revenue is from new products sold from
Mid Sept to M/E Oct
Competencies1. Simple, Well Designed, User friendly
2. Innovative Culture of Design3. Loyal Customers4. Technology iOS5. Energy Efficient
Apple, Inc.
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Apple, Inc.
1. Operational Focus - Willing to release incomplete products2. Wall Street - Engaging to increase dividends3. Shifting Values - MBA vs. Liberal Arts
4. Relaxed Atmosphere - Leadership quiet yet demanding5. Highly Ethical ?- Some might question
Procurement Vendors
Internal Assessment
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Leadership
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Governance
$50k per yearServe one-year terms
3 Committees
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Apple's board of directors has three committees:
The Audit and Finance committee members are Ronald D. Sugar, Ph.D.(Chairperson), Robert A. Iger, and Arthur D. Levinson, Ph.D.
The Compensation committee members are Andrea Jung (Chairperson),William V. Campbell, Millard S. Drexler, and Albert Gore, Jr.
The Nominating and Corporate Governance committee members areWilliam V. Campbell (Chairperson), Millard S. Drexler, and Albert Gore, Jr.
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Committees
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Foxconn
Product Quality
Privacy
Sustainability
Intellectual Property Theft
Patents
Ethics
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Management Effectiveness
Revenue per Employee $2,023,349
Net Income per Employee $539,528RIA % (Net) 28.08ROE % (Net) 42.15ROI% (Operating) 55.79
Profitability Ratios
Gross Margin 44%Operating Margin 35%EBITA Margin % 38%Calculated Tax Rate % 25%Profit Margin (TTM) 27%
Valuation Ratios
Price/Earnings (TTM) 15.19Price/Book (TTM) 53.3
Price/Cash Flow (TTM) 12.46Asset Management
Total Asset Turnover 1.05Receivables Turnover 10.13Inventory Turnover 112.12Prop Plant & Equip Turnover 13.26
Cash & Equivalents Turn 14.98
Financial Analysis
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80% 2012 revenue from new products sold Mid Sept to Oct 31 - CNBC
Industry Ratio Comparisons
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Reinvention
Change is Inevitable?
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Release history
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LEADING INDICATORS
&
DEMAND DRIVERS
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D = f(li1, li2, li3, , lin)
Market Share: Stable
Search trends as an early indicator: Who has it? Networking effect
Sharing
Social NetsSocial Networking capabilities 20
Demand
And Adoption
Rate
Demand as a F(x) of leading indicators
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Demographics
World Progress Indicators
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Economic Leading Indicators
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Product Drivers:
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Leading Indicators: Product Drivers
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ANDROID
iPhone
Mobile browser counter as a leading indicator ?
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EXTERNALITIES
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Smart Phones: Competitors
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iPhone, Droid or Windows Phone ?
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Mobile computing: Laptops & Notebooks
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Banking: $$$$$$$$
Educational Financing
Distribution
Kiosks Digital
Cloud Direct Apple Stores Retail VARS Education
App developers Effective Designers Infrastructure
Talent (Well trainedworkforce)
Apple University $$$$$$$$$$$$$$$ Manufacturing,
Suppliers, Partners
(100+)
iPhone
iPadiCool
PatentsDesign
Manufacturing
R&D,
IPInnovation Marketing
Quality
Value Chain & Business Model
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Design Miniaturization
Security
Ease of Use
Reliability
Marketing
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Open Systems
Improve + Innovate
Closed Systems
Cool! SecureReliable
Reduced Cost of production
Improved Sales & Margins
V
A
L
UE
++
+
$$
$
FreeBSD
Key Success Factors
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B2B Market B2C Market
BOP $
Enterprise + Government
SMB$$$$$ Class
$$$$$$ Affluent
Premium PricingEducation
Target Market
G
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INDUSTRY GROWTH & MARKET SHARESmart Phones: 71% CAGR for the next 4 yrs.
Cloud computing: 20% CAGR
Mobile dev. in general: 25%
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*nomic
02
*provisioning
Carrying
Capacity ???
Convergence
Value Chain & Business Model
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0
10
20
30
40
50
60
70
iPhone Android Other
2011
2012
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Smart Phone: Market share growth
The mobile worldwide market in 2010
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X
Apple as a Mobile browser leader In 2010
The mobile worldwide market in 2010
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X X
X
X
X
iPhone Mobile market share 2012
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Apple has 68% of the tablet market
Cannibalization of iPad by the mini iPad?
Google & Others TabletsOpen source to the rescue?
App store: Closed platform ?
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What about the iPad ?
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OPPORTUNITIES THREATS
Rapid Technological Changes
Highly Competitive Market
Continual Timeliness of R&DPatent/Copyright Violation
Multiple Distribution Network Weak
Outsourcing manufacturing
New Management (Midas touch?)
Growing demand:
Education
Enterprise and Government
ConsumersMobility & Nomadic computing
Media devices
TV, Tailored Shows, MOD
Growing incomes in ASIA and other
emerging nations.
External Scanning Analysis
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Industry EnvironmentSociocultural Forces
Political-Legal Risk
Economies
Technological Factors
Workers at an Apple supplier facility in Shanghai
assemble parts for the MacBook Pro
Societal Constraints
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Niche MarketINNOVATION
High Advertising Budget
Patent ViolationsChina/othersStrong BrandFAKE iPhone anyone?
Global DemandExisting Patents(i.e.Googles 17000!)Supply Costs
Supply ShortagesPrice IncreasesOutsourcing Process
High Customer LoyaltyHigh DemandUniqueness
Buyers
SubstitutesSuppliers
New Entrants
Industry Competitors
Porters Five Forces
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Apples Sustainable Product Differentiation
Cost of Apple Product
Apple Pursues Niche Market
Differentiation Strategy
Defensive
Pass Cost on to Customers
Oligopoly Market (Niche)
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Capabilities
VISION 2020
Future Goals Current Strategy
Assumptions NewTechnology
Innovative Products
Creative Solutions
Strong Market Position
Diversified Portfolio
Inspire the World, Create the Future
Robust Top Line Growth
Fluctuating operating & net profits
(S)
(W)
Segmentation
Targeting
Positioning
Promote new Value for Core Networks Industry
Partners
Employees
Expand Global Penetration (SW Asia)
Promote Top Line Products
Company that goes after its goals
Change = ActionSame Threats as all Competition
Raw Material Pricing
Intense competition
Increasing regulations
Competitive Analysis - Porter
TOWS Matrix: Strengths/Opportunities
TOWS Matrix: Strengths/Opportunities
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TOWS Matrix: Strengths/Opportunities
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TOWS Matrix: Strengths/Opportunities
External
Scanning
Internal
Assessment
Opportunities
1. Demand in Education2. Demand in Enterprise & Government3. General Use Demand
4. Demand for Mobile Communications5. Demand for Media Devices6. APPLE Television7. Strong growth opportunities in emerging nations8. Rising wages in China
Strengths
1. Global Company2. Strong Brand Image
3. Diverse Distribution Avenues
4. Design, Manufacturing & Marketing
expertise
5. Wide Market Circle
6. Reputation for Innovation7. Master with 3rdparty digital content
8. Compatible with Windows platform
9. Horizontal and Vertical Integration
10. Financially Sound
11. Entrepreneurial culture
12. Customer loyalty
S/O Strategies: GROWTHContinue aggressive international growth
strategies S1-O7
Strengthen partnerships with Education S12-O1
Increase APPLE television content S4/S6-O6
Capitalize on the smart-phone revolution S4,S7-O4,O7
Continue to aggressively develop mobile app
market S6-O4,O5,O7
TOWS Matrix: Strengths/Threats
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TOWS Matrix: Strengths/ThreatsExternal
Scanning
Internal
Assessment
Threats
1. Industry constantly evolving2. Highly Competitive Market3. Outsourcing Difficulties
4. Inability to meet R&D requirements5. Imitation of Apple products6. Violation of patents and copyrights
Strengths
1. Global Company2. Strong Brand Image3. Diverse Distribution Avenues4. Design, Manufacturing & Marketing
expertise5. Wide Market Circle6. Reputation for Innovation7. Master with 3rdparty digital content8. Compatible with Windows platform9. Horizontal and Vertical Integration10. Financially Sound
11. Entrepreneurial culture12. Customer loyalty
S-T Strategies: External Fix-it
Aggressively pursue new product
development i.e.; wearable & pen
computing S6-T4
Strengthen partnerships with band widthvendors i.e.; international market S1-T1-T2
Evaluate niche market concentration S12-
T1,T2
Eval Backward/FWD Integration (S9:T3)
TOWS Matrix: Weaknesses/Opportunities
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TOWS Matrix: Weaknesses/Opportunities
External
Scanning
Internal
Assessment
Opportunities1. Demand in Education2. Demand in Enterprise & Government3. General Use Demand
4. Demand for Mobile Communications5. Demand for Media Devices6. APPLE Television7. Strong growth opportunities in emerging nations8. Rising wages in China
Weaknesses
1. Subject to supply shortages & price
increases
2. Difficulty controlling outsourcing processes
3. Accusations of infringement upon patents of
other organizations
4. Dependence on iPhone and iPadlimited
variants
5. Lack of different price points with products
6. Dependence cellular network providers
7. Cost of product
W-O Strategies: Internal Fix-it
Improve domestic supply chain (W1-O3)
Aggressively continue to pursue R&Dproduct development (W4-O1-07)
Continue to develop superior product(s)
at lower cost point (W7-O7)
TOWS Matrix: Weaknesses/Opportunities
TOWS M i W k /Th
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TOWS Matrix: Weaknesses/Opportunities
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Internal External
Scanning Assessment
Threats
1. Industry constantly evolving
2. Highly Competitive Market3. Outsourcing Difficulties4. Inability to meet R&D requirements5. Imitation of Apple products6. Violation of patents and copyrights
Weaknesses
1. Subject to supply shortages & price
increases
2. Difficulty controlling outsourcing processes
3. Accusations of infringement upon patents
of other organizations4. Dependence on iPhone and iPadlimited
variants
5. Lack of different price points with products
6. Dependence cellular network providers
7. Cost of product
W-T Strategies: Eliminate/Survival
Strive to avoid patent infringement within
tech community (W3-T4,T6)
TOWS Matrix: Weaknesses/Threats
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Relative sales growth rate: g = 100(Sn - S(n-1) ) /Sn-1
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Flush with Cash: Lets do Backward andForward Integration
Backward Integration: Purchase of carriers
i.e. Nortel Networks (Done!)
WiMAX?
Cable or others with a market cap of
100B?
Forward Integration:
Kiosks
Service Providers
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Conclusion
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LOW COST DIFFERENTIATION
BroadTarget
Low cost Differentiation
NarrowTarget
Cost focus
Focused differentiation
Competitive Advantage
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Factory Orders Report Gross Domestic Product (GDP)
Housing Starts
Industrial Production
Jobless Claims Report
Money Supply
Mutual Fund Flows
Non-Manufacturing Report
Personal Income andOutlays
Producer Price Index (PPI)
Productivity Report
Purchasing Managers Index (PMI)
Retail Sales Report
Trade Balance Report
Wholesale Trade Report
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Economic Indicators
http://www.investopedia.com/university/releases/factory-orders.asphttp://www.investopedia.com/university/releases/gdp.asphttp://www.investopedia.com/university/releases/housingstarts.asphttp://www.investopedia.com/university/releases/productioncapacity.asphttp://www.investopedia.com/university/releases/joblessclaims.asphttp://www.investopedia.com/university/releases/moneysupply.asphttp://www.investopedia.com/university/releases/mutualfundflows.asphttp://www.investopedia.com/university/releases/servicereport.asphttp://www.investopedia.com/university/releases/personalconsumption.asphttp://www.investopedia.com/university/releases/personalconsumption.asphttp://www.investopedia.com/university/releases/ppi.asphttp://www.investopedia.com/university/releases/productivity.asphttp://www.investopedia.com/university/releases/napm.asphttp://www.investopedia.com/university/releases/retailsales.asphttp://www.investopedia.com/university/releases/tradebalance.asphttp://www.investopedia.com/university/releases/wholesaletrade.asphttp://www.investopedia.com/university/releases/wholesaletrade.asphttp://www.investopedia.com/university/releases/tradebalance.asphttp://www.investopedia.com/university/releases/retailsales.asphttp://www.investopedia.com/university/releases/napm.asphttp://www.investopedia.com/university/releases/productivity.asphttp://www.investopedia.com/university/releases/ppi.asphttp://www.investopedia.com/university/releases/personalconsumption.asphttp://www.investopedia.com/university/releases/personalconsumption.asphttp://www.investopedia.com/university/releases/servicereport.asphttp://www.investopedia.com/university/releases/servicereport.asphttp://www.investopedia.com/university/releases/servicereport.asphttp://www.investopedia.com/university/releases/mutualfundflows.asphttp://www.investopedia.com/university/releases/moneysupply.asphttp://www.investopedia.com/university/releases/joblessclaims.asphttp://www.investopedia.com/university/releases/productioncapacity.asphttp://www.investopedia.com/university/releases/housingstarts.asphttp://www.investopedia.com/university/releases/gdp.asphttp://www.investopedia.com/university/releases/factory-orders.asp -
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Business Outlook Survey
Consumer Confidence Index (CCI)
Consumer Credit Report
Consumer Price Index (CPI) Durable Goods Report
Employee Cost Index (ECI)
Employee Situation Report Existing Home Sales
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Economic leading indicators: work in tandem!
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