exampple apple

8/13/2019 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

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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

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30

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60

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iPhone Android Other

2011

2012

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Smart Phone: Market share growth

The mobile worldwide market in 2010


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Apple as a Mobile browser leader In 2010

The mobile worldwide market in 2010


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X X

X

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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



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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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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 M i W k /Th


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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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