Apple was still maintaining the leader position until the mid sass's when IBM entered the PC market, Dell, Compact and HP were soon to follow, and they have taken some market share from Apple. In this bad situation, Apple faced weak unit sales, flat gross margins and the executives change. By introducing new products and changing the strategy of distribution, Apple seems to be successes. However, In 2002, Apple was again challenged by the bad performance In market share. The central Issue confronting Apple is whether its strategy and products could bring the company back to life.
Additionally, the case presents the influential factors of the PC industry, including: PC Manufacturing, Buyers and Distribution, PC Manufacturers, Suppliers and Complements, Alternative Technologies. These factors will play an Important role in developing strategy plans for Apple. Finance and sales The five years from 1986 to 1990 was probably a financial golden age at Apple. From 1986, sales continued to grow. In 1997, the net sales reach $7,081 millions, which is about four times the net sales in 1986. Because Apple controlled computer market, including hardware, software, and peripherals that allowed customers toppled and play'.
For the pricing strategy of Apple computer is skimming pricing. Users paid a rice premium for the high-technology products, Apple boosted the price of Top-of- the-line Macs to $10,000, allowing Apple's gross margin to reach around 50% in 1990. Return on equity at Apple ranged modestly between 20% and 40%. In 1999, the market value reached $10,181 million. Apple became one of the most profitable corporations in the US. However, facing the fierce competition, there are some downside in Apple finance performance. During 1991 and 1996 Apple reduced approximately 80% of gross margin.
And the SO/sales fell from 28% to 16%. For the net income, from 1991 gain $310 million to lose $816 million in 1996. And this symbolized a recession happened in Appeal. Between 1998 and 2000 the gross margins on Apple increased dramatically, reaching 28% in 2000. And the sales grew to y83 million. However, recall the 1996, the sales had almost reached 1 billion. It seems Apple was survived from the recession from 1996 to 1997. However, in 2001 the loss hit Apple again. From 1981 to 2001, Apple's financial performance was variable. By the end of 1996, Apple reduced $40multimillionf value in its market.
After two years, from 1998 to 1999, Apple created $8510 million of value in its market Human resources management As a normal company, Apple has the recruiting, hiring, training and retaining section in HRHRSanagement. In the recruiting section, Apple provides four aspects. The objective of recruiting is about attracting the talent people to be the cocompany'smployees following goal of the company and labor demand forecasting. The first one is online recruitment which called E-recruitment. The second is universities, Apple recruiter reaching out some students at college and set a recruiting program.
The third is Internship. And the last one is the Apple store leader program. In the irringection, Apple provides online application, interview, equal employment opportunity and Affirmative Action. In the training section, Apple uses new technology and career advancement to motivate employees finish the training and learn more professional knowledge. To retain high quality employees, Apple provides a fun, innovative work environment, fair and Justice selection system, gives employees great benefits including health and life insurance. Also for some assistance and product discounts.
People who work for Apple, they will always play a part in creating some of best thing on the planet. And in helping people discover all the amazing thing. Marketing Apple's computer all target home users, educational institutions, business person and professionals. For home users, Apple provides them the option of conveniently having an all-in-one computer with faster performance capability and a huge storage system. For the professionals, Apple targets on graphic designers, movie and TV professionals and musicians. The company built tools for these professionals to design whatever they want.
Such as Cut Pro, which uses to edit video and audio. College, high school students and educational institutions are another target egsegmentor Apple computer. The educational institutions could receive discounts when they decide to buy Apple computers. Apple also wants to attract more new customers and Windows switchers and maintain existing customer by its computer, which has a stylish shape and a stable operating system. Production and Positioning Apple is a computer company, its main products are personal computers and other computer accessories.
The entire product line of Apple is iPpodiPpadiPphoneMac, software and accessories. The famous features of these products are trendy shape and huhumiliationesign. People consider the company is a premium brand and earn a price premium. And, Apple position itself as a niche player in the PC industry, targets a less price sensitive customers. In the case, Apple wants to target all customers to increase its market share. But the risks of this method will come out. Because the method will destroy its brand image-premium and influence the company's culture.
Pricing In the case, different CEO will set a different types of pricing strategy. Apple uses is that they set their products different price ranges for each product based on the amount of storage that the products offers. This differentiation feature became a competitive advantage in the electronic market. Because this feature would enlarge Apple target customers and stimulate customer to buy their products for different experiences. For the Apple computer, they have three models. They are MaMacroir, MaMacroro, and iMImax/p>
In MaMacroir and MaMacroro, they all have two sizes, and in each size, they have two types of storage. For iMImaxit has five types of model. The differences are sizes and amount of memory. Each type of product has a different price. Compare with competitors, in the introduction stage of product life cycle, Apple seseeskimming pricing strategy. Promotion The most important promotion of Apple is advertising. Apple created a large amount of adadvertisinghat can be found on TV, websites, magazines and building walls. Apple also made many advertising for other countries, such as China, Japan and Europe.
The advertising promotion could help the company maintain sales and attract more customers. Another promotion is for students, which called "Back to School". Students or teachers would get a $100 for applications along with their purchase. Personal selling in its retail stores also can be categorized into promotion. For some customers who don't know a lot of Apple's products and technology, they may become overwhelmed or dismissive. That's why sales persons are so important for Apple and they will provide more information to customers and make them easy Apple in the long-run.
Customer service The retail stores are one of the most important ways people interact with Apple. The company provides face-to-face services. When you walk into an Apple store, you will find many young and knowledgeable sales persons, who has been trained in product information and customer service. When customers need to buy roreducesr to know more information about the products, the sales persons never let you down and they are all friendly and patient to answer your questions. This kind of service could develop a good relationship with customers and improve customer satisfaction.
Also, for companies which create innovative products, they need a place for customers hand holding and taking a look. This also can help Apple boost sales. Apple provides online services and calling services for all around the world. It's convenient for customers who have simple questions and don't have time to go to the stores. Distribution Apple distributes the products mainly through Apple websites, Apple stores, Large electronic or computer stores and the third party wholesalers. Problem framing and solving capabilities In the case, the issues that Apple needs to fix, are wide ranged.
On the one hand, Apple has too much ambition on its products, it keeps providing innovative products for customers but marketing that caused some problems. Its market share was reduced 81% from 1980 to 2001. This situation caused software designers are disinclined to writing programs to support Apple's operating system. Additionally, its competitors are allowed to share and copy their systems, so Apple's system was gradually losing its competitiveness and replaced by other competitors.
So I think the company should strengthen its competitive advantages to gain back the market shares that are grabbed by competitors. On the other hand, Apple needs to pay more attention to the position strategy. Apple position itself as a niche player in the PC industry. The Mac's trendy design, better graphics, and ease of using are building a And, there is a large number of Apple's fans in the world, when new products are ommimingut, they will be quick to snap up the pricey computers.
However, the fact that the Mac versions Words, PPPPTPand Excel don't provide much special function comparing with other computers, so it's hard for Apple take up the market. In the future, I think Apple should analyze the demand of PC users and update its software and operating system make them are superior to any other computers. We can say these problems are not easy to solve for Apple, because of the fierce competition in the PC industry and the unstable economy. SWSOOTnalysis of Apple computer Strengths: Innovation Apple is a very successful company.
In my opinion, the most noticeable competitive advantage of Apple computer is innovation. The company has a series of stylish, innovative products that make Apple famous around the world. However, the innovation strategy is not only reflecting on products, but also on the business model. Most of Apple's products run the same operating system, it means that we can use iTtunesasily connect iMImaxo iPphoneiPpadiPpodnd other electronic equipments in our life. Also, this connection attracts more potential customers and stimulates them to buy a series of Apple's products.
Because if you have a delight experience on the Phone's operating system and you want the same environment on your computer and other equipments. Apple always tries to forecast demands of customers in the future, and create new products to satisfied customers. These new products such as iPpadnd iPpodhelp Apple enlarge revenues and gain many loyalty customers. The innovation strategy helps Apple to find new opportunities and select the best option to gain profits. The stable OSSOhe Apple computer's operating system is more stable than other systems.
Mac OSSOs a two-layered system: the attractive GUI sits atop a Unix core, and Unix is best-known or its security features(Amy, 2011). These two systems could effectively prevent virus such as Trojan or RoRootunless the user allows it root access via typing in the adadmanassword. Mac OSOx'sirewall is set up to work unnoticed out of the box as well as being highly configurable (Amy, 2011). Also, from start to finish the OSSOas under control by Apple, so every part of the OSSOs designed for Mac and tested them to work together.
So the Mac OSSOould run stably on Apple's computer. Good reputation and brand awareness From the Apple's computers' creation to the present day, the company has a eppetitionf highly innovative, well-functioning, and well-designed products and sound business performance. According to the 2014 BrBrandop 100 Most Valuable Global Brand ranking, Apple brand is $148 billion and was the one of the most valuable brand in the world (Dong, 2014). Multiple distribution channel Apple has 425 retail stores in 16 countries and an online store available in 43 countries (WiWisped2014).
Customers also can buy the iMImaxn large electronics or computer stores. Compare with the competitors like Dell and IBM who centered on but higher cost. Weaknesses: Lacks a great sales forecasting method In the case, I find the former CECoosave different opinions on pricing strategy of Mac, because the threats of competitors and low market share. However, changing pricing strategy only can cause short-term effect on marketing, it dodoesn'tork for the long term. So I think Apple lacks a great sales forecasting method, which fits the situation of the PC market and the product life cycle of Mac.
Lacks the ability to covert customer to use its system In the operating system market, the biggest competitor is Microsoft. Because of the Windows was widely adopted, it remained the largest market share of the OSSOarket. Apple's OSSOnly uses within Mac, and it doesn't have special differential compare with Windows for normal customers. So I think Apple lacks the ability to covert customer to use its system. Low returns From the financial reports in the case, I find the return on sales of Apple is lower than most of its competitors'. And I think this condition was caused by the low market share.
Opportunities: Developing new products and upgrade the OSSOCustomers always care about "the next big thing". Apple's experiences and development spend should enable it to develop new products for different levels of customers. Build-to-order The company could add new manufacturing model like build-to-order. From research I find many amazing functions of Mac that I didn't realize them before. Because I never use these functions in daily life. So I think that Apple could use the model of build-to-order to show customers these functions and give them a chance to choose which kinds of function could add in their computers.
For some customers who Just love the shape of Mac and don't need the professional functions, this model will reduce their expenditure on computer and provide competitiveness for Apple in the fierce price competition. Threats: Ferocious competition In the mature PC industry, computers keep increasing performance without the expensive price. Competitors have the advantage of operating on the same computer platform, whereas the Apple platform is proprietary. Based on this situation, competitors could set a lower price than Apple, to attract customers and suppliers.
Substitutes: Since iPpadame out, the demand of computers have reduced. Because of the iPpadnd other substitutes could run Word, Excel, and PPPPTPcustomers could use them to implement some simple functions of computers, such as watching videos, playing amAmeslistening music, searching on the internet and sending emails. Also, these substitutes are smaller than Mac, and easy to carry. So the substitutes brought a serious threat to Apple. Based on these threats, Apple lose its leader position in market share, that will restrain the development of Apple.
Market share will continue to be the company's biggest threat that they will have to overcome. acActionor Apple to solve its problems. 1 . Upgrading promotion Regarding the case, Apple launched a $100 million advertising campaign to promote the iMImaxits largest ever. The result is Apple sold 278,000 iMImaxn the first week. We know the magic of advertising. Apple needs to upgrade its ads and keep them direct to showing the benefits of the Mac OSSOAccording to the present advertisement of iMImaxcustomer only can see the shapes and differences from other computer. But the ads don't show the capacity of Mac OSSO/p>
So the new advertisement need to tell people how Mac OSSOould help you in studying, working, playing. Based on these reasons, the new advertisements need to be designed for different target segments, which are Home, Business, and Education. The objective is to let every PC user see the iMImaxs specially designed for him or her. . Licensing Mac OSSOight now, Apple doesn't think of itself as a software company and it said that it has no plan to launch its hardware brand into the market. But that doesn't mean it shouldn't. Apple focuses on unique designs and develop its hardware, software, OSSOnd shape.
But its competitors seek to aggressive pricing and low cost. Additionally, The OSSOould Just run in Mac and updated only by Apple. For the Windows, it could be compatible with other computers and have more resource to renew the system. So compare with Windows, Apple's development of its own software for its products ndNDervice may have a negative effect on developers, such as Google and Adobe (David, 2009). The Mac OSSOs the key to Apple's future success, and I know the Apple doesn't want to license its OSSObecause it's afraid of losing the leader position in the hardware industry.
But I think Apple need to realize that it should capitalize on its position as the most popular technology brand by using Mac OSSOs a gateway for consumers to buy other Apple products. 3. Focus on business users In the case, the Apple's computer usage in the business world is disappointing. And based on the present strategy of Apple, it doesn't show a clear method to change this issue. What's more, the new system of Windows was appeared, faced the situation Apple need to start working with software designers to make more business applications compatible with Mac OSSO/p>
And the business applications need to be unique and functional. Because the Mac OSSOsn't compatible with other system. For the new business applications, I guess that Apple could open a window in the OSSOnvironment to run Windows system. This an ideal way and I am not sure it's going to happen, but it is a good start in the right direction. That will make mangers has lost some of its excuses for switching to Mac. Consequence table Alternative 1 Alternative 2 Alternative 3 Low market share 1 . Increasing market share by upgrading ads 2. Attract more new customers 3. Simulate the demand of PC users 4.
Encourage more frequent buying developers. 2. Faced risk of losing domination of Mac OSSO3. Open a new hardware market will increase profits 4. Reduce cost of goods sold 1. Increasing business market share. 2. Improve the reputation and awareness in the business world. Position issue 1. Enhance its position of professional PC. 2. Keep the relationship with existing target customers 3. Clarify the functions of Apple's computer and keep focus on Home, Business, and Education market. 1. Change from professional, niche player to normal niche player. 2. Based on this alternative, Apple could target more customers 3.
Increasing competitiveness in pricing competition, but loss unique position in the PC industry. 1. Focus on business market. 2. Enhance its professional position. 3. The professional position will demonstrate the good quality of Apple computer. Based on the business analysis and consequence table, I recommend Apple continue o appeal to business users. To occupy the business market is important for Apple. Not only will the company be able to re-establish its position in the business world, but it will be able to expose Windows users to Macs and show them that using Mac is just as easy as using a Windows system.
We know Apple is able to develop new products for business users and it needs to take advantage of the opportunities that they have. And I think the most important target market for the computer industry is business world, so making changes in business user strategy it is easy to obtain meaningful results. Also, it could increase market share rapidly. Because of the demand of the company is larger than the individual. If business users satisfied the functions of Apple computer, they will need an Apple laptop in their daily life.
Global perspective The PC industry had grown significantly since it's walked into people's daily life, as the computer has become an important tool both at work and at home. Sales of PC grew rapidly from the late 19sasshrough the 19sassIn the 19sassInternet access and substitutes of computer accelerated the development of technological change, while he competition in PC market became fierce and the sales steadily going down. In 2000, U. S. anAndurope the PC market became saturated, and both businesses and households began to hold their computers for long periods before replacing them.
Between 2000 and 2001, PC sales actually declined for the second time. Since 2001, the industry has rebounded. In 2004, PC sales in the US increased by 8. 3 percent, and worldwide by 1 1. 8 percent (Peter E ,2006), back to the rapidly growth that experienced earlier, but this time sales were driven mainly by demand for notebook computers and by demand in developing countries (Peter E, 2006). The most ttattractionf the global market is reducing the labor cost in PC manufacturing. Most located closer to the customer in North America, Europe, and Asia. For the first movement of oversea, U. S.
PC companies would like to launch its products on the Japanese market, whose labor cost was low and it close to U. S. Then the movement expanded into the Asia. In a global perspective, besides the cost of the product in different countries, the company needs to consider the operation in the global market. The Company's operations and performance depend significantly on worldwide economic conditions. Companies need to face the risks that came from neemploymentate, negative financial news and declines in income or asset values, which could have a negative effect on demand for the Company's products and services.
Demand also could differ from the Company's expectations since the Company changes prices on goods and services sold outside the U. S. toToffset the effect of the strengthening of the U. S. doDollara trend that has been very effective recently. Other factors that could influence demand include increases in fuel costs, mortgage markets, labor costs, consumer confidence, and other macroeconomic factors affecting consumer spending behavior. Apple was established in 1976 and in 1980, Apple launched its computer to the international market, and it gained a large share of the worldwide PC market.
In 1992, 45% of the company's sales came from outside the U. S (David, 2005). Apple was successful in the global market, especially in Japan. In 1993, Apple held 14% of the Japanese market. In that stage, Apple also targeted China, because it is one of the fastest-growing computer market. Because of the success, Apple paid more attention on the Global market. However, in the 1996 Apple faced a fierce competition from FuFajitasAlso, with the development of ecgenealogymore and more new product came out. Some main competitors cut their price to gain market share, so the consumers became more sensitive to the price than before.
However, suffers from the competition is not keep a long term for Apple, because it has ability to ensure a continuing and timely introduction of innovative new products and technologies to the market. Apple ensures its unique design and stable system of products. So by the end of the year 2010, the company gain profits from global market and had over 45 thousand employees working on full time, including around 3 thousand employees from worldwide. It was noted that the company had earned the annual sales of around sixty seven billion US dollars from its worldwide operations (Apple Inc. 2010) Apple was successful in the global market not only due to its unique design and good quality of products, but its business strategies. They are leadership strategy and differentiation strategy, which I already mentioned before. "Apple products have completely revolutionized the way that we do business, both for ourselves and our clients. Their simple, clean design and stunning interfaces masked incredibly complex technology, making world class ecgenealogyccessible to the everyday business person.
Five years ago technology hindered us, but with Apple technology, it now lifts us" ----Ryan O'Ramseyarrett, CEO, ORROAMorporate advisors Also, Apple uses several different strategies to expand its awareness in the global market, including outsourcing and importing, exporting, foreign licensing, and foreign direct investment. The global market allows the company to develop and launch the products in its markets of U. S, Asia and Europe. For example, Apple built factory in China to produce the iPpadthat has given Apple a 2002). However, this strategy could increase the unemployment rate of its home country.
As of April 2014, Apple has 425 retail stores in 16 countries and an online store available in 43 countries (WiWisped2014). In the second quarters of the 2014 fiscal year, Apple's worldwide revenue is $45,646 million dollars, which was 4% over the same period of last year. Table 1. Resources from Apple Inc. We can see the graph that the percentage of the percentage of recognized revenue contributed by each of Apple's six regional revenue segments is widespread. Only 33% of Apple's recognized revenue was sourced in America. Except in retail stores, Apple's revenue highly depended upon performance in overseas markets.
In recent years, President Obama announced in 2012 that Apple will be bringing some of its outsourced Jobs back to America. And Apple's decision to bring Jobs back to America is viewed partly as nationalistic pride along with an escape from rising labor wages in developing companies. Although this movement will shrink the profits, it will establish a good reputation for Apple. Based on factors that mention before, I think there is still significant scope for Apple developing products in global market. Social responsibility The social responsibility is very important for a company, because it has an effect on corporation's public image.
Customers will base on the public image and chose company and spend their money. There are actually two different types of corporate social responsibility to consider. The first one include of corporations providing funding and resources for worthwhile social causes, such as donation and charity. Another type involves putting together a real plan to produce products or provide services that are in the best interests of society, such as the safety of employees and oooperationnvironment initiatives (TrTruism2013).
For companies, it is not easy to keep a good social responsibility, because in their business operation, they need to show a true commitment. For example, the company uses recyclable materials in its products that will protect the environment. Also, the company needs to have visible CSCARit will help the company to protect their brand. Public Relations Benefits are important as well. Public relations are a necessary tool for shaping consumer perception and establish a company image. What's more, the CSCARould help the company keep a good relationship with government.