Issues and Outlook 1999 and Beyond Is Apple

Issues and Outlook: 1999 and Beyond • Is Apple successful? • Past/current strategy? • What are the main concerns/issues that confront Apple? • Where is Apple headed in the future?

Apple’s Business Level Strategy Source of Competitive Advantage Breadth of Competitive Scope Cost Uniqueness Broad Target Market Cost Leadership Differentiation Narrow Target Market Focused Low Cost Focused Differentiation

Internal Analysis • Resource-based View Analysis of: – Core Competencies – Core Weaknesses • Value Chain Analysis of: – Value-enhancing Activities – Value-diminishing Activities • Promoters of / Barriers to Change

Value Chain Analysis Firm Infrastructure Technological Development Primary Activities M AR G IN Service Marketing & Sales Outbound Logistics Operations Procurement Inbound Logistics Support Activities M A R G IN Human Resource Management

External Analysis • • • Influences from Remote Environment Influences from Competitive Environment Promoters of / Barriers to Change SWOT Summary Competitor Analysis

Analysis of the Competitive Environment Threat of New Entrants Bargaining Power of Suppliers Rivalry Among Competing Firms in Industry Threat of Substitute Products Bargaining Power of Buyers

Strategic Group Map Pre-Windows Premium Sun Apple Price Compaq IBM Low Clones Broad Narrow Strategic Focus - Differentiation

Strategic Group Map Post-Windows Premium Sun Price Low Apple Compaq IBM Clones Broad Narrow Strategic Focus - Differentiation

New Products

Rebound?

Revised Mission/Intent Statement “Apple ………………. . ” • • Definition of Industry Description of Core Values Description of Basic Strategic Approach General Identification of Customer Base

Revised Mission • To position Apple as the world leader in man-machine interfaces though the development of ergo- and cerebro-nomic software and interface devices required for electronic and electromechanical applications.

Goals • • 20% ROS by 2003 40% Share of O/S Market by 2003 Develop 3 New Interface Devices by 2002 Achieve full interoperability with – Intel and AMD microprocessors by 2002 – Top 4 Software Vendors by 2002

Milk Hardware • No new manufacturing and R&D investment in existing hardware products • Outsource next 3 years’ production to Malaysia: – Send VP Mfg. and 3 Engineers on “Sourcing Mission” Benefit: Decrease COGS from 53% to 33%

Apple Core • “Open system” O/S – not processor specific – head-to-head with Windows, UNIX and LINUX – increase installed base – increase ISV applications • Shift 80% of R&D budget to Core Benefit: Increase ROS from 5% to 20% (NOTE: O/S production has COGS average 19% percent of sales vs. 66% in hardware manufacturing. )

New OS (Apple Core) Applications Robotics Wearable Computers Handhelds Automotive Systems Office Machinery