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Issues and Outlook: 1999 and Beyond

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?. Comparative Market Share (%) by Revenue. Revenue Comparison (in $millions). Profit Comparison (ROS %).

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Issues and Outlook: 1999 and Beyond

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  1. 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?

  2. Comparative Market Share (%)by Revenue

  3. Revenue Comparison (in $millions)

  4. Profit Comparison (ROS %)

  5. Actual Results: 1991-97

  6. Rebound?

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

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

  9. Apple’s Business Level Strategy Source of Competitive Advantage Cost Uniqueness Cost Leadership Differen- tiation Broad Target Market Breadth of Competitive Scope Focused Differen- tiation Focused Low Cost Narrow Target Market

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

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

  12. Value Chain Analysis Firm Infrastructure Human Resource Management Support Activities MARGIN Technological Development Procurement Service Inbound Logistics Marketing & Sales Outbound Logistics MARGIN Operations Primary Activities

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

  14. 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.

  15. Goals • 20% ROS by 1994 • 40% Share of O/S Market by 1994 • Develop 3 New Interface Devices by 1994 • Achieve full interoperability with • Intel and RISC microprocessors by 1993 • Top 4 Software Vendors by 1993

  16. Milk Mac • 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%

  17. Apple Core • “Open system” O/S (a.k.a. Pink) • not processor specific • head-to-head with Windows • 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.)

  18. 1994 Layoffs and Mfg. Rationalization Pushed Pink H-P joined Apple and IBM Sculley resigns; Spindler is new CEO 1993 Cut Mac prices 26% down from a 20-40% premium PowerPC with IBM and Motorola PowerMac PowerBook laptop Overseas expansion; Japan (2% to 15%) Newton (PDA) Apple’s Recent Actions

  19. 1995 Attack educational and desktop pub markets License Mac O/S (aka Copeland) Record revenues; $69 million net loss Fujitsu starts price war in Japan 1996-98 Terminated Taligent and Kaleida Jobs and Woz are back Accepted $150 million from MSFT Intros iMac Recent Actions (cont.)

  20. New Products

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