Naren Nandi

i-ntroductionSteve Jobs and Steve Wozniak founded Apple on April 1, 1976. The two Steves, Jobs and Woz (woz.org), have personalities that persist throughout Apple’s products, even today. Jobs was the consummate salesperson and visionary while Woz was the inquisitive technical genius.

Revenue $42.91 billion ▲Operating income $11.74 billion▲Profit $8.24 billion▲AUM $26.83 billion ▲Total assets $47.50 billion ▲Total equity $31.64 billion ▲Employees 34,300 +▼

PC industry

We can glean Insight into the history and composition of the PC Industry from its eponymous title. In the late 1970s, as Wozniak and Jobs were starting Apple computer, personal computers were an emerging product.

While Apple clearly dominates the online music industry, the battle for domination is not over.

Apple’s sales are between 66% and 75% of downloads and 80% of music players.

Apple is part to a suit alleging monopolistic practices concerning their market share dominance of players and downloads.

Online music industry

Products

Mac (Pro, Mini · iMac · MacBook, Air, Pro · Xserve)iPhone, iPad, iPod (Shuffle, Nano, Classic, Touch)Apple TV, Cinema Display, AirPort Time CapsuleMac OS X (Server · iPhone OS), iLife, iWork

Services

Stores (retail, online, iTunes, App, iBooks) Mobile Me

Mission Statement -> "Apple is committed to bringing

the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and internet offerings.“

Vision Statement -> "Man is the creator of change in

this world. As such he should be above systems and structures, and not subordinate to them."

CORE COMPETENCY --- USER EXPERIENCE

KEY SUCCESS FACTORS

PORTER’S FIVE FORCES MODEL

1. CarriersAT&T

2. OS providerslike Linux

3. Hardware makersIntel

1. VoIPSkype2. PDA phonePalmtops etc.3. Similar features phone emerged in Nokia, LG etc

1. Establish mobile manufacture: Nokia,LG,Samsung

2. Software giants: Google, Microsoft

1. More companies entering into smartphones market

2. Strong brands and finance

SWOT ANALYSIS

How Green is Apple?Apple Inc.'s eye-catching logo - an apple with a bite taken from it - has come in many colors in the past. Now, the iconic computer company is trying to prove its commitment to the color greenIt now makes iPods and iPhones free of polyvinyl chlorides and brominated flame retardant, and it's in the final stages of making all of its products without bromine and chlorine. Both chemicals have been criticized for creating toxic byproducts.

Work Ethics

Labour StandardsWorking and living environmentsCompensationOvertimeWorker treatment

Apple has a zero tolerance policy for any instance, isolated or not, of any treatment of workers that could be interpreted as harsh

Process Analysis

Inputs OutputsGoods,

Services Raw material, Customers, etc.

TransformationTransformationProcess

 Resources: Labor & Capital

Key steps in Process Analysis

Step 1: Draw process flow diagram (define process)– Determine the inputs and outputs– Determine the flow units– Determine the tasks and their sequence– Determine which resources are used in each task– Determine where inventory is kept in the process– Record this through a process flow diagram

Step 2: Bottleneck Analysis (performance evaluation)– Determine the capacity of each task and of the process– Further analysis will be covered later in the course

Process Example – iTunes Music

Apple sells downloadable songs for $.99 ea.

Process: – Apple retains music files and printable material on a server– Customers download all material, print labels and burn

CDs themselves

Benefits:– No physical inventory, no warehouse, low production

costs– Always meet demand

Draw a process flow diagram1. Determine the inputs and outputs2. Determine the flow units: orders in process3. Determine the tasks and their sequence4. Determine resources: computer server5. Determine where inventory is kept in the process

Orders ReviewOrder

ValidateCreditCard

SendConfirmation

DownloadFinished

Order

WIP

WIPWIP

WIP

Validate Order Download

Capacity rate:

Cycle time:

The (whole) process

Flow time:

Capacity rate:

Cycle time:

40 units / hr 30 units / hr

1.5 min 2 min

1.5 min + 2 min = 3.5 min

30 units / hr

2 min

Individual stages

ExampleWIP Finished

orders

Validate Order Download

Capacity rate:

Cycle time:

The (whole) process

Flow time:

Capacity rate:

Cycle time:

40 units / hr 60 units / hr

1.5 min 1 min

1.5 min + 2 min = 3.5 min

40 units / hr

1/40 hr = 1.5 min

Individual stages

(cont’d) adding an extra server for download

WIP Finishedgoods

Download

Constraints

Industrial World Economic SlowdownApple’s dependency on Steve Job’s healthTechnological LimitationsMP3 Market is shrinking rapidlyiPod Market is saturatediPhone Cannibalizes part of iPod Sales

Alternatives

Do Nothing -> Pro: No increased risk -> Con: Continue being stagnant

Reposition the iPod -> Pro: Increase the profit capability of a Cash

Cow -> Con: Placing advertising money into a lost

cause

Alternatives

Renovate the Mac desktop line -> Pro: More competitive with other desktops -> Con: Repositioning into a Market that is

decreasing due to a global economic slowdown Create a netbook based on the MacBook Air platform

-> Pro: Great for the psychology of the company and shareholders, and stakeholders

-> Con: Expensive development in a recession

JIT-LeanApple Computers implemented the just-in-time global economy (JITGE) to streamline the unnecessary steps and waiting time in the delivery of its tailor-made iPod from 90 days to 90 hoursJITGE methodology, a combination of lean manufacturing, just-in-time-delivery and supply chain management had helped Apple computers to minimise the cost of production by manufacturing its products in low cost economies. Apple manufactured the customised iPods to meet the needs of individual customers by following the lean manufacturing methodology

Cultivate Your EliteApple focuses on atmosphere, nurturing its best designers behind opaque glass in a hidden sanctuary with music playing in the background.Despite their favored status, Apple’s creatives still have no more insight into the company’s overall operations than an Army private has into the Pentagon.At Apple, new products are often seen in their complete form by only a small group of top executives. This, too, works as a strength for Apple

VALUE CHAIN ANALYSIS

Technology and product design

This component represents the true core (no pun intended) of Apple’s capability. From being the first platform to run an electronic spreadsheet (VisiCalc on the Apple II Plus) to the first to establish a “digital lifestyle” hub (the Macintosh product lines), Apple’s history is rich with cutting-edge technology development. (Linzmayer) Apple drives to be the best, no simply the first The best way to summarize the entrepreneurial culture within Apple “it’s very easy to be different, but very difficult to be better.”

Vertical Integration of competitors

• Sony is an example of a competitor with a unique position against Apple. Sony Music supplies Apple with many of the songs for iTunes. Sony also creates a version of the Walkman portable music player that is a direct competitor to the iPod. Sony is attempting to vertically integrate forward directly to the music buyer. Sony integrated their music system into the Sony Walkman. Sony is exclusively distributing certain songs on Mora. Mora currently targets Japanese consumers. If Sony can gain additional momentum (such as collaborating with other record labels), their service could present a formidable challenge to iTunes in additional markets.

Production

• Because Apple had long refused to license its operating system to external entities, the bundled packages of Apple-developed hardware and software became the cornerstone of Apple’s production process..

• While every product introduction has not been a success ,Apple treats component production as a natural extension of the design process.

Sales and Marketing

• We could simply title this section “Steve Jobs”. Since his return as CEO in 1997, Jobs personally unveils all new product introductions, reviews corresponding marketing campaigns, and approves new product development guidelines.

• Apple continued to command a market premium for producing a “better mousetrap” throughout its history.

Apple Computer Marketing Channel Structure:

Apple Retail Store - Direct Channel

CustomersConsumer

Producer

Apple Computer Marketing Channel Structure: Ingram Micro/Best Buy - Indirect Channel

CustomersConsumer

Wholesaler

Retailer

Producer

Best Buy

Ingram

Micro

Customer Service• How has Apple retained substantial cash reserves

during the explosive growth and dominance of PCs worldwide? Apple created a virtual love affair with their customer base by delivering technically superior and aggressively pursuing hardware and software updates.

• Apple integrated their primary activities so well that it is transparent to the consumer where one activity begins and the other ends. Although Apple employs many resources and capabilities to support their primary activities the most strategically relevant would be Legal Services.

Awards

Business week awards Apple A+ for quality of staff and efficiency of serviceApple won eight product design awards at CeBIT conference.

Legal Services

• In a market climate of constant change and innovation, it is inevitable that the drive to expand product and service offerings will subject Apple to patent and copyright infringement claims. The dispute over the Apple logo on its iTunes Music Store, for example, continues despite a previously reached settlement with Beatles’ Apple Corps Ltd. in 1991.

• There was a recent attempt to uncover the identities of internal “sources who leaked confidential information about an unreleased product to online media outlets in 2004.”

Steve Jobs= Apple, Inc.

Apple’s Success is Related to Steve Jobs Standards, Not Steve Jobs Himself.Regular Rules Don’t ApplyMicromanagerIntense SecrecyConcentrated, Hard-Fought InnovationCommunicated ZealRadical Opacity

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