FINAL PROJECT

This Report is one of the Assignments Required to Pass

(TI-4004) Industrial Management B Class
Institut Teknologi Bandung

Lecturer
Dr. Yosi Agustina Hidayat

By:
Muhammad Syahrian Wirawan 13616050
Naufal Rizqy Albana 13617012
Akhdan Fakhri 13617023
Alvin Irwanto 13617034
Dino Satrio Pandu 13617050
Mela Marcelina 13617063
Fatwa Azam Maulana 13617074
Wilbert Alexsoh 13618030
Muhammad Rizky Pratama Hakim 13618074

(Industrial System and Supply Chain Engineering)

AERONAUTICS AND ASTRONAUTICS ENGINEERING STUDY

PROGRAM
FACULTY OF MECHANICAL AND AEROSPACE ENGINEERING
INSTITUT TEKNOLOGI BANDUNG
MARCH 2020
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ABSTRACT

This project asks each group to select one of multinational company. The
company alternative can be Industrial Otomotive Company or any other
Transportation Copmany, High-Technology Content Company, Start-Up
Company, Aeronautics Company, etc. Retail companies are not allowed. Make
sure each group select different company. Pick one of the (famous) products of
the selected company to be analyzed. The analysis consists of i) Strategic
Mapping, ii) Company Profile (including organization structure), iii) Product and
Technology Development Analysis and Business Process Mapping (limited to
R&D divison and Production Division Business Procesess) and finally after the
mid-test, you should iv) analyze the company performance indicated by Financial
KPI. Therefore please carefully choose the company, hope you can find complete
data and access of the companies from the website or other relevant sources.

Keywords : ……..
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TABLE OF CONTENT

ABSTRACT.............................................................................................................i
TABLE OF CONTENT...........................................................................................ii
LIST OF FIGURES................................................................................................iv
LIST OF TABLES...................................................................................................v
Chapter I Introduction................................................................................................1

I.1 Background.................................................................................................1

I.2 Problem Identification.................................................................................1

I.3 Problem Formulation..................................................................................2

I.4 Project Objective.........................................................................................2

I.5 Assumption and Limitation.........................................................................3

I.5.1 Project Assumptions....................................................................................3

I.5.2 Project Limitation........................................................................................3

I.6 Project Report Structure.............................................................................3

Chapter II Company Profile and Literature Studies......................................................5

II.1 Company Profile..........................................................................................5

II.2 Literature Studies........................................................................................7

Chapter III Strategic Analysis......................................................................................10

III.1 Strategic Analysis and Mapping.................................................................10

Chapter IV Product and Technology Development Analysis and Business Process

Mapping 15

IV.1 R&D...........................................................................................................15

IV.2 Marketing..................................................................................................17

Chapter V Data Processing.........................................................................................20

Chapter VI Conclusion and Suggestion........................................................................21

VI.1 Conclusions...............................................................................................21

VI.2 Suggestions...............................................................................................21
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LIST OF FIGURES

Figure II.1 Modular Products General Structure...............Error! Bookmark not defined.

Figure II.2 Influence Diagram Reference Model 1............Error! Bookmark not defined.
Figure II.3 Influence Diagram Reference Model 2............Error! Bookmark not defined.
Figure II.4 Flowchart to solve the reference model 2........Error! Bookmark not defined.
Figure II.5 Influence Diagram for the proposed model.....Error! Bookmark not defined.
Figure II.6 Formulation of Proposed Model......................Error! Bookmark not defined.
Figure III.1 Flowchart to Solve Proposed Model..............Error! Bookmark not defined.
Figure III.2 Product Structure for P1 and P2 (without communality).....Error! Bookmark
not defined.
Figure III.3 Structure of 2 Modular Products with Communality....Error! Bookmark not
defined.
Figure IV.1 Sensitivity Analysis Graphic of Total Cost toward Demand..................Error!
Bookmark not defined.
Figure IV.2 Graphic of Sensitivity Analysis of Total Cost Towards Component Price
Change..............................................................................Error! Bookmark not defined.
Figure IV.3 Graphic of Sensitivity Analysis of Total Cost towards Ordering Cost...Error!
Bookmark not defined.
Figure IV.4 Graphic of Sensitivity Analysis of Total Cost towards Crashing Cost...Error!
Bookmark not defined.
Figure IV.5 Graphic of Sensitivity Analysis of Total Cost towards Service Level. . .Error!
Bookmark not defined.
Figure IV.6 Graphic of Sensitivity Analysis of Total Cost towards Cost per Setup. .Error!
Bookmark not defined.
Figure IV.7 Graphic of Sensitivity Analysis of Total Cost towards Cost per Setup. .Error!
Bookmark not defined.
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LIST OF TABLE

Table III.1 Parameters for each Supplier...........................Error! Bookmark not defined.

Table III.2 Demand for Each Component.........................Error! Bookmark not defined.
Table III.3 Replenishment Time for Each Supplier (Year)Error! Bookmark not defined.
Table III.4 Component’s Safety Stock (units)...................Error! Bookmark not defined.
Table III.5 Supplier Total Integrated Cost ($)...................Error! Bookmark not defined.
Table III.6 Parameter for each Supplier............................Error! Bookmark not defined.
Table III.7 Demand of Each Component...........................Error! Bookmark not defined.
Table III.8. Safety Stock for Each Component (units).......Error! Bookmark not defined.
Table III.9. Total Cost of Each Supplier ($)......................Error! Bookmark not defined.
Table III.10. Part Family for Each Component.................Error! Bookmark not defined.
Table III.11. Safety Stock for Each Component (units).....Error! Bookmark not defined.
Table III.12. Total Cost for Each Supplier ($)...................Error! Bookmark not defined.
Table IV.1 Change of Total Cost Towards Change of Expectation Demand Component
..........................................................................................Error! Bookmark not defined.
Table IV.2 Change of Total Cost towards the Change of Component Price.............Error!
Bookmark not defined.
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Table IV.3 Calculation of the Change of Total Cost towards the Change of Ordering Cost
..........................................................................................Error! Bookmark not defined.
Table IV.4 Calculation of the Change of Total Cost Towards Change of.................Error!
Bookmark not defined.
Table IV.5 Calculation of the Change of Total Cost towards the Change of Service Level
..........................................................................................Error! Bookmark not defined.
Table IV.6 Calculation of the Change of Total Cost towards the Change of Set Up Cost
..........................................................................................Error! Bookmark not defined.
Table IV.7 Calculation of the Change of Total Cost towards the Change of Production
Rate...................................................................................Error! Bookmark not defined.
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Chapter I
Introduction

I.1 Background

Bussiness and strategy is the two thing that need to adapt everytime today.
Knowing the principle and the practical aspect of planning the strategy is a key of
an organization or company to be established and developed in this digital and
globalization era. The key of mastering the planning and strategy is determining
by an identification of external and internal condition of a company. External
aspect like market, rivals condition, politics condition, and the demand from the
people are important in order to make a company still sustain and fullfiling
demand from the people. Otherwise, not just in external aspect, internal aspet are
also important to control, so the company will not fail by an internal effect such
as, employee condition, machine production, technical aspect, financial condition,
economic condition, and mny more.
One of the most important thing on this day are the development of tools
and technology, and one of the most famous and powerfull company in hi-tech is
Apple Inc.. Apple Inc. is a company with the speciality of research and
development ini science and technology that can easily access any information on
the world such as tablet, smartphone, notebook, and many electrical tools thath
can be used ini any application. With the dynamical condition of the world today,
it is important for Apple Inc. to make a strategy and planning to make the
company still sustain and develop in the future. From this background, we decided
to choose Apple Inc. as an example of a company that we need to analyze and
studied comprehensively about their internal financial condition, teamwork and
the strategic planning of the company to make them still sustain and develop.

I.2 Problem Identification

1. Vision of the Apple Inc.

2. Mission of the Apple Inc.
3. Strategic planning and mapping for Apple Inc
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4. Financial condition and performance

5. Reasearch and development of product and technology
6. Analysis of external condition
7. Analysis of internal condition

I.3 Problem Formulation

1. What is the vision of the Apple Inc. ?

2. How they reach their vision ?
3. What is the mission of the Apple Inc. ?
4. How many mission of the Apple Inc.?
5. How they reach their mision ?
6. How are the strategic planning and mapping for Apple
Inc. ?
7. How is strategic planning and mapping for Apple Inc. ?
8. How is financial condition and performance in a few years ?
9. How they research and development of product and
technology ?
10. When they decide to research ?
11. What is the main aspect of determination ?
12. How they analysis external condition ?
13. How they analysis internal condition ?

I.4 Project Objective

1. Know the vision of the Apple Inc.

2. Know the mission of the Apple Inc.
3. Knowing and kearning about strategic planning and
mapping from Apple Inc.
4. Knowing and calculating financial condition of a company
and knowing the effect to their performance
5. Knowing Apple’s reasearch and development of product
and technology
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6. Knowing how to analyze external condition

7. Knowing how to analyze internal condition

I.5 Assumption and Limitation

I.5.1 Project Assumptions

The assumptions for this project is that the company is

in good condition.

I.5.2 Project Limitation

The limitation of this project is all the information are

accesed only from internet.
I.6 Project Report Structure

This study will be presented in the following systematics:

1. Chapter I Introduction
In this chapter the core of the study such as the research background,
problem identification and formulation, project objective, assumption
and limitation of the study and the report structure will be elaborated.
2. Chapter II Company Profile and Literature Review
The company profile and theoretical foundation and relevant literature
review will be narrated in this chapter.
3. Chapter III Strategic Analysis
In this chapter, the analysis on company vision and mission and
mapping of strategic planning according to the company profile, taken
into example a product will be explained.
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4. Chapter IV Business Process

In this chapter, the analysis on company’s business process, limited to
two divisions, i.e. R&D and Production divisions should be conducted
using cross-functional diagram.
5. Chapter V Data Processing
In this chapter the writers will present the result of data processing
such as financial KPI and engineering economics analysis.
6. Chapter VI Conclusion and Suggestion
This chapter will elaborate the core result of the research project along
with the suggestion for further project and managerial context.
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Chapter II
Company Profile and Literature Studies

II.1 Company Profile

Apple is a company that works not only in technology design and

development, but also selling consumer electronics, computer software, and also
providing online services. Its headquarter is located in Cupertino, California,
United States and is considered as one of the Big Four technology companies,
along with Amazon, Google and Microsoft. This company was founded by Steve
Jobs, Steve Wozniak, and Ronald Wayne in April 1976 and was founded as Apple
Computer, Inc., in January 1977.

Figure
Figure 2.1
2.1 Apple’s
Apple’s logo
logo evolution
evolution

Apple’s products are very renowned, this includes hardware products such
as: iPhone smartphones, iPad tablet computers, Mac personal computers, iPod
portable media players, Apple Watch smart watches, Apple TV digital media
players, AirPods wireless earbuds, and HomePod smart speakers. They also have
their own software which are: macOS, iOS, iPadOS, watchOS and tvOS operating
systems, iTunes media players, Safari web browsers, Shazam acoustic fingerprint
utilities, and iLife and iWork creativity and productivity suites, as well as
professional applications such as Final Cut Pro, Logic Pro , and Xcode. While its
online services include iTunes Store, iOS App Store, Mac App Store, Apple
Music, Apple TV +, iMessage, and iCloud. Other services include Apple Store,
Genius Bar, AppleCare, Apple Pay, Apple Pay Cash, and Apple Card.
Apple worldwide annual revenue is undoubtedly magnificent, totaled $265
billion for the 2018 fiscal year. While becoming the world's largest technology
 6

company by revenue, it is also the world's third-largest mobile phone

manufacturer which is the reason of Apple to become the first public U.S.
company to be valued at over $1 trillion (in August 2018). Based on the data in
2018, Apple has already employed 123,000 full-time employees and maintained
504 retail stores in 24 countries. The company also has a very great value in terms
of brand loyalty and is ranked as the world's most valuable brand.
It is stated that Apple has mission “to bring the best user experience to its
customers through its innovative hardware, software, and services.” And in a
dated 2009 Tim Cook set the vision specified as “We believe that we are on the
face of the earth to make great products and that’s not changing.

Figure
Figure 2.22.2 Apple
Apple IncInc Organizational
Organizational Structure
Structure (2011)
(2011)

Apple organizational structure uses hierarchical structure (see figure 2,2).

This has been developed by its founder and former CEO late Steve Jobs in order
to ensure focused realization of his innovative ideas and clear vision for the
business. The structure has been subjected to certain modifications since the
 7

leadership by Tim Cook on August 2011. This is considered to be embracing the

decentralization of decision making to a such an extent that can encourage
innovation and creativity at various levels.

II.2 Literature Studies

II.2.1 Strategic Planning

The process of developing a mission and long-range objectives and
taking consideration of how they will be accomplished is commonly called
strategic planning. There are several required in strategic planning, firstly,
making missions is very a crucial step so that they know what the
company want to accomplish in the future or what will the company
become in the future. Secondly, they need to analyse the environment so
the company threats and opportunities can be taken to consideration.
Thirdly, setting objectives for which the company need to achieve in the
progress.
Then, the next step is developing strategies. Mainly there are three
strategies: corporate level strategies (managing multiple lines in the
company), business level strategies (managing one specific line in the
company), and functional level strategies (managing only in specific area
in the company). Lastly, the company also required to make a strategy for
implementing and controling.

II.2.1.1 Strategic Analysis

There are two types of analysis, external and internal
analysis. For external Analysis, managers need to know about the
competition situation in the environment. They should examine all
the external factors especially in economic, demographic, and also
technological to see the trends and changes that happen. There are
two tools that can be used: PESTLE and Five Competitive Forces.
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Figure2.3
Figure 2.3PESTLE
PESTLEAnalysis
Analysis

For the internal analysis, the scope focuses on the strength

and weakness of the company. One of the tools that can be used to
analyse these is Boston Box.

Figure2.4
Figure 2.4Boston
BostonBox
Box
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After analysing the external and internal factors, now we can

make the SWOT analysis, which is an analysis of the organization’s
strengths, weaknesses, opportunities, and threats.

II.2.1.2 Strategic Mapping

A strategy map is like a visual summarization of an organization’s
overall objectives and how are they related from the process of
strategic planning in the section before. Typically it is divided into
four categories: Finance, Customer, Internal Processes, and
People/Learning & Growth. This will help the company to identify
key goals in their strategy before initiate execution.

II.2.2 Business Process

Business Process is the activity that takes several inputs and creates an
output that gives a value to the customer. It can be used to help making a logical
framework for achieving the company’s vision, mission, and goals. There are two
types of method to construct business process. Top Down- STAR Model and
Bottom-Up-Process Classification on Framework.

Figure 2.5
Figure 2.5 Top
TopDown-
Down-STAR
STARModel
Model
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Chapter III Strategic Analysis

III.1 Strategic Analysis and Mapping

Figure 3.1 Steve Jobs Statement

(Source: ipadinsight.com)

The goals of Apple Inc. is:

1. Provide the best product,
2. Preserve investor’s investment, and
3. Make sure the company has good profitability, service and production.
The objectives of Apple Inc. is:
1. Expand the sales of their product to everyone who has not known
about their product,
2. Expand the rate of production
3. Became the best company that produces mobile devices, and
4. Produce product that have great enjoyment and service.
Those objectives are very important to Apple Inc. To make sure all of the
objectives can be accomplished, ofcourse Apple Inc. has strategy to achive it.
Before the strategy is formulated, there are several tools to help Apple Inc.
formulate the strategy. The tools are:
1. SWOT Analysis
STRENGTHS:
a. Apple Inc. has valuable brand. By Interbrand, Apple is ranked
on the top list for the most valuable brand.
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b. Apple Inc. is the first company that introduce the innovative

product. Afterward, Apple Inc. keep innovate their product to
give customer best mobile device.
c. Apple Inc. has specific business section that provide good
quality technology.
d. When produces and manufactures their product, Apple really
put their dedication. They carefully study and research about
what customer needs and requires.

WEAKNESSES:
a. Apple product has very high price. Sometimes it can make
customer feels hard to buy Apple product.
b. Apple product does not have compatibility with other software.
c. Apple has limited marketing and promotion because of Apple
rely their marketing and advertising on their iconic retail stores,
Apple Stores.

OPPORTUNITY:
a. Consistency in customer growth. Since Apple has dominated
the sector of technology with their product, it gives Apple
opportunity to has high customer in the future.
b. With their dedication on producing their product, Apple will
develop new product lines.
c. Apple Inc. has the opportunity to expand their distribution
network.

THREATS:
a. Coronavirus outbreak in 2020 can lead to fall of the Apple
stock.
b. Tough competition with other brand that provide high
technology such as Samsung, Dell and Google.
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c. Rapid technology change that can lead to customer change in

needs.
d. Other company that may provide lower price than Apple.

2. PESTLE Analysis
POLITICAL:
1) Apple Inc. has bad political relation with US and other
countries that can affect the company.
2) Apple Inc. is highly dependant to manufacturer with lower cost
in China.
3) Mor than half of sales of their product come from out of US.
4) The cost for finding alternatives manufacturer probabily will be
high for Apple.
5) Apple Inc. may be the targer fo anti-America in China, so it can
lead to reduce in market.

ECONOMICAL
1) Apple Inc. high price product can lead to customers spend less
on the Apple product.
2) The increasing of labour cost in China may affect the price of
Apple product.
3) Strong US dollar can lead to increase in exchange rates,
making it more expensive for Apple to do business in key
markets.

SOCIAL
1) Increasing the popularity of smartphone devices can lead Apple
to provide mobile devices that easy to use and affordable
smartphone.
2) The close-relation between Apple and China can make
customer from Europe and North America feel offended
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3) If there is tension between US and China, it can affect Apple

brand image.

TECHNOLOGY
1) Apple competitiors have demonstrated the ability to duplicate
Apple’s products and services.
2) The increasing use of smaprtphones and tablets will reduce the
demand of Apple’s personal computer.
3) There are lots of Apple’s competitors that provide high-
technology-devices with affordable price.
4) The growing of cyber crime can cause Apple’s system less
secure. It also can make bad reputation for Apple on high levels
of security and safety.

LEGAL
1) Because of Apple is offering financial services, Apple may
experiences increasing in litigation.
2) Now, Apple has antered the highly regulated financial
services by offering Apple Pay services.
3) News indicate that Apple has plan to enter another highly
regulated sector; automobile manufacturing. If Apple really
achieve this plan, it will increase regulatory, insurance and
litigation on Apple.

ENVIRONMENT
1) Climate change vaused by global warming can disturb shipping
accrose ocean and Apple’s supply chain.
2) Apple relies on a large internet infrastructure and data. This
may increase in electricity costs in the future.
3) Environmental side effects, such as pollution, can increase
regulation and price cost in the future.
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4) Apple now is working on green technology that provide has

efficient energy such as batteries and other equipment that
generate small amount of heat loss.

3. Porter’s Five Force Analysis

1) Industry Competition
Apple Inc. is in high competition with other company such as
Microsoft, Samsung, Google, Dell, Lenovo, etc. the
competitive force within the company is strong. In addition, in
terms of product differentiation, products available on the
market are generally similar in meeting certain objectives.
2) Bargaining Power of Buyers
For the individual bargaining power of buyers, the threat is low
because of losing one customer respresents a negligible amount
of Apple’s revenue. For bargaining power of the collective
market of customers, the possibility of massive customer
defection to competitors is a strong force. To encounter this,
Apple Inc. keep developing new and unique product such as
Airpods.

3) Bargaining Power of Suppliers

The bargaining power of suppliers is relatively low because of
high number of suppliers that potentially can be suppliers for
Apple. Furthermore, Apple is free to choose from a large
number of suppliers to supply their component parts. Still, the
cost for changing suppliers is relatively low for Apple.
4) Threat of New Entrants to the Marketplace
The therat of new entrants for Apple is relatively low because
of two factors: very high costs for establishing a company and
high additional costs for building brand name recognition.
However, there are large company that have financial capacity
to enter the market, such as Google.
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5) Threat of Substitutes Product

The threat of substitutes product of Apple is relatively low.
Maybe the substitute product is available in the market and has
affordable price than Apple product, but most potential
substitution product have limited competence compared to
Apple product.

4. Boston Box
Here is the boston box of Apple Inc.:

Figure 3.2 Boston Box of Apple Inc.

(Source: strategicplanning13.weebly.com)

1) Rising stars
The rising strars is region that product which have high growth
market. The Apple product that lies in rising stars region is
Apple iPhone. Every time Apple Inc. launch new iPhone, they
will sets new sales records. Apple iPad and Apple Smartwatch
are also in this region with this product is in the transition to
cash cows region.
2) Cash cows
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These are the products which are in low growth markets with
high market share. The Apple product that lies in cash cows
region is Apple iTunes, Apple MacBook, and Apple iMac.
3) Question mark
Question Marks are those products or business units of the
company which can either become a revenue generator by
taking the position of a Star or can become a loss-making
machine for the company in the future. The Apple product that
lies in this region is Apple TV. Apple TV only produce a bit of
money, although it has not reached its true potential.
4) Dogs
These are the products that has low growth market nor market
share. The Apple product that lies in this region is Apple iPod
because of high competition and relatively low customer
demand.

After knowing all the strategic analysis tools on Apple Inc., strategic
planning of Apple can be formulated. The strategic planning of Apple Inc. is:
1. Corporate-level strategy
The corporate strategy of Apple is related to diversification of
product at medium and high levels. Apple use constrained
diversification by utilizing their competencies in developing hardware
and software. The advantage of diversification is the customer can
obtain the product with high quality and design. The Apple core
competencies are its technology. Apple is always trying to innovate
their product. The latest product that they produce are is equipped with
more innovative features than the previous product.
Another coporate strategy of Apple Inc. is by forming alliances
with another company to obtain benefit from economic scale and share
risks and costs. For example, alliance between Apple an AT&T for
producing Apple iPhone, alliance between Apple and Microsoft so
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Microsoft software can be used in Mac, and alliance with Intel for
processors.
Another corporate strategy that Apple use is
internationalization for the production. Apple Inc.’s base production is
in China. This strategy is to get low labor cost, get access to raw
materials, and high market potential. Another strategy is cut of its
supply in Asian market at 2013. This strategy made the investor
worried and then made Apple’s stock fall to almost 24%. However,
Apple stil can maintain their position as the leader of the innovation of
the products so they can increase their revenue. They introduce other
product such as iCloud, Apple TV, and iPod Touch so they can
generate more capital.

2. Business strategy
Marketing strategy is the activities of selecting and describing
one or more target markets and developing and maintaining a
marketing mix that will produce mutually satisfying exchanges with
target markets. Apple Company involves of Target Market Strategy,
Marketing Mix and most important 4 P’s.

The first target is always the teenagers because for many

reasons like they use the Apple products for socializing, for
entertainment and etc. The next target would be a college and
universities student, which use these products for their daily homework
and assignments. The use of Apple products like laptop, iPad makes
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their lives flexible. Next comes, the business people, who are very
keen to use these products for presentation, business purpose and for
dealing reasons. Last are the adults, they use Apple products to stay in
touch with each other and have a little enjoyment in live by socializing
with others.
Apple Inc. uses all four P strategies to accomplish their goals
and objectives. The four P’s are Product, place, promotion, and pricing
strategy.
1) Product Strategy
The products manufactured by Apple Inc. are more flexible,
easy of carry, less time consuming, and are well designed and
are always better then the last product.
2) Place Strategy
When you see a long running line outside of a store that means
it’s the Apple store. Apple stores are located at easy and
approachable places where people can reach quickly and buy
their desired product.
3) Promotion Strategy
The first promotional tool for Apple Company’s promotion is
advertising. Heavily in areas Apple promotes the products, new
managing changes at any television network, technology
magazine and all over the Internet and apps.
4) Pricing Strategy
The last is the pricing strategy of Apple Company. The
products are not really cheap and less priced. They are sold in
high prices but according to surveys the purchase of products
with high prices is worth of spending money and satisfies
people. 
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Chapter IV

Product and Technology Development Analysis and Business

Process Mapping

IV.1 R&D
Companies often spend resources on certain investigative undertakings in an
effort to make discoveries that can help develop new products or way of doing
things or work towards enhancing pre-existing products or processes. These
activities come under the Research and Development (R&D) umbrella.

R&D is an important means for achieving future growth and maintaining a

relevant product in the market. There is a misconception that R&D is the domain
of high tech technology firms or the big pharmaceutical companies. In fact, most
established consumer goods companies dedicate a significant part of their
resources towards developing new versions of products or improving
existing designs. However, where most other firms may only spend less than 5
percent of their revenue on research, industries such as pharmaceutical, software
or high technology products need to spend significantly given the nature of their
products

Apple spent $4.2 billion on research and development in the quarter ending in
June, the highest quarterly amount it has ever spent on research and development,
according to its quarterly earnings statement. Apple’s R&D bill came out to 7.9%
of its total revenue, the highest percentage since 2003, when Apple was still
focusing on iPods and Macs. Apple is on pace to spend over $16 billion on
research and development in 2019.

The increased spending on R&D comes as Apple’s cash cow, the iPhone, has
seen sales slump. iPhone revenue last quarter was down 12% from the same
period last year. So Apple is investing in core technologies that may power
devices that haven’t been built — but open-ended technology development and
exploration comes at a cost.
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Figure 4.2 AAPL R&D as a Percentage of Revenue

(Source: strategicplanning13.weebly.com)
Historically, Apple has been a laggard behind other top technology
companies when it comes to spending as a percentage of its sales, and it still is. In
the June quarter, Microsoft spent 13.4% of its revenue on R&D, and Google spent
15.7% of its sales on R&D. Analysts have noticed Apple’s rising R&D costs. On
its Q3 earnings call, an analyst asked Apple CFO Luca Maestri if the company
 21

expects to continue to spend an increasing amount on investment, and he said that

the trend would continue.

Apple now develops the processor inside its iPhones, for example, instead
of buying off-the-shelf chips from companies like Qualcomm. That requires
skilled engineers and specialized equipment, often hired or purchased in
competitive markets, like Silicon Valley or Israel. The strategy may be working.
Apple also developed its own wireless Bluetooth chip, which was one of the key
technologies behind the company’s AirPods, which is now a big part of Apple’s
growth engine, wearable devices.

Apple doesn’t discuss upcoming products. But it is probably also spending

heavily on technologies that might take years to hit the market. Apple’s “Project
Titan” is reportedly working on self-driving car technologies, and has hired execs
from Tesla and other companies. Apple has also invested heavily in augmented
reality, a technology that uses sophisticated cameras and computers to place
digital objects in the real world. Apple currently offers a set of developer tools to
help make AR apps for iPhones, but Apple’s been posting a lot of job openings
for “technology development” jobs that suggest it’s staffing up for a bigger swing
at the market, which Cook previously said will be “profound.” Analysts and
media reports say that the company is working on a set of consumer AR glasses.

Another comparison: Apple’s R&D expense is still a fraction of what it spends on

share buybacks. Apple said it spent $17 billion buying 88 million Apple shares
during the quarter, over four times what it spent on R&D.

IV.2 Marketing
In this strategy, Apple could aim on selling the existing products, e.g. Mac
Computers to the existing markets. Apple should try to increase the market share
of the existing product. This could be achieved by using the appropriate marketing
tools( lower prices, sales promotion, advertising) in order to attract new customers
to buy its products. For example, more advertisement or reduced prices on Mac
Computers could persuade new customers that prefer Windows operations system
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to change to Macintosh. This is more highly to be achieved in the grown markets

because in there the product is at its rising stage.

In order to increase its sales and its profit, Apple could persuade existing
customers to buy more products. This can be done during an economic grown
where customers are willing to spent more money in technological items. For
example, Apple could use more advertisements or sales promotion to persuade
customers to buy an iPhone for all the members of their family. Or Apple could
persuade existing iPod customers to buy also a Mac computer.

In the Market Development, Apple could use different marketing strategies

in order to sell existing products/services to new markets and increase its profit. It
could achieve that, either by expanding to other geographical areas or by looking
for users that will use the product in a different way. A common example is by
expanding to foreign markets or to expand from the private sector to the public.
Some examples of Apple are the following:

Apple did not stayed on selling only to U.S but expanded on all over the
world and in 2010 it earned $24,298 from America sales and $30,929 from
worldwide.

Another example is that when Apple introduces a new product to the market,
it leaves the previous one for some time in the market in order for the customers
with low income to buy it. With this technique Apple gain a new market and make
a small profit.

Another example is that Apple in the beginning was only selling only to
customer market but a few years later, it expanded to the area of education.

This strategic option is the most risky of all as Apple has to think of new
products and introduced them into totally new markets. This option has a very
high failure rate as many products fail to come up with the expectations of the
customers, so the company has a loss instead of a profit.
 23

The most recent example of diversification to Apple was the introduction of

iPad in 2010. With this product Apple was aiming in capturing the customers who
used the Internet all the time and did not want to carry a notebook with them.
With iPad Apple did not enter to a completely different market because iPad is
like an iPhone with a bigger screen. Therefore, Apple knew how to handle this
type of product.

Another example is the introduction of iPhone. In 2007 Apple introduced

the iPhone, the first mobile phone from Apple. With the specific product, it
entered immediately to the mobile market which was totally new to them and in
which did not have any previous experience. Apple knew that it should have many
competitors and it knew that the product will be either a failure or a success.
Therefore, with appropriate marketing and management strategies, iPhone proved
to be a success.

A much older example is the introduction of iPod. Apple introduced the

iPod in 2001. Like in the case of iPhone, Apple was also entering into a whole
different area from the computer market. It was entering into the music market
and was aiming for existing customers to buy an iPod and for new customers to
try one and also try the services of Apple.

Finally, as Apple has already entered in the markets of Mobile

Communications, Computers, TV and Music, it could develop a gaming console,
like Play Station 3, in order to enter to the market of gaming. If it enters this area,
it will make a lot of profit because young people spent a lot of money on gaming.
 24

Chapter V Data Processing

 25

Chapter VI Conclusion and Suggestion

VI.1 Conclusions

VI.2 Suggestions
 26

REFERENCES

 (2013, September 5).Retrieved from

http://wwwappleinc.blogspot.com/2013/09/strategic-planning-for-competitive.html
 https://www.ukessays.com/essays/marketing/market-strategies-of-apple-inc-marketing-
essay.php
 https://www.cleverism.com/rd-research-and-development-overview-process/
 https://www.cnbc.com/2019/08/03/apple-rd-spend-increases-fulfilling-tim-cook-
doctrine.html
 https://www.statista.com/statistics/273006/apple-expenses-for-research-and-development/
 27

REFERENCES

Bahagia, Senator N. (2006). Sistem Inventori. Bandung: Penerbit ITB

Chopra, Sunil and Meindl, Peter (2004), Supply Chain Management 2nd ed. Pearson
Prentice Hall, New Jersey

Hernandez, K.E., Benitez, E.O., and Zuniga, C.A. (2015): Safety Stock Levels In
Modular Product System Using Commonality And Part Families, IFAC-
PapersOnLine, 48-3, 1387–1392

Vijayashree, M., and Uthayakumar, R. (2015): Two-Echelon Supply Chain

Inventory Model With Controllable Lead Time, International Journal
of System Assurance Engineering and Management, 10, 1007-13198
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APPENDIX