MM 5012 BUSINESS STRATEGY AND ENTERPRISE MODELLING

APPLE: THE IPHONE TURNS 10,

SO WHAT’S NEXT?
Syndicate Group 1:
Adistya Suciyanti | 29319016
Dany Akbar | 29319066
Faisal Ali Mohammad | 29319144
Putri Aisha Mayangsuri | 29319112
Samuella Magdalena E. | 29319075
TABLE OF CONTENTS
CASE PROPOSED
01 SUMMARY
Apple development and its
SOLUTION 04
Transform weaknesses and
good strategy
threats, developing Apple’s
good strategy

STRATEGIC
02 PROBLEM
Apple’s competitive advantage
LESSON LEARNED
Things can be learned from
05
that disrupt industries Apple’s successful

RELEVANT THEORY
03 AND CONCEPTS
Apple’s industry analysis, firm
analysis, and SWOT
 CASE
SUMMARY

01
APPLE’S
FOUNDER

Steve Jobs Ronald Wayne Steve Wozniak

APPLE’S 1976
Apple
Apple computer company is
TIMELINE iPod
founded

Apple introduced Digital 2001

Music Player

2003
iTunes Music
Online Music
iPhone
Apple introduced Iphone 2007
revolutionized smartphone

iPad
2010 Apple created the tablet
computer Industry
Apple Pay
Apple launched mobile 2014
payment system
Apple Watch & Apple Music
2015 The first new product launched
since the iPad 2010
APPLE’S GOOD STRATEGY
A DIAGNOSIS OF THE
COMPETITIVE CHALLENGE
● Apple hit the product and business
model innovation of the
iPod/iTunes combinations
● To improve Apple’s strategic
focus: Apple focusing on only two
computer models (one laptop and
one desktop) in each two market
segments (the professional market
and the consumer market).
A GUIDING POLICY TO
ADDRESS THE COMPETITIVE
CHALLENGE
● Apple shift competitive focus
away from personal computer
to mobile devices.
● The new innovation and
business model of Apple is
combining hardware (the iPod)
with a complementary service
product (the iTunes Store)
● With this innovation, Apple
disrupted several industries
through its product and
business-model innovations.
A SET OF COHERENT
ACTIONS TO IMPLEMENT
THE FIRM’S GUIDING POLICY
● Apple took a two-pronged
approach:
○ Computer models (one laptop
and one desktop)
○ In each two market segments
(the professional market and
the consumer market).
STRATEGIC
PROBLEM

02
Q1: Explain Apple’s success over the past decade relative to its main
competitors. Think about which industries it has disrupted and how.
HOW APPLE DISRUPT THE INDUSTRIES?
Competitive Advantage:
Developing Innovative Business
Model
Combining hardware with complimentary
service products to make a seamless
product lineup
STRATEGIC PROBLEM: WILL IT BE SUSTAINABLE?
Disrupted Industries
● Music Industry: CD, cassette, Walkman,
illegal songs downloader website
● Telecommunication industry: cable-phone,
non-touch screen handphone
● Computer industry: Desktop, laptop
● Photography and video industry: SLR
camera, lomo camera
● Operation system: Symbian, Windows Phone
● Media industry: television, newspaper,
magazine
 RELEVANT
THEORY AND
CONCEPTS

03
 Q2: Is Apple’s success attributable to industry effects,
INDUSTRY ANALYSIS: firm effects, or a combination of both? Explain.

Porter’s Five Forces Model

● High capital investment
● Relatively low switching cost
regarding of the customer’s loyalty
to Apple products
● Difficult arrangement of legal
LOW requirements to start the business
● Difficult access to distribution
(Opportunity) channel for new entrants

● Apple still have Threat of ● Sellers availability

dependency on some New Entrants relatively higher
dominant suppliers, such compared to the buyer’s

MEDIUM (Opportunity)
as Intel, 3M, Samsung, etc. Rivalry Among Existing Competitors demand
● Some of Apple’s supplier ● Apple has its own
HIGH (Threat)
HIGH (Threat)

can be a direct operational system (iOs)

competitor (e.g.: Bargaining ● Electronic is a highly growth industry
Bargaining that makes it
Samsung), and also have Power of ● Have high fixed cost of the product Power of differentiated
high demand from other Suppliers ● Have high exit barriers due to the Buyers ● Some loyal buyers will
competitors regulation and patent not easily buy other
● Apple’s suppliers can set ● Have numerous of balanced competitors competitor’s product
its price based on their ● Buyer have tendency to
technology development buy other Apple
Threat of products to have a
Substitutes seamless experience

● Lots of substitutes throughout

phone, laptop, tablet and music
HIGH ● Substitutes relatively have lower
price than Apple products
streaming apps (Threat)
 FIRM ANALYSIS:
Core Competencies Theory
Reinvest, Hone, & Upgrade
Resources
Cash capital
Brand equity
patent

Reinforce

Leverage Superior Firm

Core Competencies Activities Competitive Advantage Performance
Superior industrial design Creating a string of Product and business-model
Success build
in integration of hardware temporary competitive innovation (iPod/iTunes
sustainable
and software advantage combination)
competitive advantage

Orchestrate

Capabilities
CEO’s skill and experience

Reinvest, Hone, & Upgrade

 INDUSTRY
EFFECTS
APPLE’S Industry factors have given
impact to Apple with more

FIRM SUCCESS?
threats rather than
opportunity.

EFFECTS Combination of Industry

and Firm Effects, but
dominance is from firm effect
Integration of Apple products
based on its business model
innovation has been the
success key of its sustainable
competitive advantage.
 Q3a: What are the greatest challenges Apple is facing?
EXTERNAL & INTERNAL ANALYSIS: Detail them by internal weaknesses and external threats.

SWOT Analysis
STRENGTH WEAKNESS
● Good strategy ● Decreasing new innovative product (TheStreet.com)
● Reputable brand image ● More than 60 percent of Apple's $220 billion revenue
● Tremendous brainpower (leaders and employees) comes from the iPhone.
● Intellectual property ● The difference on recent developments in terms of
● Innovation in business models (products and product prices is far away while the quality is not too
services) significant.
● Good privacy system from viruses, malwares, etc. ● Difficult to connect with non-Apple devices.

S W
THREAT

O T
OPPORTUNITY
● Uncertain future circumstances (e.g: pandemic and
● Apple continues to capture over 90 percent of profits
global recession)
in the smartphone industry that can be increased
● Strong competition and rapidly changing industry
● Digital industry has good development occurs to
environments
payment systems easier for Apple
● China accounts for more than 20 percent of Apple's
● People tendency to use smart wearable technology is
total revenues, a market that is becoming more and
increasing
more volatile
● Low threat of new entrants and relatively low
● Trade war between America and China
bargaining power of buyers (loyal customers)
● High bargaining power of suppliers and threat of
substitutes
PROPOSED
SOLUTION

04
 Q3b: How can Apple transform internal weaknesses into
strengths and external threats into opportunities?
STRATEGY #1:
TOWS Matrix - Transform Weaknesses and Threats
Internal
Factors Strength (S) Weakness (W)
External
Factors

Opportunity (O) SO Strategies: WO Strategies:

- Increasing smart wearable product
Developing new product/service that focuses regarding emerging tendency of people
on disrupting product in digital industry behavior
- Maximize digital payment system

Threat (T) ST Strategies: WT Strategies:

With intellectual property and tremendous Creating innovative product that suitable with
brainpower, they should create adaptive ongoing situation
strategy for uncertain circumstances

STRATEGY #2:
Three-step Process Developing Good Strategy
The Competitive Challenge
In May 2019, Piper Jaffray analyst,
Michael Olson claimed that Apple had
evolved its service business so much
that it was worth $502 billion, using an
analysis that assesses the value of
each business unit and then combines
them together for an overall valuation
estimate. At the same time, Olson
estimated that Apple's hardware
business was only worth $398.8
billion. This would make Apple's
services business worth more than its
hardware business.
Q4a: Apply the three-step process for developing a
A Guiding Policy
Apple must navigate a shift from
selling devices to selling content
and services like the App Store.
Tim Cook has made an increasing
revenue on business services as a
goal to speed up the growth.
Recently, they have several
addition on Apple’s services
business including a streaming
movie, TV service, new video game
subscription and the apple card
which will compete against other
financial payment giants.
good strategy to Apple’s situation today.
(Apple’s Current Situation)
Coherent Action
Apple has marked the close of a
historic 2019 for its services offerings,
a year that introduced Apple Arcade,
Apple TV+, Apple News+ and Apple
Card, and celebrated the continued
success of the App Store, Apple Music,
iCloud and more experiences only
Apple can create and deliver. Apple
provides customers with the
highest-quality services along with an
unparalleled commitment to privacy
and security, and offers creators and
developers the opportunity to bring
their creative visions to people
around the world.
 Q4b: Which recommendation would you have for Apple to
outperform its competitors in the future? Be specific.

Net sales Apple’s Product in Q1 2020

March 2020 March 2019

Recommendation: Based on the Q1 financial statement 2020 we recommend for Apple to be more
concern for taking opportunity to develop its service product regarding the increasing net sales.
 LESSON
LEARNED

05
LESSON LEARNED
Adaptive Within
Changes
Apple has good strategy
that is developing based on
dynamic human behavior
Developing
Good Positioning
Developing good positioning on
highly competitive market will
determine the successful of the
business
Sustainable Competitive
Advantage
By successfully producing many
products connected each others,
Apple build sustainable competitive
advantage to become superior firm
Seeking
Suitable Strategy
There are many strategy that can be
done depends on the firm’s
situation to gain competitive
advantages
THANKS
Do you have any questions?

ENTREE 17 - GROUP 1