Apple: How to Sustain a Competitive Advantage?

Group-5
CGT19003: Anil Kumar Nayak
CGT19004: Animesh Kumar Singh
CGT19005: Ankit Bansal
 HISTORY

1976 1984 2007 2010

Apple Computer Co. was The finest creation of Apple launched 1st Jobs announced 1st iPad.
founded by Steve Jobs Apple, the Macintosh was iPhone, which, according
and Steve Wozniak introduced in the market. to Jobs was “Internet in
your pocket”.

1st PC of Apple (Apple II) In Oct 2001, a portable

was launched and sold or digital music player, iPod
$666.66 and Apple went was launched which was an Steve Jobs introduced the
Public instant hit. first generation of Apple TV.

1978 2001 2007

 Apple, Inc.
MACINTOSH AND IBM
 After the launch of Apple II in 1976, Apple had released three improved version of personal
computer by 1980.
 Although Macintosh was the 1st PC applauded or unique industrial design and ease of use,
it was slower than IBM PCs and a very few compatible software were available due to
Apple’s closed proprietary OS. So by 1982 IBM became a serious competitor for Apple in
PC market.
JOHN SCULLY AND STEVE JOBS

 In 1983, Steve Jobs brought John Scully, a marketing guru from Pepsi.
 Apple’s core business strategy shifted from differentiation based on premium product with
high price tag to producing low cost product with mass market appeal while Scully was in-
charge.
 Scully’s new ambition was to compete directly with IBM in household-computer market.
 With reduced sales and declining net income, a power struggle erupted between Jobs and
Scully, who convinced Apple’s board of directors to throw Jobs out of Apple in 1985.
 In1993, leadership changed hands from Scully to Michael Spindler, who focused on cost-
cutting and also made international growth as main objective.
 Apple, Inc.
STEVE JOBS RETURNS

 In Spindler was replaced by Gilbert Amelio, whose intention was to revive Apple’s
former strategy by focusing again on the premium product market segment.
 After the worst financial performance of Apple in 1997, Jobs was brought back as
interim CEO of Apple.

RESTRUCTURING APPLE

• Discontinued of several products such as Newton PDA, LaserWriter Print line and
Apple QuickTake Camera.
• Outsourced manufacturing to Taiwan and distribution was scaled down by ending
relationship with small outlets.
• Launched Apple website to sell online and opened retail store for build-to-order
manufacturing strategy.
• Switched everything to the open-source, UNIX based operating system.
• Created Industrial Design group to produce more aesthetically pleasing computers.
 COMPETITIVE ADVANTAGE

Brand
Strength

Rapid
Organisational
Innovation
Culture
Processes

Seamless Premium
Integration of Pricing
Apple Devices Strategy

Critical
Satisfaction of
Customers
 SWOT ANALYSIS - STRENGHT

Innovation Driven Culture

• Innovation is a process that can be cultivated and managed within an
organization
• High tolerance for failure and risk appetite for creative projects

Brand Loyalty
• Cult like following
• Customers eat, think, breathe and believe apple

Product Design and Style

• Transformation of brand image to young, creative, appealing product and
challenging the norm of Industry

Seamlessly Integrated Devices

• Information synergy between different devices, iPod, iPhone, iPad and Laptop
 SWOT ANALYSIS - WEAKNESS

Premium Pricing
• Constant pressure from competitors
• Expansion in developing markets

Inflexible OS
• High flexibility in Google’s Android OS
 SWOT ANALYSIS - OPPORTUNITIES

New Product Categories

• Wearables like watches, Television etc.

Geographical Expansion
• Expansion in emerging economies like Brazil, China and India

Cloud based Services

• Transformation in other cloud based services like done in the case of Apple
Music
 SWOT ANALYSIS - THREATS

Intense Competition
• Competition from different technology giants in different segments
• Highly dynamic Industry

Threat of Imitable
• Consumer electronics trying to design their product like Apple’s

Leadership Pipeline
• High dependence on Steve Jobs for driving the culture

Dependence of third parties (even competitors)

• Sourcing some of the hardware from Samsung and Intel
• Device assembly outsourced in Taiwan
 VRIO ANALYSIS OF APPLES BRAND VALUE

• Value: Strong brand loyalty, Above average margin on products

• Rare: Cult-like following of Apple’s products
• Inimitable: Brand value in generally intangible and impossible to
copy. Apple culture of continuous innovation and focus on product
design helped in further strengthening it
• Organization: Brand value associated with apple products, over a
period of time

Brand value of Apple can provide sustainable competitive advantage

COMPETITORS OF APPLE