Apple Case Stidy

Executive Summary

This case analyzes the current situation of Apple Inc. as of 2008. This report also provides recommendations that could facilitate the future growth and profitability of Apple Inc. The following methods will be used to give a detailed analysis of Apple Inc.:

Key success factors

A SWOT analysis

Identification of critical issues

Perceptual Maps comparing Apple with competitors

Tables of financial data

Recommendations to facilitate future success of the company

This case report shows that Apple Inc. has drastically improved under the leadership of CEO Steve Jobs. Apple Inc. leads the market in handheld mp3 devices with their wide variety of Ipods. Apple Inc. is also doing a better job in competing in the PC industry and with the introduction of the Iphone they are slowly becoming a threat in the smart phone industry. However, the struggling U.S. economy, low market share in the pc industry, and health issues of CEO Steve Jobs threaten Apple's growth. There are a few critical issues that Apple needs to address in order to maintain its margins and continue to grow and this analysis will provide recommendations for doing just that.

Introduction

Steve Wozniak and Steve Jobs established Apple in 1976. Apple's mission was to introduce a first generation simple to use computer. Apple's struggles early on and Jobs's volatile personally lead to him resigning as CEO in 1985. Over the next 12 years, Apple made many advances but was unable to retain a competent chief executive officer and encountered many leadership problems. CEO John Sculley tried to subcontract out much of the company's manufacturing processes but this was not enough to bring Apple out of the slump it has fallen in. Next CEO Michael Spindler felt the company needed to expand internationally, but due to tight control over their operating system and software Apple continued to have issues. When Gilbert Amelio replaced Michael Spindler as CEO, he announced that Apple would revert back to its original premium-price differentiation strategy. Despite gaining ground Apple once again lost its momentum and began reporting losses.

Apple purchased Steve Jobs's co-founded company NeXT in 1996 and in this move Jobs was once again part of the Apple team. As of 1997, Steve Jobs has been the CEO of Apple. Jobs came back with a new strategic plan and an answer to many of Apple's critical problems. Apple began to focus once again on innovation and setting itself apart from its competition. Thanks to Jobs reinvigorating the company, Apple has grown and thrived in many markets since. In order to better understand Apple's situation, internal and external forces must be analyzed in detail and supporting financial data will be presented.

Critical Issues

Critical Issue #1: Low Market Share in the PC Industry

Despite Apple having the highest growth rate in the industry of 38.1% from the second quarter of 2007 to the second quarter of 2008, the company only accounted for 8.5% of the U.S. market and only 3% in the international market. Apple's competitors have clear competitive advantages, where as Apple relies on its innovativeness to set itself apart. Apple suffers because of its premium price-differentiation strategy. Apple is having a difficult time taking market share away from competitors such as Dell and Hewlett-Packard because the company cannot compete on price. Other key factors that affect Apple's market share include the company offering products that have compatibility issues with other electronic brands and the company not allowing outside programmers to create software for its operating system.

Critical Issue #2: The Health of Chief Executive Officer Steve Jobs

Apple has struggled without Jobs making the decisions and prospered with him coming back as CEO. Steve Jobs can be credited with Apple's decision to rely on innovation and continuously introduce new products into many different electronic industries. Over the past decade, Apple has relied on Jobs every step of the way. Shareholders became very uneasy when Steve Jobs health became an issue. Apple is in a position to where they must keep Jobs at all costs, however, if his health issues are not completely cured then the company must find a way to succeed without him.

Recommendations

Recommendation #1: Stay with a premium cost-differentiate strategy and take advantage of the niche that has been created.

Apple needs to focus on expanding their market share in all industries, but specifically the PC industry. Due to Microsoft based PC's