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The company’s first product was Apple 1 which was sold at a local computer club and in matter of half a year the company had 10 retail stores selling its product. After several years of unsuccessful products and technical failures in 1990 the company reformed new company goals .With the release of Macintosh and iPod the company regained high profits and brand recognition . Apple has a unique reputation in the consumer electronic market. In 2008 ‘Fortune ‘magazine named apple as the most admired company in the USA.
Pestle analysis is a tool which helps an organization to help with the external environment which will affect the organization in present and future
Pestle stands for
P – Political
The political issues of any country play a vital role in the regulations of the business .A business need to abide regulations set by the political parties in the country
In 2007 it was recorded that most of it products were manufactured outside USA which means any bad relation, war and terrorism will effects its production
Due to global warming and environmental awareness, this issue has to be considered by organizations’ and firms
Recently apple has been designing new computer which use less of materials and emit less of carbon dioxide
S – Social
The socio cultures are different from country to country, so it makes it important to consider social factors
The issue with Steve jobs health is making its shareholders think who is going to take over the company.
T – Technological
The major driver of globalization is competitive advantage of technology
Apple is no more using the new technology NFC for its new product iPhone 5 which allows users to do payments online.
L – Legal
This factor is related to legal affairs of a country. In recent UK have many changes in the legal environment which affects the organizations behavior.
One of the most legal suits on Apple is one from Nokia which claimed infringement of its patents
E – Economic
Businesses need to consider the economy in the long term as well as short term
Apple has levied 20% VAT on its phone in the UK which makes it products more expensive
Porters 5 forces
Michael porter designed a framework which allows a manager to understand an industry’s context with the way it’s operated.http://www.kstoolkit.org/file/view/porters_five_forces.png/194319300/porters_five_forces.png http://www.kstoolkit.org/Porter’s+Five+Forces+Analysis
Bargain power of suppliers
As Apple has more than 200 stores all over the world, its suppliers might demand lower prices or better terms this might affect the Apple products.
Bargaining power of customers
As Apples main revenue is through iTunes service which is downloading music and videos but there are other peer to peer sharing music software online like Lime wire, Napster.
Threat of new entrant
As apple is famous for its innovative product technology but more and more new products are launched with the same technology like Google ‘ NEXT ‘which has more or less same technology. There is much competition to portable media as well and online demand for music.
Threat of substitute product
Apple products have substitute for its product and service like CDs and DVDS, satellite radios and also for media, music and videos.
Existing rivalry for Apple is windows operating systems by Microsoft, there are many portable music players by Sony, Samsung etc, and computers are manufactured by Dell, Samsung, and HP which are rivals to Macintosh.
In 1970 Boston consulting group designed the BCG matrix which is known for managing portfolios and also considered decision making tool. In the BCG matrix an organization can focus on the products which generate profits to which are making losses and also to which need more focus. This method is also based on product life cycle. It also has two dimensions market growth and market share of the products of a company
BCG matrix is categorized in 4 groups
Stars – These are the products which are successful in the market but have high costs and are leaders in the business and are also roughly balanced on the net cash flow,
Apple has products such as iWork fall into this category.
Cash cows – These products are profitable, established and successful, profits and cash is high.
Apple iPhone and iPod are successful products which fall into this category.
Question mark – these products are worst cash products because of high demand and low returns due to market
Due to high competition in the personal computer market Apple iMac was losing its market shares, so the company redesigned the new iMac and launched it again which regained its share in the market.
Dogs – An organization always tries to keep these to minimum due to expensive turn around plans these products are considered to have low market shares in a mature market.
The launch of iPad did not have much impact on its customers.
With the help of BCG matrix an organization can understand well it’s frequently made strategy mistakes, the strategy approach of one size of fits all, such as generic growth target or a generic return of capital for an entire organization. In such a situation
Cash cows business will take over the profit margins where the organization usually needs to reinvest cash amount in the business which are not growing anymore or mature
Dogs’ business units anyways always fight an impossible battle and worse case is when investments are often made and attempts to turn the business around.
As a result of this the stars and question marks get a very medium sized investments and which doesn’t allow them to every turn into cash cows and thus the invested money is all in vain.
Some of the limitations of BCG matrix are
Success factor does not solely dependent on high market share.
Market attraction is not only the indicator for market growth.
Dogs also can sometimes yield more profits than cash cows
Bowman strategic clock
In this process an organization determines its position in comparison to the other competitors; the strategy clock was founded by Cliff Bowman. As the market is open and highly competitive customers have a wide choices to choose from as many companies sell the same products , the organization needs to meet customers need better than other companies . This theory also considers price over other advantages.
There are eight different core strategies involved in bowman strategy clock
Option 1 – Low added value / low price
This is more specific to its segment
Option 2 – Low price
It has more price wars and low margins as well and needs to be a cost leader
Option 3 – Hybrid
It has low base of cost and needs reinvestment in low price
Option 4 – Differentiation
The clients consider perceived added value and yields market share benefits without premium price
Adds value sufficient to bear price premium
Option 5 – Focused differentiation
Adds value to a specific segment warranting a premium price
Option 6 – Increased standard / price
Higher margins can be achieved if the market shares are not low
Option 7 – low values / increased price
In this scenario it only affects the organization in a monopoly situation.
Option 8 – standard price / low value
If the organization is in a state of market loss
Based on Bowman’s strategy clock of the company , the company focuses on strategy based on prices where the main goal is to generate more profits without losing other things , the company aims to achieve a better financial status compared to other competitors in the market , it also focuses to have prices that are unique from what the other competitors offer in the market .Apple is one of the most innovative and creative organizations which targets to cater the mass market with its most innovative products like iPhone and iPod which combines with a different strategy which is based on its design, user experience and also on its design and branding that enables the organization to charge a price premium due to perceived unavailability of the same product or the technology driven by the company and with no close competition.
Key performance indicators
KPI is the term used by the industry to measure performance. It is also defined as a measurement in which an organization is engaged that measures its progress towards organizational goals.
Key performance indicators are quantifiable and they reflect the critical success factors of a company and they differ from company to organizations from finance team to sales team. The most effective way to assign KPI is to apply management framework like balanced score card.
For a school key performance indicator can be graduate rate of its student.
For a call centre it can be percentage of calls answered in the first minute.
For a social service organization can be number of clients assisted in a year.
Following are the sub categories for KPIs
Quantitative indicators – it can be in numbers
Practical indicators – interface with the process of existing company
Directional indicators – indicates if an organization is improving or not
Actionable indicators – are used to specify if an organizations control to effect change
Financial indicators – mostly used to measure performance measurement and for checking operating index
Apple has updated their key performance indicator to also include training of workers. In 2009 the company has trained more than 130000 workers. Apple is also committed to ensure high standards of social responsibility throughout supply base. Apple states that the companies in business with the organization provide safety for its working staff, treat them with respect and dignity and be responsible for the environment into the manufacturing processes wherever the products are manufactured for Apple Inc.
Apple also has included key activities for the supplier program
The suppliers need to develop seven clarifying standards that address detailed related to juvenile worker protections, non discrimination in medical, dormitories, non discrimination in pregnancy, involuntary labor prevention, benefits and wages , and also working hours of a labor as well as management
The organization has implemented training programs for all Apples manufacturers. At this initiative of this supervisor, managers and more than 133 000 workers have been trained for workers rights and management responsibility.
Apple also has taken in responsibility of recruitment in regards to ethical and foreign contracts workers. As a result of audit and corrective actions, foreign recruited workers were reimbursed $ 2. 2 million fee over charge. In 2009 the organization initiated 2 strategy co founding a cross industry focus group and collaborating with government agencies to educate the staff to address solutions in their challenges Number of facility that audited with apples compliance code have been increased , in 2009 onsite auditing of 109 facilities were completed for 190 individual staff audited since 2007.
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Product life cycle
The life a product can be said is what appeals its customers. At the introduction phase the product is new in the market and hence it has slow sales as the awareness of the product is limited, at the period of growth sales grow rapidly, at this time the competitors enter the market and promote the same line of products and due to this the growth reduces and this period is called maturity as many company’s launch their same line of product which makes market more competitive. Many companies compete in different ways, many enter and many drop off the market. The market for the same product falls and the existing product is no more as profitable as it used to be. Product life cycle of different product differ from hundred years to few months, for a prolong life cycle of a product a company needs invest very well in the promotions and development of it. So a lot of attention is required into its launching and at times a product needs to be upgraded with new technologies, improvement, extending the range and more promotions with improvements.
A good example is for personal computers which have a short life span as many upgrades are available in the competitive markets, same goes for the mobile phones as well innovations The life cycle of a product does not always end; it can easily keep going on with good marketing and production.
As for Apple products the introduction level is very good as there is always hype of it products at the launch and the company always goes out of it production due to good marketing and promotions and also due to its innovation and design. The apple iPhone is slowly moving into maturity phase which very common phase in most cases of successful products in a product life cycle. At the beginning of its life cycle iPhone proved to be the best but in matter of time more products and competitors started launching their products with same innovation for example android phones and due to this the mobile market has become saturated with touch screen and android phones which are very similar to iPhone , so now the sales have slowed down and the revenue has fallen than before which has an impact on the overall profitability of iPhone , in order to regain its profits the firm needs to have new strategy for its product lifecycle.
In the maturity phase Apple needs to use a number of key strategies so that it can defend its market share to maximize its profits for the iPhone , the key elements of the sales strategy are marketing , distribution and new product features by effectively using these strategy iPhone can hold back the market position until its final stage.
New product features
To align with the sales plan apple, it has launched iPhone 3, 3gs, and 4 and soon is going to launch its new iPhone 5. Introducing enhancement and product upgrade will lengthen its product life cycle and it will also range from its accessories to software updates.
Pricing is another biggest factor that Apple needs to consider to stay in the competitive market and this can be in form of rebates, price drops and discounts. By reducing its price Apple plans to increase its sales volume. During this phase only clients remaining who are price sensitive and risk adverse because of this price becomes imperative to moving additional unit (Thomson, 1999).
In the maturity level of a product distribution is increased, the firm needs to flood in the market with the distribution as its channel, distribution can be increased with the help of promotions, discounts etc , with this the cost to the customer decrease but the sales do increase and its type of strategy is used in the maturity level.
Product life cycle for iPod
iPod has significantly helped with growth to Apple Inc, but as of now its growth is slowing down as it is at its maturity level, however the firm has done some upgrades to the model to boost it sales. IPods growth for financial year 05 and 06 is around 58% of apples total revenue, in financial year 07; iPods segment generated 14 % sales growth. For FY05 was 33%, FY06 was 40% and FY07 was 35%.
Last quarter year 2008 units increased 5%, compared to 50% of Q1 2007
Unit growth for financial year 07 was 31% compared to financial year 06 to 75%
Competitors of Apple Inc
Hewlett Packard HP D B RGB 72 MX+space.png
In 1939 Bill Hewlett and Dave Packard classmates of Stanford University founded HP .An audio oscillator was their first product built in a garage in Palo Alto which is an instrument used by sound engineers and is one of the largest multinational information technology companies and is operating almost all over the world. Hp designs computing devices, industry and enterprise servers, storage devices, software, network and a range of printers. HP is worth $126.3 billion is the year 2010. HP markets its products from household to small business to enterprises through online as well as consumer electronic, office supply retailers and technology vendors.
HP claims to be one of the largest vendors of PC in the world based on unit volume shipped and annual revenue
In 2002 HP merged with Compaq to build personal computers. HP has a line of successful products like scanners, printers, calculators, PDAs, digital cameras, work stations and personal computer for home and business.
In 1984 Michael dell founded Dell Inc, it’s an American multinational based in Texas USA and it sells, develops and supports personal computer and products and services. Being one of the largest technological companies in the world it employs more than 105,500 people all over the world .In Fortune 500 list dell ranks 41.Dell has notable mergers and acquisitions . Some of the products of Dell include personal computers, software, data storage, network switches and computer peripherals. Dell also has a line of HDTVs, cameras, printers, portable music players and other manufactured built products. The company is known for its supply chain management and electronic commerce.
Dell is listed sixth largest company in Texas in total revenue generated by Fortune magazine, it is also non oil company and also largest in Austin.
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