A Strategic Analysis of Apple Corporation

ASTRATEGICANALYSISOFAPPLECORPORATIONAprojectstudysubmittedinthepartialfulfillmentoftherequirementsforthesubject“OrganizationalEventAnalysisforExperientialLearning”SubmittedByHuzefaA.N.DeeptiDineshGauravVinayHarmanjeetSinghUndertheguidanceofPROF.DEBAJYOTIMAJUMDARTHEINDIANINSTITUTEOFPLANNINGANDMANAGEMENTHYDERABADCERTIFICATEThisistocertifythatthisisaprojectreporton“ASTRATEGICANALYSISOFAPPLECORPORATION”submittedbyMr.Huzefa,Ms.A.N.Deepti,Mr.DineshGaurav,Mr.VinayandMr.HarmanjeetSingh(PGP/SS/2007-09)asapartofthecurriculumforthefirsttrimester.TheworkhasbeenundertakenandcompletedundertheguidanceofProf.DebajyotiMajumdarandissatisfactory.Prof:Date:Page2of54ACKNOWLEDGEMENTItgivesusgreatpleasureinpresentingourprojectworkon“ASTRATEGICANALYSISOFAPPLECORPORATION”.We,thestudentsofPGP/SS/2007-09,IIPM-HYDERABADsuccessfullycompletedourprojectandwouldliketothankProf.DebajyotiMajumdarforhistimelyencouragement,guidanceandsupport.We,asco-workersarealsogratefultoeachotherfortheteamworkwithoutwhichthisstudycouldnothavebeencompletedsuccessfully.Page3of54PREFACETheprimaryobjectiveofthisreportistoprovidethereaderstheinsightintothesuccessofappleindustry.Wehopethatthereporthasmadethetextinterestingandlucid.Inwritingthisreport,wehavebenefitedimmenselybyreferringtomanypublicationsandarticles.Weexpressourgratitudetoallsuchauthorsandpublishers.Anysuggestionstoimprovethisreportincontentsorinstylearealwayswelcomeandwillbeappreciatedandacknowledged.Page4of54DECLARATIONWeherebydeclarethatalltheinformationthathasbeencollected,analyzedanddocumentedfortheprojectisauthenticpossessionofus.Wewouldliketocategoricallymentionthattheworkherehasneitherbeenpurchasednoracquiredbyanyotherunfairmeans.However,forthepurposeoftheproject,informationalreadycompiledinmanysourceshasbeenutilized.(Huzefa)(Deepti)(Dinesh)(Vinay)(Harmanjeet)Page5of54CONTENTSEXECUTIVESUMMARY……………………………………………………………………….7HISTORYOFAPPLE………………………………………………………................................8MISSIONANDVISION………………………………………………………………………...15THEPCINDUSTRY……………………………………………………………………………..16THEONLINEMUSICINDUSTRY…………………………………………………..................17THEFUTUREOFAPPLE………………………………………………………………………17PERSONALCOMPUTERS-ASHIFTINSTRATERGY…………………………….17APPLEINTHELIVINGROOM………………………………………………………19STRATEGICALLIANCES……………………………………………………………..20EXTERNALANALYSIS……………………………………………………………....................21TECHNOLOGICALENVIRONMENT……………………………………....................21PERSONALAWARENESS-STYLEATAPREMIUM……………………...21INTEROPERABILITY……………………………………………………….22TECHNOLOGYANDTHEDIGITALLIFESTYLE………………………..23REGULATORYENVIRONMENT……………………………………………………24INDUSTRYANALYSISUSINGPORTER’SFIVEFORCESMODEL………………………25WHICHEXTERNALTHREATSAREMORESIGNIFICANT……………..............26ADDITIONALEXTERNALTHREATS……………………………………………………….28SECUTITY…………………………………………………………………………….28VERTICALINTEGRATIONOFCOMPETITORS…………………………………..29VALUECHAINANALYSIS…………………………………………………………………...30TECHNOLOGYANDPRODUCTDESIGN…………………………………………30PRODUCTION………………………………………………………………………..31SALESANDMARKETING………………………………………………………….31CUSTOMERSERVICE……………………………………………………………..31LEGALSERVICES…………………………………………………………………...32SWOTANALYSIS……………………………………………………………………………..33STRENGTHS………………………………………………………………………….33WEAKNESSES………………………………………………………………………..34OPPORTUNITIES………………………………………………………………..……34THREATS…………………………………………………………………….………36FINANCIALANALYSIS…………………………………………………………….………..362NDQUARTER2006…………………………………………………………………36HISTORICALPERFORMANCE……………………………………………………36STOCKPRICEPERFORMANCE…………………………………………………..37PROFITABILITYMEASURES…………………………………....………………..38LIQUIDITYANDLEVERAGEMEASURES………………………………………38PRODUCTUNITSALES……………………………………………………………39OPERATINGSEGMENTS………………………………………………………….39MARKETVALUEANALYSIS………………………………………………………………40PROFORMAINCOMESTATEMENT……………………………………………...41PROJECTEDFREECASHFLOW&EQUITYVALUATION………………………42STRATEGY……………………………………………………………………………………43PRODUCTDIFFERENTIATION…………………………………………………....43STRATEGICALLIANCES………………………………………………………….47RECOMMENDATIONS………………………………………………………………………50CONCLUSION………………………………………………………………………………..51INDEX…………………………………………………………………………………………52BIBLIOGRAPHY……………………………………………………………………………..53Page6of54EXECUTIVESUMMARYAppleComputer’s30-yearhistoryisfullofhighsandlows,whichiswhatwewouldexpectinahighlyinnovativecompany.Theyevolvedthroughouttheyearsintoanorganizationthatisverymucharepresentationofitsleader,StevenJobs.Applemadeseveralhugelysuccessfulproductintroductionsovertheyears.Theyhavealsocompletelyfallenontheirfaceonseveraloccasions.TheystruggledmightilywhileJobswasnotapartoftheorganization.Applereachedapointwheremanythoughttheywouldnotsurvive.Whenaskedinlate1997whatJobsshoulddoasheadofApple,DellInc.'s(DELL)then-CEOMichaelS.Dellsaidataninvestorconference:I'dshutitdownandgivethemoneybacktotheshareholders.”(Burrows,Grover,andGreen)Well,timeschanged.Lessthan10yearslater,BusinessWeekrankedAppleasthetopperformerinits2006BusinessWeek50.AppleattributestheirrecentsuccesstorobustsalesofiPodmusicplayers(32millionin2005).Theyareoptimisticabouttheeconomiesofscopewithmediagiants,suchasDisneyandPixar.(