Imc Plan- Apple

However, Microsoft Windows Operating System and Office Software coupled with Intel microprocessors causing Apple to fall behind in the PC market share to being just a niche player by the mid-1990s. At the beginning of the 21st century, the introduction of iPod catapulted Apple back to being the darling of the industry.

Now, the company makes announcement on new products and services on a continuous basis. 2 Mission Apple Computer’s mission is to design, manufacture and market PCs, and related software, services, peripherals and networking solutions.

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Apple also has another mission which is to design, develop and market a line of portable digital music players along with related accessories and services including the online distribution of third – party music, audio book, music videos, short films and television shows. 3 Objectives Their current objective is to remain number one in portable digital music players market. They attempt to do this by having differentiation strategy for each of its key products –Mac, iPods, and iTunes, re-establish a retail presence and to design and develop new products using its own.

4 Strategies

One of Apple’s strategies is to innovate in the design of new products and to utilize technology convergence in new products. The company is working towards being a leader in the portable digital music players (iPod) and to grow the iMusic market share. They hope to increase sales of PCs and servers and to maintain present growth in revenues and profits and growth in MAC products. 5 Policies Apple’s policies include converging technology in new products, finding new music sources (Apple Cos) for portable digital players, distribution of on –line music and maintaining user friendly products.

Corporate Governance 1 Board of Directors Apple Inc, formerly Apple Computer Inc. is an American multinational corporation which focusing in designing and manufacturing consumer electronics and also developing software products.

Apple was founded in Cupertino, California on April 1, 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne. The Board of Directors includes Bill Campbell (Chairman and former CEO), Millard Drexler (Chairman and CEO), Albert Gore Jr. (Former Vice President of the United States), Steve Jobs (CEO, Apple), Andrea Jung (Chairman and CEO, Avon Products), Arthur D.

Levinson, Ph. D.

(Chairman and CEO), Dr. Eric Schmidt (CEO) and Jerry York (Chairman, President and CEO). Jobs owned 16,307,625 (1. 94%) of the shares. The company’s two largest stockholders are Barclay Bank Plc with 67,094,321 (8.

09%) shares and FMR with 51,250,663 (6. 18%) shares. External Environment 1 Societal Environment (PESTDN) 3. 1. 1 Political-Legal Apple was also involved in lawsuits regarding to their battery for their products such as the iPod.

Owners have reported that that Apple made misrepresentations and omissions in its advertising regarding the lifespan of the iPod’s battery. Apple iPod Class Action Lawsuit) The law in France requires companies that sell digital-music files to open up their digital rights management systems so that the files can be played on any device. This would pose a problem to Apple as the songs from iTunes are only playable on their products. (Apple vs. France) There are also laws protecting patent and copyright. Intellectual Property (IP).

IP can be an invention or innovation, special names and images used in trade, original designs or an expression of an idea. In Singapore, laws exist to protect such IP.

This may be through a registration process such as patent grants for inventions, trade mark registration for signs used in trade. (Intellectual Property) Apple would be able to make use of such laws to protect and patent its design especially for the iPod or the iPhone. Apple has filed a patent for the technology which would enable a layer of solar cells to be inserted under a touch-sensitive screen of the sort used in the iPhone.

(Apple Planning for Solar Energy Phone) 3. 1. 2 Economic The current GDP Trends for 2007 shows per capita GDP at $52,994 with nnual growth of 7. 7%. Labor force is at 1,918,000 with a low unemployment rate at 3. 1%.

There is also the increase in purchasing power of the consumer which will increase the demand for more sophisticated goods. Also, with more credit availability such as credit cards, loans and NETS have enable purchasing of hi-technology goods to be inexpensive nowadays. Apple Inc. is reducing the price of all songs on its iTunes Store without anti-copying software to 99 cents from $1. 29, bringing Apple’s prices on such tracks closer to those offered by Amazon. com Inc. Wal-Mart Stores Inc. and other rivals in online music. (Apple Reduces Prices on iTunes Songs Without Anti-Copying Software, 2007) This would make it around the same price as copy-protected songs. However, Apple would need to consider to place more control over the pricing of songs and videos that it was selling on iTunes, in addition to better piracy controls and more flexibility to bundle contents together.

3. 1. 3 Sociocultural Apple would be able to target on changing the secondary beliefs of consumer by using Apple products such as iPod Nano or the new iPhone.

They would also be able to shape their products to appeal to the personality and character that consumers would seek after. Combining iTunes to synchronize their music, video, contacts, photos and applications, iPod normally position itself to target the youth market of the society typically Generation Y.

There is also the trend toward a more “wired” society continues with continued demand for computer products. 4 Technological With regards to hacking activity, John Loch Johansen, said that he had cracked Apple’s iTunes copyright restrictions.

The copyright protection stopped iPod users from playing downloaded music from music stores other than iTunes. Apple’s iPod music player and iTunes online music store, some have called for Apple to “open” the digital rights management (DRM) system that Apple uses to protect its music against theft, so that music purchased from iTunes can be played on digital devices purchased from other companies, and protected music purchased from other online music stores can play on iPods. This will help Apple to reduce illegal copies of music being distributed as the DRM systems only allow authorized devices to play the protected music.

Thoughts on Music, 2007) 5 Demographic The population age mix would include the baby boomers, generation X and Generation Y.

Apple would be targeting at the generation Y born from 1980 to 1999, which grew up in the 1990s and 2000s. As compared to Generation X, the consumers in Generation Y are more prone to purchase and have liking to technological products. With increase in literacy rate, it also meant a more educated society which would go for products that are more sophisticated. As of 2007, the literacy rate among residents aged 15 yrs and over stands at 95. %.

Apple also secured early dominance in the education and consumer markets by awarding hundreds of thousands of dollars in grants to schools and individuals for the development of education software. 6 Nature Population growth is driving all of our resource problems, including water and energy. (Population growth drives depletion of natural resources, 2008) There have also been increasing energy costs around the world. Much of the prices increases which can be traced back to increases in external prices, especially the price of oil.

Higher oil prices have translated into higher pump prices, taxi fares, airfares and electricity tariffs.

(Electricity Fare Hike, 2008) Apple also introduce a new recycling program which allow consumers to receive free recycling of their old computer or monitor regardless of the manufacturer when they purchase any Apple computer or monitor enabling consumers to play a role in protecting the environment. (Apple and the Environment) 2 Task Environment (Porter’s Five Forces) According to Porter (1990) in his 5 forces model, there are 5 elements to analyse an industry.

Apple operates in two primary industries, the computing industry and the portable entertainment and media delivery industry. Apple is always subjected to intense competition within these 2 industries, thus it is difficult to sustain a leadership position all the time. Porter’s 5 Forces model can help Apple in evaluating its opportunities and threats in the external task environment.

Porter’s Five Forces Model Threat of New Entrants (Threat: HIGH) The threat of new entrants is high as the technology industry is a very volatile market place, with many new products appearing all the time.

New entrants change the competitive landscape of the industry. Typically they bring in new capacity and a desire to gain market share (Wheelen ; Hunger, 2008). The main entrant posing a threat to Apple’s iTunes will be Verizon with its VCAST streaming audio and video. Major online retailers such as Amazon are also considering entry into the online music market.

With a wide internet presence and a household name, Amazon could present a formidable challenge to Apple in future. Rivalry amongst Existing Firms (Threat: HIGH) In most industries, corporations are mutually dependent.

A key issue is to accurately identify one’s competitors, as organizations may focus on traditional rivals and miss emerging ones. (Wheelen ; Hunger, 2008) The key competitor of Apple’s Software would be Microsoft. Looking at Microsoft’s products, Windows operating system and Windows Media Player, both are similar to that of Apple’s Mac OS X and iTunes Player.

The key competitor for Apple in the portable media player market would be Sony with its latest PSP, as well as Samsung with their small, stylish MP3 Players also having good market position presently. Bargaining Power of Suppliers (Threat: HIGH)

Suppliers can often affect an industry through their ability to raise prices or reduce the quality of purchased goods and services (Wheelen ; Hunger, 2008). Thus, powerful suppliers can reduce an organization’s profits, especially if the organization cannot pass on the price increase to its customers. Threat of suppliers is high for Apple Corporation.

The recent shift to Intel processors could present a significant threat to Apple, as with only two companies, Intel and AMD, producing Intel-compatible processors, there is a strong potential for tacit collusion and oligopoly power between these 2 suppliers.

Apple’s purchasing department would need to directly compete with other rival computer manufacturers such as HP, Lenovo, and Dell. If shortages or exclusive agreements materialize, Apple could face problems with obtaining the raw materials necessary to build its computers.

Bargaining Power of Buyers (Threat: MODERATE) Consumers are the purchasers of the products or services the organization offers and can play competitors against one another. The greater the bargaining power of the consumers, the greater extent they can impose their will on the organization.

Distributors or Apple retailers may pressure for lower prices or better terms. Consumers or businesses may reduce spending on personal computers or non-essential music players if they fear economic downturns. Threat of Substitutes (Threat: MODERATE) A substitute product is a product that appears to be different but can satisfy the same need as another product (Wheelen ; Hunger, 2008).

Technological changes may lead to the discovery and manufacture of new products that replace existing products in terms of features. The threat of substitutes for Apple’s portable media products is moderate.

Its main competitor will probably be Sony’s PSP which provides similar entertainment features to Apple’s iPod line of portable media players. HP, Lenovo and Dell continue to compete with Apples iMac and Macbook line of computers by manufacturing similar type computing products like Tablet PCs or PDAs. 5 Forces Evaluation for Apple The overall industry threat for Apple is quite high. Apple must continue to pursue product differentiation, such as maintaining the cool style and ease-of-use of an iPod, to maintain their sustained competitive advantage in this industry.

Apple having 4 main product lines (computer, cellphone, media player, software) presently means it has to fight on 4 different fronts against different type competitors in each product line. 3 Consumer Behaviour Analysis – B2C Markets and Buyer Behaviour Kolter, Armstong and Silva (2006, 166) suggested that consumer respond based on the stimulus-response model of buyer behaviour which includes marketing and other stimuli (input), buyer’s black box and buyer responses (output). The marketing stimuli consist of the 4Ps that marketers would use to push the consumers to purchase Apple products.

All of the stimuli will then lead to affect the buyer’s black box which includes buyer characteristics and the buyer decision process to determine the brand or product that they will purchase. The consumers are influenced strongly by cultural, social, personal, and psychological characteristics.

3. 3. 1Cultural Factors Apple products mainly cater to the group of consumers who are in the middle and upper class. As Asians become more affluent, such factor would allow a consumer to acquire branded products such as Apple iPod or iPhone hich helps to depict their social class. 2 Social Factors Apple uses reference groups to expose a person to new behaviors and lifestyles thus influencing the buyers’ decision of a product.

They have used the Chinese NBA superstar Yao Ming along with Verne Troyer to advertise the launch of the PowerBook line with the biggest laptop screen of 17″ and the compact full featured laptop of 12″. (Yao Ming stars in Apple commercial, 2003) Also in Singapore, children have a strong influence on family buying decisions.

They would most likely ask for the product such as iPod or a Mac computer from their parents. With increasing purchase power in Asian children, Apple need to positively position themselves in the minds of the consumers. 3.

3. 3Personal Factors A person occupation affects the goods and services bought. (Kolter, Armstrong, Silva, 2006, 172) Products from Apple such as iPhone and Mac computers would appeal to executives or businessman. Leopard- an advanced OS from Apple can easily run Windows and Linux applications and also uses a secure operating system to keep the Mac secure.

It also includes .

Mac which is an account that allows businessman to sync their laptop with the desktop to keep the data always on hand. (Apple- Leopard) iPod also associates themselves to “sync easily with your life”. (iPod here, there, and everywhere) The iPod Nano or Touch is made compatible along with Nike shoes and other accessories to aid in running or even in gym and improve the experience gained. Thus, a person who enjoys running or other sports activities would be attracted to the new feature provided by iPod. 3.

3. Psychological Factors A motive or drive is a need that is sufficiently pressing to direct the person to seek satisfaction. (Kolter, Armstrong, Silva, 2006, 175) Apple’s consumer may have the need to be entertained thus needing the iPod. Based on Maslow’s Hierarchy of Needs, Apple products appeal largely to social and esteem needs. The new 3G iPhone allows communication with friends and also includes video conferencing.

Having a iPod or the latest Apple products may also be seen by others as recognition from friends and status.

Internal Environment 4. 1Corporate Structure Apple is a huge organization with a Board of Directors, CEO, and Vice Presidents for various departments, and a large employee base. Apple manages business on a geographic basis in the Americas, Europe, Japan, and Asia-Pacific of which each segment provides similar services. The organization is divided into different sectors namely, Applications, Finance, Hardware Engineering, Retail, Software Engineering, Worldwide Product Marketing, Industrial Design, Worldwide Operation and Worldwide Sales.

Through these various sectors, the company produces, markets, and sells hardware products, peripheral products, and software products and computer technologies.

Apple operates using a divisional structure. The following figure indicates Apple’s corporate structure within US headquarter: 2 Corporate Culture Employees are generally loyal to the company as there was only one executive departure since 1997 when Jobs brought NeXT employees. The organization focuses on innovation and distinctive products with Steve Jobs serving as a very impassioned leader 3 Corporate Resources . 3. 1Porter’s Value Chain An organization that can identify its value chain activities, determine which value chain activities are strategic, trace costs to value chain activities, and use the activity cost information to manage the strategic value chain activities better than its competitors creates a sustainable competitive advantage.

(http://cde. athabascau. ca/online_book/ch3. html). Apple’s internal environment consists of Marketing, Finance, Research and Development (R;D), Operations and Logistics, Human Resource Management (HRM), and Information Systems.

Support activities consist of organizational infrastructure, which is concerned with a wide range of support systems and functions, human resource management, which deals with activities concerned with the workforce of the organization, technology development, which deals with activities concerned with managing information processing and the development and protection of “knowledge” in the organization and procurement, which deals with how resources are acquired for the organization (Value Chain Analysis: A Strategic Approach to Online Learning)

The primary activities of an organization include inbound logistics, which involves the receiving, storing and distributing the inputs to the products, operations, which is concerned with the transformation of these various inputs into the final products, outbound logistics, which collects, stores ; distributes the products to customers, marketing and sales.

(Internal Analysis) For inbound logistics, as logistics execution is not a core competence of Apple and managing network of freight forwarders, customs brokers, hub operators, etc. s complex and consumes valuable Apple resources, thus Fritz was chosen as Apple’s single worldwide customs broker as they had the information system and logistic know-how. Apple’s operation is managed on a geographic basis which comprise of the Americas, Europe, Japan and Retail. These are reportable geographic operating segments which provide similar hardware and software products and similar services. Other operating segments include Asia-Pacific, which includes Australia and Asia except for Japan, and the company’s subsidiary, FileMaker, Inc.

For outbound logistics, Apple has sold many of its products and resold certain third-party products in most of the major markets directly to customers, education customers and business through its retail and online stores in the U. S. and internationally. The company believed in providing direct contact with its products over those of its competitors. The company had significantly increased the channels of distribution for the iPod product family, in order to make its products available at locations where its customers shopped.

For marketing and sales, the company controls the customer’s retail experience and attracts new customers by operating in its own stores and building them in desirable high traffic locations.

Apple used all forms of advertising which focused on the target market to introduce new products and sustain existing products. In terms of services, Apple stores employ experienced and knowledgeable personnel who are able to provide product advice and certain hardware support services.

In addition, the stores provide a forum in which the company is able to present computing solutions to users in areas such as digital photography, digital video, music, children’s software and home and small business computing. Since many of the value activities will be performed outside the organization, it is essential that the organizations own value chain is seen in a wider context. The linkages and relationship between the value activities are often the basis on which competitive advantages are achieved.

The concept of value relates to how the ultimate consumers / users view the organization products or services in relation to competitive offerings. Therefore, an analysis of resources must be undertaken in a way which estimates how such competitive differences are achieved throughout the value chain. 4. 3. 2Financial Analysis The graph below shows the revenue growth of Apple from 1998 through to 2005.

It can be seen that the by 2005, the net sales increased to almost $14,000. Additionally, financial ratios are vital as they determine whether the company is in a healthy state in the marketing industry.