1.

INTRODUCTION AND BACKGROUND OF COMPANY

Apple Inc. is an American multinational corporation that designs and
manufactures consumer electronics and computer software products. The
company's best-known hardware products include Macintosh computers, the iPod
and the iPhone. The company operates more than 250 retail stores in nine countries
and an online store where hardware and software products are sold.
Established in Cupertino, California on 1 April 1976 and incorporated 3 January
1977, the company was called Apple Computer, Inc. for its first 30 years, but
dropped the word "Computer" on 9 January 2007 to reflect the company's ongoing
expansion into the consumer electronics market in addition to its traditional focus on
personal computers. For reasons as various as its philosophy of comprehensive
aesthetic design to its distinctive advertising campaigns, Apple has established a
unique reputation in the consumer electronics industry.

2. THE COMPANY ICT ENVIRONMENT

Apple consists of significant resources and considerable potential in the business
world. Even though it consists of such capabilities there occur various trends in the
general environment that causes the threats which pull down the progress and
success of the firm. These threats can be marginalized only with the help of
appropriate planning and suitable action which concentrates more on the value
added core competencies in the business. This may lead the company to produce
valuable products and services leads to a mounting opportunity for the shareholders
and customers.
Economic Environment
1. Booming Global Economy
On revising the past years of global economy the world has attained the
complete progress from recession in recent years. This uncertainty makes
people looming of the money. This makes people to depart from the quality to
1

less expensive products. The Apple known for its brand, quality, innovative
technology and luxury has mislaid due to its supreme pricing position paves the
way for its competitors the producers of less expensive products. However the
consumers attracted more towards the valuable Apple's premium products during
the economic upturn than its low pricing competitors.
2. Socio cultural Environment
1.1 Increasing desire for Wireless devices
Apple plays at the front position of the wireless transition. As there is a
remarkable increase in the value of the internet and the wireless connectivity
creates a powerful demand comparatively to the other devices. This is due to its
portability and accessibility everywhere makes these rapid speed wireless
technologies valuable. The devices such as the portable includes the smart
phones and the tablet computers "wireless-connected devices" allows its user to
perform several operation by the use of internet in the constant and secured
manner as wherever they go. As these devices is highly received by the people
than the traditional computers such as PC or laptops. This technology has been
developed widespread by Apple and its competitive manufacturers such as
Google. This technology has been faced a lot of relevance as all these
manufacturers focused on the consumer's preference. Among them the Apple
differs by its Innovative technology according to the recent technological
landscape. Apple spends its extensive investment in the field of research and
innovative development for the creation of highly well-liked devices such as the
iPhone and iPad.
3. Technological Environment
The world has been going behind the analogue music system Apple made
a revolution through its innovation of iPod. This made an impulsive progress in
the revenue of the Apple. Due its consecutive pioneering researches resulted in
the creation of iPhone. Even though the Apple is younger in the mobile phone
industry comparing the Giants like Nokia, HTC and Blackberry it poses a radical

technology. To withstand its market Apple has been spend 3.1 % of its net sales
i.e. almost $ 1,333 million for the Research and Development (apple). The
world's ongoing mobile technology is landed in 3G manufacturing technology. But
Apple is been ahead of them by launching its 4G due to the supremacy of the
Apple's R&D. This makes the Apple withstand as a leader in its high innovation
and portability

3. COMPETITIVE ENVIRONMENT ANALYSIS

i.

Rivalry between Competitors

Technological growth has put forth the electronic industry ahead as it

leads to lot of manufacturers. Due the entry of electronic industry in everyday life
the PC's, mobile phones and laptops has become a commodity product into the
people's life. Most users prefer the business cost than that of the performance of
the devices. This may resulted in the various levels of provider strategies. The
providers who provides at low price may not be able to satisfy the users with the
best features. Whereas the providers such as Hp, Dell, Samsung and Sony
Ericson offers the customers a wide range of options for the varying prices. Apple
differs from those of the Providers as they provide a High Quality and High Cost
products but without the diverse models. For example Apple consists of Single
model iPhone varying only in its memory and its cost whereas the Samsung may
vary its product options from the variable technology by varying its costs from 4400.
ii.

Supplier Power
Suppliers are those who pose the entire control in manufacturing of

computers as Apple's Mac book or the mobile phones. Apple Suppliers also
embark on the special responsibility for producing the best inputs which is the
most challenging for its competitors. In the computer manufacturing industry Intel
and Advanced Micro devices (AMD) are the two suppliers of the processors. Both
of the chips have their own unified motherboard. They are incompatible with one

another as they cannot be swapped with the other parts of the device. If Apple
has to switch their processor it is also essential to modify their motherboards too
resulting in high switching costs. This may results in high supplier power as the
company has to rely on them.
iii.

Buyer Power
Almost all the industry consists of buyers who have high influence on thier

manufacturers. Each buyer has their own choice of the product needs. This leads
the company to launch the wide variety of products into the market. Thus power
of the buyers has influences on the bargaining in the Quality, Price, and the
Service. Apple exclusive products such as IMac and IBook are unique from its
competitors in features of highly technological operation system, innovative
functionality and brand value attracts the customers by avoiding them to switch to
its competitors. Even though it has attracted the customers through its
functionality there arose a chance to switch to its competitors if there is no
product differentiation.
iv.

Threat of new entrants

Every business has own threat of new competitors. The field of Computer

market have the highest possibility of new competitors. The portable pc's market
is widespread effortlessly paves the way for the new entrants. Despite the
possibilities it also consists of several barrier from its successful entrants. Apple
have been deep rooted in field of computers and mobile products by its
substantial recognition, own innovative technology and royalty among the other
manufacturers. It has been a high challenging to the competitors in order to make
its brand successful and stable in the competitive market. Apple maintains their
price of the products based on the economies of scale which is not possible by
the new entrants without the huge investment.

v.

Threat of substitutes

Recent Development of the technology makes the computing products

handy. As every features and functionality of the computers has been substitute
by the tablet pc's or smart phones. Time has changed where the users rely on
the stable pc but now it has been grown substantially the computers are back
behind the users and posses wide variety of application than pc's by means of
wireless internet technology. This occurs in the case of Apple as due to the entry
of the Smart phones the buyers of Mac pc are apparently reduced. Thus these
show the change for substitutes of the consumers. Considerably Apple has been
analyzed all these cases and introduced the iPhone and iPad to satisfy its
consumers who are in search of substitutes to a new technology.
vi.

Value added core competencies

Value added core competencies of Apple includes its highly Innovative
ideas, featured design, well-known brand, and critical creativity as all these
united to make the company a most competitive advantage among its
competitors. Thus Apple has almost set all these strategies to the company in
order to withstand its high position in the competitive market.
Risks of the apple have been initiated with its supplier and foreign
factories. Apple has its own guidelines for its suppliers in manufacturing its
product they don't have the direct control of their suppliers. The suppliers derived
their profits based on the high volume low margin. Thus in order to increase the
profit the suppliers produces the goods by low quality raw materials. As a result
of this the quality of the Apple products has been diminished. Thus in order to
rectify these defects Apple have been undergone the mutual understanding of its
suppliers to retain its quality.

4. PROBLEM IN APPLE INC COMPANY

1.

Cloud Services. We never hear much about this issue now that

theyve launched iCloud and its worked reasonably well so far. There was the
initial launch of it which marred with issues but they seemed to work their way
around them. Today, most people think that, just because they built some big
server farm in North Carolina. The question is does Apple have enough cloud
talent inside the company to continue to grow and develop iCloud? Its debatable.
There was a reason that they tried to buy Dropbox. That deal would have made
enormous sense for Apple not just for tagging on to Dropboxs momentum but
for bringing in that domain-specific knowledge into Apple. Such a deal would still
make a lot of sense. Very few people know that, when iCloud launched, it relied
heavily on Amazon (AMZN) Web Services and Microsoft (MSFT) to deliver their
first cloud functionality.

As Facebook (FB) and Google (GOOG) continue to

develop these services, they have a lot of in house knowledge on scaling these
up. Apple at present does not.
2.

Internet Services. This has received some attention quite a bit over

the last few months on blogs and in the press and it deserves to. As the battle
between mobile OSs continues to heat up over the coming years, rolling out
amazing Internet Services will become more important, not less. Apple is again
taking a go slow and grind it out approach to these. MobileMe didnt work. Well
learn from that. Apple Maps didnt work. Well learn from that.

The thinking

seems to be internally: we dont need to be first to market with great services, we

just need to get to market. Sadly though, consumers seem to be getting more
and more impatient in waiting around for Apple. Google was never perfect out of
the blocks with their Internet Services but they do seem to be on a roll lately.
Apple does need more external talent with these skills injected into the
organization. Yahoo (YHOO) could be a great fit and Marissa Mayer would be an
ideal head of
Apple mobile Internet Services. Mail, Flickr, and their core properties would fit
very well into prominent positioning in iOS. As Mayer has been saying of late,

the Yahoo properties map on very well to the top 10 list of activities of what
people do most on mobile.
3.

Social. Tim Cook said in an All Things D interview last year that

Apple has to be social but that doesnt mean it has to own a social network.
However, thats not at all obvious. From an internal skill set perspective, its not
obvious that Apple can understand social and take advantage of its evolution
from here, without having a lot of internal talent who live and breathe social.
Twitter has been often talked about as a great way of Apple to inject social into its
lifeblood if they were to acquire it. Im in favor of this approach as well. The two
companies have been working closely since first deeply integrating Twitter into
iOS 5. However, the biggest concern among Valley insiders I discussed this idea
with last week was: the big differences in culture between the two companies.
How do you keep whats special at Twitter if its swallowed up by Apple? And that
leads to the next point.
4.

Can Apple really do any big outside acquisitions successfully?

Everyone knows that they havent done any big multi-billion dollar acquisitions of
outside companies, but the question is: could they even if they wanted to? Its
not at all clear.

The Quattro Wireless deal I would conclude was

unsuccessful. The founders are gone. Did Apple really get everything they could
have out of it with iAd? I dont think so. Siri is also an interesting case study.
Apple has of course made it a major focus and selling point for the new iPhones
starting last year. And its now under the purview of Eddy Cue and an outsider
who came in from Amazon search. But the Siri founders are also out of the
company now.

I would worry that, even if Apple were to buy Twitter (or

Foursquare) today, where would those properties be a year from now? Would
the founders all disperse again? Would they all say, I love Apple; its just that Im
a small company guy and I have the start-up bug again Its all code for, Im
outta here. Just doing a deal isnt enough. Apple needs real technology transfer
of core cloud, internet services, and social skills into the company. And this leads
to the last problem.

5.

Does Apple really think it has any weaknesses? This isnt obvious

to me and many others who follow the company closely and have good friends
who work there. Maybe they do know and are actively working on it. But if thats
true, its really not at all obvious. Apples culture is tremendously secretive. They
also have tremendous talent there. But the DNA of the company is really just
working away in silence away from the eyes of others. The Apple Way is pretty
simple: work really hard for years even and then dazzle the public when you
reveal it finally. If Apple makes a mistake like MobileMe, Ping, or Maps their
modus operandi is public self-flagellation and work twice as hard. The solution
has never been: lets make a big splashy outside acquisition to fill in this hole.
Thats been a core strength for the company since 1996.

However, every

strength can also be a weakness on the flip side. If the thinking is that Well,
sure people criticize us for cloud, internet services, and social now, but weve
been criticized before and the solution has always been to just work harder.
Thats made the company a fast follower in these areas rather than a first mover.
Its stayed a first mover in the product area and of course their push into retail a
number of years ago.
Perhaps its the model of Retail that Apple really needs to think about now as it
begins to prepare for its next 10 years.
According to all the experts at the time, Apple made a huge blunder by
going into retail against the grain of what was expected back then. Instead, their
move is now being copied by all their big competitors. They need to think about
how they can move deeply against the grain once again.
The problem with that analogy is that Apple decided to develop their retail
skills in a home-grown fashion through slow hiring and investment. In the weak
areas I mentioned above, I think theyll require acquisitions and thats just not in
Apples comfort zone.
Apple really needs to look at itself honestly in the mirror. It needs to
address where it is weak at the moment relative to others and move quickly to fill

in those holes. If it requires a big expensive acquisition, they need to move

quickly to do that and retain the key top talent.
All this could use require a lot of cash. And thats exactly why Apple
needs to be careful not to be distracted by short-term calls for return of cash from
its investors.

5. CONCERN ISSUE IN APPLE INC COMPANY

Administration

Eco- Friendly Apple

Apple has always been intense on the environment factors in its
manufacturing. Apple has been taken several steps to avoid the usage of harmful
chemicals in manufacturing of its product. Shipment of the products plays a vital
role in emitting combustion during its transportation. Thus in order to reduce the
emission of Co2 Apple considers the portable packaging result in the less
transportation and less combustion.

Strong cash position

Apple has less long term debits and run its business efficiently without the
financial intervention by means of its own cash. The financial status of Apple
helps its business to run efficiently as it may not depend on any of the creditors in
terms of the decision making such as the financial capital purchases, decision on
expansion.

Human resource management

Hiring process
Apple recruits its employee by means of Selective hiring. It highly picks up
the persons based on their innovative skills and high creative skills rather than by

recruiting process. It focuses more on the well experienced professionals and

innovative fresher rather by trainees.

Employ benefits and appraisals

Apple places a leading role in motivating its employees by means of high
benefits and appraisals. It possesses a high role in the employee satisfaction.
The benefitted employees provide full support and dedication to the company by
means of their highly innovative ideas.

Technological Development
Research and Development
Apple believes the research and development is one of the key factors of the

success of its organization. As it believes analysis on various factors determines the

current requirement of the product have been pushed towards the new innovative
product which paves a way for noncompetitive industry. It has been estimated that
Apple spends around $1.3 million for its research and development.

Procurement
Relationship with suppliers
Apple has maintained the good relationship with its suppliers. As it

manufacturing its product based on the low cost and high quality. Despite it sets the
high marginal cost for its product whereas in turn it spends its profit for the research
and development. It also concurrently updates about its new technology to its
suppliers by means of short courses and practical classes.

Inbound Logistics
Apple maintains a highly automated system for placing goods. The stock has

been ordered to its suppliers in JIT process i.e. Just in Time when there is an
reduction of the stocks it will be ordered automatically to its suppliers this may helps
in avoiding the overstocks. Thus it hoard the cost spend for the stock management
system.

10

Operations
Design of the product is been implemented by the Apple and hence it

outsources its production to several factories in china by implementing its design.

This may results in the reduction of risk factors as it is apart from its firm. Thus it
modifies its management and Economy scale according to its outsourcing.

Outbound Logistics
Apple has its production department in china whereas the goods have been

transferred to various countries from china rather than bringing to US the head office
of the Apple. This may leads to the reduction of shipment cost and the warehousing
cost.

Marketing and Sales

Apple uses the television advertisements as their marketing strategy by

comparing its features and functionality of the product towards its competitive
products. It also brings its own marketing strategy by means of the customer
attraction towards the product. Apple discloses the new launch of the product which
in turn acts as an indirect marketing which pulls the customers to know about its
launched products.

Service
Apple genius is a person acts as a tech assistant in considering the

consumers problem and rectify them. Apple provides a extended warranty to their
customers within 90 days of product shipment also poses an opportunity of
replacement within the given time.

6. RECOMMANDATIONS
Marketing mix for Apple.

11

Marketing Aspect

Basic Customer Need

They need to understand what the people want besides the normal application of

mobile devices. According to trends, a mobile phone nowadays MUST have a built in
camera; able to store videos, pictures, music and also can download applications or
use the internet and play games. Apple TV was design to play videos in high
definition, either from normal channel, iTunes, YouTube or from the computer in wide
screen.

Target Marketing
Apple market strategies were focusing on several specific groups of people

which consist of the age groups; 12-35 for music fans, 18-60 for all products. For the
second market target they are focusing on both gender which consist of middle and
upper economic class who willing to paying more for higher quality products and
experience. The educational level; could be from 5th grader to professional level.
Next is the resident of U.S and Europe, and global market as well, depending on
what the best interest on them. Lastly from the lifestyle point of view; including
business people.

Market Segmentation
Divide the company to small sectors depending on the products nature. The

music-device industry = iPod, smart-phone industry = iPhone, computer industry =

iMac and MacBook along with the laptops, computers and Apple TV.

Products
A convergence of technologies e.g. An Apple TV has a broadcasting function,

play videos from iTunes and computer capabilities. For example, the iPhone3G/3Gs,
iPod shuffle iPod Nano, Apple TV, MacBook etc. Products have different color and
hardware specification which directly linked with price.

Price (http://store.apple.com/my)

12

Premium price strategy is the practice of keeping the products price in high
degree in order to place a high perception in terms of exceptional reputation,
exclusiveness or represent exceptional quality and distinction. Price fluctuation is
rare, products benefit from low depreciation value. With the starting price for iPhones
(5c) around RM 1589, the iPods (shuffle, Nano, touch) starting price RM 189, RM
589, RM 779 respectively. Apple TV for RM 296. MacBook (classic, Pro, Air), Mac
mini, iMac, Mac Pro, starting price from RM 4769, RM 4027, RM 3391, RM 1849,
RM 4199, RM 11399, respectively.

Principal Promotion Tools

Apple products are well known for their vivid logo, distinct and consistent style

and also they have celebrities involved in some of the advertising. Other methods
that been used are through Apple shops, supermarkets and electronic shops. Some
are through internet and TV adverts, Billboard advertising, internet sales and print
adverts in magazine.

Main Competitors
The computer market is an Oligopoly market, which means there is only a

several numbers of a company in this market. Those are the company who give the
most influence in the world computers markets which is Apple Inc., Dell Inc., Hewlett
Packard Co, Microsoft Corp., and IBM; the big 5.
How Does Their Product Differ
Generally, Macs are better than Dells in quality or design. Between Mac and
HP, Mac has a better technology in designing and arts fields but the most obvious
difference is the price.
Apple and Microsoft in the other hands were the biggest competitors now.
The biggest advantage for Microsoft over Apple is the numbers of users. Microsoft
has the largest numbers of users in the world but it still doesnt make them the best.
Before the Microsoft become Apples biggest competitor, they are competing
with IBM, but when Apple make changes to their visual operating system they

13

manage to caught peoples attentions thus boost up Apples sales. Overall, the most
crucial difference between all of them from Apple is the operating system they use.
How Each Competitor Advertises
For Dell, they moved from mass media advert to direct marketing. They prefer
to talk with the customer directly so that they can create a better understanding and
interest because the customer get the answer straight from them plus the customer
feel important to the company. Dell competes on overall cost as well, they do not
have store which mean there are no cost for rent or sales people at store. They also
give the customer the power to choose the installations and parts own their own.
Microsoft was one of the most creative advertisers. They manage to turn the
customer to be their agent of advertising by creating some interesting experience so
that the people who experiences that will tell the stories to their friends; it was one of
the greatest methods of advertising. Direct marketing also seems to be the most
effective advertising for Microsoft so far.
For IBM, earlier they try to make a business owner aware of their brand by
picking the prime-time on TV for their advertising. They moved from traditional
advertisement to centric marketing strategies and by doing that, they started to
experiment with new models.
Mass advertising is the advertisement strategies chosen by the Hewlett
Packard, mostly through TV and web advertisement, and also by sponsoring games.
For HP, they are targeting the young age-groups of people between 18 to 35 years
old. They also have the low minimum prices of computers.

7.

CONCLUSIONS
Apple is set apart from its competition by its combination of hardware and
software, by the content gate-keeper strategy embodied in iTunes, and by their
successful retail strategy. While there are many other reasons in the companys
history for their success in recent years, these are the dominant themes of their

14

astounding success. Companies looking to compete with Apple need to know

that it is not impossible, however they will need to pick their battles wisely,
innovate on their differentiation, and focus heavily on being the best solution in
the market for the problems they are trying to solve. Administration
Eco- Friendly Apple
Apple has always been intense on the environment factors in its
manufacturing. Apple has been taken several steps to avoid the usage of harmful
chemicals in manufacturing of its product. Shipment of the products plays a vital
role in emitting combustion during its transportation. Thus in order to reduce the
emission of Co2 Apple considers the portable packaging result in the less
transportation and less combustion.

15