Brief capability to compete. Three years later (1987)
History and Introduction
Apple Inc. was founded in
1976 by Steven Wozniak and Steven Jobs when they began to sell a crudely
designed personal computer called Apple 1. In 1983, the Board of Directors
hired John Sculley as both CEO and president of Apple. Then in 1985, Steve Jobs
(chairman) tried to convene the board to get rid of Sculley and failed. He
resigned afterwards. Later in 1993, the board decided to remove Sculley as
current CEO and put the current Chief Operating Officer, Michael Spindler, in
the president spot. Then in January of 1996, the board asked Spindler to resign
and chose Gil Amelio to take his place. Then in 1997, the Apple board
terminated Amelio’s employment and hired Steve Jobs as interim CEO. In the next
few years, Steve Jobs turned Apple around and made their quarters profitable.
The company’s share price reached a high of $70 under Steve Jobs leadership. In
August of 2011, Steve Jobs resigned as CEO and became chairman of the board and
suggested Tim Cook (COO) to be the replacement.
This case project on
Apple is based on the most recent information available online (2013-2017) and
this is what our evaluations, ratios and SWOT analysis’ results will be based
The 1976 Apple 1 was a
crudely designed personal computer. Apple followed this up to two years later
with the Apple 2. Then in 1984, the Macintosh was introduced but lacked the
speed, power and software capability to compete. Three years later (1987) Apple
introduced a revamped Macintosh. The Macintosh desktop line included the Mac
Pro, iMac and Mac Mini, while the notebook line included the MacBook Pro,
MacBook and MacBook Air. Despite this, most users preferred a PC that ran
windows 3.0 and Word. In 1991 and 1994, the first-generation notebooks were
released and were called the PowerBook and PowerMac family. In 1998, the iMac
was introduced and one year later an iBook line of notebook computers came out.
Then in 2001, the iPod was released and had modest sales until the launch of
the iTunes website in 2003. In 2010, the iPod line included the Shuffle, Nano,
Classic, and the Touch. This helped Apple get a 70% market share among all
legal online music download services. The successes of the iPod helped Apple
enter the market for smartphones in June 29, 2007 with the successful launch of
the iPhone, which was named invention of the year by the Time magazine. In 2008
and 2009, the iPhone 3G and the iPhone 3Gs were both introduced to the mobile
phone market. Then in June of 2010 the IPhone 4 was created. The iPhone 6 was introduced in September of
2014 and the 6S in September of 2015. In addition, the development of the app
store helped developers build applications for current iPhones and sell them for
a small fee. In April of 2010, Apple introduced the tablet line to great
success. The iPad line is now on the 4th generation and includes the Pro, Mini
and Air. Apple, also recently made a jump into the watch industry by developing
the Apple watch in 2015.
Apple’s mission statement
is very specific, detailed, narrow and accurate when describing the company’s
situation and goals. It is also worth pointing out that this mission statement
is a departure from Steve Jobs’ original mission for the company: “To make a
contribution to the world by making tools for the mind that advance humankind.”
Apple’s 2015 mission statement has shifted away from a general picture towards
a specific reflection of what it wants to achieve in terms of products and
services: “Apple designs Macs, the best personal computers in the world, along
with OS X, iLife, iWork and professional software. Apple leads the digital
music revolution with its iPods and iTunes online store. Apple has reinvented
the mobile phone with its revolutionary iPhone and App store, and is defining
the future of mobile media and computing devices with iPad.” (Farfan, 2017).
Evaluation (EFE) Matrix
The EFE matrix, External
Factor Evaluation, is a tool for evaluating the business’ main opportunities
and threats. This evaluation allows people to understand how the company can
reach a competitive advantage within the industry or what the company can do to
prevail over its competitors. Also, by looking at the threats, the company knows
what the most important issues are and how to overcome these risks.
external improvements the company can make to increase profits. Apple’s opportunities reside in product
diversification, network expansion, and reduce prices. Apple has the opportunity to expand its
distribution network (Apple Inc, 2016).
An expanded distribution network can help the firm reach more
customers. Apple also has the opportunity
to explore new product lines. Through
further innovation, Apple can introduce new product lines. Developing new product lines can support the
company’s growth. With the high prices
and large profits, Apple also has the opportunity to lower its prices to open a
bigger sales market.
Threats can limit or
reduce the financial performance of companies.
Apple faces the threat of aggressive competition and imitation. Competition is the main threat in this industry
partly because the persistent product cycles.
Apple is especially vulnerable to price discounting by low-cost rivals.
Because of the aggressive behaviors of competing firms, it is necessary to have
strong fundamentals for maintaining competitive advantage. The threat of imitation is significant
because of the large number of firms that can easily imitate Apple’s
products. The company’s performance
could suffer because of these threats.
Apple must take appropriate actions to prevent these threats.
Audit – Competitive Profile Matrix (CPM)
CPM, or the CPM Matrix,
stands for Competitive Profile Matrix and is a powerful strategic analysis
tool. CPM allows business owners, stockholders and other interested parties to
see the strengths and weaknesses of all major competitors in an industry on a
single page (David, 2015). The CPM table features a list of critical success
factors, and each of them is given a certain weight depending on the industry we
are in. Among the Apple’s strongest critical success factors, we find Financial
profit, Market penetration, and Market share which are rated 4, 3 and 2 respectively.
Therefore, Apple Inc. scores 0.48, 0.33, and 0.22 in these three areas. Among the success factors with a lighter weight,
instead, we find E-commerce, Employee dedication, and Advertising whose scores
are 0.24 for the first two and 0.21 for the last one. This information shows
how Apple is doing and the importance assigned to the main success factors. When
we analyze its strongest competitors, we can see how Microsoft is the only one
that gets close to Apple’s final score. In fact, Microsoft’s score is 3.22,
while Apple’s final score is 3.35 (when adding all the scores together). Dell,
Samsung and Nokia are behind the two giants with a score below 3.0. These data
will be shown in a table that I will integrate to this paper during Phase 2.
Assessment – IFE Matrix
The IFE matrix, Internal
Factor Evaluation, is a tool for the evaluation of the business’ main strengths
and weaknesses. Financial ratios are an important component for the internal
evaluation. The table below shows the main financial ratios for Apple Inc.: