Apple Strategy

Internal Analysis _Mission Statement : Apple is committed to bringing the best personal computing, portable digital music and mobile communication experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and internet offerings._ Resources

Apple and innovation has almost been synonymous. Apple’s has been through many ups and few downs in its life and this trend brings out clearly its internal competencies. It has turned around successfully whenever it has exploited its unique internal resources which provide for its core competency. Whenever it has not been able to utilize its resources it has been through tough times. Following are the important internal resources of Apple: Unique Tangible Resources of Apple

Leader One of the most important resources of Apple is its leader, Steve Jobs. So much so that he is able to pull the whole company on his own and in his absence company was struggling for its survival. The whole company is centralized around him and all the team heads report to him directly. His importance can be gauged from the recent remarks of Bill Gates: More than saving Apple, Steve Jobs has shown the company what it is really good at and how to harness its own resources to develop a core competency.

Human Resources Along with leader, the workforce comprising of skilled engineers and designers provide the required innovative capabilities that the company has harnessed to develop it core competency, which is innovation with aesthetic sense. Apple hardly discloses its human resources strength. The Organizational chart as on Sep, 2009 was as shown below: {draw:frame}

Apple Stores In 2001, Apple opened its first two retail stores in Virginia and California. They were aimed to display their entire line of computer products, software and peripherals. Moreover Apple’s declining share of the computer market and poor marketing of it’s Machintosh products at other retails stores like Sears and CompUSA also prompted Apple to start its own retail store. Currently Apple has more than 255 stores worldwide.

The unique features of each apple store are: Large front windows with interactive displays using a cable, wire and slot system. The window glass is a special low-iron ("water white") variety that has a higher visible transmittance than regular glass of the same thickness, and doesn't exhibit a blue or green color. A very bright interior

Large wall posters showing products Merchandise is displayed in "solution zones" for hands-on, real-world use A sit-down theatre (benches or chairs) area for instruction and demonstrations [in late 2005 Apple changed its mind about the theatres: new smaller stores were designed with a Studio bar instead of a theatre, and existing smaller stores were scheduled for a swap-out, removing the theatre and installing a Studio bar.] A circular Studio Bar where Creative’s provide assistance with software, including iLife and other software.

A "Genius Bar" where customers can ask questions and solve tech problems. During 2004-2005, the Genius Bars at 54 stores were retrofitted over an 8-week period with two LCD screens for marketing, instructional and displaying the reservation queue [behind the Union Square bar. As of mid-2007, a Macworld magazine survey found 34% of those with problems took them to an Apple store Genius Bar. A children's area with low-seating and kid-type software on the computers An open Airport wireless network, so visitors can bring in their laptops and download e-mail A diverse staff, including older employees

Strategically Apple Stores has helped Apple Inc. in the following ways: Appropriate display of its products with enough space vs. Crammed and obscurely located displays in Sears and CompUSA Total, complete control of the retail experience

Hands-on use for the consumers Unique customer experience to try and understand Apple products which was not present with any of its competitors. Unique Intangible Resources of Apple The important intangible resource of Apple are its Technological Resources in the form of patents/copyrights and Brand loyalty. Patents, Copyrights and Intellectual Property Apple Inc current has 2838 patents under US Patent Office, and is still building up more. The sheer innovativeness of the company is displayed by the number of patents it holds. Brand Loyalty Convenience, aesthetics, consistency and reliability are the key factors of Apple products which fetches a high degree of Brand Loyalty. With every product launch, Apple has added value to overall Brand Value. Loyalty is evident from increasing sales of its products like iPod since 2001, as shown in the fig below, despite downturns in the economy. {draw:frame}

Source: www.interbrand.com Value Chain analysis The Apple podcasting value chain, commonly known as Digital supply chain, is comprised of nine steps that essentially move from raw content to the listener. All the steps of the value chain include content, advertising, production, publishing, hosting/bandwidth, promotion, searching, catching, and listening. It is important to note that each step in the value chain adds value to the podcast in distinctive ways, and has its own sets of challenges and opportunities. A schematic diagram of Digital Supply Chain is as follows: {draw:frame}

The main processes of a digital supply chain are as follows: True on-demand product availability Ease of use and speed for content search and activation Pricing and subscriptions Quality management built on licensing and refunds Given the enormous growth of the electronic market, a highly fragmented market expertise, and the asset costs to build and maintain a digital supply chain, it’s clear that this model is transforming traditional practices. Some of the key issues in Digital Supply Chain management are: Innovation—This goes for product and supply chain delivery methods.

Time to market—Since digital products can be made once and sold many times, speed of collaboration between design and delivery will be a major measure of success Customer service—This includes quality of the transaction and product, speed of activations, and ease of refunds. So far, these issues have been efficiently dealt with by the innovators like Apple. Apple’s iTunes supply chain: transforming an industry

Apple’s traditional supply chain and services underwent a much needed transformation. To start on its journey, the company’s innovators identified a new product that required significant effort and investment—and did it ever pay off. As a result, Apple built a supply chain that transformed an industry. iTunes is considered the No. 1 retail store for music, providing the company with significant information on demand patterns. In turn, it’s using its supply chain to develop new products and services.

Apple’s inevitable competition and digital supply chain growth The digital supply chain moves more than music, though. It can also include videos, television, games, and publications. For this reason, channel management shifts from classic distribution to retailers, to broadband providers, to online, to direct to consumer. Device manufacturers will be challenged to integrate within this market, as digital content will shape their hardware demand. In fact, more money has been spent on creating content than products for its capture, storage, and distribution.

The challenge to supply chain leaders will be less on managing plants, trucks, and assembly lines, and more on understanding the quality, cost, and speed of the infrastructures to support the digital supply chain. The supply chain challenge for Apple going forward is to enable the digital content to be distributed across all channels on a single, easy-to-use device. Much like the Mac versus PC battle, a collaboration of multiple parties in the digital market can serve as the most significant risk to the company’s lead.