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Spindler and
Initial years Amelio years
Not many players in the PC Efforts for overseas expansion
market; quickly became the
industry leader Suffered huge losses; on the
verge of bankruptcy
Ease of use, industrial design
1976-1985 and technical elegance 1993-1997
Entry of IBM in the PC industry
standardized the PCs
2
Apples Competitive Advantages
R&D and Innovation
New breakthroughs in innovation and
technology have been the backbone of the
company
Very high emphasis on designing their
product from scratch, using unique chips,
Product
disk drives, and monitors Differentiated products with very high value placed
on aesthetics and customer experience (Customers
Devoted higher share of its sales to R&D as loved their Macs)
compared to its competitors resulting in
technologically superior products (Chart) Products like Mac, iPod, iPhone marked a
breakthrough in ease of use, industrial design, and
technical elegance
Very high customer loyalty towards the products
allowing apple to charge a high premium on its
products leading to a higher gross margin (Chart)
Operations
Strategy
& Marketing
Very high emphasis on vertical and
horizontal integration a)helped retain
Campaigns
control over propriety knowledge
b) Reduce transaction costs
c) Higher quality
HR policies
Extreme practices of secrecy, including a closed
Successful multimillion dollar campaigns door policy and dummy positions for new hires
like Think Different ads and catchy
slogans increasing the brand value Violation of Apples culture of confidentiality was
grounds for termination
3
R&D to Sales
HP Dell Apple
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
1997 2000 2003 2006 2008 2010 2012 2014
Back
Gross Margin
50.00%
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
1997 2000 2003 2006 2008 2010 2012 2014
HP Dell Lenovo Apple
Back
Value Chain Analysis of Apple
Firm Infrastructure
SUPPORT ACTIVITIES
Technology Indigenous technology development, highest spent on R&D from sales many
technological breakthroughs
Procurement Initially everything was produced by the company. Later on outsourced to
providers like intel, Microsoft, Samsung etc.
Alliance with Design & Plug and Play
major suppliers Innovation
Music Player Secure OS
Linkage with Technology Horizontal & with iTunes Ease of use
independent driven Vertical gives brand Replacement
software Collaborations integration awareness warranties
vendors with AT&T & Revamped
Vodafone marketing
campaign
PRIMARY ACTIVITIES
PC Industry Analysis
Supplier Internal
Power Rivalry Buyer Buyer Power(Moderate)
Among Power +Moderate switching cost
(High) firms +High dependency on computers
Rise of Wintel
1978-1990
1990-1997 Steve Jobs
Scully,
Steve Jobs and Scully
Spindler
1997-2011 and Amelio
Broad
Scope
Narrow
Cost Differentiation
Back
Shipped and Installed Base of PC Microprocessors
In millions
*Exhibit 4
Apples Position in the Smartphone Industry
Market Share over the years
45
40
35
30
25
20
(%age)
15
10
0
2009 2010 2011 2012 2013 2014
Apple Samsung Nokia HTC RIM
Is Apples Competitive Position Sustainable in the
Smartphones?
Valuable Technology is at the core of iPhone
Apples Brand Image
Developing the technology was an expensive and time-consuming process and hence, it was not
Imitable readily imitable. However operating systems similar to Apples iOS have been developed
Durable Rapidly changing technology and market. Frequently changing customer needs
Appropriable High gross profit margin. Large part of the profit accrued to Apple due to propriety technology
Is Apples Competitive Position Sustainable in the
Smartphones? COMPETITIVE FORCES
Economic Moat Theory
NONE COMPANY
WIDE NARROW
PROFITABILITY
Barriers to Exit
Weight Criteria Rating (1-5) Reason
0.1 Asset specialization 2 Low
0.1 Cost of Exit 2 High
1 Total 2.4