Issues and Outlook: 1999 and Beyond Is Apple successful? Past/current strategy? What are the main concerns/issues that confront Apple? Where is Apple headed in the future?

Breadth of Competitive Scope Source of Competitive Advantage BroadTargetMarket NarrowTargetMarket Cost CostLeadershipCostLeadership Differen- tiation Differen- tiation Apple’s Business Level Strategy Focused Differen- tiation tiation Focused Low Cost Uniqueness

Internal Analysis Resource-based View Analysis of: –Core Competencies –Core Weaknesses Value Chain Analysis of: –Value-enhancing Activities –Value-diminishing Activities Promoters of / Barriers to Change

Support Activities Primary Activities Value Chain Analysis Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN MARGIN

External Analysis Influences from Remote Environment Influences from Competitive Environment Promoters of / Barriers to Change SWOT Summary Competitor Analysis

Threat of Substitute Products Threat of New Entrants Analysis of the Competitive Environment Rivalry Among Competing Firms in Industry Bargaining Power of Buyers Bargaining Power of Suppliers

Strategic Group Map Pre-Windows Price Premium Low Strategic Focus - Differentiation BroadNarrow Apple IBM Sun Clones Compaq

Strategic Group Map Post-Windows Price Premium Low Strategic Focus - Differentiation BroadNarrow Apple IBM Sun Clones Compaq

New Products

Rebound?

Revised Mission/Intent Statement “Apple ………………………………..” Definition of Industry Description of Core Values Description of Basic Strategic Approach General Identification of Customer Base

Revised Mission ergo-cerebro-nomicTo position Apple as the world leader in man-machine interfaces though the development of ergo- and cerebro-nomic software and interface devices required for electronic and electromechanical applications.

Goals 20% ROS by % Share of O/S Market by 2003 Develop 3 New Interface Devices by 2002 Achieve full interoperability with –Intel and AMD microprocessors by 2002 –Top 4 Software Vendors by 2002

Milk Hardware No new manufacturing and R&D investment in existing hardware products Outsource next 3 years’ production to Malaysia: –Send VP Mfg. and 3 Engineers on “Sourcing Mission” Benefit: Decrease COGS from 53% to 33%

Apple Core “Open system” O/S –not processor specific –head-to-head with Windows, UNIX and LINUX –increase installed base –increase ISV applications Shift 80% of R&D budget to Core Increase ROS from 5% to 20% Benefit: Increase ROS from 5% to 20% (NOTE: O/S production has COGS average 19% percent of sales vs. 66% in hardware manufacturing.)

New OS (Apple Core) Applications Robotics Wearable Computers Handhelds Automotive Systems Office Machinery