1. Apple inc. in 2010
GROUP 1

2. PROBLEM STATEMENT
What should Apple Inc. do, amidst growing competition and challenges, to thrive and maintain its status as a successful full-fledged digital convergence company?

3. OBJECTIVE
To be able to look for solution/s that will enable Apple Inc. to maintain its competitive advantage

4. Brief description of the case
The company started off as “Apple Computer” by Steve Jobs and Steve Wozniak, a pair of 20-something college dropouts in Jobs then went to work and transformed “Apple Computer” into “Apple Inc.” with innovative and technologically sophisticated non-PC products in 2000’s. By 2010, the company also viewed itself as a “mobile device company.”

5. Brief description of the case
Apple became the fourth- largest PC vendor in the US market with an 8% share by the end of Its market capitalization went to $220 billion in spring of 2010 through multi-million dollar marketing campaigns such as the successful “Think Different” ads and catch slogan. Apple promoted itself as a hip alternative to other computer brands. It also highlighted its computers as the world “greenest line-up of notebooks”. The goal of Apple is to differentiate its products amid intense competition in the PC and mobile device industry.

6. Areas of consideration
STRENGTHS
WEAKNESSES
Pioneer of innovative and high-tech quality products like iPod, iPhone, iPad and Mac
Globally recognized brand name
Large segment of loyal customer of “Apple culture”
Strong research and development Department
Retail stores providing the eye-catching products and experience of Apple’s Software
Innovative culture
High quality and user experience
Revolutionary products
Appealing designs
Lower market share
Products are expensive compared to Microsoft and other competitors
Reliance on suppliers for MP, App, and Memory
iTunes: Low margin
iPhone: Lacking features
Less market presence overseas
Content provider relations
Technological Limitations

7. Areas of consideration
OPPORTUNITIES
THREATS
Good relationship through joint venture with other big Companies coupled to bring out new hits
Constant growth of PC and mobile industry
More international expansion
Increasing demand of online music and other applications like cloud based services
Growing market of “Green” and energy efficient products
Capitalize on iPhone, iPhone, and iPad growth
iTunes and app store
Strong growth of mobile advertising market
Competition in technology with other PC industry giants like Dell, HP, Lenovo and mobile industry giants like Nokia, Motorola and Samsung
Expensive products as compared to other competitors such as Dell, Nokia, Microsoft
High product substitution effect in the innovative and competitive technology market
Incompatibility with windows platform
Imitators
Rapid technology changes
New Entrants like Google
Dying Mp3 market
Piracy and free content availability
Highly competitive and saturated market
The rise of Android OS

8. Alternative courses of action
The Apple Inc.’s identified markets are: PC market (Macintosh), phone market (iPhone) and other digital device markets (iPod Touch and iPad).
The first alternative course of action is international expansion like looking into the China and other developing countries.
Pros: China has 616 million mobile subscribers, there are a lot of opportunities and possibilities that Apple Inc. can do with that population of mobile subscribers.
Cons: International expansion would mean high expenses and costs.

9. Alternative courses of action
One of Apple Inc.’s competitive advantages is its Research and Development rapid innovation. The second alternative course of action is based on this competitive advantage. It is to increase its budget allocation on its R&D.
Pros: With the rapid changes in technology in this contemporary society, it is logical for Apple Inc. to increase its budget allocation on its R&D. Furthermore, one of the core strengths of the company is rapid innovation, an increase of budget on its R&D would ensure that this core strength would still remain as one.

10. Alternative courses of action
Cons: The Apple Inc. may decrease its budget on one or some of its value chain link like sales, marketing, and advertising in order to give in to the increase of the budget allocation on its R&D.
Capitalize on iPhone, iPad, and iPod growth
Pros: The brand is already strong. It is trusted and widely known
Cons: Expensive development
Employ on Market expansion and penetration
Pro: Retail store strategy is effective and iTunes worldwide content is already popular
Con: Competition

11. recommendation
With the given alternative courses of action, increasing its budget allocation on its Research & Development is the best course of action for Apple Inc. It would ensure that Apple’s products be ahead of other competitors’ products. This would also retain the company’s reputation for rapid innovation. Continuous innovation in technology and its products would allow Apple Inc. to continue its momentum.

12. Action plan WHAT WHO WHEN Date gathering on Finance Finance Department
WHAT
WHO
WHEN
Date gathering on Finance
Finance Department
ASAP
Adjust budget allocation
Top Mgt and Finance Dept
Explore possible partners for R&D
Top Mgt and R&D
Continuous innovation in technology and in its products
R&D
Set timelines and deadlines for innovations
Top mgt

13. conclusion
Apple Inc. is a leader in global product innovation. Over the years, the company has introduced one of a kind technological advancement. However, due to the rapid changes in technology, some of Apple’s contemporaries are becoming at par with them. Thus, it is only logical for Apple Inc. to increase its budget allocation on its Research and Development. Further innovation and improvement of their products will not only maintain their competitive advantage but it will also boost their market penetration.