Question 1
Apple has enjoyed success due to its good competitive strategies. It aims at innovation of new ideas and products to edge its competitors. Its innovation strategy has been focused in its three main products- computers, personal media players and mobile phone. Apple has introduced new products in the global market. Moreover Apple has designed and developed complementary operating systems and software technologies which enable it to protect its innovation skills.
Question 2
Apple has continued to attract its customers through its stylish computer products. The attractive design and peculiar technology used by these computers has proved beneficial for its competition in the market. Apple has been the determinant for personal media players in the market. It consistently introduces new fashionable innovative features in the market. Similar strategies have been replicated in marketing its smartphones. However Apple has not been successful in all its strategies. Despite being the first to introduce new innovations in the market, it has faced stiff competition from other competitors who use modern applications and operating systems for their computers. High pricing of Apple’s products and over restrictiveness have provided a soft spot for their competitors who price their products to match their market.
Question 3
A competitive strength assessment table
|
|
Importance Weight |
Apple |
Dell |
HP |
Acer |
||||
|
Rating |
Weighted |
Rating |
Weighted |
Rating |
Weighted |
Rating |
Weighted |
||
|
Price |
0.1 |
6 |
0.6 |
9 |
0.9 |
9 |
0.9 |
10 |
1.0 |
|
Quality/Product performance |
0.15 |
8 |
1.2 |
7 |
1.05 |
7 |
1.05 |
6 |
0.9 |
|
Peripheral synchronization capabilities |
0.1 |
9 |
0.9 |
7 |
0.7 |
7 |
0.7 |
7 |
0.7 |
|
New product innovation capabilities |
0.2 |
10 |
2.0 |
6 |
1.2 |
7 |
1.4 |
6 |
1.2 |
|
Customization availability |
0.15 |
5 |
0.75 |
10 |
1.5 |
9 |
1.35 |
5 |
0.75 |
|
Software compatibility |
0.1 |
5 |
0.5 |
8 |
0.8 |
8 |
0.8 |
8 |
0.8 |
|
Reputation/Image |
0.1 |
8 |
0.8 |
8 |
0.8 |
8 |
0.8 |
6 |
0.6 |
|
Market position |
0.05 |
4 |
0.2 |
9 |
0.45 |
10 |
0.5 |
6 |
0.3 |
|
Breadth of product offerings |
0.05 |
6 |
0.3 |
8 |
0.4 |
7 |
0.35 |
8 |
0.4 |
|
Total |
1.0 |
61 |
7.25 |
72 |
7.8 |
72 |
7.85 |
62 |
6.65 |
The competitive strength assessment table above shows that Dell and HP are the main players in computer industry while Acer is the weakest. This is evidenced by the Exhibit 3. However Apple’s competition in personal media player is much stronger compared to computer industry. Its iTunes music composed 69% of the digital music industry in U.S in 2010. This was far ahead of its competitors like Amazon and Walmart which soared at 12% in their market shares.
Question 4
It is of good strategic sense for Apple to compete in the computer, personal media player, smartphone and tablet computer industries. The ability of apple to adopt technologies used by its competitors has enabled it to improve its products. For future growth and profitability its participation in personal media players is of great significance. Despite stagnation in the lower-end media players greater return have been witnessed in mobile phone industry.
Question 5
|
Performance Ratios |
2005 |
2006 |
2007 |
2008 |
2009 |
|
Revenue growth |
— |
38.7% |
24.3% |
35.3% |
12.5% |
|
Operating profit margin |
11.8% |
12.7% |
18.4% |
19.3% |
21.0% |
|
R&D as % of sales |
4.0% |
4.0% |
3.0% |
3.4% |
3.6% |
|
Return on assets (ROA) |
11.5% |
11.6% |
13.8% |
12.2% |
10.6% |
|
Return on equity (ROE) |
17.9% |
19.9% |
24.1% |
23.0% |
20.5% |
According to information in Exhibit 1 Apple’s revenue grew steadily from 24.3% to 35.3% in 2007 and 2008 respectively. However the profit margin improved steadily from 11.8% to 21.0% despite experiencing a decline in revenue growth. The company reached its best performance in the fourth quarter of its 2010 fiscal year. The financial records of the company revealed that it recovered quickly from economic depression experienced in 2008 compared to other similar companies.
Question 6
Apple should consider making various changes in their production in order to strengthen its position in important markets. It should make compatible products which can be adopted by its customers in different uses. Reducing their pricing in the market would also help it compete equitably as more people would afford its products. Apple should continue with its aggressive innovation to edge out its competitors in the market.
