Evaluating a Companys Resource,

Capabilities and Competitiveness. (Apple Inc. Case)

Evaluating a firms internal situation

2

How well is the firms present strategy working ? What are the firms competitively important resources and capabilities? Is the firm able to take advantage of market opportunities and overcome external threats to its external well-being? Are the firms prices and costs competitive with those of key rivals, and does it have an appealing customer value proposition?

Is the firm competitively stronger or weaker than key rivals? What strategic issues and problems merit front-burner managerial attention?
2

How well is the firms present strategy working ?

Question 1: How well is the present strategy working?

The best way to start evaluating of how well companys present strategy is working is with a clear view of what the strategy entails.

2 Steps best indicators :

objectives

-The company is achieving its stated financial and strategic

Other indicators :

- The company is an above-average industry performer

-Growth in firms sales and market share

-Acquisition and retention of customers -Increasing profit margins, net profits and ROI -Growing financial strength and credit rating

-Positively viewed by shareholders and customers

-Leadership in factors relevant to market\industry success -Continuing improvement in operating performance
4

Question 1: How well is the present strategy working?

4.1 Identifying the Components of a Single-Business Companys Strategy

Do the companys resources and capabilities have sufficient competitive power to give it a sustainable advantage over competitors?

QUESTION 2: Do the companys resources and capabilities have sufficient competitive power to give it a sustainable advantage over competitors?

Tangible Resources Physical resources Financial resources Technological assets

Organizational resources Company Resources

Intangible Resources Human assets and intellectual capital

Brands
External relationships Company culture and incentive system

QUESTION 2: Do the companys resources and capabilities have sufficient competitive power to give it a sustainable advantage over competitors?
How do we know that the company has a competitive power of resources and capabilities

4 Tests

Is the resource (or capability) competitively valuable?

Is the resource rareis it something rivals lack?

Is the resource hard to copy?

Can the resource be overcome by different types of resources and capabilitiesare there good substitutes available for the resource?
8

Is the company able to seize market opportunities and overcome external threats?

QUESTION 3: Is the company able to seize market opportunities and nullify external threats ? Using SWOT Analysis, which will involves

Drawing conclusions from the SWOT listings about the firms overall situation Translating these conclusions into strategic actions by the firm that: Match its strategy to its internal strengths and to market opportunities Correct important weaknesses, and defend it against external threats.

10

4.2 The Steps Involved in SWOT Analysis: Identify the Four

Components of SWOT, Draw Conclusions, Translate Implications QUESTION 3: Is the company ableActions to seize market opportunities and into Strategic

overcome external threats ?

11

Are the companys prices, costs and value proposition competitive ?

12

QUESTION 4: Are the companys prices, costs and value proposition competitive ?
Signs of A Firms Competitive Strength:

Its prices and costs are in line with rivals.

Its customer-value proposition is competitive and cost effective. Its bundled capabilities are yielding a sustainable competitive advantage. 4.3 A Representative Company Value Chain

13

QUESTION 4: Are the companys prices, costs and value proposition competitive ?
Benchmarking and Value Chain Activities
Benchmarking:
Involves improving a firms internal activities based on learning other companies best practices. Assesses whether the cost competitiveness and effectiveness of a firms value chain activities are in line with its competitors activities.

Sources of Benchmarking Information

Reports, trade groups, analysts and customers Visits to benchmark companies Data from consulting firms

14

On an overall basis, is the company competitively stronger or weaker than key rivals?

15

QUESTION 5: On an overall basis, is the company competitively stronger or weaker than key rivals?
Competitive Advantage Indicators:
Ability to effectively and efficiently bundle resources and capabilities. Achieving a high rank on each key success factor.

Having a net competitive advantage over its rivals.

The Competitive Strength Assessment Process

Step 1 Step 2 Step 3

Make a list of the industrys key success factors and measures of competitive strength or weakness (6 to 10 measures usually suffice). Assign a weight to each competitive strength measure based on its perceived importance. Rate the firm and its rivals on each competitive strength measure and multiply by each measure by its corresponding weight.

16

QUESTION 5: On an overall basis, is the company competitively stronger or weaker than key rivals?
4.4 A Representative Weighted Competitive Strength Assessment

17

QUESTION 5: On an overall basis, is the company competitively stronger or weaker than key rivals?
Strategic Implications of Competitive Strength Assessment

The higher a firms overall weighted strength rating, the stronger its overall competitiveness versus rivals. The rating score indicates the total net competitive advantage for a firm relative to other firms. Firms with high competitive strength scores are targets for benchmarking. The ratings show how a company compares against rivals, factor by factor (or capability by capability). Strength scores can be useful in deciding what strategic moves to make.

18

What strategic issues and problems merit frontburner managerial attention ?

19

QUESTION 6: What strategic issues and problems merit front-burner managerial attention ?

Identifying Strategic Issues :

How to stave off market challenges from new foreign competitors. How to combat the price discounting of rivals. How to reduce high costs and pave the way for price reductions. How to sustain growth in light of slowing buyer demand. Whether to expand the firms product line. Whether to correct the firms competitive deficiencies by acquiring a rival company

with the missing strengths.

Whether to expand into foreign markets rapidly or cautiously. Whether to reposition the company and move to a different strategic group.

What to do about growing buyer interest in substitute products.

What to do to combat the aging demographics of the firms customer base.

20

Apple Inc. Case 2010

Apple Inc.
Visio n To be the most admired company in the world and the most loveable brand people ever use Every person around the global should taste at least 1 apple product

Missio n

Apples business strategy leverage its ability, through the design

and development of its owb operating system, hardware, and many software applicatons and technologies, to bring to its customers around the world compelling new products and

solutions with ease of use, seamless integration, and innovative

industrial design
22

Goals

Objectives
Attain double digit growth in terms of unit shipments through 2010 and then high single digit growth through 2012

Strategies
Introduce innovetive products at competitive prices to the market to convince investor s and consumers that apple offers a unique product over the competition Ease of compatibility between the iPod, iPhone, and iTunes via the App Store

Apple Inc.
Take market share from competitors, such as Dell and Hewlett - Packard

Synchronize the digital electronics and computer market

Resolve Mobi le Me Web application failures to 0% by 2009

Achieve superior technological innovation

Maintain funds allocated to the R&D budget while establishing a $0 long-term liability balance

Pour large amount of operating budget into research & development. Closely guard secret behind companys technology.

23

Apple Inc.
1976 1978 Apple II is Launched iTunes is create 2003 2001 iPod is developed Macbook Pro and new Imac becomes first Apple computers to use intel chips iBook is released 1999

Apple was founded

Machintosh is introduced 1984

Powerboo k is released 1991 1985 Jobs leaves Steves Jobs returns to Apple as adviser and eventually takes CEO title once again 1997

1998

iMac Release
App Store Launche d 2008

iPad 2 is launched 2011 2010 iPad is launched

24

2006
2007 First iPhone Launched

Question 1: How well is the present strategy working?

Apple Inc.
Strategies (stated)
Introduce innovative products at competitive prices to the market to convince investor s and consumers that apple offers a unique product over the competition Ease of compatibility between the iPod, iPhone, and iTunes via the App Store

Strategies
Apple launched one innovative product, named iPad which by that time it has no competitor (since Samsung still developing its G-Tab).

In 2010, App Store became more utilized since the iPad and iPhone 4 has been launched.

Pour large amount of operating budget into research & development. Closely guard secret behind companys technology.

The R&D budget is increasing every year. But, compared with to total operating expense, the percentage of R&D budget for 2010 is the same with 2009, which is 24%. Though the amount is increase by $449.

25

Apple Inc.
4 Tests

Question 2: Do the companys resources and capabilities have sufficient competitive power to give it a sustainable advantage over competitors?
Is the resource (or capability) competitively valuable? Though the Mac failed in the PC industry, Apples has its breakthrough by launching the iPad and iPhone 4 and became the #1 in its industry. Is the resource rareis it something rivals lack?

In the 2010, we could say that Apple resources, whether tangible (technology) and intangible (human & brand image) are rare.

26

Apple Inc.
4 Tests

Question 2: Do the companys resources and capabilities have sufficient competitive power to give it a sustainable advantage over competitors?
Is the resource hard to copy? Its not impossible for competitors to imitate the tangible resource, but the intangible resource (human & brand image0 would be difficult and need some time to be imitated. Can the resource be overcome by different types of resources and capabilitiesare there good substitutes available for the resource?

In time, there would be possibility for technology and human resource (labor) to be overcome. But, brand image required a long process and time to be substitute.

27

Apple Inc.

Question 3: Is the company able to seize market opportunities and overcome external threats ?
In 2010, the revolutionary differentiated product became the most attractive variable for the company. While some product failure became the most unattractive variable.

SWOT ANALYSIS

STRENGTHS
-Revolutionary differentiated product -Charismasic visionary CEO -High loyalty customer -Patents -Fast Innovation Pace OPPORTUNITIES EXTERNAL -I Tunes -Tablet -Features and apps limitation

WEAKNESS

INTERNAL

-Some Product Failure -Low Market Share (MAC) -Content Provider Relations -Centralized decision

THREATS -Imitators -Rapid Technology Changes -Free Content Availability -Highly Competitive market New Entrants
28

Apple Inc.
Supply chain managemen t

Question 4: Are the companys prices, costs and value proposition competitive ?

Operations

Distribution

Marketing & Sales

Service

Procurement Technology Development & R&D HRM General Administration

29

Primary Activities Supply chain management Operation Distribution Marketing & Sales Service Supportive activities Procurement Technology development HRM General administration

How Does Apple Inc. Create Value For Customer Apple outsource high quality inventory from Japan and Taiwan Using R&D , strategic alliance Shipment in large lot to minimize cost and assure quick delivery Focusing on premium price and international market to boost the sales Emphasize on customer feedback to improve quality

Outsource material from Taiwan and Japan Large emphasize on quality than to quantity Good management with emphasize on quality work Effective planning with ability to coordinate and integrate activities across the system
30

Apple Inc.

Question 5: On an overall basis, is the company competitively stronger or weaker than key rivals?

31

Apple Inc.

Question 6: What strategic issues and problems merit front-burner managerial attention ?
Strategic Issues for Apples Future
Apple needs to maintain its growth in the siege of competitors
iPad successes will become a magnet for other company to build similar gadget Dont be lulled by the growth of iPad &

How to maintain its growth How to stave off new competitor?

What Apple should do about the other product line, such as iMac & iPod ?
How to maintain Apple resources? What to do with the product failure issue ?

32