STRATEGIC PLANNING & DECISION MAKING

BY MR. YOUSUF ALI MEHMOOD NED UNIVERSITY OF ENGG & TECH. KARACHI

APPLE COMPUTERS INC.

PREPARED BY:

SYED MANZAR ABBAS JAFRI

ROLL NO: IM-009 PROGRAMME: 2008-2009 DATE: 20-10-2009

VISION STATEMENT
Create a better world with innovation in computing technology and consumer electronics.

MISSION STATEMENT
Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings. Apple is also committed to provide social services world wide and providing best environment for user and seller. To be on top of innovative product range Apple is dedicated its efforts to invent state of art technology with best human machine interface system.

STRENGTHS

SWOT ANALYSIS

WEAKNESSES

1. Highly innovative products. 2. Own retail stores. 3. Brand loyalty among customers. 4. Most profitable company in industry. 5. Top of line product i.e. IPOD.

1. No direct sales approach. 2. High inventory and warehousing expenses. 3. Higher prices less affordable. 4. Production delays.

OPPORTUNITIES
1. Product line diversification. 2. Better alternative to windows which is highly vulnerable to virus threat.

THREATS
1. DOS system. 2. Japan sales declining. 3. Only 3% market share in PC.

3. Cross platform format which is compatible with windows & Intel.

4. Development of next generation computer system with voice recognition.

4. Microsoft media player.

External Factors Evaluation (EFE) Matrix

Key External Factors

External Opportunities
1. Product line diversification. 2. Better alternative to windows which is highly vulnerable to virus threat. 3. Cross platform format which is compatible with windows & Intel.

Weight 0.20 0.08 0.15

Rating 4 2 3

Weighted Score 0.80 0.16 0.45

4. Development of next generation computer system with voice recognition.

0.12

0.36

External Threats
1. DOS System 0.06 2 0.12

2. Japan sales declining.

3. Only 3% market share in PC. 4. Microsoft media player.

0.18
0.15 0.06 1.00

4
3 3

0.72
0.45 0.18 3.24

Total.

Internal Factors Evaluation (IFE) Matrix

Key Internal Factors

Strengths
1. Highly innovative products. 2. Own retail stores. 3. Brand Loyalty among customers. 4. Most profitable company in industry. 5. Top of line product i.e. IPOD

Weight 0.12 0.06 0.20 0.08 0.10 0.08 0.10 0.14 0.12 1.00

Rating 4 3 4 4 3 2 1 2 1

Weighted Score 0.48 0.18 0.80 0.32 0.30 0.16 0.10 0.28 0.12 2.74

Weaknesses
1. No direct sales approach. 2. High inventory and warehousing expenses. 3. Higher prices less affordable. 4. Production delays.

Total.

LONG TERM OBJECTIVES

1. Increase market share up-to 30% globally. 2. Introduce at least four innovative product to its customer annualy.

I. SWOT Matrix

CHOOSING AMONG STRATEGIES

Strengths 1. Highly innovative products. 2. Own retail stores. 3. Brand Loyalty among customers. 4. Most profitable company in industry. 5. Top of line product i.e. IPOD Weaknesses 1. No direct sales approach. 2. High inventory and warehousing expenses. 3. Higher prices less affordable.
4.

Production delays.

Opportunities 1. Product line diversification. 2. Better alternative to windows which is highly vulnerable to virus threat. 3. Cross platform format which is compatible with windows & Intel. 4. Development of next generation computer system with voice recognition.

SO Strategies 1. Develop more innovative products Product Development (S1, S3, O1) 2. Expand market share through innovative and compatible products and effective marketing- Market Penetration (S1, S2, O1, O3) 3. Increase market share in computer hardware systems Market Penetration. (S1, S2, O2, O3, O4)

WO Strategies 1. Develop good marketing force to increase market share Market Penetration. (W1, O2, O3) 2. Develop next generation computer system to grab market niche Product Development (W3, O4)

Threats DOS System 1. Japan sales declining. 2. Only 3% market share in PC. 3. Microsoft media player.

ST Strategies 1. Develop affordable and user friendly products Product Development. (S1, S4, T1, T4) 2. Expand market share through effective marketing Market Penetration. (S1, S4, S5, T2, T3)

WT Strategies 1. Reduce expenses to reduce cost of goods Retrenchment. (W2, W3, T2, T3)

II. Space Matrix

After evaluation of given information in the case study, following values are assigned to SPACE Matrix Components: Horizontal Axis Industry Strength (IS) Competitive Advantage (CA) Vertical Axis Financial Strength (FS) Environmental Stability (ES) (FS) Conservative Aggressive

= +6 = -3

(CA)

(IS) (+3, -1)

= +4 = -5

Defensive (ES)

Competitive

Cumulative Value (Horizontal Axis) Cumulative Value (Vertical Axis)

= +3 = -1

According to the results achieved through SPACE Matrix, Apple computer should opt Competitive Strategies. i.e.,

1. Product Development 2. Market Development 3. Market Penetration

4. 5. 6. 7.

Forward Integration Backward Integration Horizontal Integration Joint Ventures

III. Internal External (IE) Matrix

Based on EFE and IFE matrix, we got following scores. EFE Score = 3.24 IFE Score = 2.74

IFE Score
Strong (3.0 to 4.0) Average (2.0 to 2.99)
II

Weak (1.0 to 1.99)

III

High (3.0 to 4.0)

EFE Score

Medium (2.0 to 2.99)

Low (1.0 to 1.99)

IV

VI

VII

VIII

IX

Based on the mentioned dimensions, Box II is our choice. i.e., Grow and Build strategy will be adopted. It contain Intensive strategies as follows. 1.Market Penetration 2.Product Development 3.Market Development 4. 5. 6. Backward Integration. Forward Integration. Horizontal Integration.

IV. Grand Strategy Matrix

RAPID MARKET GROWTH
Quadrant II 1. 2. 3. 4. 5. 6. Market Development. Market Penetration. Product Development. Horizontal Integration Divestiture. Liquidation. 1. 2. 3. 4. 5. 6. 7. Quadrant I Market Development. Market Penetration. Product Development. Forward Integration Backward Integration. Horizontal Integration. Related Diversification. Quadrant IV

WEAK COMPETITIVE POSITION

Quadrant III Retrenchment. Related Diversification. Unrelated Diversification. Divestiture. Liquidation.

STRONG COMPETITIVE POSITION

1. 2. 3. 4. 5.

1. 2. 3.

Related Diversification. Unrelated Diversification. Joint Ventures.

SLOWD MARKET GROWTH

From the case study of Apple computer it is evident that Apple computer has strong competitive advantage because of its strength in innovative products and the market growth of telecommunication sector is very high. Therefore we will select strategies mentioned in Quadrant II. i.e., 1.Market development. 3. Product Development. 5. Backward Integration. 7. Related Diversification. 2. Market Penetration. 4. Forward Integration. 6. Horizontal Integration.

TALLY:

Tally strategies from above four tools: 1. 2. 3. 4. 5. 6. 7. Market penetration. (7) Market development. (3) Product development. (6) Forward integration. (3) Backward integration. (3) Horizontal integration. (3) Related diversification. (1)

Short Listing Strategies:

Based on our analysis we short list our strategies as follows: 1. 2. Market penetration. Product development.

CHOOSING THE FINAL STRATEGY: (Quantitative Strategic Planning Matrix QSPM)

Key External Factors
Weight

Product Development AS TAS

Market Penetration AS TAS

Opportunities
1. Product line diversification. 2. Better alternative to windows which is highly vulnerable to virus threat. 3. Cross platform format which is compatible with windows & Intel. 4. Development of next generation computer system with voice recognition. 0.20 0.08 0.15 0.12 4 3 3 4 0.80 0.24 0.45 0.48 4 4 4 3 0.80 0.32 0.60 0.36

Threats
1. DOS System 2. Japan sales declining. 3. Only 3% market share in PC. 4. Microsoft media player. Total. 0.06 0.18 0.15 0.06 1.00 3 2 2 3 0.18 0.36 0.30 0.18 2.99 2 3 4 3 0.12 0.54 0.45 0.18 3.3

QSPM

Key Internal Factors

Weight

Product Development
AS
4 3 3 4 3

Market Penetration
AS
4 3 3 3 4

TAS
0.48 0.12 0.60 0.32 0.30

TAS
0.48 0.18 0.60 0.24 0.40

Strengths
1. Highly innovative products. 2. Own retail stores. 3. Brand Loyalty among customers. 4. Most profitable company in industry. 5. Top of line product i.e. IPOD 0.12 0.06 0.20 0.08 0.10

Weaknesses
1. No direct sales approach. 2. High inventory and warehousing expenses. 3. Higher prices less affordable. 4. Production delays. Total. 0.08 0.10 0.14 0.12 1.00 1 1 2 0.08 0.14 0.24 2.28 2 2 1 0.16 0.28 0.12 2.22

Sum Total Attractiveness Score

5.27

5.52

Analyzing key factors through QSPM indicate that Market Penetration will be best strategy for Apple Computers.

Justification of Final Strategy Selection

Analyzing case of Apple computers clearly indicates that Apple Computer is highly innovative company with highest profit taking in industry but because of low market share it can not capitalize its products. It is therefore best for Apple computer to aggressively formulate its marketing strategy with innovative products to penetrate into market and capture more share.