1. Evaluation of the External Environment a. Introduction i.

Apple Computers originated in Cupertino, California by three friends, Steve Wozniak, Steve Jobs, and Ronald Wayne. Wozniak was the computer nerd of the three and had been working on a computer design and once Jobs convinced him of finishing his model and selling it to the public the beginning of Apple computers was underway. On January 3, 1977 the hard work of the three friends became Apple Computer, Inc. Soon after Wayne sold his share back to Jobs and Wozniak. The two Steves continued on to create one of the most successful companies that would in future years be known for their computers, music devices, cell phones, and software worldwide. Apple took off after Wozniaks Apple I adding numerous versions of the Apple, the Macintosh line, the iPod, iPhone, and iTunes products, and numerous other computer/software products to the Apple Computer, Inc. family. Apple has made its mark on the technology industry by continuing to be successful innovators that lead their numerous product markets. b. Identification of the Current Corporate Level Long-Term Strategies and Tactics i. Apple has two major long-term strategies and tactics that they focus on. The first being strategic alliances that they have with IBM, Microsoft, and AT&T. The alliances they formed with IBM and Microsoft have enabled Apple to further their computer growth and guarantee software that is

available and familiar to consumers all over the world. The alliance with AT&T was a recent alliance that was formed when Apple came out with their iPhone. Their contract with AT&T ends in 2010, and the phone world is anxiously waiting to see if they will continue this alliance or create a new one. The second strategy is concentration on internal growth which they are implementing by developing new products for the markets they have already established and by finding new markets for their current products. For example Apple created a new market for their Macintosh computers by pushing them into the education market and creating their mark among students and teachers. c. Identification of the Current Corporate Level Short-Term Strategies and Tactics i. Currently Apple does not seem to have any short-term strategies and tactics. This could be very risky for Apple, but at the time being they seem to be successful without it. They may want to rethink their lack of strategy soon due to the illness of Steve Jobs and implement a plan incase they lose their leader. d. Identification of the Current SBU Level and Tactics i. Apples current strategies defined by Porter are product differentiation with a focus on a broad market. This can be seen by Apples many products including the iPod, the iPhone, and all their Mac books that are priced and designed to fit every persons needs and wants. Apples current strategy defined by Miles & Snow is being a prospector. Apple

creates new products and services, such as their iTunes when legally downloading music was needed, to changing market conditions. They also respond rapidly and try to be the first mover. By doing this they set a benchmark for their competitors and place their products in consumers mindset first. e. Identification of Apples Current Green Efforts i. Apple has been making large strides in order to make their company a green company. Looking at the transformation of their MacBook Pro from 2006 to 2008 you will see that they have gone from having BFR, PVC, mercury, and arsenic in their 2006 version to having none of them in their 2008 version. They have also been reducing their packaging to both save materials and to make it possible to store more packages on one mode of distribution, thus reducing the amounts of trips it would have had to make. Last but not least, Apple has also been putting more of their attention on getting more recycling centers set up for their products. One of their ways of doing this is having a program within their stores that allows a customer to bring in their old Apple product they dont want anymore, and the store will take care of the recycling process. Apples efforts are a great way to start their journey to being a completely green company (Apple.com). f. Current Mission and Need for Change i. Apples current mission statement is:

Apple ignited the personal computer revolution in the 1970 with the Apple I and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating systems and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market with its revolutionary iPhone. Apples mission statement is not very good, because it is more of description of their company rather then an explanation of their direction and purpose. 2. Opportunities and ThreatsAssessment of Remote Environment

Opportunities 10- Technological Innovations-T 10- Global Expansion-I 9- Increase in world mobile technology market-I 9-Increased use of MP3 technology-T 8- Increase online sales-E 7- Create more compatibility with Microsoft-T

Threats 8- Recession-E 8- US Market Saturation- E 7- Drop in US consumer spending-E 6- Environmental Concerns-Eco 5- Viruses-T 4- Regulation-P

Totals: Opportunities-53

Threats- 38

i.

These two lists illustrate that Apples opportunities far out way their threats. With a score of 10 in the opportunities column technological Innovation is by far the most important thing that Apple needs to accomplish in order to continue being successful. In the technology industry innovation is essential to long term market presence. Global expansion is also very important for Apple because there is a huge consumer market in foreign countries that Apple has not even started to serve. Alone with expanding to foreign markets Apple can take advantage of the large mobile technology market of consumers wanting handheld devices like the iPhone. When the iPhone was released in Europe the sales were much higher than expected. With a score of 8 we feel that an opportunity for Apple is an increase in online sales. Apple has stores all over the United states and they are currently opening stores in many other countries even with this fact many consumers would prefer to shop online and Apple has a very user friendly website where people can long on and get exactly what they want. Apple could use marketing tactics to get more consumers to use this form of purchasing their products.

ii.

The threats facing Apple in their remote environment are definitely challenging the first being the recession. We ranked the recession as an 8 and we believe that because Apples products are at the higher end of prices in the technology industry, consumers being hit by the recession make choose to go with a lower cost substitute. Also ranked with an 8 is market saturation, Apple currently holds a commanding 70% of the MP3 and online music sales market. Although this

shows their amazing success in these markets in the past it also shows a possible weakness in the future. If consumers already have an ipod they are less likely to buy the newest version especially with the current economy. Another threat to Apple is the rise in consumer awareness of environmental concerns. Apple needs to combat this threat by making environmentally friendly products and expanding their recycling program. Assessment of Industry (Task) Environment
Threats Opportunities (10)- Bargaining Power of Consumers (10)- Business Consumers (9)- High Rivalry Among Competitors (10)- Public Contracts (7)- Substitute Products (9)- Green Products (6)- Bargaining Power of Suppliers (8)- Strategic Alliances (7)- Continue to Produce High Quality Products (6)- Increase brand loyalty by entering new markets (5)-Increased pressure from music industry to raise MP3 prices (5)- Ease of Entry for New Companies

Totals: Opportunities-57 i.

Threats-43

In the industry environment Apple again has more opportunities than threats. Traditionally schools and businesses have gotten contracts with PC manufactures such as Dell and Hewlett-Packard, this gives Apple an opportunity to try to break into these markets and show that Apple computers have a place in the office and in

schools. Another opportunity that we feel is very important is the growing demand for green products. If Apple can produce products that are environmentally superior to other products on the market it could give them a competitive advantage and give consumers a valid reason to spend the extra money that Apple products cost. Apple is a very independent company mostly because of Steve Jobs; we feel that this has created an opportunity for them to make strategic alliances with other cell phone carriers and technology industry companies. Apple is known for their high quality and extreme brand loyalty, these two factors have created an, Apple Culture, and Apple has an opportunity to enter new markets and add more members. ii. Apples threats in the Industry Environment are led by bargaining power of consumers. We ranked this threat a 10 because consumers hold a lot of power in the technology industry and because Apples products are at the higher price points of the industry consumers have many lower cost options. The high rivalry among competitors in this industry also poses a threat to Apple. In the United States it seems that people are either PC users or Mac users and it is difficult to switch a person from one side to the other. Since PC computers are much more popular and most people have had more exposure to them Apple faces an uphill battle in converting PC users. Apples itunes online music store generates huge profits for the company and a threat to this is the music industry pressuring Apple to raise the prices on online music. If Apple and other online music providers were forced to raise prices this would severely hurt their bottom line.

Assessment of Competitive Environment

Opportunities (10)- Global Expansion (9)- User friendly products (8)- Loyal Customer Base (7)- Contracts with Schools and Businesses Threats (8)-Dell (8)- Hewlett Packard (6)- Android and new Android phone (6)Low cost substitutes

Totals: Opportunities- 34 i.

Threats-28

Apples competitive environment is very intense and the rivalrys are fierce. In the competitive environment we again feel that Apples opportunities outweigh their threats. As previously stated Apple has a large opportunity to expand into global markets that have countless potential consumers. The user friendliness of Apples products in an opportunity for them, most people can learn fairly easily how to use Apple products such as their ipod products and their iphone. This is part of the reason that these products have been so wildly successful. In the future Apple has the opportunity to create more user-friendly products and continue to be successful. Apple currently has a very loyal customer base and the opportunity for the future is to expand this customer base by exposing more users to their products. Apple also has an opportunity to get public and private contracts with schools and businesses.

ii. Apples biggest threats in the competitive environment are Dell and Hewlett Packard both raked at an 8. Dell and Hewlett Packard both offer customers a range of prices and options to suit the tastes of almost everyone. This is a huge threat to Apple

because their computers only appeal to customers with a higher price point. In these difficult financial times this could prove to be a problem for Apple. Another threat for Apple is Android and the new Android phone. These two items will rival Apples iphone and the iphone apps. With Android most of the apps are free and the Android phone and monthly service are less expensive than those of the Apple iphone. Summary- Most Crucial Opportunities and Threats
Opportunities (10)- Technological innovation (10)- Global expansion (9)- Increase in world mobile technology market (8)- Creating more compatibility with Microsoft products Threats (10)- Economy (8)- High rivalry among competitors (7)- Decrease in demand (7)- Dell / HP (6)- Low cost substitute products

O-T Final Score= 2.5

(7)- Strategic Alliances

i.

Apple has many great opportunities and also great threats in their future. The most important opportunity for Apple is technological innovation, in the past this has been one of Apples greatest strengths and this will continue to be the case in the future. Global expansion is an extremely important opportunity for Apple because there are so many consumers that they can reach around the world. Since Microsoft and PCs have traditionally been the operating system and computers used by the majority of the population it would benefit Apple greatly if they can create more compatibility with them. We also feel that an important opportunity for Apple would

be to create more strategic alliances with cell phone carriers and with computer companies to create lower cost products. ii. Apples most prominent threats are led by the economy ranked at 10. This top threat is an obvious one considering the prices of Apple products. For almost every product Apple has there is a similar low cost alternative and in the current economic times even people who would like to but Apple products will be forced to go with a lower cost substitute. The high rivalry among competitors in the technology industry makes it very important that Apple stay ahead of the curve with innovation. In this industry the company that has long-term success is the company that offers customers the newest and latest technology. Along with a slower economy comes the threat of decreased demand, this is a threat to Apple especially because of their limited product line. 3. Identification of the Internal Environments a. Apple currently holds a very strong financial position. Over the last several years they have experienced an increase in their growth, sales, net profit, and stock price. One of Apples top financial strengths is the fact that they do not pay out any dividends. This enables them to re-invest the money into capital structures. Part of Apples financial strategy is to spend a high amount of money on R&D; allowing them access to the latest technology, which keeps them a leader in industry innovator. b. Ratio Analyses, Z-Value, and g*

2009 Financial Ratios

Current Ratio Quick Ratio ROA (%) ROE 9%) ROI (%) Net Profit (%) Debt/Equity (%) Debt/Assets (%) Dividend Pay/Share (%) Dividend P Ratio (%)

Industry 1.91 1.54 -48.69 -415.91 -370.59 -50.25 -14.89 10.36 0 0

Apple 1.88 1.86 10.59 20.49 20.49 15.61 0 0 0 0

Microsoft 1.82 1.58 18.71 36.83 33.64 24.93 9.49 7.39 2.10 31.71

Dell 1.36 1.06 9.35 58.02 40.17 4.06 44.44 7.59 0 0

HP 0.98 0.67 7.35 21.39 17.87 7.04 19.71 15.75 0.84 9.56

i. Apples current ratio is slightly lower than the industry which suggests that Apple has fewer resources to pay its debts. Although this is true, all of the competitors have fewer resources available to pay back their debt than Apple. This ratio suggests that Apple would be considered to have good short-term financial strength. When looking at the quick ratio it is clear that when Apple is compared to the industry, Apple is better able to meet their current liability obligations by using their liquid assets. When compared to Microsoft, HP, and Dell, Apple is more liquid. Apples return on assets is on the higher end when compared to the listed competitors. This suggests that Apples assets are profitable in generating revenue. The industry has a negative ROA, suggesting a low amount of earnings derived from each dollar of assets. This means the industrys assets are

not profitable in generating revenue. Apple has a low return on equity in comparison to its competitors. This means that Apple isnt as efficient in generating profits from their shareholders equity. Again, the industry has a negative ROE, which makes Apple highly appealing. Apple has a significantly lower return on investment than the competition. This means that the Apple gains less money on their investments. Apple doesnt pay out any dividends; they instead reinvest the money into active capital structures. ii. Apple has a current Z-Score of 3.018. This z-score indicates that Apple has a very good financial standing and is not in any immediate danger of bankruptcy. Apples g* is -1.03. This indicates negative growth, which is mostly due to their high increase in assets. Even though their growth is shown to be negative, they are still having successful growth and can make it positive again. c. Income Statement, Balance Sheet, and Cash Flows
Comparative Income Statement in millions Apple Microsoft $ 36,537 100% $ 58,437 100% $ 22,694 62% $ 9,864 17% $ 5,482 15% $ 25,589 44% $ 703 2% $ 2,291 4% $ $ $ 2,280 6% $ 5,252 9% $ 5,704 16% $ 14,569 25% $ 6.39 $ 1.63

Sales Cost of Goods Sold Admin. Expenses Depreciation Interest Income Tax Net Income EPS

Industry $ 110,599 100% $ 79,015 71% $ 18,938 17% $ 2,223 2% $ 140 0.13% $ 3,591 3.25% $ 5,127 5% $ 5.43

$ $ $ $ $ $ $ $

Dell HP 61,101 100% $ 118,364 100% 49,284 81% $ 87,521 74% 7,624 12% $ 16,647 14% 769 1% $ 3,367 3% 93 0% $ 467 0% 846 1% $ 2,144 2% 2,478 4% $ 8,329 7% 1.25 $ 3.35

i. This comparative income statement for Apple, the technology industry, and three major competitors shows why Apple is such a successful

company. When comparing Apples sales to Microsoft, Dell, and HP one may conclude that Apple isnt selling nearly as much; however, Apple is a much smaller company than the competitors presented above. When comparing cost of goods sold, Apples remains relatively low compared to Dell and HP, but are significantly higher than Microsoft. This could indicate that although Apples products are relatively expensive, they are able to produce their products at a lower cost than Dell and HP. However, Microsoft appears to produce their products at the lowest cost. It is worth noting that Apple spends the least amount of money on administrative expenses when compared to Microsoft, Dell, and HP. Lastly, Apple by far has the highest earning per share on its stock.
Comparative Balance Sheet in millions Microsoft 23,464 44% $ 31,447 40% 455 1% $ 717 1% 8,985 17% $ 5,924 8% 36,265 67% $ 49,280 63% 2,954 5% $ 7,535 10% 3,651 7% $ 1,878 2% 53,851 100% $ 77,888 100% 19,282 26,019 27,832 $ 74% $ 48% $ 52% $ 3,756 37,034 38,330 39,558

Cash and Cash Equivalents Inventory Other Current Assets Total Current Assest Property Plant and Equipment Other Assets Total Assets Long Term Debt Total Current Liabilities Total Liabilities Total Equity Total L & E

Industry $ 36,202 $ 2,018 $ 13,020 $ 64,304 $ 6,926 $ 4,853 $ 93,062 $ 3,000 $ 40,403 $ 57,303 $ 35,759 $ 93,062

Apple 39% 2% 14% 69% 7% 5% 100% $ $ $ $ $ $ $

HP $ $ $ $ $ $ $ 10,153 9% 7,879 7% 4,244 4% 51,728 46% 10,838 10% 6,954 6% 113,331 100% 7,676 52,939 74,389 38,942 $ $ $ $ $ $ $

Dell 9,305 35% 3% 867 3,749 14% 20,151 76% 2,277 9% 2% 657 26,500 100% 1,898 14,859 260,729 4,271
1% 6% 98% 2%

5% $ 71% $ 62% $ 38% $ 100% $

10% $ 97% $ 49% $ 51% $

10% $ 71% $ 66% $ 34% $

53,851 100% $

77,888 100% $

113,331 100% $

265,000 100%

ii. Apple has the lowest amount of inventory on hand when compared to Microsoft, HP, and Dell. Part of Apples strategy is to invest their capital into assets which are actually active because inventory creates an expense. Apple currently has the highest amount of long term investments in relation to its major competitors. This indicates that Apples management is focused on long-term growth. Apple and

Microsoft are the only firms in this data set who actually have a higher level of equity in comparison to their liabilities. This is crucial for Apple because it allows them to generate enough equity from their resources to pay off their debts.

Operating Activities Investing Activities Financing Activities Net Cash Change

$ $ $ $

Apple 5 Year Statmenet of Cash Flows in millions 2009 2008 2007 10,159.00 $ 9,596.00 $ 5,470.00 (17,434.00) $ (8,189.00) $ (3,249.00) 663.00 $ 1,116.00 $ 739.00 (6,612.00) $ 2,523.00 $ 2,960.00

2006 $ 2,220.00 $ 357.00 $ 324.00 $ 2,901.00

2005 $ 2,535.00 $ (2,556.00) $ 543.00 $ 522.00

iii. This year Apple has experienced its first negative cash flow in four years. This is not only due to the fact that they spent more than double the amount of money on capital expenditures than last year, but that they werent able to generate enough money from their operating activities to offset the major expenditures. This suggests that Apple needs to work on increasing their revenue and decreasing their expenses in order to see a positive cash flow next year. d. Profitability Explanation i. Apple is showing a great level of profit for several reasons. First, and probably the most important is that they do not have any long term debt. The continually choose not to provide dividends in order to reinvest the money into capital infrastructures. Apple also has a very small amount of liabilities in comparison to the industry and its competitors. They generate enough equity from their resources to cover their short term

debt. Another great indicator of their profitability is their high earnings per share. Apple is also currently growing faster than the industry. In order to sustain their profitability they need to make sure to continue to increase their growth rate. e. Industry Financial Numbers and Explanations i. The industry as a whole is doing quite well. When comparing the industry and Apples income statement its clear that both have experienced an increase in sales and have come out with a positive net income. Apples sales constitute about 33% of the entire industries sales. Considering the size of Apple and the amount of time they have been a major player in the industry, they are surely showing their potential. Both the industry and Apple have an extremely high earning per share when compared to Dell, HP, and Microsoft. This demonstrates the attractiveness of Apple for investors along with their profitability. When comparing balance sheet statements, the industry has a lot of inventory on hand, a lot of long term debt and current liabilities. In fact, the industry has more liabilities than it has generated equity. Clearly, the industry as a whole has a difficult time generating enough equity from their resources to pay off their debts. However, Apple has no problem here. They are very capable of paying off their debts. In conclusion, Apple is currently performing better than the industry. f. Financial Problem or Success Statement

i. Apple is currently experiencing financial success. Although Apple has seen an increase in their profitability, sales, stock price, and assets the industry. Some major factors that need to be improved upon are increasing their ROA, ROE, and ROI. In addition, they need to work on decreasing their cost of goods sold because as of now it represents over 60% of their expenses. They also need to make sure that their growth rate continues to increase.

Analysis of Marketing Position a. Sales/Company and Industry Growth Including Regression

ii. Apple is currently growing faster than the industry. Apples growth rate is 9.30% while the industry is at 5.37%. Although the industry is in a strong position, Apples growth is soaring due to their innovative strategies. b. Market Share vs. Industry and Competitors for 5 Years

5 Year Market Share

2009 2008 2007 2006 2005

Industry 110,599 109,422 97,413 90,359 75879

Apple 36,537 32,479 24,006 19,315 13,931

33% 30% 25% 21% 18%

Microsoft 58,437 60,420 51,122 44,282 39,788

53% 55% 52% 49% 52%

Dell 61,101 61,133 57,420 55,908 49,205

55% 56% 59% 62% 65%

HP 118, 104, 91, 86, 79,

i. Apples current market position is very strong. Microsoft, HP, and Dell currently hold a higher percentage of the market than Apple. Although this is true, Apple has proven to be an industry innovator. Virtually every product they have developed has created a huge sensation among consumers. Apples marketing efforts are truly one of kind. They rely heavily on guerilla tactics and celebrities to draw consumers in. The only downfall Apple faces is the fact that its competitors such as Microsoft, HP, and Dell have been able to create strong brand names over a long period of time. Apple has just recently become a major competitor in the industry. Even though this is true, they have done an impeccable job sustaining their position. They have successfully proven to provide high quality products and create a very strong brand name. c. Marketing Tactics Humorous commercials Hip and fun campaigns Cutting edge technology Easy to use operating systems User friendly Products Environmentally Friendly Products Innovation Sleek Designs

i. Apple has an unmistakable marketing style and it has been very successful for them in the past few years. Apple is known for their humorous commercials and hip and fun campaigns which draw in the young and the young at heart. Apple provides products that are cutting edge and in their commercials and ads they try to communicate that to the consumers. Another thing that they try to convince their viewers of is the easy to use operating system and products. In most Apple commercials they show actual games or apps that can be run on their products this is to draw in their potential customers and show them why they cant live without the specific Apple product. d. Marketing Problem/ Success Statement This companys marketing efforts are a strong success because their campaigns are recognizable and memorable. Their products and branding have enabled them to create a culture that people want to be part of. Over the past 3 years Apple has continually increased their shareholder wealth and the profitability of the company (yahoo finance, 2009). Analysis of Management Position a. Identification of Structure and Top Management i. Apple uses a multi-divisional structure within their company. They have Steve Jobs at the top as CEO and branch down to the COO and then branch down to their divisions that consist of: Worldwide Product

Marketing, Software Engineering, Retail, Mac Hardware Engineering, iPhone Software Engineering, and Devices Hardware Engineering. Each of their divisions houses their own supervisors and employees. b. Top Management and Executive Compensation (Company News for Apple Inc.)

c. Direction of Top Management i. The vision that Apples top management has is to continue to be the leading innovator in their markets. They have continuously captured their target market audience by producing the latest and greatest products before any of their competitors. They also want to push for more worldwide success by expanding their retail stores and iTunes into more foreign countries that have not be fully exposed to their products. By doing this they will increase their sales overseas and will become a worldwide phenomenon just like they did in the United States.

d. Stock Price Performance i. Apple has had great success with their stock. It has been strong from the beginning and has been very strong as of late, currently selling at $194.34. Looking back at Apples stock it seems that though they look like they dip down here and there, they never go below selling for $50. This shows the strength of the companys stock is for them (Yahoo Finance, 2009). As with any other product driven company, Apples stock heavily reflects the releases of their new products. This also favors Apple though because of their positioning as a market leader. e. Proposed Mission, Vision, and/or Corporate Goals i. Since we concluded that Apple does not have a strong mission statement due to the lack of direction or purpose, we have created one we think would work better for them: To be a leading innovator and provider of technological products to countries all over the world. We feel this will give Apple the direction and purpose they need to communicate with their consumers. ii. The vision that we found for Apple was a quote given by Steve Jobs in an interview that states, To have an Apple on every desk (Birnbaum, 2000). This is direct and to the point and we believe Apple should continue with this vision.

iii. Apple doesnt seem to have defined any values for their company, so we propose that Apple should define values concerning the environment, their community, and the world to reach a level of understanding with their consumers.

f. Management Performance Assessment

i. Apples management score of a 75 places them in an average position. Even though Apple is a successful company, they still do have some improvements that need to be made within their management. One of the important strengths they have is their leadership quality which also leads to a weakness of theirs, which is Steven Jobs. Steve Jobs is an amazing leader for Apple and has brought Apple up to where it is now.

The weakness Apple is facing is not having a successor for him now that he is ill. A few other weaknesses that Apple faces are their return on assets, investments and equity. Once they can get those back up to where they need to be, Apple will be a great success in their management position. g. Management Problem or Success Statement i. Apples management is a marginal success because of the weaknesses they still do possess. We believe that Apple can easily become a strong success since their weaknesses are concentrated to mainly one area that can be turned around relatively quickly. Apples strengths are strong and will continue to be strong, which will hold them at the success level that they are at until their weaknesses can be improved. 4. Strategic Position a. I.D. of Current Core Competencies i. Product differentiation ii. Industry innovator iii. Brand loyalty b. I.D. of Competitive Advantages i. Apples greatest competitive advantage is differentiation of their products. Their computers and digital music devices set the standard for innovation and quality. They have various versions of almost every product including: Mac computers, software, iPhones, and iPods. Apple is

well known for being an industry innovator. Apple guarantees their customers state of the art products that are not available anywhere else. In addition, Apple has managed to create a community of intensely brand loyal customers. These consumers who are proud to be a part of the Apple culture stand by their purchasing decisions with pride and commitment. In fact, most consumers who decide to go Mac, never go back to a PC. c. I.D. of Top 5 Key Performance Indicators i. Profits: ii. Stock Price: $201.46 Nov. 9, 2009 compared to $94.77 Nov, 11, 2008 iii. R&D: +83% 2009 compared to +71% 2008 d. Overall Position
Strengths (10) Low debt (10) Continual investment in R&D (10) Steve Jobs (9) Secrecy (9) Brand image (8) Celebrities (8) Innovation (7) Multi-divisional Total: 72 Avg: 9 Weaknesses (9) High R&D (8) Dependence on Steve Jobs (7) High beta (6) Social responsibility (6) Batteries (6) Not compatible with Microsoft Total: 47 Avg: 6.7 S-T Index: 2.3

i. Apple has many strengths which allow them to be the successful company they are. Because Apple keeps such a low amount of debt allows them to keep their capital available for other uses. Their high devotion to R&D enables them access to the latest technology to keep them in the position of an industry innovator. Apple has a very strong brand image which promotes quality and reliability. Part of their marketing strategy is to us celebrities in their advertisements in order to Apple in the consumers evoked set. Steve Jobs is the most valuable asset Apple has because of his drive and commitment. Without him, Apple wouldnt be where they are today. Secrecy is very important to Apple. Steve Jobs is the only person who fully knows every detail of the company and hes very apprehensive to divulge information about Apples products, software, and new developments. This is seen as a strength because it provides a smaller chance for competitors to copy. Being a multi-divisional structure is very important. It keeps the functions of the company working at what they do best rather than stretching out the top management. Innovation is definitely Apples biggest strength in the technological industry. They are the leaders of computer technology. ii. Along with strengths come weaknesses. Apple has several weaknesses which they need to address in order to remain a top player in the industry. The fact that they have a high beta could make them be perceived as a risky company. It could be seen as unattractive to spend so

much money on R&D because so much is being devoted to one area instead of other areas of their infrastructure. However, without it, they wouldnt be a leader in innovation. Social responsibility is something that is very important to consumers today. Apple currently does not highlight their efforts towards social responsibility. Its well known that Apple relies too heavily on Steve Jobs. If he were unable to perform because of his illness or even have to leave the company, Apple would be in serious trouble. Although secrecy is important in protecting Apples ideas, it has caused them trouble in the past in regards to withholding information from their stockholders. Consumers are also well aware that Apples batteries have a poor performance and are a huge inconvenience to have replaced. The last weakness for Apple is the fact that they are not very compatible with Microsoft products, which deters many consumers. e. Overall Problem/Success Statement

i. Apple is a success because of their product differentiation, innovation, and brand loyalty. 5. Conclusion and Discussion a. Long-Term Prospects and Options i. Some long-term strategy options that Apple has are to continue their internal growth by continuing to update their current products and services and to expand their green movement. By continuously updating their products and services they will continue to be the leading innovator in their markets and continue their long-term success. By expanding their green movement, Apple will become more appealing to consumers since the worlds population is looking for anyway to become a little greener. Another option would be to create more strategic alliances to expand their mobile phone carriers that support the iPhone. This would open up many more markets worldwide for them to take over. b. SBU Level Options (Porter; Miles & Snow)
i. Apples current positions in both Porter and Miles & Snow should not be

changed. We recommend that they continue to hold their current positions at differentiation (Porter) and prospector (Miles & Snow) because of the success that they have had with being the leading innovator with all of their products in the different markets

Bibliography
Birnbaum, B. (2000). Strategic Thinking, A Four Piece Puzzle. Birnbaum Associates. Company News for Apple Inc. (n.d.). Retrieved November 2009, from Reuters: http://www.reuters.com/finance/stocks/companyNews?symbol=AAPL.O Yahoo Finance. (2009, November). Retrieved November 2009, from Yahoo: http://finance.yahoo.com/q?s=AAPL Apple Retrieved November 2009: www.apple.com