Strategic Management

Report On: APPLE Inc.

Program: MBA 3rd (Non-Business)

Submitted To: Dr. Tasawar Javed

Submitted By: Ayesha Aslam (S23BMGMT3M07021)

Maryam Mehmood (S23BMGMT3M07020)

“The Ins tute of Business Management

& Administra ve Sciences”

The Islamia University Of Bahawalpur

Table of Contents:
1. Introduction: ............................................................................................................................... 16
1.1. History:..................................................................................................................... 17
1.2. Headquarters: .......................................................................................................... 18
1.3. Vision Statement of Apple: ..................................................................................... 18
1.4. Mission Statement of Apple: .................................................................................. 18
1.5. Value Statement:...................................................................................................... 18
1.6. Evaluation Matrix Of Mission Statement: ............................................................ 19
2. Products & Services of Apple: ................................................................................................... 19
2.1. Hardware: ................................................................................................................ 19
2.2. Software: .................................................................................................................. 20
2.3. Services:.................................................................................................................... 20
3. Competitors Of APPLE Inc: ...................................................................................................... 20
3.1. Smartphones: ........................................................................................................... 21
3.2. Computers and Laptops: ........................................................................................ 21
3.3. Tablets: ..................................................................................................................... 21
3.4. Wearables:................................................................................................................ 21
3.5. Streaming Services: ................................................................................................. 21
3.6. Operating Systems: ................................................................................................. 21
3.7. Cloud Services: ........................................................................................................ 21
3.8. Retail: ....................................................................................................................... 21
4. PESTLE Analysis of Apple: ....................................................................................................... 22
4.1. Political factors: ....................................................................................................... 22
4.2. Economic Factors: ................................................................................................... 22
4.3. Social Factors: ......................................................................................................... 22
4.4. Technological Factors: ............................................................................................ 23
4.5. Legal Factors: .......................................................................................................... 23
4.6. Environmental Factors: .......................................................................................... 23
4.7. Summary: ........................................................................................................................ 23
5. SWOT Analysis: .......................................................................................................................... 23
5.1. Internal Factors:...................................................................................................... 24
5.1.1. Strengths: ................................................................................................................. 24
5.1.2. Weaknesses: ............................................................................................................. 24
5.2. External Factors: .................................................................................................................... 25
 5.2.1. Opportunities: ......................................................................................................... 25
5.2.2. Threats: .................................................................................................................... 25
6. Porter’s Five Forces Model: ....................................................................................................... 25
6.1. Competition in the industry (Strong force) ........................................................... 26
6.2. The threat of new entrants (Moderate force) ....................................................... 26
6.3. The bargaining power of suppliers (Weak force) ................................................. 26
6.4. The bargaining power of customers (Strong force).............................................. 27
6.5. Threat of substitute products or services (Strong force) ............................................. 27
7. External Factor Evaluation Matrix:.......................................................................................... 27
7.1. Score Range: ............................................................................................................ 27
8. Porter’s Value Chain: ................................................................................................................. 28
8.1. Primary Activities in Apple Value Chain Analysis ............................................... 29
8.1.1. Inbound Logistics: ...................................................................................................... 29
8.1.2. Operations: .................................................................................................................. 29
8.1.3. Outbound Logistics:.................................................................................................... 30
8.1.4. Marketing and Sales: .................................................................................................. 30
8.1.5. Service: ......................................................................................................................... 30
8.2. Support Activities in Apple Value Chain Analysis ............................................... 31
8.2.1. Firm Infrastructure: ............................................................................................... 31
8.2.2. Human Resources: .................................................................................................. 31
8.2.3. Technology Development: ....................................................................................... 31
8.2.4. Procurement: ........................................................................................................... 31
8.3. Apple Value Chain Analysis Example: .................................................................................. 32
9. Internal Factor Evaluation Matrix: .......................................................................................... 32
9.1. Score Range: ............................................................................................................ 32
10. SWOT Matrix: ........................................................................................................................ 33
11. The Strategic Position and Action Evaluation (SPACE) Matrix: ....................................... 34
11.1. Internal Strategic Position: .................................................................................... 34
11.1.1. Financial Strength (FS): ............................................................................................. 34
11.2. External Strategic Position:.................................................................................... 34
11.2.1. Industry Strength (IS): ............................................................................................... 34
11.2.2. Environmental Stability (ES): .................................................................................... 35
11.3. Calculation and Plotting: ........................................................................................ 35
11.4. Conclusion: .............................................................................................................. 36
12. BCG Matrix:............................................................................................................................ 36
12.1. BCG Matrix Categories:......................................................................................... 36
12.2. Apple's Products: .................................................................................................... 36
12.2.1. Stars: ............................................................................................................................ 36
12.2.2. Cash Cows: .................................................................................................................. 36
12.2.3. Question Marks:.......................................................................................................... 36
12.2.4. Dogs: ............................................................................................................................. 37
12.3. BCG Matrix for APPLE : ....................................................................................... 37
12.4. BCG Matrix Chart:................................................................................................. 37
12.5. Conclusion: .............................................................................................................. 37
12.5.1. Stars:............................................................................................................................. 37
12.5.2. Cash Cows: .................................................................................................................. 37
12.5.3. Question Marks: .......................................................................................................... 38
12.5.4. Dogs: ............................................................................................................................. 38
13. Internal-External Matrix: ...................................................................................................... 38
13.1. Constructing the IE Matrix: .................................................................................. 38
13.1.1. Internal Factors: ......................................................................................................... 38
13.1.2. External Factors:......................................................................................................... 38
13.2. IE Matrix Positioning: ............................................................................................ 38
13.3. Conclusion: .............................................................................................................. 39
13.4. Strategic Recommendations for Apple Inc. .......................................................... 39
Reference: ........................................................................................................................... 40
1. Introduction:
Apple Inc. is an American multinational technology company that specializes in consumer
electronics, computer software, and online services. Apple is one of the Big Five American
information technology companies, along with Amazon, Google, Microsoft, and Meta. As of
January 2023, it is the world's largest technology company by revenue and the world's most
valuable company, with a market capitalization of over US$2.3 trillion.

Apple was founded on April 1, 1976, by Steve Jobs, Steve Wozniak, and Ronald Wayne in
Jobs' garage in Los Altos, California. They initially focused on developing and selling
personal computers, but the company has since expanded into other areas, including
smartphones, tablets, wearable devices, home appliances, and digital content.

Apple is known for its innovative products and its focus on user experience. Some of its most
popular products include the iPhone, iPad, Mac, Apple Watch, and AirPods. Apple also
offers a variety of software and services, such as the iOS and macOS operating systems, the
iCloud storage service, and the App Store.

Apple is a major player in the global economy. It employs over 150,000 people worldwide
and has a retail network of over 500 stores. Apple's products and services are used by
millions of people around the world.
1.1. History:
Here are some of the key milestones in Apple's history:
 1976: Apple is founded by Steve Jobs, Steve Wozniak, and Ronald Wayne.
 1977: Apple releases the Apple II, its first successful personal computer.
 1980: Apple goes public and becomes one of the most valuable companies in the
world.

 1984: Apple releases the Macintosh, the first commercially successful personal
computer with a graphical user interface.

 1997: Apple releases the iMac, which helps to revive the company's fortunes.

 2001: Apple releases the iPod, which revolutionizes the way people listen to music.

 2007: Apple releases the iPhone, which quickly becomes the best-selling smartphone
in the world.

 2010: Apple releases the iPad, which creates a new category of mobile devices.

 2014: Apple releases the Apple Watch, its first wearable device.

 2016: Apple releases the AirPods, which become the best-selling wireless earbuds in
the world.

Apple is one of the most successful and influential companies in the world. It has pioneered
many of the technologies that we now take for granted, such as graphical user interfaces,
portable music players, and smartphones. Apple is also known for its strong brand identity
and its loyal customer base.
1.2. Headquarters:
The headquarters of Apple Inc. Is located at 1 Apple Park Way, Cupertino, CA 95014, United States.

1.3. Vision Statement of Apple:

"We believe that we are on the face of the earth to make great products, and that's not
changing."
Comments: The vision statement is ambitious. It sets a high bar for APPLE’s products and
services. This can help to motivate employees and ensure that the company is always striving
to improve.
1.4. Mission Statement of Apple:
“To bringing the best user experience to customers through innovative hardware, software,
and services.”
Comments: The mission statement is customer-experience. It puts the focus on what APPLE
wants to do for its customers, rather than what APPLE wants to achieve for itself. This is a
good way to ensure that the company is always aligned with the needs of its customers.
Overall, APPLE’s vision and mission statements are strong and effective. They clearly
communicate the company’s goals and values, and they help to inspire employees and
customers alike.
1.5. Value Statement:
The value statement of apple is “THINK DIFFERENT.”
1.6. Evaluation Matrix Of Mission Statement:
Components Present Explanation
Customers Yes To bring the best user
experience to customers"
clearly identifies customers
as the focus.
Product & Services Yes "Innovative hardware,
software, and services"
specifies the main products
and services Apple offers.
Markets No The mission statement does
not specify the geographic or
demographic markets where
Apple competes.
Technology Yes The focus on "innovative"
hardware and software
implies that Apple is
technologically current.
Concern for Survival, No The mission statement does
Growth, and Profitability not explicitly mention
growth, profitability, or
financial objectives.
Philosophy Yes The statement reflects a
philosophy centered on "the
best user experience" and
"innovation."
Self-concept Yes The emphasis on "best user
experience" and
"innovative" products
highlights Apple's distinctive
competence.
Concern for Public Image No There is no explicit mention
of social, community, or
environmental concerns in
the mission statement.
Concern for Employees No The mission statement does
not mention employees or
their value to the company.

2. Products & Services of Apple:

Apple Inc. Designs, manufactures, and sells a variety of products, including:
2.1. Hardware:
o iPhone: Smartphone
o iPad: Tablet computer
o Mac: Personal computer
o Apple Watch: Wearable device
 o AirPods: Wireless earbuds
o Home Pod: Smart speaker
o Apple TV: Digital media player
o Apple AirTag: Item tracker

2.2. Software:
o iOS: Opera ng system for iPhone and iPad
o macOS: Opera ng system for Mac
o watchOS: Opera ng system for Apple Watch
o tvOS: Opera ng system for Apple TV
o iPadOS: Opera ng system for iPad

2.3. Services:
o iCloud: Cloud storage and compu ng service
o Apple Music: Music streaming service
o Apple TV+: Video streaming service
o Apple Arcade: Gaming subscrip on service
o Apple Fitness+: Fitness subscrip on service
o Apple News+: News subscrip on service
o Apple Pay: Mobile payment service
o Apple Card: Credit card
o Apple One: Subscrip on bundle that includes Apple Music, Apple TV+, Apple Arcade,
and iCloud+
Apple’s products are known for their innova ve design, user‐friendly interface, and high
quality. The company has a loyal customer base that is willing to pay a premium for its
products and services.

3. Competitors Of APPLE Inc:

Apple Inc. faces competition across its various product lines and services from multiple
companies. Here are some of its main competitors:
3.1. Smartphones:
 Samsung: A major competitor in the smartphone market with its Galaxy
series.
 Google: Competes with its Pixel phones.
 Huawei: Offers a range of high-end smartphones.
3.2. Computers and Laptops:
 Microsoft: Competes with Surface devices.
 Dell: Offers a wide range of PCs and laptops.
 HP: Another significant competitor in the computer market.
3.3. Tablets:
 Samsung: Competes with its Galaxy Tab series.
 Microsoft: With its Surface Pro tablets.
 Amazon: Offers affordable tablets through its Fire series.
3.4. Wearables:
 Fitbit: Known for its fitness trackers and smartwatches.
 Garmin: Offers a range of wearables for fitness and outdoor activities.
 Samsung: Competes with its Galaxy Watch series.
3.5. Streaming Services:
 Netflix: A major player in video streaming.
 Amazon Prime Video: Competes in the streaming market.
 Spotify: Competes with Apple Music in the music streaming sector.
3.6. Operating Systems:
 Google: Android OS competes with iOS.
 Microsoft: Windows OS competes with macOS.
3.7. Cloud Services:
 Amazon Web Services (AWS): A leader in cloud services.
 Google Cloud Platform (GCP): Competes in cloud computing.
 Microsoft Azure: Another major player in cloud services.
3.8. Retail:
 Best Buy: Competes with Apple's retail stores.
 Walmart: Offers electronics and competes with Apple’s online store.
These competitors challenge Apple across various sectors, pushing innovation and
influencing market dynamics.
 The Input Stage

4. PESTLE Analysis of Apple:

PESTLE analysis is a business analysis framework used by strategic and business managers
to identify the Political, Economic, Sociocultural, Technological, Legal, and Environmental
factors that affect a company or an entire industry.

4.1. Political factors:

Apple is a global brand with its headquarters in Cupertino, California. It does business in
many countries, and each has its own political environment. There are a lot of political issues
that affect how apple does business. The business has to deal with a lot of different political
issues, such as trade policies, tax rules, and relationships between countries.
Also, the trade disputes between the us and china, where many apple goods are made, for
example, have a big effect on the company’s costs and supply chain. For apple to keep its
global presence, political stability in key countries is also important.

4.2. Economic Factors:

Trends in the economy have a big effect on how well Apple does. Things like foreign
exchange rates, inflation, and the chance of a recession have a direct effect on consumers’
ability to buy things, which in turn has an effect on Apple’s sales.
Because the company charges high prices, it can lose customers when the economy is bad
and people are looking for cheaper options. There are some risks, but Apple’s strong brand
image and loyal customer base help to some degree.

4.3. Social Factors:

Demographics, changes in lifestyle, and customer preferences are all social factors that have
a big impact on how Apple develops and markets its products. As people become more
dependent on technology and move toward mobile entertainment and conversation, it has
been good for Apple.
Apple’s efforts in education and health care, such as with iPads and the Apple Watch, are also
in line with the growing social focus on health and education.

4.4. Technological Factors:

Technology is what makes Apple successful. In the tech business, where things become
outdated quickly, constant innovation is very important.
Apple is at the cutting edge of technology because it can come up with new ideas. Its iPhone,
iPad, and MacBook lines, as well as its more recent services like Apple Music and Apple Pay,
are all examples of this. The company puts a lot of money into research and development,
which helps it come up with new ideas and stay ahead in a very competitive market.

4.5. Legal Factors:

The tech industry always has to deal with legal issues. Apple has a lot of legal problems,
from patent abuse to antitrust claims. Because Apple is so focused on making new products,
intellectual property rights are very important to the company. Apple’s brand image and its
bottom line are both affected by legal fights like the one it has with Samsung over patent
infringements.
Apple needs to be very careful with the law when it comes to data privacy and customer
rights, especially since data protection is becoming more important around the world.
4.6. Environmental Factors:
For global companies like Apple, environmental factors are becoming more and more
important. There is pressure on the company to make its activities more eco-friendly and
long-lasting.
Apple’s actions, like using renewable energy sources and making it easier to recycle
products, show that it cares about the earth. These efforts not only help the environment, but
they also improve Apple’s image as a company and make it more appealing to people who
care about the environment.
4.7. Summary:
It can be stated that PESTLE analysis is a great tool for businesses that can be leveraged for
several purposes. It brings information about the possible impact of the six external factors
on an organization. This makes it easier for organizations to prepare for any sort of problems
caused by these PESTLE factors

5. SWOT Analysis:
To identify the factors which make the company successful, it is necessary to analyze its
every aspects in market. Apple is a company which started from nothing, but an idea along
with sheer determination and will of its founding members became the world’s largest
technological giant in a very short time. The purpose of doing SWOT analysis for Apple is to
find out the various factors which have contributed to its unparalleled success.
A SWOT analysis is an incredibly easy but effective method used to identify the components
that help a business thrive or contribute to its development. SWOT stands for strengths,
weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors, where
as opportunities’ and threats are external factors.

5.1. Internal Factors:

5.1.1. Strengths:
 Strong Brand Identity: Apple is one of the most recognized and valued brands
globally.
 High Profit Margins: The company enjoys high profit margins due to premium
pricing.
 Innovative Products: Apple consistently innovates with products like the iPhone,
iPad, Mac, and Apple Watch.
 Ecosystem: A cohesive ecosystem that integrates hardware, software, and services
(e.g., iCloud, Apple Music).
 Customer Loyalty: High levels of customer loyalty and strong brand community.
5.1.2. Weaknesses:
 High Price: Products are often more expensive than competitors, potentially limiting
market reach.
 Dependency on iPhone Sales: A significant portion of revenue is reliant on iPhone
sales.
 Limited Market Share in Emerging Markets: Struggles to capture market share in
price-sensitive markets.
  Closed Ecosystem: Limited compatibility with non-Apple devices can be a drawback
for some consumers.
 Supply Chain Issues: Vulnerability to supply chain disrup ons, par cularly in China.

5.2. External Factors:

5.2.1. Opportunities:
 Expansion in Services: Increasing revenue from services like Apple TV+, Apple
Music, and Apple Pay.
 Emerging Technologies: Growth potential in augmented reality (AR), virtual reality
(VR), and artificial intelligence (AI).
 Wearables Market: Expanding product line in wearables like Apple Watch and
AirPods.
 Health and Fitness: Opportunities in health tracking and fitness markets.
 Sustainability Initiatives: Focus on sustainability can attract environmentally
conscious consumers.
5.2.2. Threats:
 Intense Competition: Strong competition from other tech giants like Google,
Samsung, and Microsoft.
 Regulatory Challenges: Potential for regulatory scrutiny and antitrust issues.
 Economic Downturns: Sensitivity to global economic conditions that can impact
consumer spending.
 Security and Privacy Issues: Potential risks related to data breaches and privacy
concerns.
 Currency Fluctuations: Exposure to fluctua ons in foreign exchange rates.

External Assessment

6. Porter’s Five Forces Model:

Porter's five forces for Apple shows that the two strong forces are industry competition and
the bargaining power of buyers. The bargaining power of suppliers, the threat of buyers'
bargaining power, and the threat of new entrants in the marketplace are all comparatively
weak or moderate elements. Let us look at the model in detail.
 Competition in the industry (Strong force)
 The threat of new entrants (Moderate force)
 The bargaining power of suppliers (Weak force)
 The bargaining power of customers (Strong force)
 Threat of substitute products or services (Weak force)
6.1. Competition in the industry (Strong force)
Apple competitors analysis shows that many companies directly compete with Apple,
including Google, HP, Samsung, etc. Every company conducts massive research and
development to introduce the most innovative products to gain market share. We know that
switching devices and OS is usually low to moderate cost action, and consumers do not need
substantial investment to switch from Android to iPhone or vice versa. Hence Apple
competitors' analysis also shows the strong force of competition in the industry. Various
factors contributing to this force are;
The high aggressiveness of competitors in R&D and innovation is a strong force.
 Low differentiation of products is another strong force.
 Consumers can buy a new product without substantial investment, so the low
switching cost is another strong force.

6.2. The threat of new entrants (Moderate force)

In Porter's five forces for Apple the threat of new entrants is low to moderate. Establishing a
big company within the industry is extremely expensive, and it needs finance, manpower,
infrastructure, and marketing. To make a noticeable mark in personal computing and gadgets
also requires brand recognition, which is another overhead.
The other challenge is that standing in the face of already established companies like Apple,
Google, and HP is not easy. Let us see the contributing factors.
 High investment requirements are a weak force.
 Brand development cost is another weak force.
 New entrants' potential and capacity development is also a tough call, which is a
strong force.

6.3. The bargaining power of suppliers (Weak force)

In Porter's five forces for Apple, the bargaining power of suppliers is a weak force. Apple has
many potential suppliers with adequate supply, and these suppliers can provide parts,
processors, packaging, and virtually everything related to Apple products. Also, Apple enjoys
economies of scale, and suppliers do not want to lose the business.
Factors contributing to the weak force of bargaining power of suppliers are;
 A large number of suppliers is a weak force.
 The weak force of large order size by Apple.
 Firm concentration to supplier concentration ratio is another weak force.

6.4. The bargaining power of customers (Strong force)

Factors responsible for the bargaining power of customers in Porter's five forces for Apple
are both individual bargaining power and collective bargaining power. Individual bargaining
power is weak because losing a single client does not affect Apple's revenue. However,
collective bargaining power is a strong force.
Various factors contributing to the consumers' bargaining power are;
 A strong force of low switching cost.
 A weak force of individual bargaining power.
 A strong force of collective bargaining power.
6.5. Threat of substitute products or services (Strong force)
In Porter's five forces for Apple, we see a weak threat of substitute products. This is a weak
force because currently, we do not see any products that can surpass the facilities provided by
Apple's products.
The breakdown of contributing factors to the threat of substitute products is as follows.
 Moderate to the high availability of substitutes is a moderate force.
 Inadequate substitutes are a weak force.

7. External Factor Evaluation Matrix:

An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate
economic, social, cultural, demographic, environmental, political, governmental, legal,
technological, and competitive information. EFE Matrix indicates whether the firm is able to
effectively take advantage of existing opportunities along with minimizing the external
threats. Similarly, it will help the strategists to formulate new strategies and policies on the
basis of existing position of the company.

7.1. Score Range:

The total weighted scored ranges from 1.0 to 4.0
1.0: Poor response to external factors.
2.0 to 2.99: Average response to external factors.
3.0 to 4.0: Above-average to excellent response to external factors.
 External Factors Weight Rating Weighted Score
Opportunities
Expansion in Services 0.15 4 0.6

Emerging Technologies 0.15 4 0.6

Growth in Wearables 0.1 4 0.4

Market
Opportunities in Health and 0.1 4 0.4
Fitness
Sustainability Initiatives 0.1 3 0.3

Threats
Intense Competition 0.15 3 0.45

Regulatory Challenges 0.1 3 0.3

Economic Sensitivity 0.05 3 0.15

Security and Privacy Risks 0.05 3 0.15

Currency Fluctuations 0.05 2 0.1

Total 1 3.45

A total score of 3.45 that is above the average of 3.0 shows that, the company is effectively
managing its external environment, suggesting a solid strategic positioning and competent
response to both opportunities and threats.

Internal Assessment

8. Porter’s Value Chain:

The Apple value chain analysis is a business strategy to evaluate and describe the activities
the company performs for product development and to identify areas for improvement to
increase production efficiency. We use values chain analysis to reduce costs for production
and deliver the most value. It helps companies reduce waste by optimizing efforts and
increasing profitability.
Here, we will discuss the primary and support activities of Apple value chain.
8.1. Primary Activities in Apple Value Chain Analysis
In Apple's value chain analysis, the primary activities can be described in vital five key
points, which hold their importance in Apple value chain analysis. They are:

8.1.1. Inbound Logistics:

This team receives and arranges the raw materials to manufacture the products of the
company. The quality of the product is also ensured by inbound logistics. They are
responsible for fast production within a low range of time. Apple collects its raw materials
from China, America, Europe, and various Asian counties, the product is then assembled in
China.
8.1.2. Operations:
Apple runs its operation by segmenting its market into five sectors.
America: Most of the sale of this company is gained by this sector which comprises both
North and South America. The sale of this segment got increased by near around 7% in 2020
compared with 2019.
Europe: It has India, Middle East, Europe, and Africa. Here the sales are dynamic. Such as
in 2019 the sale declined and in 2020 they again raised.
Greater China: China is placed in this segment. For Apple, this is not a promising sector. In
the last two consecutive years sales in this segment just got declined. The only reason behind
this is, the segment is packed with local competitors with a low range of price.
Japan: This sector is somewhat constant in-term of sales. The sale was same in 2019 and
2020.
Rest of Asia Pacific: This is now emerging as a new potential sector for sales. In the year
2020, the sale of this segment increased by 10%.
8.1.3. Outbound Logistics:
This includes the activity of sending a manufactured product to California’s warehouse of
Apple and then distributing them. Apple’s technological items have a short product life cycle
of about 12 months. Thus, the inventory cost is higher for them. Apple reduced its shipment
costs in China and the Asian region by efficient market penetration. Therefore, they have
gained a good brand image and brand appeal from the customers.
8.1.4. Marketing and Sales:
Marketing and sales are highly responsible for the enormous revenue of Apple. The
company’s sale comes from 7 distinguished sectors. These are:
 Apple Retail Stores
 Apple Online Stores
 Wholesalers
 Direct Sales Force
 Third-Cellular Network Carries
 Retailers
 Value-added Resellers
Through direct distribution, Apple earns 34% of its sales while by indirect distribution they
earn the rest 66%.
8.1.5. Service:
Apple is very consistent in course of its service. In the pre-purchase stage, Apple by its
young, enthusiast and technologically expert trained sales assistants demonstrate to the
customers about their products. After the purchase, the customers can upgrade to newer
models of Apple products for some additional money. There is even a return policy for
purchased items in 14 days. The condition applied here is the product should be purchased
from the Apple store, either online or in-store purchase.
8.2. Support Activities in Apple Value Chain Analysis
Value chain analysis for Apple contains its support activities as well. This part is well
organized in four sections:

8.2.1. Firm Infrastructure:

Apple's corporate infrastructure is robust and global in scale. Headquartered in Cupertino,
California, in a facility known as Apple Park, the company also has significant presences
across the world. Their efficient system of management, coupled with a commitment to
corporate social responsibility and sustainable practices, has helped establish the brand's trust
and credibility.
With a workforce of over 147,000 employees worldwide as of 2020, Apple relies on strong
leadership and effective human resource management. It places emphasis on fostering a
culture of innovation and teamwork, enabling it to attract and retain some of the best talent in
the industry.
8.2.2. Human Resources:
Apple’s human resource strategies have always focused on fostering an innovative and
inclusive environment. With over 130,000 employees worldwide, the company emphasizes
attracting and retaining the best talent through competitive remuneration, career development
opportunities, and robust diversity and inclusion initiatives.
In addition, Apple has invested heavily in employee training and development. The 'Apple
University' program is an example of this commitment. Established in 2008, it aims to instill
Apple’s business culture and values into its employees, ensuring they remain committed to
the company's vision of innovation and quality.
8.2.3. Technology Development:
As a tech giant, technological development is at the heart of Apple's operations. The
company invests heavily in research and development (R&D), with R&D expenditure
totaling $18.75 billion in 2020. This investment drives innovation across all Apple's products
and services.
Apple’s technological developments extend beyond its products, with advanced IT systems
playing a crucial role in everything from supply chain management to customer service.
Sophisticated algorithms power customer recommendations on the App Store and Apple
Music, while advanced data analytics enable Apple to monitor performance, track consumer
behavior, and forecast trends.
8.2.4. Procurement:
Procurement plays a cri cal role in Apple's value chain. The company works with hundreds
of suppliers worldwide to secure the high‐quality materials necessary for product
manufacturing. In its procurement strategies, Apple priori zes suppliers that comply with its
strict standards for labor and environmental prac ces.
Notably, Apple strives to reduce its dependence on single suppliers to mi gate poten al
risks. As part of this strategy, the company invests in securing long‐term supply contracts for
cri cal components like flash memory.
8.3. Apple Value Chain Analysis Example:
Below is a simplified example of Apple's value chain analysis, summarizing these key
aspects in a quick-reference format for business professionals:

This model presents an overview of how each segment interconnects and contributes to
Apple's success story.

9. Internal Factor Evaluation Matrix:

An Internal Factor Evaluation (IFE) Matrix is a strategy formulation tool that summarizes
and evaluates the major strengths and weaknesses in the functional areas of a business, and it
also provides a basis for identifying and evaluating relationships among those areas.
9.1. Score Range:
The total weighted score ranges from 1.0 to 4.0.
1.0 to 1.99: Weak internal position.
2.0 to 2.99: Average internal position.
3.0 to 4.0: Strong internal position.

Internal Factors Weight Rating Weighted

Score
Strengths
Strong Brand Identity 0.15 4 0.6

High Profit Margins 0.1 4 0.4

Innovative Products 0.1 4 0.4

Ecosystem Integration 0.1 4 0.4

Customer Loyalty 0.1 3 0.3

 Weaknesses
High Product Pricing 0.1 2 0.2

Dependence on iPhone Sales 0.1 2 0.2

Supply Chain Vulnerabilities 0.1 3 0.3

Limited Market Share in Emerging 0.1 2 0.2

Markets

Closed Ecosystem 0.05 3 0.15

Total 1 3.15

A total score of 3.15 that is strong internal posi on shows that the company is effectively managing
its internal environment, the strengths can strongly help to overcome the available weaknesses.

Matching Stage

10. SWOT Matrix:

Strengths Weaknesses

 Leverage Strong Brand Identity for  Adjust Pricing Strategies for

Service Expansion: Utilize Apple's Emerging Markets: Develop
strong brand to promote new services more affordable product lines or
like Apple TV+, Apple Music, and financing options to increase
Apple Pay, driving growth in these market share in emerging
high-potential areas. markets.
 Innovative Products in Emerging  Diversify Revenue Streams
Technologies: Use Apple's Beyond iPhone Sales: Increase
Opportunities innovation capabilities to lead in AR, investment in services and other
VR, and AI markets, ensuring a product lines (e.g., wearables,
competitive edge. health tech) to reduce
 Ecosystem Expansion into dependency on iPhone sales.
Wearables and Health: Expand the  Enhance Ecosystem
Apple ecosystem to include more Compatibility: Work on making
wearables and health-related the Apple ecosystem more
products, taking advantage of the compatible with non-Apple
growing interest in health and fitness. devices to attract a broader
customer base.
 High Profit Margins to Buffer  Mitigate Supply Chain Risks:
Against Economic Downturns: Diversify the supply chain and
Maintain high profit margins to reduce reliance on any single
cushion the impact of potential region (e.g., China) to minimize
risks from disruptions.
 economic downturns, ensuring  Address Regulatory
financial stability. Challenges: Proactively engage
Threats  Customer Loyalty to Combat with regulators and ensure
Intense Competition: Strengthen compliance with global
customer loyalty programs and standards to avoid potential legal
community engagement to retain issues.
customers amidst intense competition  Prepare for Economic
from other tech giants. Downturns: Implement cost-
 Focus on Security to Mitigate saving measures and build a
Privacy Issues: Leverage Apple's financial buffer to protect against
strong reputation for privacy and potential economic downturns
security to differentiate itself from impacting consumer spending.
competitors and address potential
data security threats.

11. The Strategic Position and Action Evaluation (SPACE) Matrix:

The Strategic Position and Action Evaluation (SPACE) Matrix is a strategic management
tool that helps a company determine its strategic posture by analyzing four key dimensions:
11.1. Internal Strategic Position:
 Financial Strength (FS)
 Compe ve Advantage (CA)

11.1.1. Financial Strength (FS):

 Strong revenue growth: Apple consistently reports high revenue growth.
 High profit margins: The company enjoys substan al profit margins.
 Strong cash flow: Apple has a robust cash flow posi on.
 Creditworthiness: High credit ra ng and low debt levels.
Score: +5
11.1.2. Competitive Advantage (CA):

 Strong brand loyalty: Apple has a fiercely loyal customer base.

 Innova ve product line: Products are o en seen as leading in design and func onality.
 Integrated ecosystem: Apple’s ecosystem of products and services creates a high barrier to
entry.
 High pricing: Could be seen as a disadvantage in price‐sensi ve markets.
Score: -3
11.2. External Strategic Position:
 Industry Strength (IS)
 Environmental Stability (ES)
Each dimension is rated on a scale from +6 (best) to -6 (worst) for FS and IS, and from -6
(best) to +6 (worst) for CA and ES. The scores are then plotted on a two-dimensional grid to
determine the company’s strategic position.

11.2.1. Industry Strength (IS):

 High demand for technology products: Consistent growth in consumer electronics.
 Strong market growth: Technology and services markets are expanding.
  Opportuni es for innova on: The industry is ripe with opportuni es for new technologies
like AR/VR, AI, etc.
Score: +4
11.2.2. Environmental Stability (ES):
 Regulatory challenges: Increasing regulatory scru ny in various markets.
 Economic sensi vity: Consumer spending on premium products can be affected by
economic downturns.
 Intense compe on: Highly compe ve market with major players like Samsung, Google,
and Huawei.
 Technological obsolescence: Fast pace of technological change can make products quickly
obsolete.
Score: +2
SPACE Matrix:

Dimensions Factors Score (Range: ‐6 to +6)

Financial Strength (FS) Revenue growth, profit margins, cash flow,
creditworthiness 5

Competitive Advantage (CA) Brand loyalty, product innovation,

ecosystem integration, pricing strategy ‐3

Industry Strength (IS) Demand for technology products, market

growth, innovation opportunities 4

Environmental Stability (ES) Regulatory challenges, economic sensitivity,

competition, technological obsolescence 2

11.3. Calculation and Plotting:

To determine Apple’s strategic position:
 FS and CA scores are plo ed on the X‐axis.
 IS and ES scores are plo ed on the Y‐axis.
X-axis (Internal Strategic Position):
 FS: +5
 CA: ‐3
 X = FS + CA = 5 ‐ 3 = +2

Y-axis (External Strategic Position):

 IS: +4
 ES: +2
 Y = IS ‐ ES = 4 ‐ 2 = +2
 FS
7
6
5
4
3 Aggressive
2
1
0
CS

IS
‐7 ‐6 ‐5 ‐4 ‐3 ‐2 ‐1 ‐1 0 1 2 3 4 5 6 7
‐2
‐3
‐4
‐5
‐6
‐7
ES
11.4. Conclusion:
Based on the calculated scores (X=+2, Y=+2), Apple Inc. falls into the Aggressive quadrant
of the SPACE matrix. This strategic position suggests that Apple should pursue aggressive
growth strategies, leveraging its financial strength and industry position to capitalize on
market opportunities.

12. BCG Matrix:

The Boston Consulting Group (BCG) Matrix is a strategic tool used to evaluate a company’s
product portfolio and make investment decisions. It classifies products into four categories
based on market growth rate and relative market share: Stars, Cash Cows, Question Marks,
and Dogs.

12.1. BCG Matrix Categories:

 Stars: High market growth rate, high market share.
 Cash Cows: Low market growth rate, high market share.
 Question Marks: High market growth rate, low market share.
 Dogs: Low market growth rate, low market share.

12.2. Apple's Products:

12.2.1. Stars:
 iPhone: Continues to be a market leader with significant growth potential, especially
with new models.
 Wearables and Accessories: This includes Apple Watch and AirPods, which are
experiencing rapid growth.
12.2.2. Cash Cows:
 Mac: Mature product with a loyal customer base and steady revenue.
 iPad: While still popular, its market growth has stabilized.
12.2.3. Question Marks:
 Apple TV+: Significant potential in the growing streaming market but currently has a
smaller market share compared to established players.
 Apple Pay: Growing market for digital payments, but still competing for market
share.
12.2.4. Dogs:
 iPod: With declining interest and sales, the iPod no longer holds a significant market
position.

12.3. BCG Matrix for APPLE :

Category Product/Service Market Growth Market Share
Rate

Star iPhone/Wearables & High High

Accessories
Cash Cow Mac/iPad Low High
Question Mark Apple TV+/ Apple Pay High Low
Dog iPod Low Low

12.4. BCG Matrix Chart:

Here’s a representation of Apple’s product portfolio on the BCG Matrix:
Relative Market Share

High Medium Low

1.0 .50 0.0
High +20 +--------------------+-------------------+
-------------+---------------

-------------+---------------
Market Growth Rate

Stars Question Marks

iPhone/Wearables & Apple TV+/ Apple Pay
Accessories II I

Medium 0

Cash Cows Dogs

Mac/iPad III iPod IV

Low -20
+--------------------+-------------------+
12.5. Conclusion:
12.5.1. Stars:
iPhone: Continue investing in R&D and marketing to maintain leadership and

capitalize on growth.
 Wearables & Accessories: Expand product offerings and integrate more features to
capture market potential.
12.5.2. Cash Cows:
 Mac: Maintain and optimize for steady cash flow. Incremental updates and targeted
marketing can sustain profitability.
  iPad: Focus on maintaining market position through innovation and niche targeting
(e.g., education, professional use).
12.5.3. Question Marks:
 Apple TV+: Invest in content creation and marketing to increase market share.
 Apple Pay: Expand partnerships and geographical reach to capture growth in the
digital payment market.
12.5.4. Dogs:
 iPod: Gradually phase out and reallocate resources to more promising product lines.
By strategically managing its portfolio, Apple can maximize profitability from its Cash
Cows, invest in the growth of its Stars, make informed decisions about its Question Marks,
and minimize losses from its Dog.

13. Internal-External Matrix:

The Internal-External (IE) Matrix is a strategic management tool used to analyze a company's
business units or products based on their internal strengths and external opportunities. It
combines aspects of the SWOT analysis and the BCG matrix, helping in determining
strategic directions. The IE Matrix is divided into nine cells, which correspond to different
strategies:
 Grow and Build (I, II, IV)
 Hold and Maintain (III, V, VII)
 Harvest or Divest (VI, VIII, IX)

13.1. Constructing the IE Matrix:

To construct the IE Matrix for Apple Inc., we need to assess the internal and external factors:
13.1.1. Internal Factors:
 Strengths and Weaknesses (combined into an Internal Factor Evaluation (IFE)
score)
13.1.2. External Factors:
 Opportunities and Threats (combined into an External Factor Evaluation (EFE)
score)

13.2. IE Matrix Positioning:

IFE Score: 3.15 EFE Score: 3.45
Based on the IFE and EFE scores, we can position Apple Inc. within the IE Matrix.

High (3.0-4.0) Medium (2.0-2.99) Low (1.0-1.99)

Strong (3.0-4.0) I II III

Average (2.0-2.99) IV V VI
Weak (1.0-1.99) VII VIII IX

Given the scores:

 IFE Score of 3.15 places Apple in the Strong internal position.
 EFE Score of 3.45 places Apple in the High external position.
13.3. Conclusion:
Apple Inc. falls into Quadrant I of the IE Matrix, which suggests a Grow and Build
strategy. This position indicates that Apple should focus on aggressive growth strategies,
leveraging its internal strengths and favorable external opportunities to expand and build its
market position.

13.4. Strategic Recommendations for Apple Inc.

 Market Penetration and Expansion: Increase efforts to penetrate existing markets more
deeply and expand into new geographical markets, particularly in emerging economies.
 Product Development: Continue to innovate and expand the product line, especially in
wearables, health tech, and new services.
 Strategic Acquisitions and Partnerships: Look for acquisition opportunities and
strategic partnerships that can complement and enhance Apple's product offerings and
market reach.
 Investment in R&D: Maintain high levels of investment in research and development to
stay at the forefront of technological advancements and innovation.

By implementing these strategies, Apple can leverage its strong internal capabilities and
favorable external environment to drive sustained growth and maintain its competitive edge.
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