APPLE STRATEGIC AUDIT I. Current Situation A.

Performance: The financial condition on an overall basis are exceptional; The recorded sales are exceptional; Financial growth in the company is stable; Expansion of the company is diversified; Competition is high within the sectors of innovation; Survival is difficult due to strong competition. B. Strategic Posture i. Mission Mission of the company is not publicized but understood through their activities and performance levels; They design, produce and publish personalized computer systems, in addition to which they also release related softwares and gadgets supporting the main products; They have been able to capture the market with their own design and support systems allowing them to leverage their stance in the markets worldwide, gaining a competitive edge with their superior innovation. Page 1 of 9

ii. Objectives They have been able to procure their resources towards gaining market share rather than just profitability, by maintaining their main product line and accessories; With continued research and development, the company has been able to take the international market for its iPod and accessories lines; Even though, the statistical data does not support the complementary strategy but the company has been able to comfort their objective in to providing the best personalized technology. iii. Strategy Dominating the music online industry by providing exclusive line; They have retail lines available in major countries and major cities; Whilst they use intermediaries to sell their product lines in stores not their own, they do provide staff with training and supervision in these stores; They are known to like any multinational to use the medias of marketing and advertising in order to create an increased sense of awareness about their company. iv. Policy Investment in research and development programs for new and existing product lines; Gaining a competitive edge by utilizing improved cost reduction methodologies;

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 Increasing their market share through increase in knowledge about the company and its product lines through personalization of sales worldwide. II. Strategic Management A. The Directors i. The board only consists of one internal member where as the rest six are external; ii. They are all respected and experienced members of the industry; iii. With backgrounds in major fields and industries the management is made of responsible members; iv. They have no stakes in the company in relation to personal ownership of stock. B. Higher Management i. As leader in the study and practice of management Steve Jobs is a member of the Board of Directors as well as the CEO of the company; ii. Members managing the company have extensive experience in the industry; iii. With a flair for not innovation but risk as well they are leaders in the industry; iv. However, for survival in the international market the team needs to be diversified further, to bring more. III. External Atmosphere A. Economical i. Significant growth in demand for technological advancement in user friendly and personalized gadgets; (O)

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ii. Significant growth in demand in regards to addition geographical locations such as Asia, South America, and the Pacific. (O) B. Technological i. Increased competition in the innovation of user friendly releases; (T) ii. Increase in substitution of products available in the market. (T) C. Political i. The European Union charged the company with a legal notice for price differentiation between the UK and other zones of Europe; (T) ii. Labor unions formed in China; (T) iii. Volatility in foreign exchange rates; (T) iv. Highly expensive import rates. (T) D. Social Culture i. Many countries and individuals have been indulging in providing grants for research and development projects involving education; (O) ii. Availability of innovative product lines in regards to the companys product lines; (O) iii. Ownership of retail stores as well as external selling points. (O) E. Competition i. Substitution of all products is found easily and in timely manner; (T) ii. Competition in relation to company faced by new companies is high, making it hard for new companies to survive; (O) iii. Existing firms however pose significant threat to the companys future; (T) iv. With high competition not only in innovation but also cost leadership. (T)

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IV.

Internal Atmosphere A. Structure of the Company i. The structure is divided in accordance to products being developed; (S) ii. Increase in operating geographically, tapping into a bigger market; (S) iii. Increase in manufacturing facilities geographically, tapping in to more resources; (S) iv. Centralized decision making, however utilizing a decentralized management system, providing control system as well as flexibility. (S) B. Culture of the Company i. Stable growth in release of new products or upgraded products; (S) ii. Both innovation of new products and after sales services are some of the main reasons for the companys successful growth rates; (S) iii. The Director and CEO of the company Steve Jobs has been able to not only indulge the company in stabilizing its growth but also allowing the company to remain in business through the application of his knowledge and skills. (S) C. Resources of the Company i. Marketing/Advertisement Well reputed and well known trough out the world; (S) Providing educated and trained faces in the frontlines interacting with the end users; (S) Whilst sustaining the existing products marketing of new products has gained focus as well; (S) ii. Financial

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 Astonishing rise in sales volume with exceptional growth in the numbers; (S) With the increase in sales the company had been able to increase its reserves in relation to regulatory authorities; (S) iii. Research and Development Giving high regards and importance to their research and development departments; (S) Not only inventing new and improved technology, the company also indulges in outside sources of advancements, through purchasing of licenses and patents; (S) iv. Operational However, the market has the ability to adapt to advancing technology and duplicate at a cheaper price; (W) The American market has been over taken by the company with their iPods and music sales; (S) v. HR With employees both permanent and temporary working towards the mutual goal of the company; (S) With the introduction of labor unions in China as well as the involvement of the Chinese government has increased costs of production; (W) vi. IT Structure

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 Even though it is not specified the company does deal in the IT world in turn it can be assumed they have an exceptional IT structure in place; (S) Pirated music being available freely on the internet produces unsystematic risk for the company. (W) V. Analyzing the Strategies A. The companys situational analysis indicates a mixture of opportunities and threats faced by the company in terms of competition as technology is easily duplicated. B. Mission and objectives of the company have not been stated clearly or described in a quantitative manner, in essence insufficient planning to battle the problems faced by the company internally and externally. VI. Alternatives and Recommendations for Adoption of Strategies A. Alternatives to Strategy i. Growth by Focused Diversification: Acquisition of companies with manufacturing capabilities in locations that allows reduction of cost like China and Korea. The advantage being the synergy that is created through these acquisitions in other markets; The con is that financial gain might not be attained. ii. Halt: this is where innovation is given its power. The advantage is the management controls everyone that comes under relation with them;

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 However, the con is the competition in the market might not allow this to happen. iii. Retreat: they might just retreat to locations where they are to make gains in a more stable manner selling off their investments on foreign grounds. The advantage of course if the increase that comes in the domestic sales; However, the con is the loss bared by the company of procured customers on those foreign lands. B. Recommendations to Strategy Identifying with the need of the markets and their process in regards to finances and resources, the company should mainly divulge themselves into the strategy of focused diversification. This allowing them to gain control of their operations by acquisitions and in turn of their costs allowing themselves to be more effective and efficient manner in regards to the success of the company. However, it should be realized that to utilize this strategy the company would have to increase their finances as well as incorporate a strategy to train the new companies into their culture. VII. Implementing the Strategy A. The budget of the research and development department would have to increased; B. The top management should compromise of people with experience in these countries; C. Whereas, an increase in the budgets of marketing and advertising would also have to increase, the company will also have to increase their investments in the retail department. Page 8 of 9

VIII.

Control and Evaluate A. Apple would require to train their top management rigorously in order to take control in regards to the departure of a director from the board; B. Instead of relying on external companies to supply them with manufacturing and retailing capabilities the company would need to invest in their own infrastructure and operations as a whole; C. They would need to gain control of their own products in countries of Asia and GCC, in order to complement the culture of these countries through personal interaction rather than through intermediaries.

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