EXECUTIVE SUMMARY Apple Computer Inc. ’s strategy to gain market share dominance by market penetration has achieved poor results. This report finds that the industry has consolidated around six companies. The industry is unattractive for new entrants but for the existing firms, there is much market growth to be exploited. The financial analysis of Apple indicates that the strategies have not provided a strategic fit with the critical success factors of the industry. The company may come to bankruptcy if quick implementation of recommended strategies are ignored.
The company may seem profitable but due to its high borrowings, tis profit cannot be reinvested to further the company’s competitive advantage. Consequently, the reduced attention and focus on the current, non-profitable market such as Japan will be necessary to restructure the balance sheet and strengthen the financial position of the company. Driving Apple’s growth strategy has been the desire for the company to increase its distribution and availability through the introduction of clones.
Unfortunately, this strategy has not provided the company with a strategic fit with its major strength which is the company’s innovation. Apple’s reputation is that of reliability and quality and should look to exploit these characteristics. Its pure performance is partly attributed to this failing of not matching its strength with its strategy. It has been recommended that Apple must refocus on its strength which is achievable by product differentiation.
Furthermore, immediate attention must be given to the high cost structure that it currently has.
Apple has not been able to fight in a price war and the likelihood of it recurring is high. To combat this, Apple needs create a niche market in which it can compete and still reduce its costs by making strategic alliances or merging to facilitate economies of scale, improvement in its distribution channels, increase quality and increase market share in the future.
It is also recommended that Apple moves quickly into the developing regions such as India and China whilst the market is still unsaturated and establish a strong presence there. Upon implementation of the strategies outlined above over the next few years, Apple can expect to have cemented its position as the market leader in the premium personal computer segment of the market. In addition, a strong balanced sheet and improved profitability will be realised.