APPLE CASE ANALYSIS : SUBMITTED BY - GROUP I

KUNAL JAIN | 85150473

CHINMAY GUPTA | 85150214
CHAKSHU GOYAL | 85150034
DURGAPRASAD | 85150506
NEERAJ MUTHA| 85150282

SWOT Analysis of Apple as per its position in market in 1980s

Strengths:
1. Easy to use machine
2. It offers a complete desktop solution including softwares, peripherals,
hardware, etc
3. Very strong R&D ( 9% sales to R&D)
4. Differentiation in design and technology ( allowed higher price)
5. Strong team of technical, visionary and businessman.
Weakness:
1. They have lesser 3rd party or compatible softwares
2. Slow mac processor
3. Closed system that other producers cant clone with
Opportunities:
1. Desktop publishing and education market
2. Customer lock-in
3. Target rich customers
Threats:
1. Lower prices can hurt its sales. ( left only with installed base)
2. IBM market share i.e. strong competition with IBM
3. New players can enter in this growing industry
Answer 1.
Along with the internal attributes (i.e. firms strengths and weakness), we have
analysed the the competitive environment Apple is facing in 1980s. (i.e. the
opportunities and threats) .
Apple used its firms resources and capabilities to develop, manufacture and
deliver its products to its customers. It used its strengths to grab the
opportunities to enter into the market.
In 1978, Jobs mission to bring ease to use computer came true, when the
company launched Apple 2. It was a relatively simple machine which people can
use straight out of the box. It sparked a complete revolution in the industry and
Apple quickly became the industry leader by the end of 1980. It used its strength

of the strong team it had : Job- the visionary who wanted to change the world
through technology, Wozniak-the technical genius and Marrkula- the experienced
businessman, to enter the market with an easy to use machine.
In 1981, IBM entered the PC market, due to which market share dropped sharply.
But Apples revenue continued to growth. Apples weakness of slow MAC
processor and lack of compatible softwares, being a closed system limited its
sales.
After April 1985, Sculley made Apple a leader by offering a complete desktop
solution. Apples combination of superior software and laser printers gave
Macintosh unmatched capabilities to excel in desktop and education market.
Apple increased its spending on its strength R&D ( from 21 million $ in 1991 to
583 million $ in 1991). This helped Apple to design its products from scratch
using chips, disk drives, monitors, unusual shapes, its own operating system
which it bundled with Mac, its own application software and many peripherals
including printers. While IBM users struggled to add hardware and software to
IBM-compatible PCs , apple users enjoyed complete desktop solution which
allowed them to plug and play. This made Apple customers love their Macs.
Apples resources and capabilities added value by enabling it to exploit
its opportunities and neutralize its threats. Offering a complete
solution gave Apple a quality of rareness which no other company in
market had. No other competing firm at that time had these valuable
capabilities like that Apple. So there was no question of imitability.
This love affair with Mac, allowed Apple to sell its products at a premium price.
Top of the line Macs went upto 10,000$ .It was seen as BMW of the computer
industry. It earned gross profit of 50%. In 1990, it even offered many combination
of products and prices to regain market share and launched Mac classic at 999$
and power book laptops.

Answer 2.
After studying the case and as per the SWOT analysis done above, we can say
that the performance of Apple deteriorated from 92-97 because the company
began to deviate from its strength. Apple companys products were catered to
target the higher segment of the market. It enjoyed a profit margin of 50-55%.
Apples R&D was its major strength which helped the firm to innovate new ideas
and products to bring change in the world through technology. Earlier it used to
spend 9% of its sales to R&D, compared with 5% at Compaq and 1% at IBM. But
in early 90s Apple deviated from its strength to cater to the middle class
segment by competing with the Microsofts and IBMs. For this, it slashed its costs,
cutting 16% of its workforce and reduced its R&D spending. In doing so it was
trying to enter the market in which Apple didnt have a stronghold.
As mentioned above the weakness of Apple of having slow processing speed, not
having third party compatible softwares and also no accessory but only Apple

accessory could work with Apple devices were the major points why Apple found
it difficult to cater to the middle class segment. They couldnt successfully break
the market, since Microsoft had made its softwares compatible with other
devices. Microsoft allowed third party compatibility at much cheaper price.
Because of these issues customers started to think why shall one buy Apple
products. Apple had started loosing market share since it had lost its niche in the
market.
Apple also had started handing out licences to other parities to use its software
as an operating system. Because of this Apple began to loose its rarity in the
market. It started being perceived as a common product but at a high price.
These are some of the reasons why Apples performance deteriorated from
92-97.

Answer 3. Yes Steve Job put company back on track after returning to leadership
in 1997. His decision to end Macnitosh licensing program was based on the
vision he had for apple. He wanted his products to be unique but by licensing
Macnitosh the rarity feature of the Mac was lost. Not only that, it was also
cannibalizing Apples sales.
Instead of making the Macnitosh work on other computers, he did the opposite
by making other components like peripherals usable on the Mac. It also brought
the widely popular Microsoft office suite to Macnitosh by forging alliances with
Microsoft. Since office was a widely accepted piece of software, its functionality
on Mac implied that consumers who valued office wouldnt turn away from
Macnitosh.
Also Jobs consolidated his distribution channel and also offered sales through
online mode. Jobs increased spending on one of its biggest strengths i.e. R&D.
Jobs also reenergized Apples image as a hip alternative to other brands. This
was a very important step as earlier this was the reason that Apple was able to
charge a price premium. But by trying to enter the low price PC segment it had
somewhat downplayed on that strength. Reinforcing that image was crucial to
Apples success.