Apple strategic analysis. This paper includes SWOT/TOWS analysis, PEST analysis, and strategic environmental scan.

APPLE COMPUTER

CASE ISSUES

Core Competency (CI#1) : Apple design, develop and market numerous product and service lines. They sell their products to education, consumer creative professional, business and government customers. While apple seems to display numerous products and conduct business on different segments, it is legitimate to wonder what the company is really good at? Too much diversity is exactly what crushed Apple during the John Scully days.

Cannibalization (CI#2): Through January 2005, Apple has opened 102 retail stores. Although these launches are potentially beneficial, Apple stores are hurting the resellers ' business and not all of them will survive. Considering that the company 's resellers still account for more than 50% of its domestic sales, the company is facing the risk of cannibalization and might deeply suffer.

High Cash (CI#3): Why is Apple holding so much cash? Having too much cash in reserve might either mean that the company does not know yet how to allocate it or that they may have some risk concerns about future potential investment.

Succession (CI#4): Apple is clearly one of the handful of companies where the fortunes are seen to be intricately tied to the person in charge. The star quality and the visionary talents associated with Steve Jobs are certainly contributed to the success of the company. So the news of Jobs ' cancer surgery might lead to a succession problem and compromise the company 's future.

I. CURRENT SITUATION

A.CURRENT PERFORMANCE

Apple achieved a solid performance for the first quarter of 2005 compared to the same quarter 2004 with strong net sales in the Americas segment (+77%) in Europe (+63%) and in Japan (+18%). The Americas segment represents approximately 47% of the company 's total net sales. The increase in net sales in the Americas, Europe and Japan was primarily driven by increased demand of the iPod and the consumer-oriented iMAC. Demand for the iBook products were especially high for the Americas, while peripherals and other hardware were more popular in Europe.

The retail segment 's net sales grew to $561 million as compared to $273 million in the same period in 2004, this represents a remarkable 105% increase.

B. SRATEGIC POSTURE

Mission

Apple strives for continuous improvement in our environmental, health and safety management systems and in the environmental quality of our products, processes and services.

Apple 's Guiding Principles

Ø Meet or exceed all applicable environmental, health and safety requirements.

Ø Where laws and regulations do not provide adequate controls, Apple will adopt their own standards to protect human health and the environment.

Ø Support and promote sound scientific principles and fiscally responsible public policy that enhance environmental quality, health and safety.

Ø Advocate the adoption of prudent environmental, health and safety principles and practices by their contractors, vendors and suppliers.

Ø Communicate environmental, health and safety policies and programs to Apple employees and stakeholders.

Ø Design, manage and operate our facilities to maximize safety, promote energy efficiency and protect the environment.

Ø Strive to create products that are safe in their intended use, conserve energy and materials and prevent pollution throughout the product life cycle including design, manufacture, use and end-of-life management.

Ø Ensure that all employees are aware of their role and responsibility to fulfill and sustain Apple 's environmental, health and safety management systems and policy.

Goals

Ø Innovation above everything else.

Ø Increase sales in the education segment.

Ø Produce user friendly, good appearance products to get customers "think Different" and "think Digital".

Ø Developing new digital lifestyle consumer, and professional software application

Ø Investing in new products area such as rack-mount servers, RAID storage system and wireless technologies.

Ø Provide a high quality sales and after sales support experience.

Strategy

Trough the design and the development of its own operating system, hardware and many software application and technologies, Apple strives to bring to its customers compelling new products and solution with superior ease-of-use, seamless integration and innovative industrial design.

Apple currently focus on:

Ø Increasing marketing and advertising investment in order to improve product and brand awareness.

Ø Vertical growth strategy: expand the retail segment by opening more retail stores. (CI#2)

Ø Market opportunities related to digital music distribution and consumer electronic devices, including iPod.

Ø Implement a cost leadership strategy to keep up with the competition and be more affordable for the educational segment.

Ø Continue to be the leader in innovation for new technology by implementing a product differentiation strategy.

Policies

"Employee diversity ": This policy is a key component and contribute to the success of the company.

"We respect these differences and threat them as an additional value that we incorporate in the way we treat other and approach our customers."

Therefore, Apple apply that each employee is fully responsible for understanding and following this policy.

"Substance policy"

Ø Apple comply with applicable substance legislation worldwide.

Ø monitor and assess new scientific findings on the environmental impact of substances used in Apple products.

Ø educate our supply chain partners and drive innovations within our supply chain to find alternative materials that improve environmental performance.

"Product Take-Back and Recycling Policy"

Ø Producers should provide a means to facilitate environmentally friendly recycling of their products at the end of electronic products ' useful life.

Ø Consumers should select a disposal method for end-of-life electronics products that does not adversely impact the environment.

Ø Governments should develop a legal framework and public policies to promote appropriate end-of-life management, including environmentally friendly disposal and recycling.

Ø Materials generated from the recycling of our products should be used as feedstock for new products whenever possible.

II. CORPORATE GOVERNANCE

A. BOARD OF DIRECTORS

The Board consists of 6 members, of which 5 are external directors:

Board Member-Occupation Audit and Finance committee Nominating Committee Compensation Committee

William l V. CampbellChairman Intuit, Inc C Ccc

Millard S. DexlerChairman and CEOJ. Crew C C

Albert Gore, Jr.Former Vice President of the US C C

Steve JobsCEO and Co-founderApple ComputerChairman and CEOPixar

Arthur D. LevinsonChairman and CEOGenentech, Inc C Ccc

Jerome B. YorkCEOHarwinton Capital Corporation Ccc

cc=Chairperson C=Member

*Audit and committees members are used to ensure feedback and monitor implementation and compliance.

Steve Jobs

Co-founder of Apple in 1976, he has played an important role in the development of the personal computer. He also co-founded NeXT Software, inc. and served as CEO until 1997 when NeXT was acquired by Apple. Director since 1997 and currently CEO of Apple and Pixar Animation Studios, Jobs is viewed as a key character for the company. However his strong voice and personality within the company could give him the power to sway the board. (internal) (Advantage/Conflict?) CI#4

William V. Campbell

Director of Apple since 1997, he was also the former CEO and president of Intuit, Inc. Mr. Campbell also serves on the board of directors of Opsware, Inc. His experience and knowledge in business, finance and technology might be valuable for the company, however, he is in direct competition with Apple in the sale of software such as Quickbook. (External) (Conflict)

Millard S. Dexler

Director of Apple since 1999, he has been Chairman and Chief Executive Officer of J. Crew Group, Inc. since March 2003. Previously, Mr. Drexler was Chief Executive Officer of Gap Inc. from 1995 and President from 1987 until September 2002. (External)

Albert Gore, Jr

Director since 2003, he was a former Vice President of the United States of America. He has remained an active leader in technology, launching a public/private effort to wire every classroom and library in America to the Internet. Therefore, Gore plays a key role in the implementation of Apple 's products in the educational segment. (External) (advantage)

Arthur D. Levinson

Director since 2000, he has been President, Chief Executive Officer and a

director of Genentech Inc. since July 1995. Mr. Levinson 's experience could benefit apple but his interest may be somewhere else. (External) (Advantage/Conflict?)

Jerome B. York

Director since 1997, he is also a director of Tyco International Ltd. and Metro-Goldwyn-Mayer, Inc. Previously, Mr. York was Chairman and Chief Executive Officer of MicroWarehouse, Inc., a reseller of computer hardware, software and peripheral products and he also served as a Senior Vice President and Chief Financial Officer of IBM Corporation. Mr. York 's experience in the computer industry might be a big pro for the company.(External) ( Advantage)

The Board of Apple is composed of a very diverse group of professionals who bring valuable expertise in the areas of technology, biotechnology, finance, turnaround strategies, retail business management, etc. The backgrounds and current "independent" positions of these members provide a wealth of knowledge and a variety of business perspectives for Apple. However the external activities of some of the members of the board might also be a source of conflict for the company.

B. Top Management & Management Style

1) Fred D. Anderson-Executive Vice President and CFO

2) Timothy D. Cook-Executive Vice President, Worldwide Sales and Operations

3) Nancy R. Heinen-Senior Vice President, General Counsel and Secretary

4) Ronald B. Johnson, Senior Vice President, Retail

5) Peter Oppenheimer, Senior Vice President of Finance and Corporate Controller

6) Jonathan Rubinstein, Senior Vice President, Hardware Engineering

7) Philip W. Schiller, Senior Vice President , Worldwide Product Marketing

8) Vertrand Serlet, Ph.D.-Senior Vice President, Software Engineering

9) Sina Tamaddon, Senior Vice President, Applications

10) Avadis Tevanian, Jr., Ph.D.-Senior Vice President, Chief Sofware Technology Officer

C. Management Style

Despite the fact that the company claims to have a partnership management style, I personally believe that Steve Jobs is leading an entrepreneurial style and highly influence the company. (CI#4)

III. EXTERNAL ENVIRONMENT SCAN

A. SOCIETAL ENVIRONMENT

1) Political-Legal Forces

Ø Different countries have different legislations and these in some ways restrict the companies or give opportunities to the company.

Ø NAFTA, European Union and other regional trade open doors to market in Europe, Asia, Latin America that offer enormous potential.

Ø Political uncertainties caused by terrorism activities are directly impacting the overall business of the company.

Ø The company relies on access to patent and intellectual property obtained from third parties. The company might unknowingly encounter infringe issues with existing patents of others.

Ø Beatles lawsuit against the company may negatively affect the company 's reputation.

Ø The company has to comply with the environment regulations such as environment safe disposal or recycling.

2) Socio-Cultural Forces

Ø The computer and internet usage is growing worldwide and is a good source of opportunities for the computer industry.

Ø Customers had become more experienced and computer literate.

Ø Education has become a primordial issue for the new generation, which is a key factor for the company 's business.

3) Economic

Ø In the past year, the industry has been affected by the slow economic and that resulted in low consumer spending. However the current economy shows some sign of improvement, consumer spending and investment might increase as well.

Ø Due to weak economic conditions, the U.S. educational is encountering large budget deficits in many states. This factor has a negative impact over Apple 's sales in the educational segment.

Ø Sales of products that include components obtained from foreign suppliers can be adversely affected by currency exchange rate fluctuations and by international trade regulations (tariffs and antidumping penalties).

4) Technology

Ø Technology is evolving at a rapid pace today ,and people appreciate more & more advances in their systems and are switching over to new information appliances.

Ø Internet availability and usage is growing and leads to good opportunities for the industry.

Ø The traditional desktop might become outdated by the entrance of new revolutionary products.

Ø Increasing demand for new technology in schools and professionals.

B. TASK ENVIRONMENT

Threat of New Entrants:

Ø Medium to High - In the PC market any firm that discovers a new technology that is efficient in terms of price & performance is an immediate threat to the industry. However, Established standards, start-up costs and established brands names (Intel, Windows) are difficult to overcome for a new entrant.

Threat of substitute products:

Ø High - The new forms of Information appliance like Digital TV / HDTV Digital set- top box & Internet screen phones are gaining increasing popularity this might hamper the growth of the PC industry as a whole.

Bargaining power of suppliers:

Ø High - Since the industry is highly dependent on component suppliers, a powerful supplier could exert pressure on the market, by supplying components at a higher price to increase his profits. Since Apple is working only with few selected suppliers, the company is running at a higher risk than the average.

Bargaining power of buyers:

Ø Low - Due to high number of other suppliers in the industry the customer has the options to take the cheapest and the best.

Rivalry among competition:

Ø High - Competition among the giants is fierce, everyone aiming for a larger market share ,intensive price cuts & changes.

IV. INTERNAL ENVIRONMENT SCAN

A. CORPORATE STRUCTURE

Apple is organized along functional lines.

Apple is structured primarily on a geographic basis. The company 's reporting operating segment are comprised of:

1. The Americas

2. Europe, Middle East and Africa

3. Japan

4. Other: Asia-Pacific (Australia, Asia, and the subsidiary FileMaker, Inc.)

B. CORPORATE CULTURE

Ø Commitment to innovation and product quality

Ø Dedication to hard work and education

Ø Commitment to diversity and to empowering employees

Ø Commitment to safety and conservation of the environment/energy

Steve Jobs has a huge impact in the company 's culture. Since Job 's return in 1997, the company has reinvented itself with an array of different colors and styles of computers. The introduction of the Ipod and Itunes largely position the company as an innovative leader.

C. CORPORATE RESOURCES

1.) Marketing Mix

a.) Product

Apple is committed to sell original, good looking products that have an easy-to-use interface. The company offers a range of personal computing products, related devices and peripherals, and various third party hardware-products. In addition, the company offers software products (Mac OS X), server software and related solution; professional application software; and consumer, education and business oriented application software.

Apple has been very innovative by finding new usages for its Macintosh computer, such as desktop publishing and strong graphics/animation capabilities. The Macintosh 's functionality for managing multimedia files from cameras, DV recorder and MP3 devices has been very popular and successful.

The new introduction of Apple 's iPod and the iTune has revolutionize the digital music industry.

b.) Place

Apple 's operating segment are comprised of:

Ø U.S.

Ø South America

Ø Europe

Ø Japan

Ø Australia.

Recently Apple chose to implement a vertical growth strategy and began expanding their own retail stores. (CI#2) The company also sells its product via third-parties dealers, or via internet through their own website or through the iTune online music stores.

c.) Promotion

In 2003, Apple formed a strategic alliance with PepsiCo. The Pepsi iTune Music promotion calls for people to use the winning code found under the Pepsi 's bottle caps products to redeem songs from Apple 's iTunes Music Store. This promotion has already been successful for both companies and increased the awareness of the iTune presence in the market.

In 2003, Apple also announced a marketing partnerships With America Online that are aimed at driving iTunes use deeply into the mainstream. Apple and America Online have agreed to put iTunes "buy this song" buttons next to every song that 's listed in AOL 's music service, which its 25 million subscribers can access. Clicking the button will automatically launch the iTunes music jukebox and begin downloading the song; billing will be handled through the customer 's existing arrangement with AOL.

Apple has a joint venture with Hewlett Packard. Apple has produced an iPod for PC users and the success of this product was a good way for the company to capture non-MAC users.

The company ' also drew on endorsements from music stars. U2 singer Bono, rap artist Dr. Dre and Rolling Stones singer Mick Jagger each gave a live endorsement of the iChat videoconferencing software. Singer Sarah McLachlan also appeared live to sing several songs and to talk about how she used the iPod.

In 2005, Apple Computer has initiated a partnership with Wal-Mart that will soon see the iPod shuffle featured at Wal-Mart discount locations around the country.

d.) Price

Apple price is know to be above average in the industry. The company is using a differentiation strategy and focus more on innovation, and quality. This strategy is justifying their premium prices. Lately, however, their new technology and their high cash flow allowed them to lower their price and to offer more discount to certain markets such as the education market. (CI#3) This new pricing strategy may help Apple to better compete with the non-Mac user market but might cause some issue with the brand image/recognition.

2.) Finance

The financial results for the fiscal 2004 fourth quarter ended September 25, 2004.

For the year 2004, the Company reported net income of $276 million on revenue of $8.28 billion compared to net income of $69 million on revenue of $6.21 billion in 2003. Their net income has increased 400%!

Sales to the education market grew 11 percent, bringing its highest quarterly total for that market in seven years.

Apple has a strong balance sheet with a lot of cash (CI#3), their inventories have almost double compared to the year 2003. Apple short-term debt and long-term debt have been completely paid, which is a very good advantage for the company.

Apple 's activity ratios are very good and improved a lot compared to year 2003. However their ROE and ROI ratios are still low compared to the industry.

Income Statement Sep 04 Sep 03 Sep 02

Revenue 8,279.0 6,207.0 5,742.0

Cost of Goods Sold 5,870.0 4,386.0 4,021.0

Gross Profit 2,409.0 1,821.0 1,721.0

Gross Profit Margin 29.1% 29.3% 30.0%

Net Income After Taxes 276.0 69.0 65.0

Balance Sheet Sep 04 Sep 03 Sep 02

Cash 2,969.0 3,396.0 2,252.0

Net Receivables 774.0 766.0 565.0

Inventories 101.0 56.0 45.0

Total Current Assets 7,055.0 5,887.0 5,388.0

Total Assets 8,050.0 6,815.0 6,298.0

Accounts Payable 1,451.0 1,154.0 911.0

Short-Term Debt 0.0 304.0 0.0

Other Current Liabilities 1,229.0 899.0 747.0

Total Current Liabilities 2,680.0 2,357.0 1,658.0

Long-Term Debt 0.0 0.0 316.0

Total Liabilities 2,974.0 2,592.0 2,203.0

Total Equity 5,076.0 4,223.0 4,095.0

Ratios 2004 2003 Industry

Liquidity Ratios

Current Ratio 2.58 2.89 1.33

Quick Ratio 2.3 1.44 1.1

Profitability Ratios

Gross Profit Margin 29.47% 27.52% 20.43%

Net Profit Margin 5.20% 1.11% 4.53%

Return on Equity (ROE) 8.8% 1.63% 20.3%

Return on Investment (ROI) 8.8% 1.01% 19.1%

Activity Ratios

Inventory Turnover 56.2 110.84 81.4

Asset Turnover 1.2 0.9108 1.8

Leverage Ratio 1.62 2.47

3.) Research and Development

Apple consider that R&D are critical for the activity of the company. therefore, they are willing to increase investment in R&D to keep a sustainable competitive advantage in the industry. According to the company 's Annual Report in 2004:

"In order to remain competitive, the Company believes that increased investment in research and development (R&D) is necessary in order to maintain and extend its position in the markets where it competes. The Company 's R&D spending is focused on delivering timely updates and enhancements to its existing line of personal computers, displays, operating systems, software applications and portable music players; developing new digital lifestyle consumer and professional software applications; and investing in new product areas such as rack-mount servers, RAID storage systems, and wireless technologies."

New products are a necessity in this industry and seems to be a priority for Apple. New products are not always a success, though. This might explain why Apple seems to be so hesitant in investing its high cash flow into new projects, the company might be afraid by the potential failure of the outcome. (CI#3)

4.) Operation and Logistics

Apple heavily rely on third-parties in the manufacturing and logistics sector. Therefore, the company 's overall performance is greatly dependent on the performance of its distributors. In order to have more control over the quality of the buying experience, Apple has done continual effort to become vertically integrated during these two passed years.

Apple work only with suppliers that meet the criteria from their policy (involve commitment to environment, safety and diversity.)

At each period the company performs a detailed review on demand forecasts, inventory, product lifecycle status.

5.) Human Resources Management (HRM)

Apple has over 13,000 employees world wide.

Apple believe that employee 's diversity is a key component for the company success. The company expects that all employee will respect the background or cultural differences of their peers.

Apple offer great benefits to its employee such has competitive pay, and compensation, insurance coverage, bonuses, substantial product discount, stock purchase and saving/investment plan.

The company offers all-level of position such as internship, part-time and entry-level for college student.

6.) Information Systems

Apple has encountered a substantial success by introducing a new digital music device called iPod that can store 1,000 songs and copy a CD in 10 seconds. The continual heavy investment in R&D allowed the company to be on the edge of new technology.

Online store distribution channel has been very powerful for the company.

V. SWOT/TOWS ANALYSIS

A. SWOT ANALYSIS

Strengths Weaknesses

1. Ease of use 2. Established in the personal computer market3. High Corporate reputation 4. Control over the product (manufacture both the computers themselves and also the operating systems which they run)5. Leader in innovation and product differentiation6. Employee diversity 7. Strategic Alliance (HP)8. Joint venture with Pepsi9. Strong Top management10. Loyal customer base11. Creative style 1. The ease of use has led to some image issues, with some business people regarding the Macintosh as a toy.2. High inventory3. Distribution problems4. high prices5. Not IBM compatible, though great strides have been made in connectivity the Macintosh is not transparently compatible.6. Declining share in educational market7. Too many product lines

Opportunities Threats

1. Internet2. Growing industry3. Creating new software markets and selling the hardware into these markets.4. Demand for innovation5. Employee benefit programs6. Growing educational market (In both higher education and schooling, the Macintosh ease of use and low maintenance costs are attractive.)7. Music downloads from Itune 1. Very intense competition among the industry2. Price competition3. loss of market share4. Potential litigations5. Budget deficits in education6. Technological and prices discontinuity7. Potential increase in supply 's costs

B. TOWS ANALYSIS

SO1. Focusing on innovation and product differentiation will contribute to the customers satisfaction (S5, O3, O4)2. The diversity of the employees and the employee benefit programs contribute to the high corporate reputation (S3, S6, O5)3. Joint venture with Pepsi and strategic alliance with HP respond to the demand for music download. (S7, S8, O7) WO1. The growing educational market should increase Apple 's market share in this segment (W6, O6)2. The growing industry should allow the company to decrease prices (W4, O2)

ST1. The high corporate reputation might suffer from the potential litigations. (S3, T4)2. Strong management might overcome the potential litigations. (S9, T4)3. Focus on innovation and product creative style might offset the low prices of competitors. (S11, T1, T2)4. Innovation will depend on the technological -prices conditions and changes. (S5, T6) WT1. The image issues concerning the ease of use of the machine might contribute to the loss of share. (W1, T3)2. The discontinuity in technology and prices might create some forecasting problems, which could result in excess or shortage of inventory. (W2, W3, T6)3. Competition might take advantage of Apple 's high price. (W4, T1, T2)4. Apple 's high price might lower the amount of educational contracts (W4, T5)5. Not being IBM compatible might lead to loss in market share (W5, T3)6. The broad product line might be endangered by the technology and prices discontinuity. (W7, T6)

VI. STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY

A. STRATEGIC ALTERNATIVES

1.) Turnaround

The company could stop the expansion of their own retail segment in order to maintain a healthy relationship with its third-party distributor and avoid lawsuit. This strategy would also reduce the risks and costs tied to the stores investment. Apple could use its high cash to implement a product development strategy within the market segment they are currently serving. The company could also keep selling its products at a premium price in order to maintain the company 's reputation as an upscale and innovative brand.

PROS

Ø Improve relationship with resellers. (CI#2)

Ø Reduce risks

Ø The allocation of the high cash into a product development strategy might ultimately increase the revenue of the company(CI#3)

Ø The premium price might be profitable and the upscale image brand of the company is respected.

CONS

Ø No control over the quality of the buying experience procured by the third-party distribution (CI#2)

Ø Potential loss of market share because of the premium selling price

Ø Broad product lines might lead to confusion and extra overhead costs. (CI#1)

2.) Pause and Proceed with Caution

In the Annual Report for 2004, the company saw an increase in revenue and profitability. The introduction of iPod or Itune items have largely contributed to the company 's successful year. The retail segment growth has increased the brand awareness of the company but has led to some conflicts with the resellers. This strategy has to be taken with caution because Their lower price strategy is allowing the company to attract some non-Mac users.

During the mid of this year (2005), the company could consider to primarily focus on: the music segment market and the education segment. Apple could also implement a succession plan for the eventual departure of Steve Jobs. The company 's growth strategy has to be taken with caution and compromises with resellers have to be done.

PROS

Ø Good financial results

Ø More control over the quality of the buying experience (CI#2)

Ø Better brand awareness

Ø Less confusion among core competency. (CI#1)

Ø Sufficient cash flow to support the discounted prices. (CI#3)

CONS

Ø Cannibalization risk is still present (CI#2)

Ø The low prices might discredit Apple 's upscale brand image.

3.) Vertical Growth

The company could decide to do a forward integration, by expanding its own retail store. Apple could use its high cash to finance this investment. The stores are a critical way to leverage Apple 's brand and showcase newfangled digital wares to affluent consumers.

PROS

Ø Total control over the quality of the buying experience (CI#2)

Ø High cash can support the investment for the retail segment (CI#3)

Ø Better brand awareness

CONS

Ø Dissatisfaction of the resellers(CI#2)

Ø Potential loss of revenue due to cannibalization (CI#2)

Ø The high cash investment is risky, and might have been allocated in a more safety way. (CI#3)

B. RECOMMENDED STRATEGY

Pause and Proceed

The last fiscal year has seen improvement for Apple. Profits have increased and the focus has been on innovation, especially in the music segment market.

Using the high cash to implement a price strategy appears to be a good idea to compete with the non-Mac users. (CI#3) The brand image might slightly suffer from this strategy, therefore marketing incentive should be increased in order to sustain Apple 's reputation for high quality and innovative products.

The retail segment growth should be implemented with a lot of caution. Apple needs to ease the pain of the resellers by coming up with programs to encourage these longtime partners to help it accomplish goals it can 't achieve on its own. (CI#2)

Apple should also primarily focus on the music segment market and the educational segment market in which they have good opportunities. This focus would allow Apple to be more competitive and profitable. (CI#1)

Least but not Last, the company should prepare a succession plan in response to the eventual departure of Steve Jobs. (CI#4)

VII. IMPLEMENTATION

A. WHO? The top management should narrow their focus to two market segment.

B. WHAT? Apple 's core competency should focus on the music segment market and the educational segment market in which they have good opportunities. (CI#1)

C. HOW? The company has to invest more into these 2 segments and cut some product lines that are not very profitable to the company.

D. WHO? As Steve Jobs initiated, the company should keep focusing on a price strategy

E. WHAT? By lowering the prices, the company will be able to be more competitive and increase market share.

F. HOW? The company can use its high cash to support discounted prices. (CI#3)

G. WHO? The top management should decide to expand the retail store.

H. WHAT? Improve the quality of the buying experience by having control over the salesperson and collaborate with the resellers. (CI#2)

I. HOW? The company can use its high cash to invest in the retail store expansion. The company should also tightly work with the resellers by supporting them through programs and bonuses.(CI#2) (CI#3)

J. When? During mid 2005.

K. HOW MUCH? The Company 's current strong financial condition and low debt-to-equity ratio will provide the means to accomplish these implementation initiatives in the short-term. In the long-term these measures will be well worth the cost in increased revenue and market share.

L. WHO? The board of directors and the top management should prepare a succession plan. (CI#4)

M. WHAT? The company has to deal with Steve Jobs eventual departure.

N. HOW? Steve Jobs has to delegate some of his power to the top management and he should also implement some training programs. Tim Cook might be a good potential successor.(CI#4)

P.WHEN? Right now.

VIII. MAINTENANCE AND CONTROL

A. The company 's strong financial position should allow the implementation of the strategies stated above. However the investment related to the retail segment growth is very costly and might be risky. Therefore, the company should:

Ø Increase gradually the opening of retail stores.

Ø Assess performance by having Finance and Marketing reviewing "the numbers "monthly".

Ø Spot and immediately address any negative trends

The top management should periodically visit stores and gather feedback from line employees. They should also gather feedback from resellers to address expansion issue.

B. The company 's focus on the music segment market and the education segment market has to be tightly monitored.

Ø Top management should evaluate on a weekly basis overall performance. (Revenue, Profit, ROI)

Ø Feedback forms should also be given to customers to maintain good relations and to spot market trends early.

Works Cited

10-Q for Quarterly Period Ended December 25, 2004

http://www.apple.com/investor/

Apple Governance

http://www.apple.com/investor/

Apple Financial Analysis

http://www.hoovers.com/

Diverse Articles on Apple

http://www.businessweek.com

Cited: 10-Q for Quarterly Period Ended December 25, 2004 http://www.apple.com/investor/ Apple Governance http://www.apple.com/investor/ Apple Financial Analysis http://www.hoovers.com/ Diverse Articles on Apple http://www.businessweek.com