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Apple Computer Corporate and Business Strategy

Improved operational efficiency.

• Low debt levels.

• Cash reserves.

Weaknesses

• Historical higher manufacturing costs, highly uncompetitive operating margins.

• Declining market share.

• Non-interoperable, “closed” system.

• Premium pricing, higher production costs.

• Lack of available new and existing software compatibility.

• Poor stock performance.

• Short term strategic management.

• High executive turnover.

Opportunities

• Increased distribution channels: national chains, Apple Stores, Web site.

• Outsourced production.

• Improved OS to compete with next generation Windows OS.

• Seamless integration of PC complements into one complete “system.”

• Mac on Intel chip, “Star Trek.”

• International sales.

• Market expansion into peripherals for PC’s.

APPLE SWOT ANALYSIS (CONTINUED)

Threats

• Microsoft slashes OS costs, forcing PC prices to plunge.

• Increased price erosion of “Wintel components” such as CPUs.

• Hostile takeover.

• ISV no longer supporting Mac platform.

• Proliferation of “me too” PC peripheral devices.

• PC industry contraction.

• Economic recession.

• Alternative OS to Windows and Mac.

• End to Microsoft Office software compatibility agreement.

• Substitutes: PDA’s, WebTV

• Increased PC industry consolidation

• Joint marketing efforts by PC industry players.

DELL SWAT ANALYSIS

Strengths

• Pioneered direct selling model, first mover and learning curve advantages.

• Economies of Scale: Efficient use of assets in PC industry as prescribed by ROA.

• Low overhead: JIT 6 day inventory turnover.

• Profit margin leader within PC industry.

• Operating cost leader.

• Strong brand equity – not highly dependant on marketing.

• Market share dominance

• Continued growth while industry contracted

Weaknesses

• Lack of product innovation: lowest allocation of R&D funds in industry

• Inherent to the direct selling model is that it is easily replicated.

• Narrow product offering scope – no peripherals, servers, mainframes, etc.

• Higher than average debt leverage - related to ROA.

• High COGS = low gross margins.

• Web Site integrity – sales highly dependant on web site

Opportunities

• Marketing value added differentiation: customer customization & direct sales.

• Line extensions: growing server market

• Brand extensions: monitors, printers, peripherals, etc.

• International sales

• Increased supplier competition = lower COGS.

Threats

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