Case Study: Apple

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Business of Software: Assignment 1 - Apple
Due on Monday, 12.03.2012

Kovacs - Corsaro

Marcello Romanelli

1

Marcello Romanelli

Business of Software (Kovacs - Corsaro): Assignment 1 - Apple

Exercise 1
What is Apples core competence? If this changes over time, discuss Apples core competence in general, and then choose a specific time period and discuss its core competence in that time period. As we can see from Apple’s history we can say that is a company that knows how to adapt to market conditions and thus how to modify its core competence accordingly to the current environment. In fact, in the very beginning Apple started with ”easy-to-use” computers, therefore it’s core competence was that they were providing both hardware and software that normal people could use. After the entry of other companies in to this market, Apple decided to invest more on publishing and education services, providing both optimized software and specialized hardware that leads to a superior experience to their users. From 1997 on, Apple focused also a lot on the design of its product line. In fact its products are not only good from an hardware point of view, but they are also innovative in terms of aesthetics. In the last years, what we can notice is that those products are considered ”status-symbols” and this, in my opinion, is an effect of both company price policy (Apple products are relatively costly compared to its competitors) and marketing decisions (App Store,Keynotes, Products Releases, Advertising).

Ease of use
The core competence of Apple I think is the more important is the creation of ”easy-to-use” products because this competence is spread all over Apple’s life. In fact, if we think about Apple’s nowadays products, we can see that they are very simple to use and therefore can be used by almost everyone. A proof of this is the fact that it’s not uncommon to see either very young customers or old people holding iPads or other touch devices. Building easy to use products is not hard but what makes Apple great is that they managed to create products that are both easy to use but nevertheless retain all their advanced features that can be used by experienced users. Summary of core competencies • Production of easy-to-use devices • Specialized hardware/software for the publishing and education industries • Innovation • Marketing decisions

Exercise 2
Choose one of the following industries: personal computers, mobile phones, music players, or tablets. Use the Five Forces analysis to analyze the industry and Apples position in the industry. Be very detailed (thats why you get so many points for this question). E.g. who are the buyers, what are the barriers to entry etc.

Rivalry among Existing Firms The market of personal computer has an high degree of concentration and is controlled by a few firms (HP, Dell, Lenovo, Apple, . . . ). In that sense we can say that we Apple is part of an oligopoly. We can affirm that modern PCs are more or less the same among the leading competitors, thus what’s important to stay in the market is a competitive price and/or an outstanding quality. The major problem with Apple is the switching cost, indeed many users prefers to stay on their Windows

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Marcello Romanelli

Business of Software (Kovacs - Corsaro): Assignment 1 - Apple

machines because they are worried about learning a totally different Operating System because it would take them a reasonable amount of time. Finally, there are no exit barriers in this market. This fact can be used by Apple that can take advantage by this since it can use it to oust competitors. Threat of New Entrants The personal computer markets contains just a few companies that are well known and trusted by customers. Moreover, there are large economies of scale and this of course severely limits the entry of new companies. Since start-ups would need a huge amount of capital to start competing in this market this event can be assumed...
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