Apple Inc. Case Analysis
MB 730 Strategic Analysis
Name: Allen (Hanlin) Wang
Overview of the PC Industry
The personal computer industry came up during the 1970s. A personal computer is one intended for individual use, as opposed to a mainframe computer where the end user's requests are filtered through operating staff, or a time sharing system in which one large processor is shared by many individuals. In the 1980s, personal computers were mostly used by business corporations. Until the 1990s, due to the internet age and information age, personal computer became common to enter into people’s household.
The most common known personal computer manufacturers include HP, Dell, Acer, Lenovo, Toshiba, Fujitsu, IBM, Compaq, NEC, and Apple. Among all these brands, the global leading personal computer manufacturers accounted for more than 50% of worldwide PC market share in 2011 are HP with 17.2 shares, Dell with 13.0 shares, Acer with 12.1 shares, and Lenovo 11.2 shares. (See Exhibit 1 --- Global PC market share information.[i]) Apple as a comparatively high-priced manufacturer focusing on design-focused affluent customers achieved a market share of 4.5% in Q1 2012.
HP acquired Compaq Computer in 2002 and overtook IBM to regain its strong market position. In 2007, HP became the world’s largest technology company. It has a good brand equity and strong financials with revenues of 127.24 billion and a net income of 7.07 billion in 2011. The weakness of HP is weak internal controls and flat R&D spending. Dell is also one of the best known PC brands in the world. Dell has a price advantage of its product with retail stores in Walmart, Bestbuy, and Stapes. Dell’s Direct Model approach enables the company to offer direct relationships with customers such as corporate and institutional customers. Also, Dell faces a huge range of products and components from many suppliers from various countries which makes Dell unable to switch suppliers. Acer has built its international capacity by joint ventures and acquisition of American and Europeans PC companies. Although Acer has become the third largest in the industry, the company suffered from the lack of international experience of managers to engage in the global market. Lenovo acquired a high-profile US PC brand (IBM) which added more reputation globally to its brand. It has the advantage of cheap labor cost in mainland China and a strong sales position in China and other emerging markets. Lenovo switched from the brand of IBM to Lenovo in 2010, it has poor brand perception in the global PC industry. PC Industry Five Forces Model
Major PC manufacturers are competing to produce the least expensive yet most advanced computer. The two areas of highest competition are technologic innovation and price. PC demand is found to be growing over the past year which is mostly in the sale of notebooks, and an increase in the international market indicates the market will continue to expand. (See Exhibit 2 --- Five Forces of PC Industry[ii]) Competitive Force 1: Rivalry among Existing
The leading Personal Computer Manufacturers - namely HP, Dell, Lenovo, Acer and Apple - are in competition to produce the least expensive and most efficient machine. Japanese companies such as Fujitsu, Toshiba, NEC, and Sony also contain large market shares in the industry. Apple focuses more on innovation while Dell and HP focus on low price, distribution channels and service, which creates differentiation to some extent. In today’s PC industry, although technology holds an important role of all companies, the price of the products has sharply fallen. The profitability and prosperity of the Personal Computer Industry depends on components of suppliers because the quality of a computer is majorly determined by the microprocessor and application system installed. In recent decade, PC has become a more commonly used product to household, price...
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