Topics: Apple Inc., Steve Jobs, Product differentiation Pages: 5 (1037 words) Published: February 10, 2015


Clint A. Persaud

University of Ontario Institute of Technology

October 2014

Question 1

From the beginning of time apple has operated in quite a few industries, the first being the Personal Computer in in 1976 (pg1) and then with the leadership of John Sculley they entered the Desktop Publishing industry from 1985 to 1993 where John Sculley also attempted to implement a low cost strategy (pg2). Scully didn’t stop there he also tried to forge an alliance with Apples rival IBM, this resulted a gross margin drop of 34% and the termination of Sculley (Pg 3). CEO, Gilbert Amelio then entered the picture with his price differentiation strategy which resulted in 1.6 billion dollar loss. (pg3) As a default Steve Jobs became the interim CEO in 1997 and that when the company really started to take off. Apple became a well diverse company with the leadership of Jobs they “had 15 product lines which were slashed down to 4 categories- desktop and portable Macintoshes, for consumers and professionals.” (Pg3) Not only did they have 15 different products which placed them in several different industries but they tried to depict themselves as “Worlds “greenest lineup of notebooks” that was energy efficient and used recyclable materials” (Pg 4)

The rivalry in this industry is high with the four top Pc vendors- Hewlett- Packard, Dell, Lenovo, and Acer accounted for 53.6 percent of worldwide shipments. (Pg 5) Even though it was Apple who founded the first personal computer it was IBM that brought them into the conventional lives of society. Within this time period there were a lot of mergers and acquisitions making rivalry amongst firms even greater as every time this occurred these merged companies would have more market share and more capital to help their business.

Threat of substitutes
A lot of these products were similar in many ways and allowed consumers to do pretty much the same things. For example a Laptop had a camera as did an iPad as well as a Ultra book, an iPhone and an iPod. All of these products could also go on the internet and have programs like Microsoft office. Competitors also had the same attributes so I would say threat of substitutes is high.

Threat of new entrants
Although there are many competitors in the industry I was say the threat of new entrants is low. First the amount or capital that you will need to enter this industry is very high and without consumers knowing and trusting your brand there would be no way to compete with companies like Apple and Lenovo.

Bargaining power or buyers
“Pc buyers fell into 5 categories home, small and medium sized, corporate, education and government” (Pg 5) later on bigger manufactures started to buy these products such as Costco, Best Buy and Walmart. In turn this made the bargaining power of buys high because there were so many substitutes and many places where you could purchase them. However it is to be noted that Apple started to have really loyal customers which made the price inelastic as consumers would begin to pay anything for a new Apple product.

Bargaining power of suppliers
“ Suppliers were divided into 2 groups those that made products such as chips, disks and drives and keyboards with many sources and those that sold products like microprocessors and operating systems which had a few sources” (Pg 6) Even though the second first category had many suppliers they still had high bargaining power as the had extremely competitive prices. The second category had even more bargaining power as only 2 firms were supplying those parts.

Industry attractiveness
Overall the industry is very unattractive with rivalry, bargaining power of buyers and suppliers being high as well as threat of substitutes. I would not suggest entering this industry. Also if you just look at how many different CEO’s Apple had and what a...

Bibliography: Yoffie, David, and Penelope Rossano. “Apple inc. in 2012.” Harvard Business School 1 (2012): 30 print
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