Steve Jobs: Apple Inc. Essay

1333 words - 5 pages

The Macintosh (Mac) computer constitutes Apple’s strategic business unit (SBU) in the PC industry. This SBU operates at a cost disadvantage, since it costs more to produce than other PCs, who all use similar or the same components (WS16). It has few opportunities for growth at a reasonable cost (WS16). Additionally, the market is not growing, conversely, it is in a decline (WS16). Apple had a 10.7% share of the PC market in 2011 (Exhibit 3). Total Mac unit sales, from 2010 to 2011, saw a 22% growth, which was significant less than the growth of iPads and iPhones (Exhibit 2). Based on this assessment, Apple should consider focusing on a specialized segment of this market, that they believe they will be able to dominate (WS16). Alternatively, they could harvest, divest, or abandon the SBU (WS16). Of the SBUs that Apple is diversified into, the Mac has the least amount of synergy (WS18). The supplies and components are different than the other SBUs, therefore they are unable to benefit from a reduction in costs (WS18). Additionally, the technology is not transferrable to the other SBUs (WS18). The Mac is not in an attractive industry, however, it does have moderate competitive strength compared to that of rivals (WS17). This business unit is an ideal candidate for divestiture, as it is not in a strong enough competitive position to counteract the unattractive industry (Thompson, Peteraf, Gamble, & Strickland, 2014).
The iPod and iTunes combination comprise Apple’s SBU in the digital media industry. In 2011, iTunes had a 65% share of the United States digital music industry, meanwhile iPod had a 78% market share in the U.S. Digital music player industry (WS16). Unit sales of iPods decreased by fifteen percent in 2011, however, there were still more units sold than both Macs and iPads in that same year (Exhibit 2). It also has strong synergy in its value chain activities (WS18). It is assumed that this SBU is generating more cash than required to maintain market share (WS16). The iPod and iTunes are strong market contenders, with digital media industry being moderately attractive (WS17). This SBU should be medium to high priority for resource investment (Thompson et al., 2014).
The Apple iPhone SBU along with related products and services including the App Store earn the highest sales revenue for Apple with $47.2 billion in 2011 (Ws?or exhibit?). The iPhone and App Store are a star on the BCG growth-share matrix for Apple (WS16). The iPhone had a 19% market share in 2011 which had it tied with the up and coming Samsung smartphones (Exhibit 6). The iPhone SBU’s strategy is to protect their existing market share and obtain a large share of the new users (WS16). The iPhone is in a very attractive industry, which has a good outlook for growth and above-average profitability (WS17). The iPhone is a strong market contender in relation to its rivals in the industry (Thompson et al., 2014). The iPhone and App Store have complete synergy across the entire...

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