Apple Inc.
in 2020
Strategy Case Presentation
Gayathri (B24072) Varsha (B24107)
Prathmesh (B24089) Vedant (B24108)
Reuben (BL24006) Vivek (BL24007)
Group No 6
Utkarsh (B24106)
Agenda
EXECUTIVE SUMMARY
PESTEL (EARLY YEARS: 1976-2000)
PESTEL (2000-2020)
INDUSTRY ANALYSIS
SWOT ANALYSIS
VRIO FRAMEWORK
PROBLEMS AND PROPOSED
SOLUTIONS
FINANCIAL OUTLOOK & INSIGHTS
Strong Competitive Position:
Executive Apple's market leadership is driven by ecosystem lock-in, differentiated
products, and deep vertical integration. Increased emphasis on services
Summary (Apple Music, iCloud, Apple TV+).
Key Challenges:
The smartphone market is maturing, with slower iPhone sales, longer
replacement cycles, and severe competition.
Regulatory and antitrust risks include scrutiny of App Store policies and
court disputes (such as the Epic Games lawsuit).
Strong reliance on China, with trade concerns forcing diversification
initiatives.
Beyond iPhones and iPads, breakthroughs in AR/VR, AI, and healthcare
are needed.
Strategic priorities:
Increase Services and Subscription Revenue to lessen hardware
dependency.
Diversify manufacturing to reduce geopolitical risk.
Invest in next-generation technologies (Apple Silicon, Augmented Reality,
Artificial Intelligence, 5G, Wearables).
Regulatory compliance and policy adaptation to ensure platform control.
PESTEL (Early years: 1976-2000)
POLITICAL SOCIAL
US Government incentivised the development of Apple revolutionized personal computing but
Silicon Valley which boosted the confidence of faced competition from Microsoft
tech startups The return of Steve Jobs (1997) refocused Apple
Trade policy had little to no impact because of on innovation and consumer experience
majority pf production was done domestically
ENVIRONMENTAL TECHNOLOGICAL
Environmental concern was not in Apple introduced groundbreaking
much focus in early days. General products (Macintosh, PowerBook)
awareness among public and but struggled against Microsoft’s
government were on low level with dominance
more priority towards innovation But Apple spent relatively well on
R&D
ECONOMIC LEGAL
The dot-com bubble (late 1990s) created both Faced legal battles with Microsoft over GUI
opportunities (internet expansion) and risks similarities
(market instability). Intellectual property (IP) lawsuits shaped the
Economic growth in the U.S. lead to increased competitive landscape.
disposable income for premium products.
PESTEL (2000-2020)
POLITICAL SOCIAL
Production facilities in China, lead to government Rise of digital lifestyles increased demand for
scrutiny involving Foxconn controvery iPhones, iPads, and MacBooks
Trade tension between USA and China, adversly Data privacy concerns, such as the FBI vs. Apple
affected the supply chain encryption case (2016), influenced consumer
Government regulations on tech monopolies trust.
TECHNOLOGICAL
ENVIRONMENTAL iPod (2001), iPhone (2007), and iPad
Focus on product recycling programs (2010) revolutionized consumer
Reduction in packaging waste and electronics
removal of harmful materials like lead Expansion into services (App Store,
and mercury. iCloud, Apple Music) diversified
revenue streams.
ECONOMIC LEGAL
Global recessions (2008 financial crisis) impacted Antitrust investigations, especially regarding App
consumer spending Store policies and developer restrictions.
Rise of emerging markets (China, India) drove Increased compliance with international data
sales growth, making Apple a global giant protection laws (GDPR, CCPA).
Threat of New Entrants
Bargaining Power of Steep capital requirements for technology, branding, and global Bargaining Power of
Customers distribution, combined with Apple's high-end image and loyal customer Suppliers
base represent high entry barriers. Economies of scale and high research
Customer’s power increases due to: and development costs also disadvantage new players
Customers have the option of availing Suppliers’ power increases due to:
alternate products from one of the Apple has to rely on specialized suppliers
competing brands who provide similar for critical components like sophisticated
functions and features at a cost effective chips, and A-series processors or display
price. These alternative brands include Industry Rivalry - High technologies. High switching costs could
Apple faces tough competition from competitors who offer be incurred by Apple for these as they also
Samsung, Huawei, Motorola and Google.
the same services but at lower rates. Market saturation is have some patented and specific design
Customers are price-elastic and will spend
also becoming more of a problem, particularly in the technology.
more money looking for alternatives in
smartphone market, where rivals like Google Pixel are
cheaper products which come with similar
gaining ground. As innovation slows, opportunities for Suppliers’ power decreases due to:
functions.
growth and differentiation become increasingly scarce. The supplier base being so large and caries
means that the company has higher
Customer’s power decreases due to:
negotiating power for all components that
Apple’s proprietary features such as iOS,
are non-critical. They can avail favourable
iCloud and App Store create a deep-seated
brand loyalty.
Threat of Substitutes terms and distribute purchases widely.
Suppliers may find it detrimental to
Distinguishable features like seamless Apple defends against relevance risks as its cloud services reduce decline Apple’s orders due to scale and
integration and user experience between hardware dependence. While Android and Microsoft offer alternatives in volume.
different Apple products leave customers the phone and PC segments respectively, Apple's integrated ecosystem
less price-sensitive. fosters strong user loyalty.
Industry Analysis
SWOT Analysis
Strengths Weaknesses Opportunities Threats
Customer Loyalty: A very loyal High Prices: Apple's products Growth in Services: There is Competition: Especially in the
customer base due to the are generally more expensive. substantial room for growth smartphone market, Apple
company’s focus on user This may limit market share, in its services business, which faces intense competition
experience and the seamless especially in price-sensitive includes Apple Music, Apple from other tech companies
integration of hardware and markets. Pay, Apple TV+, and Apple such as Samsung, Google,
software. Arcade. and Huawei.
Management Issues: Apple
Innovation: Apple strongly has had issues with Emerging Markets: Apple can Changing Consumer
focuses on R&D and has a management in the past, explore further growth Preferences: The company
history of introducing such as spats with its opportunities in emerging needs to adjust to changing
revolutionary products. founders and strategic markets where there is an consumer preferences and
missteps increasing demand for its technology trends.
Evolving Business Model: products.
Apple has successfully Dependence on Hardware Supply Chain Issues:
transitioned itself to services. Sales: The company still Technological Gains: Apple's Dependency on global supply
depends heavily on hardware products can also grow from chains might pose risks to
Control over the supply chain: sales, particularly iPhones. 5G. production and revenue
Apple has taken proper
control of its supply chain, Slowing Growth: Apple Data Privacy: Apple's focus Market Saturation: The risk of
which helps in having experienced slowing growth on data privacy can attract market saturation in
maximum cost efficiency and in some of its mature product users who are concerned developed countries may lead
profit margin. categories, such as iPhones. about data security to lower growth.
VRIO Framework
Organized to
Valuable? Rare? Imitable? Advantage
Capture Value?
Brand & Customer
Sustained
Loyalty
Ecosystem &
Sustained
Integration
Hardware-
Sustained
Software Synergy
Supply Chain &
Temporary
Operations
Services Revenue
Competitive
Model
Recommendations
Short Term Long Term
Expand Apple Focus on services Introduce Strengthen
5G Upgrades Wearables Growth
Exclusives & new products Health Tech Supply Chain
Financial Outlook
FY 2020 (in millions USD) FY 2019 (in millions USD) FY 2018 (in millions USD)
Revenues $274,515 $260,174 $265,595
Total Expenses $213,735 $205,802 $199,885
Outstanding Debt $112,436 $108,047 $114,483
Net Income $57,411 $55,256 $59,531
Overdependence on iPhone Sales:
In FY 2020, iPhone sales accounted for roughly 50% of Apple's total revenue, reflecting a
Financial strong reliance on this product segment.
This dependence is a risk, as changes in iPhone demand can significantly impact overall
Insights financial performance.
Growth in Services and Other Products:
Apple's Services division, which includes the App Store, Apple Music, iCloud, and
AppleCare, showed steady growth, reaching $53.77 billion in FY 2020, up from $46.29
billion in FY 2019.
The Wearables, Home, and Accessories segment also experienced strong growth, with
revenue increasing from $24.48 billion in FY 2019 to $30.62 billion in FY 2020.
Management’s Guidance in FY 2020:
In February 2020, Apple announced that it would not meet its revenue guidance for the
March quarter due to two primary reasons:
iPhone Supply Constraints: Manufacturing facilities scaled up production more
slowly than anticipated, leading to temporary iPhone supply shortages that affected
global revenues.
Reduced Demand in China: Store closures and lower customer traffic in China, driven
by the COVID-19 pandemic, negatively impacted product demand.
In response to these concerns, Apple has been working towards diversifying its revenue
streams by growing the Services segment and innovating products in the Wearables and
Accessories segments.
Thank You
This presentation has been prepared
towards a component of the course
STMBJ24 under the guidance of
Professor Sumit Kumar Maji
