Steve Jobs: Apple Inc.

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 ...

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...Apple must deal with to decrease their vulnerability (defensive moves) and increase their market share (offensive moves) for the future success of the company. The main strategic issue for Apple has been identified as product innovation, therefore, the front burner issues in order of importance are:

How to handle the declining demand in the PC industry? (WS1aPC)

How to defend against the threat of disruptive technology? (WS2a)

How to sustain their profitability? (WS10)

How to defend against the threat of new entrants in the Tablet industry? (WS2aTablets)

How to deal with the low switching costs for consumers? (WS2a)

Works Cited

Thompson, A., Peteraf, M., Gamble, J., Strickland, A.J.. (2014).Crafting and executing strategy: The quest for competitive advantage, concepts & cases. In Okanagan School of Business, Strategic management 1 (pp. 214-255). McGraw-Hill.