Apple Inc. Study Essay
Apple Inc. Study
1. Executive summary
Apple Inc. is a technology company, which designs, produces and sells goods of the Computer, Music and Mobile-phone Industries. It is differentiated by its brand-perception and identification. Over the last couple of years, Apple has become a cult-brand, thanking it’s iLife, iTunes, QuickTime and iMac lines. Apple Inc.’s short-term goals is currently increasing the sales of the just launched iPad (the most innovative web=browser in market). In the long-run, Apple aims for the top of the market, becoming the number one leader. Apple Inc. has incorporated numerous features that are unique and well known in the market today. We consider that there are several Apple products with several appealing features such as: iMac, iPod, iPhone and iPad. These products represent a revolutionary era for the development of Apple. By placing such products in the market, Apple Inc. has attracted a lot of customers in one way or another. Highly advanced technology, simplicity and design, and the sense of luxury are the main features integrated in these products. Moreover the comfort and convenience that these products provide are very crucial. “Think Different”
One of the main reasons which inspired me to choose Apple Inc. is its unique, simple and luxurious image that Apple has created in the market over the years. “Think differently” which is an inspiring motto, made us believe that simplicity and creativity combined with luxury can lead to a successful and profitable company, such as Apple. Another component that we found to be challenging for us was to understand Apple’s goals, objectives and their secret of being successful. A very important fact about Apple products today is that these products are globally spread. This has created among us the idea that Apple products are no longer luxuries but real necessities due to the technological developments. Moreover, what has motivated us most to select Apple Inc., is the way we relate ourselves with its products. Each of us being an Apple consumer has build trustworthiness relationship with the products that this company offers. Owning an iPod or iPhone today definitely will make your life easy and simple. As mentioned above, 2010 came with the launching of the iPad, which is a totally differentiated product in the market. It is a web-browser, which also can be used as laptop, and can be useful in every aspect of educational and professional areas. Its price, compared to regular Apple prices, is pretty affordable ($499), which is an incentive for more buyers to purchase. This is the main goal of Apple in the current day.
According to (OPPapers, 2012).Apple Inc is an American multinational organization located in 1 infinite loop, Cupertino, California 95014, in the middle of the Silicon Valley. It is focused on designing and developing the personal computers, other related software products, and the electronic products such as MP3 players and iPods. Apple Inc’s main products are iMac, iPod, iPhone, and its latest advanced product is iPad, which is on the verge of creating another revolution after iPhone. Apple Inc was founded in 1976 and since then Apple Inc has been leading the way in innovating new products, however it has encountered numerous ups and downs since then. Apple Inc produced the first ever extremely successful personal computer.
It has been always on the forefront of innovating new products; however it has often struggled to maintain the hold on the market share in the product line. Lately, Apple Inc has transformed its image from an inventive computer manufacturer to a fully-fledged consumer’s electronic company. Some facts of its success can be calculated from its sales of $13.95 billion in the year 2005. In year 2005, Apple Inc had controlled 4.2% of the US market in PCs. Also, Apple iPods models had controlled 70% of the hard drive MP3 player market. Apple Inc enjoys the leading share in the handset market, generating over 71% of the industry’s profit with 6.5% of the international handset market. Apple unveiled its first iPhone on 9th January, 2007. The most recent iPhone, is iPhone 4S, and it was announced on 4rth October, 2011 and was released 10 days later. 3. APPLE Inc.
According to (Scribd Inc., 2013) Apple has to be one of the greatest success stories of all time. The beginnings of Apple started with Wozniak assembling a simple built computer machine. It was in the summer of 1971 Wozniak 21 and Jobs 16 were introduced to each other by a mutual friend Bill Fernandez. Wozniak had shown Jobs his simple built computer machine and this impressed Jobs to the point Jobs believed he could sell it for a profit. It was here they would form a strong friendship because they not only shared a passion for computers, but because they were both known as outcasts and for the first time they had a great understanding, admiration and respect for each other‘s abilities, personality and intellect. They would begin the Apple project by selling some of their possessions: Wozniak’s HP scientific calculator and Jobs’ Volkswagen, they raised $1300 and assembled their first prototypes in Jobs bedroom. When the project became too big for the bedroom they moved the project into Jobs family’s garage, it was on a huge wooden work bench that served as their first manufacturing base.
The computers were hand built by Wozniak and first shown to the public at the Home brew Computer club. After selling a number of the machines Apple was established on April 1, 1976 and went public on December 12, 1980. Apple has maintained its great success with its ability to understand what the consumer wants before the consumer even knows what they want; Apple effectively creates wants by their constant creative innovation and unique design which is stylish, user friendly and affordable. They have also been able to create a brand in the high technology world just as Chanel has in the fashion world. People can easily recognize an apple whether it’s the I-Pod, the I-Phone, the Mac Air or the I-Pad. It has become a product that defines one’s identity in how they desire to be seen by society that is a person who is highly innovative, intelligent, stylish and apart of the in crowd. This is pure marketing genius. This marketing genius of Apple has seen this company outperform beyond the business world’s expectations. While so many companies are struggling to break even in the current recession Apple is getting stronger by the day. Apple’s Most Successful Products and Services
iPhone 4, iPad&iPad 2, iPhone, iTunes, PowerBook G4, iPod, OS X, iMac, Quick time, Mac, Apple II. PRODUCTS and SERVICES
Apple Store, Mac, iPod, iPhone, iPad, iTunes.
Other Products and Services
Desktops, Xserve, Notebooks.
4. Vision Statement
It is especially important for managers and executives in any organization to agree on the basic vision that the firm strives to achieve in the long term. A vision statement should answer the basic question, “What do we want to become?” A clear vision provides the foundation for developing a comprehensive mission statement (David, 2011) a. Vision Statement of APPLE
“Man is the creator of change in this world. As such he should be above systems andstructures, and not subordinate to them.” i. Explanation of APPLE’s vision According to (Hamilton, 2011) Apple lives this vision through the technologies it develops for consumers and corporations. It strives to make its customers masters of the products they have bought. Apple doesn’t simply make a statement. It lives it by ensuring that its employees understand the vision and strive to reach it. It has put systems in place to enable smooth customer interaction. It has put objectives in place to continuously move forward; implemented strategies to fulfill these objectives; and ensured that the right marketing, financial and operational structures are in place to apply the strategies. 5. Mission Statement
“What is our business?” is synonymous with asking the question “What is our mission?” An enduring statement of purpose that distinguishes one organization from other similar enterprises, the mission statement is a declaration of an organization’s “reason for being.” It answers the pivotal question “What our business?” A clear mission statement is essential for effectively establishing objectives and formulating strategies (David, 2011). a. Mission Statement of APPLE
“Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices.”
i. Mission Statement Analysis for APPLE Inc.
According to (Studymode, 2013) apple is mainly focusing at the following components of mission statement: 1. Apple may not be important to elaborate on its concern for its employees or to thoroughly outline its customers and targeted market. Apple is a trendy technology company which prides its self in providing easy to use electronics and efficiently run software systems. Because of this it is most important for Apple’s mission statement to focus on components like company philosophy, self-concepts, and current technologies. These aspects of Apple are what make it popular and successful today. 2. Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh.
Today, Apple continues to lead the industry in innovation with its award-winning desktop and notebook computers, OS X operating system, and iLife and professional applications. Apple is also spearheading the digital music revolution with its iPod portable music players and iTunes online music store. 3. Apple’s mission statement only includes descriptions of products and services and past and present technologies. 4. The mission statement from Apple is somewhat unconventional. It’s more of a brief history rather than a summary of the corporations overall purpose. It does however paint a picture of where Apple came from, how far it has come, and where it’s continuing to go. But for such a popular company it may be beneficial divulge into points like its self-purpose and their concern for public image. 6. Values
As stated in (appleinvestor, 2012) Apple Values are the qualities, customs, standards, and principles that the company believes will help it and its employees succeed. They are the basis for what they do and how they do it. Taken together, they identify Apple as a unique company. These are the values that govern Apple’s business conduct: Empathy for Customers/Users
Positive Social Contribution
7. External Audit
The purpose of an external audit is to develop a finite list of opportunities that could benefit a firm and threats that should be avoided. a. External Analysis for APPLE Inc. External environment determines the present situation of Apple Inc., and also helps find out the possible influences of the political, economical, and social and the technological factors on the organization. b. PESTL Analysis for Apple Inc.
i. Political Factors
As stated in (CNetnews 2012) Apple Inc. has reportedly obtained 52% of its business from outside US in 2007. Due to the bad international relations, wars and terrorism might influence Apple Inc. in a huge way, and also the organization has no control over these factors. Apple Inc. manufactures a number of its parts and products from outside the US, like Czech Republic, Ireland, China, Korea and Cork. The bad political relations between US and the other world have bad outcomes for the Apple Inc. (CNetnews, 2012). ii. Economic Factors
By the (Apple Inc., 2012) The global economic crisis had huge impact on Apple Inc. The inflation rate went high and so did the unemployment rate in the country, and since Apple Inc. products were viewed as luxury products, the customers started pending less on them. US dollar value keeps fluctuating, and thus again which have a bad impact on Apple Inc. products, however the company has purchased itself foreign currencies and thus, the economic effects on the company are minimized. Thus, Apple Inc. revenue has increased in the global market.
iii. Social Factors
Throughout the history of Apple Inc., two factors have been on the forefront of Apple Inc. products, the quality and the design of the product. Thus, globalization plays a very important role in Apple’s products. As the world cannot be imagined without the gadgets, thus Apple products have marked their presence on the international market. Also, as the purchasing power of the common has risen in various markets across the world the purchasing of luxury products have gone up, for e.g. the iPhone, iPods and the latest technology iPad. Possessing these items is considered as status symbols in many societies which have also increased the sales of Apple Inc. products. Another big social influence to Apple Inc. products is the rapid growth of the music industry, which have increased markets over the cyber space as well. The main virtual music store is the iTunes. Thus, in all Apple
products have benefitted from the social factors as it has begun defining a modern individual lifestyle. iv. Technological Factors
Apple Inc. has invested largely in its product research and development field and thus, Apple products are at the top of the new innovative products ranking. Apple Inc. has invested largely in its product research and development field and thus, Apple products are at the top of the new innovative products ranking. The technology has been fast changing in the world and the market for it has become gigantic, which has added to more and more competition and thus, as soon as technological change are concerned the product life cycle has been shortened drastically, which the Apple Inc. takes the advantage of by introducing newer products in the market, which ultimately lead the market. v. Legal Factors
Nokia has filed various lawsuits against Apple Inc., claiming the violation of 13 additional patents by iPhone, iPad and iPod touch, this apart from US complains covering 24 Nokia patents. Also, in China Apple Inc. has been fighting the battle for its right to the iPad trademark. 8. SWOT analysis for APPLE Inc.
SWOT analysis stands for Strength, Weakness, Opportunity and Threat for a particular organization, which can help in formulating a strategy for its business and can also help in analyzing its internal environment (Strengths & Weakness) and external environment (Opportunities & Threats).
According to (Wharton, 2012) The first and foremost strength of Apple Inc. is its technological edge over its competitors. IPhone have turned out to be a great success and has been associated with status in many of the countries. ITunes has turned out to be a wonderful revenue generating source and since it also sells with its own tool i.e. the iPod, thus, revenue has multiplied for Apple Inc. Another strength for the organization is that for every software that Apple Inc. produces, it introduces its hardware with it too, which leads to its expertise in both the industries. Apple Inc. products are classified as luxury items, thus its products provide enough room for it, so that the competitor products are no longer a competition. The another strikingly advantage over competitor’s products, is the design of the Apple products, and which are also simple to use. The brand loyalty of its product and its super dedicated research and development department are also its major strengths. b. Weaknesses
Weaknesses are the disadvantages that are hindrance in obtaining the business goals for the organization. The poor relationship with the market than Microsoft is surely a disadvantage to Apple Inc. Another point could be that the products introduced by Apple Inc. have very short life cycle, which concludes that the research and development department has to be constantly maintained, which requires huge capital. Apple Inc. has very low presence in the advertisements, and also it has very small market occupation as compared to its main rival Microsoft. Thus, all this leads to the fact that Apple Inc. gets very less business from its home country US, and major of its business is from outside the US. c. Opportunities
According to (Marketingteacher, 2012).Opportunities can affect both the present as well as the future condition of an organization. Apple Inc. opportunities are the introduction of more and more PC viruses, on which Apple Inc. can capitalize on. The second opportunity is the population of the world is growing at a rapid pace and thus, this opens the front for many new markets, also the purchasing power of a common man has increased drastically, who can be pursued or impressed to buy the luxury Apple products. The online sales of the organization are increasing and also, the bonds and the partnership with the other organizations have been on the rise in the past few years. Products such as iPhone have create a new set of potential customers altogether which can be targeted in the future i.e. the young population who have a craze for any new technology gadget (MarketingTeacher.com 2012).
In the past few years, many competitors have come up for Apple Inc., especially in the field of laptops, like Dell, Sony, HP, and Toshiba. Another threat could be that many of the customers have started downloading the music for free instead of purchasing at iTunes. The product expensiveness is itself a threat to the product, as substitutes at a lower price are always available. Long lasting recession could also be a threat to its products. Windows 7 software is gaining more market place after vista flopped and last but not the least, the technological advances that have been taking place every single day, is a big threat to Apple Inc. 9. Porter’s Five Forces Model
Porter’s Five-Forces Model of competitive analysis is a widely used approach for developing strategies in many industries. The intensity of competition among firms varies widely across industries (David, 2011). a. Porter’s Five Forces Model for APPLE Inc.
Porters Five force Model is a very powerful tool to understand the core of the power in a business or in a company. The Porter Five Force Model for Apple Inc. is shown below:
Model 1: Showing Porter’s Five Forces Model at APPLE Inc.
10. External Audit
An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information (David, 2011). a. Factors Evaluation (EFE) for Apple:
Model 2: Showing EFE matrix for APPLE Inc.
11. Competitive Profile Matrix
The Competitive Profile Matrix (CPM) identifies a firm’s major competitors and its particular strengths and weaknesses in relation to a sample firm’s strategic position (David, 2011). a. CPM for APPLE Inc.
Model 3: Showing CPM for APPLE Inc.
12. Internal Audit
All organizations have strengths and weaknesses in the functional areas of business. No enterprise is equally strong or weak in all areas (David, 2011). a. Internal Audit for APPLE Inc.
i. Internal Environment
The VRIO framework can be stated as the value, rarity, imitablity, and organization as a whole. VRIO framework is extremely important for the internal analysis of Apple Inc organization. Resources and Competencies
14. SWOT Matrix
The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix is an important matching tool that helps managers develop four types of strategies: SO (strengths-opportunities) Strategies, WO (weaknesses-opportunities) Strategies, ST (strengths-threats) Strategies, and WT (weaknesses-threats) Strategies (David, 2011). a. SWOT Matrix for APPLE
Increase awareness through the web of the immunity of Mac products to worms and viruses. (S5, O1) Advertise using individuals that will link Generation X & Y to the iTunes and other related products. (S1, O2, O4, O5, O6) Using movies and music groups that are geared towards Gen X and Y to promote computers and laptops. (S3, S5, O2, O5, O6) S-T Strategies
Increase and promote the compatibility to Window operating system. (S5,T1) Promote the originality of Apple computers and the different style and stable system that is slightly more but worth the price difference in style, stability and speed. (S2, S5, T2, T4, T5) W-O Strategies
Increase ties with Microsoft and Intel and their products.(W1, W2, W4 O2, O3)
Promote to business the safety of having a worm and virus free computer by using Mac. (W2, W4, O1, O5, O6) W-T Strategies
Improve relationship with Microsoft and Intel so that companies will see them as compatible. (W1, W2 T1) Increase productivity and turn around of high demand products to compete with Dell and HP (W5, T2)
15. The Strategic Position and Action Evaluation (SPACE) Matrix The Strategic Position and Action Evaluation (SPACE) Matrix is four-quadrant framework indicates whether aggressive, conservative, defensive, or competitive strategies are most appropriate for a given organization. The axes of the SPACE Matrix represent two internal dimensions (financial position [FP] and competitive position [CP]) and two external dimensions (stability position [SP] and industry position [IP]). These four factors are perhaps the most important determinants of an organization’s overall strategic position (David, 2011). 15.1 SPACE Matrix for APPLE
Model 6: Showing SPACE Matrix for APPLE Inc.
16. BCG Matrix
When a firm’s divisions compete in different industries, a separate strategy often must be developed for each business. The Boston Consulting Group (BCG) Matrix is designed specifically to enhance a multidivisional firm’s efforts to formulate strategies (David, 2011). a. BCG Matrix for APPLE
Model 7: Showing BCG Matrix for APPLE Inc.
17. Internal External Matrix
The IE Matrix is similar to the BCG Matrix in that both tools involve plotting organization divisions in a schematic diagram; this is why they are both called “portfolio matrices.” (David, 2011). a. IE Matrix for APPLE
Model 8: Showing IE Matrix for APPLE Inc.
18. Grand Matrix
The Grand Strategy Matrix has become a popular tool for formulating alternative strategies. All organizations can be positioned in one of the Grand Strategy Matrix’s four strategy quadrants. A firm’s divisions likewise could be positioned (David, 2011).
19. The Quantitative Strategic Planning Matrix (QSPM)
The Quantitative Strategic Planning Matrix (QSPM), which comprises Stage 3 of the strategy-formulation analytical framework. This technique objectively indicates which alternative strategies are best (David, 2011). a. QSPM for APPLE
Model 9: Showing QSPM for APPLE Inc.
20. Finance/ Accounting
Financial condition is often considered the single best measure of a firm’s competitive position and overall attractiveness to investors. Determining an organization’s financial strengths and weaknesses is essential to effectively formulating strategies.
a. Financial Ratios for APPLE
Model 10: Showing sales ratio for APPLE Inc.
Asset Turnover Ratio
Model 11: Showing Asset Turnover ratio for APPLE Inc.
Inventory Turnover Ratio
Model 12: Showing Inventory Turnover ratio for APPLE Inc.
Gross Profit Margin Ratio
Model 13: Showing Gross Profit Margin ratio for APPLE Inc.
It is concluded from the strategic management analysis at APPLE Inc. that technological industries are never easy to compete with. They have a lot
invest at R&D and have to be proactive in order to compete with their competitors in the industry. As for APPLE is concerned they have been working so well as it is shown form their products. As Apple Inc. is increasing also, those other businesses are increasing and trying to do something interesting for their own good. APPLE needs to make a drastic change. They don’t need to wait for people buy their products only when they are on sale but they need to focus more on the customer support and improve the areas they already have problems.
Open six computer retail stores (not just peripheral and accessories). Apple currently has stores opened throughout the United States with only peripheral and accessories for their computers. Adding the hardware should generate more hands-on awareness and use already established locations. This will increase product accessibility for those who wish to view items other than just accessories and increase awareness of the originality of Apple’s products. 2 percent increase over the next 2 years in sales representatives for the computer hardware. Strategy 2
Contract music spokesperson to attract the upcoming generation who are attending high school and college. This will invoke a sense of style and linking apple with a distinctive and memorable top 10 hit. This will stay in the customer’s awareness and influence future purchase decisions. Contracting one music spokesperson estimated $6 million. Strategy 3
Add more features to current products for greater Wintel compatibility. Features such as iTune software compatible with windows based computers, Office programs loadable from PC installation disk (This would require a software agreement with Microsoft). In late October 2003 Apple released an iTune software package that is PC ready. It will increase the United States market share at least 30 percent for the next 2-3 years. $50 million is the estimated cost for Research and Development.
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