Apple Inc. Historical Analysis
Part A- Historical Analysis: A. Business In: Apple Inc. is engaged in designing, manufacturing and marketing mobile communication and media devices, personal computers and portable digital music players. It also sells a range of related software, services, peripherals, networking solutions, and third-party digital content and applications as well as services and support offerings. Specifically, the company operates in the Technology sector and serves computer hardware, computer software, consumer electronics and digital distribution through the Personal Computers industry.
Technology: Apple sells its products worldwide through its retail stores, online stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers and resellers. The Company sells to consumers both mid and small- sized businesses, education, enterprise and government customers. Apple Inc. manages its business primarily on geographic basis. • Reportable operational business segments include: Americas, Europe, Japan, Asia-Pacific and Retail. o Americas Segment: include both North and South America. Europe Segment: includes European countries as well as Middle East and Africa. o Asia-Pacific Segment: includes Australia and Asian countries; other than Japan. o Retail Segment: operates Apple’s retail stores worldwide. • As of September 24, 1011, Apple Inc. had 357 retail stores, including 245 stores in the United States and 112 stores Internationally. Apple Incorporated NAICS Codes:2 334111- Electronic Computer Manufacturing 334119- Computer Peripheral Equipment Manufacturing 511210- Software Publishers Financials: See Appendix A: Historical Financial Data
B. Goal Clarification & Strategies and Tactics Used to Fulfill Goals: Values and/ or Guiding Principles important to Apple’s innovation strategy: 1. Be Your Own Toughest Critic • As the ‘Father of Management’, Peter Drucker once noted, “Your being the one who makes your products, process, or service obsolete is the only way to prevent your competitor from doing so. ” With this strategy in mind, besides from just beating competitors, Apple Inc. ’s success comes mainly from its attempts to beat itself. 2. Lead Customers; Don’t Follow them Apple Inc. distinguishes itself, as a business that creates those alternatives implying that customers cant tell you what they want from a product. 3. Focus on the Few and Sell to the Many • Apple Inc. is focused on selling a few products in each category rather than those companies who sell dozens of models at once. Instead of trying to satisfy every single consumers tastes, Apple Inc. narrows it down and appeals to a broader group of consumers. 4. Institutionalize your Creativities • With the passing of Steve Jobs, Apple Inc. as seemed to hold and treat his values so that Apple Inc. could be far less dependent on him. • Environmental Guiding Principles 1) “Meet or exceed all applicable environmental, health, and safety requirements. We will evaluate our EHS performance by monitoring ongoing performance results and conducting periodic management reviews. ” 2) “Communicate environmental, health, and safety policy and programs to Apple employees and stakeholders” 3) “Design, manage, and operate our facilities to maximize safety, promote energy efficiency and protect the environment” ) “Strive to create products that are safe in their intended use, conserve energy and materials, and prevent pollution throughout the product life cycle, including design manufacture, use, and end of life management. C. Environmental Analysis • Integrated Brand Promotion is a way of life now. Social acceptance lays in people’s materialistic possessions. o Being the leader in trends, advertising and promoting correctly, and staying ahead of customer wants is key to successful businesses in the technology industry. Patent Laws o Patent laws are good for technology companies because they protect intellectual property. Companies with sufficient funds to patent anything and everything come out ahead of the game. But recent concerns over the licensing on patents for technology has led to a review of the patent process. If patent laws change, Technology companies may only be able to protect their intellectual property for a shorter amount of time that leads to a change in the technology industry’s business processes. Global markets for the products and services are highly competitive and subject to rapid technological change. If companies are unable to compete effectively in these markets, their financial condition and operating results could be materially adversely affected. o To remain competitive and stimulate customer demand, companies must successfully manage frequent product introductions and transitions. • Global Economic Conditions Could Materially Adversely Affect the Industry o The Personal Computer Industry’s operating and performance epends significantly on the economic conditions worldwide. Uncertainty in global economic conditions pose risks as consumers and businesses alike cut/postpone spending in response to tighter credit, unemployment, negative financial news, and/ or decline in asset values or real wealth. • Wars, Trade-laws, Outsourcing and International Business o With many companies outsourcing both product manufacturing and logistical service jobs, wars, trade-laws and international business can adversely be affected if negative factors arise. Transportation costs could significantly increase as well as taxes on the outsourcing of jobs. o Outsourcing of jobs eliminates direct control over production and distribution. D. Competitive Analysis: The markets for the Apple Inc. ’s products and services are highly competitive and are confronted by aggressive competition in all areas of its business. Its markets are characterized by frequent product introductions and rapid technological advancements. Apple Inc. s main competitive factors include price, product features, relative price/performance, product quality and reliability, design innovation, a strong third=[arty software and peripherals ecosystem, marketing and distribution capability, service and support, and corporate reputation. These markets are characterized by frequent product introductions and rapid technological advances that have substantially increased the capabilities and use of mobile communication and media devices, personal computers, and other digital electronic devices.
The Company’s future financial condition and operating results depend on the Company’s ability to continue to develop and offer new innovative products and services in each of the markets it competes in. Industry Competitors: Direct Competitors: • Hewlett-Packard Company (HPQ) HP is a leading global provider of products, technologies, software, solutions and services to individual consumers, small- and medium-sized businesses and large enterprises, including customers in the government, health and education sectors.
HP offers personal computing and other access devices, multi-vendor customer services, infrastructure technology and business process outsourcing. They also provide technology support and maintenance, application development and support services as well as consulting and integration services. HP also offers imaging and printing-related products and services; and enterprise information technology infrastructure, including enterprise storage and server technology, networking products and solutions, IT management software, information management solutions and security intelligence/risk. Research in Motion Limited (RIMM) Research In Motion Limited designs, manufactures, and markets wireless solutions for the mobile communications market worldwide. It provides platforms and solutions for access to information, including email, voice, instant messaging, short message service, Internet and Intranet-based browsing, and multimedia content through developing integrated hardware, software, and services.
It also offers development platform that allow third party commercial and enterprise software developers to build and deploy custom applications to run on BlackBerry smartphones, and various products and technologies to third party developers, wireless carriers, and enterprise customers to develop distribute and manage these applications, as well as a range of software development tools. In addition, the company provides the BlackBerry Messenger Social Apps Platform; and push, payments, advertising, location, analytics, and score loop services, as well as the BlackBerry App World to discover and download/purchase of applications.
Further, it offers BlackBerry Enterprise Server tools and technologies that enable secure and managed provisioning of applications; BlackBerry Enterprise App World that allows employees access to a catalogue of applications; and repair and maintenance services. The company sells its BlackBerry wireless solutions through global wireless communications carriers and third party distribution channels. Research In Motion Limited was founded in 1984 and is headquartered in Waterloo, Canada. Motion Limited • Google Inc. (GOOG) Google Inc. a technology company, maintains an index of Web sites and other online content for users, advertisers, and Google network members and other content providers. It offers AdWords, an auction-based advertising program; AdSense program, which enables Web sites that are part of the Google Network to deliver ads from its AdWords advertisers; Google Display, a display advertising network that comprises the videos, text, images, and other interactive ads; DoubleClick Ad Exchange, a real-time auction marketplace for the trading of display ad space; and YouTube that provides video, interactive, and other ad formats for advertisers.
The company also provides Google Mobile that optimizes Google’s applications for mobile devices in browser and downloadable form, as well as enables advertisers to run search ad campaigns on mobile devices; and Google Local that provides local information on the Web.
In addition, it offers Android, an open source mobile software platform; Google Chrome OS, an open source operating system; Google Chrome, a Web browser; Google+ to share different things online with different people; Google TV, a platform for the consumers to use the television and the Internet on a single screen; and Google Books platform to discover, search, and consume content from printed books online. Further, the company provides Google Apps, a cloud computing suite of message and collaboration tools, which primarily includes Gmail, Google Docs, Google Calendar, Google translate, and Google Sites; Search Appliance, a search echnology for use within enterprises; Google Site Search, a custom search engine; Google Commerce Search for online retail enterprises; Google Maps Application Programming Interface for businesses; and Google Earth Enterprise, a firewall software solution for imagery and data visualization. Competitors: Computer Hardware: • Dell Inc. (DELL) Dell is a global information technology company that offers its customers a broad range of solutions and services delivered directly by Dell and through other distribution channels.
Dell Inc. is focused on providing technology solutions that are more efficient, more accessible, and easier to manage. Dell Inc. is a holding company that conducts its business worldwide through its subsidiaries. Dell built its reputation as a leading technology provider through listening to customers and developing solutions that meet customer needs. A few years ago, Dell Inc. initiated a broad transformation of the company to become an end-to-end technology solutions company.
They are expanding their enterprise solutions, which include servers, networking, and storage offerings. • International Business Machines Corporation (IBM) International Business Machines Corporation was incorporated on June 16, 1911, as the Computing-Tabulating-Recording Co. , a consolidation of the Computing Scale Co. of America, the Tabulating Machine Co. and The International Time Recording Co. of New York. IBM has focused on the intersection of business insight and technological innovation, and its operations and aims have been international in nature.
The company creates business value for clients and solves business problems through integrated solutions that leverage information technology and deep knowledge of business processes. IBM solutions typically create value by reducing a client’s operational costs or by enabling new capabilities that generate revenue. • Cisco Systems Inc. (CSCO) Cisco Systems, Inc. designs, manufactures, and sells Internet protocol (IP) based networking and other products related to the communications and information technology industries worldwide.
It offers switching products, including fixed-configuration and modular switches, and storage products that provide connectivity to end users, workstations, IP phones, access points, and servers, as well as function as aggregators on local-area networks and wide-area networks; and routers that interconnects public and private IP networks for mobile, data, voice, and video applications. The company also provides set-top boxes; cable modem CPE products, such as data, EMTA, and gateways; cable modem termination systems products; videoscape software products; and headend equipment, which include encoders, decoders, and transcoders.
In addition, it offers collaboration products comprising IP phones, call center and messaging products, unified communications infrastructure products, and Web-based collaborative offerings, as well as telepresence systems that integrates voice, video, data, and mobile applications on fixed and mobile networks; and security products consisting of firewall, intrusion prevention, remote access, virtual private networks, unified clients, network admission control, Web gateways, and email gateways, which deliver identity, network, and content security solutions for mobile, collaborative, and cloud-enabled businesses.
Further, the company provides wireless products, such as wireless access points, controllers, antennas, and integrated management solutions; data center products, which include blade and rack servers, fabric interconnects, and server access virtualization; and home networking and other networking products. Additionally, it offers technical support services; and responsive, preventive, and consultative support services for its technologies. • Xerox Corp. (XRX)
Xerox Corporation provides business process and information technology (IT) outsourcing, and document management services worldwide. Its business process outsourcing services include human resources services; finance and accounting services; healthcare payers and pharma; customer management solutions; healthcare provider solutions; technology-based transactional services for retail, travel, and non-healthcare insurance companies; programs for federal, state, county, and town governments; transportation solutions; and government healthcare solutions.
The company is involved in designing, developing, and delivering IT solutions, such as comprehensive systems support, systems administration, database administration, systems monitoring, batch processing, data backup, and capacity planning services; telecommunications management services; and desktop services.
Its document outsourcing services comprise managed print services that optimize, rationalize, and manage the operation of Xerox and non-Xerox print devices; and communication and marketing services that deliver design, communication, marketing, logistic, and distribution services through SMS, Web, email, and mobile, as well as print media. The company also manufactures and sells products, including desktop monochrome, color and compact printers, multifunction printers, copiers, digital printing presses, and light production devices for small/mid-size businesses and large enterprises.
In addition, it sells paper, wide-format systems, network integration solutions, and electronic presentation systems. The company sells its products and solutions through its sales force, as well as through a network of independent agents, dealers, value-added resellers, systems integrators, and the Web. F. Strengths and Weaknesses of the Organization Strengths: 1) Pioneer of innovation and high-tech quality products. 2) Globally recognized Brand Name/ Brand Image. ) Large segmentation of loyal customers. 4) Amazingly strong Research and Development team. 5) Eye-catching products and experience of Apple’s software both in hands and in Retail stores. 6) Strong presences in education segments. 7) Corporate culture passed down by former CEO and Founder, Steve Jobs. Weakness 1) Technological products of Apple’s have extremely short lifecycles, this implies that the development and production of new products and services has to be constant. ) Low presence in advertising. Opportunities 1) Great relationship through joint venture with other big companies. 2) Consistent growth in innovation and technology. 3) More international expansion. 4) Increase demand of online retail as well as applications and services. 5) Growing market of “Green” and energy efficient products. Threats 1) Competition 2) Expensive quality products compared to competitors products. 3) The death of Steve Jobs. ) High product substitution effect in innovative and competitive technology markets. Historical Financial Data: As of June , 2012, Apple Inc. had total sales of $108,249,000 and a net income of $25,922,000. Summary information by Geographic Region for three years ended September 24, 2011(in millions): Net Sales by Geographic Region Segmentation1 2011 2010 2009 America | $38,315 |$24,498 |$18,981 | | Europe |27,778 |18,692 |11,810 | | Japan |5,437 |3,981 |2,279 | | Asia-Pacific |22,592 |8,256 |3,179 | | Retail |14,127 |9,798 |6,656 | | Total: |$108,249 |$65,225 |$42,905 |
Summary information by Product division for three years ended September 24, 2012 (in millions): Segment Operating Income by Geographic Region Segmentation1 2011 2010 2009 | America | $13,538 |$7,590 |$6,658 | | Europe |11,528 |7,524 |4,296 | | Japan |2,481 |1,846 |961 | | Asia-Pacific |9,587 |3,647 1,100 | | Retail |3,344 |2,364 |1,677 | | Segment |$40,478 |$22,971 |$14,692 | |Operating- Income: | | | | a) Does not include segment assets nor depreciation, amortization and accretion. A reconciliation of the Company’s segment operating income and expenses for the three years ended September 24, 2011 (in millions): Total Operating Income 2011 2010 2009 Segment Operating Income | $40,478 |$22,971 |$14,692 | | Other corporate expenses (a) |(5,520) |(3,707) |(2,242) | |Share-based compensation expense |(1,168) |(879) |(710) | | Total |$33,790 |$18,385 |$47,501 | |Operating- Income: | | | | a) Other corporate expenses include research and development, corporate marketing expenses, manufacturing costs and variances not included in standard cost, and other separately managed general and administrative expenses. [pic] [pic] Not Sure if Needed: Apple Inc. also manages its business on product divisions. • Reportable operational product divisions include: o Desktops ? Including iMac, Mac mini, Mac Pro and Xserve product lines. o Portables ? Includes MacBook, MacBook Air and MacBook pro product lines. o iPod o Other music related products and services ? Includes sales from the iTunes Store, App Store, and iBookstore in addition to sales of iPod services and Apple-branded and third-party iPod accessories. o iPhone and related products and services. Includes revenue recognized from iPhone sales, carrier agreements, services, and Apple-branded and third-party iPhone accessories. o iPad and related products and services ? Includes revenue recognized from iPad sales, services and Apple-branded and third-party iPad accessories. o Peripherals and other hardware ? Includes sales of displays, wireless connectivity and networking solutions, and other hardware accessories. o Software, services and other sales. ? Includes sales from the Mac App Store in addition to sales of other Apple-branded and third-party Mac software and Mac and Internet service. Summary information by Product division for three years ended September 24, 2012 (in millions): 2011 2010 2009 Net Sales by Product1 Desktops |$6,439 |$6,201 |$4,324 | |Portables |15,344 |11,278 |9,535 | | Total Mac: |21,783 |17,479 |13,859 | |iPod |7,453 |8,274 |8,091 | |Other music related products and|6,314 |4,948 |4,036 | |services | | | | |iPhone and related products and |47,057 |25,179 |13,033 | |services | | | | |iPad and related products and |20,358 |4,958 |0 | |services | | | | |Peripherals and other hardware |2,330 |1,814 |1,475 | |Software, Service and other |2,954 |2,573 |2,411 | |sales | | | | | Total:|$108,249 |$65,225 |$42,905 | | | | | | 2011 2010 2009 Net Income by Product1 |Desktops | | |$ | |Portables | | | | | Total Mac: | | | |iPod | | | | |Other music related products and| | | | |services | | | | |iPhone and related products and | | | | |services | | | | |iPad and related products and | | |- | |services | | | | |Peripherals and other hardware | | | | |Software, Service and other | | | | |sales | | | | | Total:| | |$ | [pic]