apple inc. strategic case analysis presentation
TRANSCRIPT
Apple Inc.Case Analysis
Presented by: Mariham Helal & Esraa Elseidy
Case Analysis Content:
Situation Analysis
Financial Analysis
Key Success Factors
SWOT Analysis
Recommendations
Implementation and Expected Outcomes
Evaluation and Control
Company Overview Apple was founded by Steve Jobs,
Steve Wozniak, and Ronald Wayne on April 1, 1976 to develop and sell personal computers.
It was incorporated as Apple Computer, Inc. on January 3, 1977, and was renamed as Apple Inc. on January 9, 2007 to reflect its shifted focus towards consumer electronics.
Apple Inc. headquarter in California.
Apple Inc. has 9 products , 7 services and 378 retail stores world wide
NAME HISTORY
According to Steve Jobs, Apple was so named because Jobs was coming back from an apple farm, and he was on a fruitarian diet.
He thought the name was "fun, spirited and not intimidating"
Apple Inc. is an American multinational corporation headquartered in California, that designs, develops, and sells consumer electronics, computer software and personal computers.
Its best-known hardware products are the Mac line of computers, the iPod media player, the iPhone smartphone, and the iPad tablet computer.
Its consumer software includes the OS X and iOS operating systems, the iTunes media browser and the Safari web browser
EVALUTION OF APPLE LOGOS
Situation Analysis:
Industry Overview :
The Consumer Electronics industry includes electronic appliances that are used everyday, mostly for communication, entertainment, and office purposes.
Mission Statement"Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings."
iPod42%
iPhone23%
iPad10%
Others<1%
Macintosh Computers
25%
From Where Apple is Making Money
iMac iPod iPod Nano iPad
Mac Book Air iPhone 4s iPhone 5s iPhone 5C
Apple Inc. CompetitorsApple has many competitors in the personal
computers industry
Apple Inc. Competitors
In smart phones industry
Apple Inc. Competitors
In iPads industry
Strategic Group Map
0.5 1 1.5 2 2.5 3 3.50
1
2
3
4
5
6
7
8
9
10
Series3
SAMSUNG
Smartphones SGM
Quality
Pri
ce
Strategic Group Map for Software
Financial AnalysisRatio 2010 2009 2008 Comment
Profitability Ratios
Gross Profit Margin 39.30% 40.10% 35.20% Gross profit margin increased in 2009 compared to 2008,slightly decreased in 2010. It indicates the
margin available to cover operation expenses and generate profits
Operating Profit Margin 28.20% 27.30% 22.20% OPM improved throughout the years indicating profitability from operations regardless og interest
Net Profit Margin 21.50% 19.20% 16.30% NPM improved throughout the years indicating good profitability and pricing strategies
Return on Total Assets ( ROA) 18.60% 17.33% 15.40% ROA improved through the year reflecting good return on investment or the ability of assets to
generate return
Return on Equity (ROE) 29.30% 26% 29% ROE slightly declined in 2009 compared to 2008, but again it increased in 2010 reflecting the improved
return on stockholders investments in the co.
Earnings per share 15.15% 9.08% 6.78% EPS improved in 2009 compared to 2010 and improved dramatically in 2010 thus owners are well
paid off
Liquidity Ratios
Current Ratio 2.01 2.74 2.46 Decreased liquidity ratio but still good in 2010, it indicates that every 1$ of current liabilities is covered by
2.01$ of current assets
Quick Ratio 1.96 2.7 2.42 Decreased quick ratio but still good in 2010, it indicates that every 1$ of
current liabilities is covered by 1.96 $ of current assets, without the need to
sell inventory
Inventory to net working
capital
5.01% 2.27% 2.47% Inventory increased drastically in 2010 compared to 2009 & 2008, yet
still represents 5.01% from the working capital
Leverage Ratios
Debt-to-Asset ratio
36.40% 33.40% 46.80% Improved debt ratio in 2009 compared to 2008 , and slight increase in 2010. yet the ratio
indicates that the co. tends to lower financing its assets through debt
Debt-to-Equity ratio
57.30% 50% 88.20% Improved debt to equity ratio in 2009 compared to 2008 , and slight increase in 2010. yet the ratio indicates that the co. tends to
increase self or equity finance and decrease external debts
Long term debt to Equity ratio
13.90% 13.70% 21% Improved long term debt ratio in 2009 compared to 2008 , and slight increase in 2010. yet the ratio
indicates that the co. tends to lower depts financing its long term capital
structure
Activity Ratios
Inventory turn Over
62 94 73.6 Inventory turn over increased in 2009 compared tp 2008 then decreased in 2010 to 62 times, this might indicate
accumulation of finished goods inventory , or mmay be the company metigates the risk of supply through increasing stock
of raw materials
Fixed Assts Turn Over (
FATO)
2.08 3.08 12.7 FATO is decreasing through the years of comparison, indicating mis management of fixed assets to generate sales, or that the company maintains too much fixed assets that are not much
productive
Total Assets Turn
Over ( TATO)
0.87 0.9 0.94 TATO decreased slightly throughout the years of comparison, the decrease might indicate inefficiency of total assets o
generate sales , but it should be compared to industry average to determine clear analysis
Issues
1. Product differentiation
In today’s age there is a thirst for hot new products, and keeping a high end product on the shelves can be a challenge.
2. Product Diversification
Apple has continuously expanded its product depth to
extract all of its value. The question is how long can they
keep doing this until consumers lose interest?
Issues
3. Maintaining Customer Loyalty
❏ Apple needs to maintain their high level of customer
service to maintain their customer loyalty. This a big
differentiating factor for their business.
4. Market Saturation
❏ A saturated market leads to less profits and decreased
demand.
Key Success Factors
1-Technology
Apple is an expert in the computer technology and the electronics industry becoming a global leader in the computer industry and its R&D.
❏ They have expanded computer technology into phones,
laptops, tablets, music players, and recently into watches.
2. Manufacturing
Apple has achieved both internal and external economies of scale by becoming the number one firm in their industry which lowered their production costs given extremely high demand
Key Success Factors
3. Distribution
Strong Direct Sales Capabilities
❏ Apple’s brick and mortar stores has provided them with strong direct sales capabilities by dealing directly with the customers themselves
❏ This allows them to personally up sale their products, handle customer complaints, and gauge the overall demand for their goods
4. Marketing
A well-known and well-respected brand name
❏ Currently Apple’s brand name is ranked number one in the world
according to Interbrand's study of worlds most popular brands.
❏ This title increases their brand awareness and also
proves they are at the top of their game in the electronics
industry
Key Success Factors
5. Skills and Capability
Design expertise
❏ Apple has prided itself on its design teams efforts in crafting unique designs that grab consumers and command their attention
❏ They are lightweight, colorful, and ever changing with different cases
SWOT Analysis
Strengths
❏ #1 Globally recognized brand
❏ Research and Development
❏ Innovation
❏ Healthy Financial Performance
Loyal Consumers
❏ Economies of Scale
Weaknesses
High retail prices:
❖ Apple has a differentiation strategy and charges higher prices for their unique products, but have to be careful to not charge too much.
❏ Slowing innovation:
If this happens, then Apple may lose a competitive edge.
❏ Competition from major firms:
Competition could intensify.
Opportunities
❏ Sales growth in emerging economies
❏ iWatch and Mac Pro
❖ Demonstrating continued Apple innovation.
Threats
❏ Stiff competition:
❖ Competition is high and intense in the technology sector.
❏ Product Imitations:
❖ These product imitations could serve as a low cost substitute.
❏ Potential saturation of mobile market:
❖ If markets become saturated profits decrease for the industry and Apple.
Recommendations
Options for a leading company
Focus on differentiated lifestyle branding: Apple has successfully developed a differentiated lifestyle brand and must continue to build on this foundation while resisting pressure to move to the middle to directly compete with Dell and HP.
Recommendations
Options for competing in international markets
Continue the expansion of Apple stores: The stores represent an important source of revenue for Apple and serve as an interactive advertisement for the Apple brand. Their success has been unmatched by any other industry player.
Emphasize the integrated system in advertisements: Apple's integrated system holds a significant advantage over other industry systems relying on Microsoft Windows, yet some customers have not experienced the seamless interoperability of all Apple products. This marketing angle will result in cross selling of more products to new and existing customers.
Apple should continue to support the educational and creative professional markets
Recommendations Generic strategies
Design innovation: Put additional emphasis on design development with internal resource allocation to continue to lead the industry in design.
Research user interface possibilities: As a mode of setting Mac computers apart from other PCs Apple must continue to innovate in user interface focusing on easy-of-use and intuitive menu functions
Consumer electronics diversification: While the PC market has grown increasingly crowded with competitors and customers saturated other areas of consumer electronics continue to grow. Developing complementary products in other categories provides broader sources of revenue by accessing more customers in markets with less intense competition.
Apple should consider all work related to its operations in the iPod, iTunes, iSync, and iChat sectors.
Short Menu
Option One: Franchising of stores
Option Two: Growth Strategy through new products and new market opportunities
Option Three: Vertical Integration
Recommendations
Expected Outcomes of
selected strategies
Strategy Implementation:
Organization Structure:
Implementation
The recommended strategies are implemented as follows:
Build long term organizational strength by implementing a clearly thought out leadership development and selection programmer that will be able to develop the special leadership required for Apple.
Future leaders should be technically brilliant, innovative pioneers with strong team working skills and high levels of ethics.
Build specific products of high quality, but lesser prices, for the huge populations of India and China that are passionate about computers, mobile phones and music.
Continue and intensify the search for innovative, stylish and useful products in its existing area of operations.
Make productive use of strong cash reserves
Recommended strategy supportive policies:
Human Resources structured training programs
Rewarding plan for innovative ideas
Reward scheme for staff to increase their loyalty
Effective performance Management
Career planning and development
Action plans:
Producing an action plan can be beneficial not only for individual basis but also for businesses. For example, it allows project managers or any member of a group to monitor their progress and take each task step-by-step, therefore allowing them to handle the project efficiently. The advantage of doing this is, it allows you to execute a structured plan for the end goal you intend to achieve. Furthermore, it provides the team with appropriate foundations, therefore prioritising the amount of time you spend on each task.
This will then prevent any sidetracking that may occur. Lastly it creates a bond within a team, as each member is aware of their individual role, as well as providing necessary information to ensure success of the project
