Apple Inc.Shady Khorshed

Apple Inc. Current Profile

Name Apple Incorporation

Former CEO Steve Job

New CEO Tim Cook

Revenue $ 233.715 billion

Area served Worldwide

Headquarter California, United States.

Total number of employees 115,000

Source: www.Apple.com , 2015

Mission: "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."

Vision: We are “committed” in producing high quality products and providing high quality service thus setting high industry standards for other competitors.

Profile - Apple Corporation

1974

The idea for Apple Computers was

BORN

1976

First Computer was

SOLD

1984

The Macintosh wasINTRODUCED

1985

was dischargedSteve Jobs

1986 1990

1990 1993

1994 1996

1998 1999

Apple introduced all-in-one

the iMacAlso Apple unveiled

the iBook

Q1. What are the chief elements of Apple’s overall competitive strategy? How

well do the pieces fit together? Is the strategy evolving?

Differentiation St.

Distinct St.

Apple’s Strategies

Q2. What are the key elements of Apple’s strategy

in computers, personal media players, tablet

computers, and smartphones? Have its

strategies in its core businesses yielded success?

Advantages-Style-Proprietary Capabilities ( Unique apps ) -Limited product line

Disadvantages-Lack of price competitiveness-Limited number of business application adapted for MAC ISO

Apple computers

Advantages-Late mover advantage -Fashionable Perception -Music Store Support

Disadvantages-Unmatched brand recognition and consumer loyalty -systematic dedication & support of continuous developing market-ipad & itunes Relationship-Strategic Partnerships

Personal Media Player

-First to market innovation-Fashionable Perception-App store support

Smartphone & Tablets

Q3. What does a competitive strength assessment reveal about Apple’s computer business, as compared to the leaders in the computer industry? Use the methodology in Table 4.4 to support your answer. Does it appear that the company’s competitive positions in personal media players, tablet computers, and smartphones are stronger or weaker than its position in computers?

Key Success Factors /Strength Measures

Importance Weight

Apple Dell HP AcerRating Weighte

d ScoreRating Weighted

ScoreRating Weighte

d ScoreRating Weighted

Score

Price 0.1 6 0.6 9 0.9 9 0.9 10 1.0

Quality/ Product performance

0.15 8 1.2 7 1.05 7 1.05 6 0.9

Peripheral Synchronization Capabilities

0.1 9 0.9 7 0.7 7 0.7 7 0.7

New product innovation capabilities

0.2 10 2.0 6 1.2 7 1.4 6 1.2

Customization availability 0.15 5 0.75 10 1.5 9 1.35 5 0.75

Software compatibility 0.1 5 0.5 8 0.8 8 0.8 8 0.8

Reputation/ image 0.1 8 0.8 8 0.8 8 0.8 6 0.6

Market position 0.05 4 0.2 9 0.45 10 0.5 6 0.3

Breadth of product offerings

0.05 6 0.3 8 0.4 7 0.35 8 0.4

Total 1.0 61 7.25 72 7.8 72 7.85 62 6.65

Competitive Strength Assessment for the Leading Rivals in the Computer Industry

- Much stronger than its position in the computer industry- Held 78 % share in the digital music player in the industry in 2011- No other player held more than 5% in the industry

- Stronger than its position on the computer industry.- Apple held 68% share of market for tablet computers by mid 2012. - Tablet computer were in the market from 1990s, but Apple version gained significant interest from users.

Apple’s competitive position in the personal media player and tablet computer industry

-Stronger than its position in computers.- Second best selling smartphones in the second quarter of 2012- iphone has contributed to the success of the entire smart phone industry, which grew from unit sales of 1.7bn in 2009 to 4.9bn in 2011 - Apple lost its no.1 rank in the handset segment of the industry to Samsung in late 2011.- Threat to Apple posed by Google’s $12.5bn acquisition of Motorola mobility.

Apple’s competitive position in the smartphone industry

Q4. Does it make good strategic sense for Apple to be a competitor in the computer, personal media player, smartphone, and tablet computer industries? Are the value chain activities that Apple performs in computers, personal media players, tablet computers and smartphones very similar and “compatible” or are there very important differences from product to product? Which of the four products lines – computers, tablet computers, personal media players, or smartphones – do you think is most important to Apple’s future growth andprofitability? Why?

• It has made strategic sense for Apple to be a competitor.• There are similarities in Apple’s value chain activities for all the 4

Apple’s products:• Primary Activities (supply chain management, operation,

distribution, sales & marketing, service)• Supporting Activities (R&D in products, HRM, general

administration)• Technology Innovation (Apps, Common Operating Systems-

iOS/Mac OS)• Customer Service and Purchasing

Products & Criteria Primary Activates Supporting Activities Technology & Innovation

Customer Service & Purchasing

Personal Computer Pricing Reduction(Sales & Marketing)

PC Innovation(R&D)

Mac OS X series -Purchase online-Apple Outlet

Tablet Computer Better Hardware(Manufacturing)

Similarities as Iphone & non-pc products (R&D)

iOS series -Purchase online-Apple Outlet

Smartphone -Expand Carrier Networks (Service & Operation)-Better Hardware (Manufacturing)

Smartphone Innovation (R&D)-Great talents & developers (HRM)

-iOS series-Compatible with Microsoft Product (Microsoft Exchange)-App Store (Valuable apps & tools)

-Purchase online-Apple Outlet-Telephone Service Provider-Network Service Provider

Personal Media Player Hardware Improvement (Manufacturing)

Personal Media Player Innovation (R&D)

-iOS series-iTune’s (Digital media)-Apple’s TV (Entertainment & synchronization)

-Purchase online-Apple Outlet-Wholesale supermarket

Comparison Outcomes Similar Similar Compatible Similar

Justifications -Good sales and great marketing strategies-Good product life cycle-Follow the trend and able to fight with their rivals

-Apple Support Communities-Better financial performance (Mid 2012)-Good administration

-Synchronize-Similar functionalities-Apple ID-Innovative apps, software, tools

-Apple Outlet-Apple Website (Cart System) -Good collaboration with 3rd parties

Source: Apple, 2015-http://www.apple.com/support/

Value Chain Activities Analysis

Standard Operation Life Cycle

Source: Supply Chain 247-http://www.supplychain247.com/images/slides/apple_really_number1_supply_chain_slide1.jpg

Source: Slide Share-http://image.slidesharecdn.com/strategicanalysisofapple-140127103529-phpapp02/95/strategic-analysis-of-apple-8-638.jpg?cb=1390819001

Internal Operation Value Chain Analysis

• Apple has 3 strong dominance products;• Smartphones• Tablet Computers• Personal Media Player & Digital Content)

5. What is your assessment of Apple Computer’s financial performance the past three years? (Use the financial ratios in the Appendix of the text as aguide in doing your financial analysis?

Performance Ratios (YA 2007-2011)

2007 2008 2009 2010 20110.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

24.3%

56.2%

14.4%

52.0%

65.9%

Net Sales Growth

2007 2008 2009 2010 20110.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

18.4%

22.2%

27.4% 28.2%31.2%

Operating Profit Margin

2007 2008 2009 2010 20110.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

14.6%16.3%

19.2%21.5%

23.9%

Net Profit Margin

2007 2008 2009 2010 20110.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5% 3.3%3.0% 3.1%

2.7%

2.2%

R&D as % of Sales

Sources: Apple Inc., 2008, 2010, and 2011 10-K Annual Reports

Performance Ratios (YA 2007-2011)

Sources: Apple Inc., 2008, 2010, and 2011 10-K Annual Reports

2007 2008 2009 2010 20110.0%

5.0%

10.0%

15.0%

20.0%

25.0%

14.1%

16.9% 17.3%18.6%

22.3%

Return on Total Asset (ROA)

2007 2008 2009 2010 20110.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

24.1%27.4% 26.0%

29.3%

33.8%

Return on Stockholder's Equity (ROE)

Profitability Ratios (YA 2012-2015)

Sources: Apple Inc., 2013, 2014, and 2015 10-K Annual Reports

2012 2013 2014 20150.00%5.00%

10.00%15.00%20.00%25.00%30.00%35.00%40.00%45.00%50.00%

44.58%

9.20%6.95%

27.86%

Net Sales Growth

2012 2013 2014 20150.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

2.16%

2.62%

3.30% 3.45%

R&D as % of Sales

2012 2013 2014 20150.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%35.30%

28.67% 28.72%30.48%

Operating Profit Margin

2012 2013 2014 20150.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%26.67%

21.67% 21.61% 22.85%

Net Profit Margin

Profitability Ratios (YA 2012-2015)

Sources: Apple Inc., 2013, 2014, and 2015 10-K Annual Reports

2012 2013 2014 20150.00%

5.00%

10.00%

15.00%

20.00%

25.00% 23.70%

17.89% 17.04%18.38%

Return on Total Asset (ROA)

2012 2013 2014 20150.00%5.00%

10.00%15.00%20.00%25.00%30.00%35.00%40.00%45.00%50.00%

35.30%29.98%

35.42%

44.74%

Return on Stockholder's Equity (ROE)

2012 2013 2014 20150.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%35.30%

26.36%28.11%

30.90%

Return on Invested Capital (ROIC)

2012 2013 2014 2015 $-

$1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00

$10.00

$6.31 $5.68

$6.45

$9.22

Earnings Per Share (EPS)

Sources: Apple Inc., 2013, 2014, and 2015 10-K Annual Reports

2012 2013 2014 20150.000.200.400.600.801.001.201.401.601.80

1.501.68

1.08 1.11

Current Ratio

2012 2013 2014 20150.000.200.400.600.801.001.201.401.601.80

1.481.64

1.05 1.08

Quick Ratio

2012 2013 2014 20150.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.00

0.12

0.21

0.31

Long-Term Debt-To-Capital Ratio

2012 2013 2014 20150.000.050.100.150.200.250.300.350.400.450.50

0.00

0.14

0.26

0.45

Long-Term Debt-To-Equity Ratio

Liquidity Ratios (YA 2012-2015)

Leverage Ratios (YA 2012-2015)

Sources: Apple Inc., 2013, 2014, and 2015 10-K Annual Reports

Share Price Performance (YA 2012-2015)

Activity Ratios (YA 2012-2015)

2012 2013 2014 20150.00

20.00

40.00

60.00

80.00

100.00

120.00

3.29 6.04 6.86 6.12

25.49 27.9834.86

26.31

87.9876.58

98.18 92.47

Days of Inventory Average collection period Average payment period

Source: Apple Inc. share price 2012-2015, Bloomberg Business

6. What recommendations would you make to allow Apple to strengthen its position in its most important markets? What steps should it take to ensure that the iPad becomes a major contributor to the company’s overall performance?

Recommendations for 4 Apple Products in each industry:Personal Computer Industry -Product Customization

-Lower production costs & price reduction-More advertisements

Personal Media Player Industry -Innovation on product features-Attractive advertisements-Avoid marketing approaches & developer requirements that may violate anti-trust laws

Smartphone Industry -Continue to lead in product innovation-Make the iPhone compatible with more carrier networks-Develop valuable new apps

Tablet Computer Industry -Implementing the cost reduction strategy-Developing more portable and desktop computer compatible applications to iPad-Leading the innovative product

Recommendations

Steps for Apple iPad to become successful in marketplace & major

contributor to Apple’s overall performance

Caught rival off-guard and forcing them to quickly design and launch new lines of tablet computers to limit Apple’s dominance in the rapidly growing segment of the computer industry.- Entered in Tablet Computer Market in

2010.- 32.394 million unit sold by year-end 2011.- Held 68% market share in mid 2012.

Thank You