Executive Summary
Apple Inc. (AAPL) is an American multinational corporation that designs and manufactures personal computers, portable music players, and mobile phones that are provident, easy to use and are aimed at the mass user. The most famous products of the company are the iPhone mobile phones, iPad tablet computers, the iPod portable multimedia player, and hardware lines MAC computers.
The company sells some of its products through a network of retail stores in the US, Canada, Japan, Britain, and other countries. At present, the number of the employees exceeds 80 thousand people, and the Apple products are purchased worldwide (Weisenburger, 2015). This report aims at describing the existing risk factors faced by the company in carrying out its activities. They should be taken into account when making any investment decisions due to the fact that the global and regional economic conditions could have a financially adverse effect on the Company.
Apple Inc. is also subject to the Securities Exchange Act of 1934 and to the disclosure of the information; therefore, the Company submits annual reports on 10-K Form, quarterly reports on 10-Q Form, current reports on 8-K Form, and other information to the US Securities and Exchange Commission (Weisenburger, 2015). From the investor point of view, these documents can be a source of the information on the estimates and forecasts of the Company’s management bodies regarding the future events or actions, prospects of the development of the industry in which the Company conducts its business (George, 2014).
In addition to the evaluation and analysis of the economic indicators, the report gives a forecast of the future of the company and gives advice on the company’s management strategy. The strategy is needed to ensure sustainable development of the company and to obtain stable profits (Ross, 2015). To achieve this goal, it is recommended to improve the trade and industrial activities of the enterprise; to ensure the profitability of product sales; as well as to develop the new technical solutions in commercial and industrial activities to be competitive in the market.
Introduction
The Apple Inc. Company develops, manufactures, and markets mobile communication and storage devices, personal computers, and portable digital music players. Additionally, it sells a variety of the related software, services, peripherals, networking solutions, applications, and third-party digital content (George, 2014).
Products and services of the Company include the iPhone, iPad, Mac, iPod, Apple TV, related packages and professional applications, the operating system iOS, OS X, iCloud service, as well as various ancillary items, service, and technical proposals (Menzel, 2014). In 2014, the Company announced the launch of the Apple Watch and the launch of the service Apple Pay, which became available in the US in the same year.
The Apple Inc. markets the commodities globally through its sales representatives, online, and through retail stores. Further, it sells via the mobile operator’s, wholesalers, and intermediaries. Moreover, Apple offers different goods and services that are consistent with their devices as well as with the application software and a variety of ancillary items through its network of shops that are available for the customers worldwide (George, 2014).
The company’s customers are the end users, small and medium-sized businesses, and consumers in the educational sphere, corporate, and government departments (Menzel, 2014). The company was established in 1976 under the laws of the California State with the headquarters in Cupertino. The company sells some of its products in retail through a network of affiliated stores in the United States, Canada, Japan, Britain, and other countries.
Over the years, Apple has absorbed a variety of companies including NeXT, Quattro Wireless, Siri, Anobit Technologies. The major production facilities of the corporation are located in Asian countries while most of them are concentrated in China. Every year part of the proceeds from the sales goes for the research purposes. Apple has established branches in low-tax locations such as Ireland, the Netherlands, Luxembourg, and the British Virgin Islands to reduce the taxes that the company pays around the world (George, 2014).
The common shares of the Company were listed on the stock exchange The NASDAQ Stock Market LLC, where they are traded under the symbol AAPL. As of 2015, more than 26500 individuals were registered as the stakeholders of the Company (Weisenburger, 2015). At that moment, approximately 5864840000 ordinary shares were in circulation. In that year, the closing price of the shares amounted to 116, 31 US dollars (Weisenburger, 2015). The minimum and maximum share price for the 52 weeks amounted to 117.28 and 70.51 US dollars respectively. As per previous years, the Company paid a quarterly dividend of $1.82 US dollars per share for the 4th quarter and 1.64 US dollars per share for Q4. In the future, it will consider paying a quarterly dividend of $ 0.47 US dollars per a common share.
Body
There are certain aspects and settings, which may take its toll on the operations of the Company. Apple products are distributed in rapidly developing and highly competitive global markets, and therefore the Company might find itself in an arduous position. In order to remain competitive ability and stimulate consumer demand, the Company has to introduce new products at term (Ross, 2015). Periodically, production quality problems may emerge, which will further result in sales decline and disrepute.
Further on, the possessions or developments that belong to other bodies but are a part of the Apple products may be subject to the availability issues. Adverse litigation rulings, related to infringement of intellectual property rights of the third parties, may also influence the Company’s activity. The changes in foreign laws and regulations can lead to deductions (Menzel, 2014).
Moreover, the government tries to restrict the operations through the legislation regarding the environment and the device disposal. Further, there is a probability of system hacking, which can harm business relationships with the clients. It goes without saying that Apple as well as any other company is dependent on its staff and their capabilities and commitment, and on any unexpected setting that may adverse its operations (for instance, riots, strikes and so on).
Cost Reduction and Economies of Scale
Apple Inc. takes advantage of the internal as well as external economies of scale. Due to the growing sizes of the productions the company, in fact, has been able to reduce the cost per device unit (Ross, 2015). In addition, by purchasing in bulk, the company saves money, though, obtaining large quantities of the constituents. Further, as the size of the Company and its operations are rather big, it benefits from the worldwide advertising (an ad for a device necessarily includes advertising for the supplementary items).
Currency Fluctuations
The company restricts and constrains its proceedings and pliable pricing to be able to address and lessen the influence of the currency fluctuations on its international operations (Menzel, 2014). For instance, if the currencies attenuate contra the US dollar, the Company raises the international pricing (for example, in Europe or Australia) for the items to balance the perished income. It should be noted that so far the increase in prices has not drastically affected the demand for the Apple products. The demand is growing, and it determines the supply; consequently, the revenues remain stable.
Labor Issues
The company has introduced the innovated culture for the employees, and it abides by the wage requirements determined by the relevant regulations (Hruska, 2014). In the case of improper labor conditions or mistreatment, Apple sends the investigation team to research the violations and decide upon the corrective measures to improve the situation. The Company provides mentoring in the human resource management to ensure that there are no labor-related issues.
Globalization
Due to the globalization, the company has extended its distribution network. This strategy allows boosting the global reach by offering the goods and the post sales services to the clients. Nevertheless, the market has become highly competitive because of the progress in technologies and fast insertion of the new goods (George, 2014). However, Apple manufactures and designs the products in the American hub while outsourcing the product constituents’ production to different transborder subcontractors.
Comparative Advantage
The Apple Inc. Company’s critical advantage is in marketing. It does its best to respond to the customer’s needs and tries to exceed the client’s expectations (England, 2014). The marketing strategy does not aim at presenting the advanced technology but at providing the evidence of the ways their products and services contribute to the life of their customers (Hruska, 2014). Thus, the marketing assists Apple in gaining its comparative advantage in relation to its rivals in the market. The advanced design and marketing capabilities enable the Company to gain from trade while addressing the needs of their customers.
Conclusion
The competitive position in the market in terms of the market share, the export capacity, and the stability of the demand for the products have been analyzed to determine Apple’s quality indicators of the goals and functions of the company’s strategy (Ross, 2015). The company has high investment rates, an effective business plan, the positive history of the development dynamics, and conducts analysis and cost control of its operations.
With regard to the quality of the management, Apple demonstrates the high quality of the financial management, the appropriate organizational structure, and facilitates the information transparency. At present, the company’s short- and long-term operations are not strongly affected by the future economic conditions and government trade policies. Nevertheless, the Company should reconsider its policy towards the proactive approach and be flexible to address the environmental issues raised by the government.
However, there are strategic aspects that Apple Inc. needs to improve regarding the business planning and product diversification due to high competition in the market (Ross, 2015). The Company needs to take measures to control the development of the personnel, product promotion, and maintenance of the control measures to capitalize on its opportunities and to avoid unfavorable situations.
The main purpose of the company’s management strategy should outline the ways to achieve sustainable development, and to provide the stable income, notwithstanding the economic variables or market fluctuations (England, 2014). To achieve this goal the company needs to develop in the following areas: improve the trade and production activities; ensure the return on sales; develop new technical solutions in the commercial and industrial activity.
The company should consider planning the future development activities with regard to the current economic conditions to be able to conduct the efficient operations in perspective (Menzel, 2014). First, Apple should maintain its comparative advantage in marketing regarding the volumes of sales in the market; then endorse and improve the quality of the products and services; expand the segment of the market for the perspective sales of the goods and services; improve the organizational structure along with the increased professional level of personnel. Second, the company needs to carry out the research for innovations.
In particular, it is necessary to introduce new high-performance equipment for the effective delivery of services, to apply computer technology to sales and the provision of the services. Third, it is necessary to consolidate the financial situation to ensure profitable operations and to minimize the costs and ensure the profitability of sales. Fourth, it is crucial to utilize the effective management practices. It is important to strive for the improvement of the production discipline, motivation of the employees, efficient usage of the workforce, high maintenance of the working environment, and the creation of the safe labor conditions. In addition, it is necessary to improve the management and organization of the production.
Thus, the company will focus on the human resources and technology to create the best products and services using the principle of the development of the human resources and technical excellence. Apple Inc. will enhance the synergies of the entire control system by human resources and the technology. In addition, the recommendations may help to create products and services that provide the highest degree of customer satisfaction and to maintain leadership in the business environment.
References
England, H. (2014). Apple Inc. 309. Brisbane, Australia: Emereo Publishing.
George, B. (2014). Apple value chain analysis. Munich, Germany: GRIN Verlag.
Hruska, D. (2014). Radical decision making. New York, NY: Springer.
Menzel, A. (2014). How well placed Apple is to sustain its recent success in the consumer electronics industry. Munich, Germany: GRIN Verlag.
Ross, J. (2015). Johnson & Johnson. Charleston, SC: BiblioBazaar.
Weisenburger, M. (2015). Publishing, the new marketing for entrepreneurs. Charleston, SC: CreateSpace Independent Publishing Platform.