Apple Company’s Analysis

Abstract

The paper delves into the peculiarities of Apple Companys functioning and conducts a comprehensive investigation of its corporate strategy with the primary aim to determine its current status and ability to increase competitive advantage. To collect credible information and use only relevant data the companys annual reports, financial statements, and proxy statement are used. Therefore, the report evaluates Apples external stakeholders like leading competitors, vendors, customers, communities, etc. Furthermore, internal shareholders such as managers, directors, and workers are also assessed. To determine the most problematic areas and outline aspects that could help the company to evolve, the paper suggests data acquired from SWOT analysis. SEC filings and other credible databases are used to collect pieces of evidence and guarantee the enhanced relevance of data and practical use of the research. At the end of the paper, the conclusion is given, and the companys perspectives regarding the current competitive environment are discussed.

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Apples Analysis

The blistering rise of the global economy and alteration in strategies and models used by actors resulted in the increased importance of the business world. Entrepreneurship could be considered one of the fundamental activities of the coherent society as a significant part of population is engaged in different businesses (Editorial Board, 2015). The appearance of numerous companies and corporations functioning within the same sphere shaped the character of the international trade and stipulated the emergence of unique traits of global cooperation. For instance, a severe rivalry is one of the most distinctive features of the business environment that preconditions a crucial need for a particular competitive advantage to compete and remain profitable. Therefore, management and its tools for the in-depth analysis of organizations play an important role in the evolution of market as it helps companies to find vulnerabilities in its or its rivals structure. In such a way, the paper presents itself as a comprehensive analysis of the functioning of Apple

Background

Today, Apple could be considered one of the leaders in the sphere of mobile communication and media. It is a highly recognizable brand that attracts the attention of millions of customers globally. The company was founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne (Apple Inc., 2017a). Its first products were personal computers. Therefore, in the process of its evolution, Apple Inc. managed to turn into a leader that preconditions the evolution of the sphere. It sells a broad range of specific media devices like iPhone, iPad, Mac, Apple Watch, related software, services, networking solutions, applications, operating systems (Apple Inc., 2017a). The corporation promotes online trade by selling its products via App Store which was created with the primary aim to guarantee customers unlimited access to the majority of provided services. Additionally, Apple uses a global chain of retail stores that could be found in the majority of developed countries. It also fosters cooperation with numerous international partners to create the basis for the further evolution and acquire new vectors for its evolution.

Industry and Market

At the moment, the smartphone industry is one of the most fast-growing market segments which preserves a high speed of its growth and demonstrates a tendency towards the increase in revenues for all potent actors. In general, mobile shipments worldwide are expected to add up to 1,71 billion in 2020 (“Global revenue from smartphone sales,” 2017). Nowadays, the revenue from selling smartphones in different countries across the globe is about $434,5 billion (“Global revenue from smartphone sales,” 2017). The USA is the second most profitable market for selling smartphones with about $55,6 billion of income. Additionally, it accounted for about 18% of sales value in the world (“Global market share held by leading smartphone vendors,” 2017). For this reason, the given sphere attracts numerous companies that try to enter the market. Thus, Samsung holds leading positions with about fifth part of all sales.

The Android operating system remains the most frequently used one with an 81,7% share on the global market (“Global market share held by leading smartphone vendors,” 2017). However, iOS is the second most-used system in the world and demonstrates stable growth. In the first quarter of 2017, the company managed to sell about 78 million smartphones (“Share of Apple’s revenue by geographical region,” 2017). At the moment, the industry passes through the period of blistering rise and the tendency towards the increase in the level of income could be observed (Wilmott, Fraser, & Lammes, 2017). At the same time, there are specific features that impact the market like the increased buying capacity of customers, their diverse demands to the quality and appearance, need for reliable tools, etc. Therefore, the world financial crisis also had a pernicious impact on the sector. Nevertheless, there are still beneficial opportunities for the further rise.

Current Business Strategy

Investigating the companys functioning, it is critical to evaluate its business strategy as it determines the further evolution and essential peculiarities of Apples functioning. Therefore, the corporation proclaims its commitment to the high-quality of its products and enhanced innovativeness of hardware, software, and devices manufactured by it (Apple Inc., 2017a). Under these conditions, it uses a unique business strategy that benefits from the ability to create absolutely new and powerful operating systems hardware, and applications to maintain customers interest and attract potential buyers by numerous unique options that could be found only in Apple products.

Moreover, it tends to integrate all devices in a specific network to increase convenience and provide users with an opportunity to enjoy digitalized environment created by products suggested by the company. Apple also supports innovations through the research to guarantee the preservation of leading positions and increase the level of performance of all its products (Apple Inc., 2017a). In this regard, the companys strategy could be defined as an extremely topical as it is focused on the satisfaction of the growing need for advanced technologies and feeling of exclusiveness. Additionally, the brand cultivates its image by emphasizing an outstanding status of all owners who possess their devices. In this regard, the given business strategy preconditions the functioning of the company, choice of potential partners and peculiarities of its products.

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Customers

In general, the companys target audience is comprised of people with the average or high level of incomes. Apples products are more expensive that those of its rival which means that customers should be characterized by the enhanced buying power. For this reason, the firm uses a specific strategy when working with the target audience. It promotes the exclusive character of the brand and its outstanding qualities.

Organization

Apple is a global corporation which means that there are numerous facilities, retail stores, and departments in various states. The most important areas are the USA, Canada, Europe, China, Japan, Taiwan, Australia (IBISWorld, 2017). Apple has traditionally dominant positions here and tries to preserve its leading status by attracting new customers. The company also uses outsourcing practice to place its production assets in counties like China or Taiwan because of the beneficial conditions and numerous opportunities for the further rise (IBISWorld, 2017). In such a way, Apple contributes to the development of their economies and creates the basis for its technological advance. The appearance of new departments in countries with an advantageous business environment contributes to the companys further expansion and stable level of revenues. In such a way, Apples demonstrates an efficient performance regarding the current peculiarities of the market in which it functions and tries to promote its further growth.

Financial Indicators

The companys apparent success could be evidenced by its outstanding financial performance. Thus, by its annual report, in 2016 Apples net income comprised about $215. 639 billion. The bigger part of this sum was obtained in the American region (Canada and the USA) (Apple Inc., 2017a). Over $150 billion came from iPhones sales which remains the primary product of the company generating around 68% of total income (Apple Inc., 2017a). Therefore, in accordance with the statistics, Apples net profit was about $45. 69 billion in 2016 (Apple Inc., 2017a). In 2015 the company managed to achieve the peak of its sales; however, the decrease is not significant and data related to the first quarter of 2017 demonstrates positive tendencies towards the growth in the number of sales.

Under these conditions, the company will be able to achieve the previous level of net income and generate stable revenues. Total operating expenses comprise $24.23 billion. (Apple Inc., 2017a). Operating income is $61 billion (Apple Inc., 2017a). In general, these primary financial showings demonstrate the tendency toward the companys further rise and empowerment of its position. Apple also maintains an efficient policy related to its shares. In 2016, earnings per share comprised about $8,35 (Apple Inc., 2017a). In 2017, they increased to $9,27 (Apple Inc., 2017a). This fact demonstrates the efficiency of existing strategic measures and the companys focus on the further evolution along with preservation of its leading positions.

Competitors

As it has already been mentioned, the industry is characterized by an extremely high level of rivalry stipulated by significant revenues and tendencies towards the further rise of the market. At the moment, Apple is confronted by aggressive competition in all spheres of business (Apple Inc., 2017a). The majority of its competitors also sell mobile devices and personal computers; however, they use different operating systems and introduce different pricing strategies. For instance, Samsung preserves its leading positions in the market and excels Apple in sales (Apple Inc., 2017b). The company also emphasizes the quality of its products and introduces a lower price for them with the intention to gain Apples customers. In such a way, primary competitive factors are price, product features, performance, quality, innovativeness, reliability, and attractiveness. Regarding these elements, Apple can preserve its competitive advantage because of the attempt to combine all competitive factors within its products to satisfy customers needs.

Vendors and Suppliers

An outstanding quality of products boasted by Apple demands the use of custom components that are not commonly used by other companies functioning in the sphere. For this reason, the company has engaged in the partnership with numerous international corporations to align the supply of components needed to manufacture its products. For instance, Analog Devices provides Apple with touchscreen controllers that are used in iPhones and iWatches (Apple Inc., 2017c). Micron Technology company situated in Japan, Taiwan, Singapore, and China supply high-quality memory modules that are used in the majority of Apples products (Apple Inc., 2017c). In general, there are about 200 suppliers that manufacture an assembly of products for the company to be able to preserve its competitive advantage and create new devices using innovative technologies (Apple Inc., 2017c). The given cooperation is exceptionally beneficial for Apple as at the moment it depends on its partners significantly.

Governmental Entities

Regarding the fact that Apple is an American company which functions in its legislative environment, it has to observe a variety of U.S. laws, rules, and policies that regulate the functioning of all business organizations, their financial operations, deals, and data protection. For instance, Apple is subjected to federal, state, and international laws about the collection, use, retention, and transfer of personal data about its users (Apple Inc., 2017a). Therefore, there are numerous regulations in areas of labor, advertising, competition, e-commerce, quality, telecommunications, intellectual property, etc. (Apple Inc., 2017a). Under these conditions, violation of any rules introduced by the government might result in a severe punishment and in-depth investigation of the companys functioning. These limits also guarantee that Apple will remain within the legal framework and observe central laws related to organizations functioning.

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Communities

Being one of the leaders in the sphere of digital devices and telecommunications, Apple supports a community for the development of third-party companies that will be able to supply hardware product and digital content to enrich the firms offerings and guarantee its further rise. At the same time, Apple cannot ignore trends peculiar to the modern society and finance social or charity programs aimed at the improvement of living conditions in different regions, provision of support to people who might need it and assist communities in their further development. In such a way, Apple is one of the active members of the modern international discourse which is crucial for the company of this sort. It could help it to cooperate with members of society and promote its products.

Shareholders

Analyzing, internal shareholders impacting the evolution of Apple company, the focus on the creation of a long-term value should be admitted. Thus, for the period from September 2013 to September 2016 (three financial years), the total shareholder return comprised 73,6%.( Apple Inc., 2017b). In such a way, the firm tries to attract new shareholders by demonstrating advantages of the prolonged cooperation supported by the long-term equity awards (Apple Inc., 2017b). Apple also encourages shareholders to participate in the functioning of the company by participating in annual meetings as the only way to align an efficient corporate governance. Shareholders votes remain confidential. In such a way, they could impact the development of the company by giving their preferences to particular strategies or solutions that could help to improve the situation.

Board of Directors

The company is headed by the Board of Directors that consists of a group of leaders representing different fields necessary for the functioning of the company. The majority of directors have an outstanding expertise at multinational corporations. At the moment, the board is comprised of James Bell, Tim Cook, Al Gore, Bob Iger, Andera Jung, Art Levinson, Ron Sugar, and Sue Wagner (Apple Inc., 2017b). The candidates are suggested by Nominating and Corporate Governance Committee and are elected by shareholders (Apple Inc., 2017b). The companys board monitors the functioning of CEO and other management responsible for the majority of fundamental operations in Apple. Moreover, the existence of this board guarantees that no subjective decisions will be made as only the cooperative approach to problem-solution is used.

Management

Regarding the fact that the company adheres to the corporative governance model, the role of management could hardly be overestimated as it plays the central role in Apples further evolution. For this reason, the firm introduces increased demands for its quality and innovativeness. The character of the brand presupposes the use of new technologies and unique solutions to satisfy customers needs and provide them with high-quality products (Apple Inc., 2017b). That is why all managerial positions are suggested to employees possessing an outstanding competence in the most important spheres. At the same time, CEOs are demanded to organize the enhanced cooperation between all departments to achieve particular goals and ensure the companys further rise.

Employees

Apple also tries to inspire its workers and motivate them to work better to attain improved results. For this reason, particular compensatory practices provide appropriate awards for employees regarding their contribution to the companys development (Apple Inc., 2017b). Moreover, the personal safety and security of workers have the top priority for Apple. That is why it creates a safe environment and provides a risk-based and business-related security services to all people working in the company (Apple Inc., 2017b). Apple also suggests relocation assistance to employees when a particular business need occurs. (Apple Inc., 2017b). Additionally, the firm introduces comparatively high wages for its workers to meet their requirements and avoid a turnover. In such a way, individuals are motivated to demonstrate high performance.

SWOT Analysis

Strengths

The companys leading advantage is the unite character of its devices and operating system that is used in them. Creating their software for products, Apple attains a certain level of independence and acquires a target audience at the same time. At the moment, iOs is the leading competitor of Android which is used in the majority of smartphones presented at the market (Saardchom, 2014). The companys second strengths is an outstanding quality of products like iPhone, iPad, MacBook, etc. They combine high performance with reliability for customers to remain satisfied. Another factor that helps the company to evolve and demonstrate a particular stability is a unique culture that it managed to create. The fact is that people might want to possess iPhone or iWatch because of their desire to belong to a privileged class.

Weaknesses

One of the apparent weaknesses of Apple is an extremely high price for all its goods. It slows down the speed of the companys growth as it becomes difficult to acquire new customers and increase sales. It comes from the combination of high quality and innovativeness within a single device and the absence of models created to satisfy needs of the middle class (Editorial Board, 2015). Under these conditions, the brand demonstrates low flexibility regarding the work with customers. Another companys weakness is a significant dependence o technologies and their suppliers. The fact is that the firm is not able to manufacture some components of its devices by its own. In such a way, the price of the final product, its quality and complication might vary.

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Opportunities

Regarding the current state of the company, the company might enjoy numerous opportunities for its further growth. First, the focus on innovations and outstanding quality could create the background for Apples further rise. At the moment, customers prefer the brand due to these characteristics. In such a way, cultivating these aspects, the firm might improve its competitive advantage and attract even more customers. Additionally, by the latest statistics, Apple demonstrates a stable growth and approaches Samsung, the current leader (Saardchom, 2014). If the tendency preserves, the brand might acquire more powerful positions and become a leader in the given sphere. The current strategy and peculiarities of the functioning are appropriate for the further growth. The company could also find new international partners and improve its positions in the global market.

Threats

One of the main threats to Apples dominance at the market is the appearance of new rivals attracted by high incomes and constant rise of the given segment. For instance, along with traditionally powerful Samsung company, Huawei also becomes a more significant competitor that occupies a niche of cheap and affordable smartphones for the majority of people to be able to buy it (Dagnino & Cinci, 2015). The given strategy becomes extremely efficient regarding the tendency towards the rise of the middle class. Moreover, Apples success is to a large extent preconditioned by the attractiveness of models and their unusual design. However, the last several models demonstrate similar features. It introduces a new threat to Apple.

Conclusion

Altogether, Apple could be characterized as an extremely powerful brand that holds leading positions in smartphones market. Its efficient marketing strategy, management, and organizations structure contribute to the gradual growth in income. The company has numerous opportunities for the further rise because of the extensive use of innovations, unusual approaches, and technologies its rivals do not add to their products. In this regard, despite some decline observed in 2016 if to compare with 2015, Apple improves its position and creates the basis for the further rise.

References

Apple Inc. (2017a). Form 10-K 2017. Web.

Apple Inc. (2017b). Form DEF -14A 2017. Web.

Apple Inc. (2017c). Supplier list. Web.

Dagnino, G., & Cinci, M. (2015). Research methods for strategic management. New York, NY: Routledge.

Editorial Board. (2015). Research methods for strategic management. New York, NY: Words of Wisdom.

Global revenue from smartphone sales from 2013 to 2017. (2017). Web.

Global market share held by leading smartphone vendors from 4th quarter 2009 to 3rd quarter 2017. (2017). Web.

IBISWorld. (2017). Global computer hardware manufacturing: Market research report. Web.

Saardchom, N. (2014). Design patent war: Apple versus samsung. South Asian Journal of Business and Management Cases, 3(2), 221-228. Web.

Share of Apple’s revenue by geographical region from the first quarter of 2012 to the fourth quarter of 2017. (2017). Web.

Wilmott, C., Fraser, E., & Lammes, S. (2017). ‘I am he. I am he. Siri rules’: Work and play with the Apple Watch. European Journal of Cultural Studies. Web.

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