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."
From Where Apple is Making
Money
Macintosh
Computer
s iPod
25% 42%

Others
<1%

iPad
10% iPhone
23%
 iMac iPod Nano
iPod iPad

Mac Book Air iPhone 4s iPhone 5s iPhone 5C

 Apple Inc. Competitors
Apple has many competitors in the personal
computers industry
 Apple Inc. Competitors
In smart phones
industry
Apple Inc. Competitors
In iPads
industry
 Strategic Group Map

Smartphones SGM
12

10

APPLE
8

HTC
Price

4 SAMSUNG

0
0 0.5 1 1.5 2 2.5 3 3.5
Quality
Strategic Group Map for
Software
 Financial Analysis
Ratio 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 5.01% 2.27% 2.47% Inventory increased drastically in

net working 2010 compared to 2009 & 2008, yet
capital still represents 5.01% from the
working capital
 Leverage Ratios

Debt-to-Asset 36.40% 33.40% 46.80% Improved debt ratio in 2009

ratio 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 57.30% 50% 88.20% Improved debt to equity ratio in 2009

ratio 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 13.90% 13.70% 21% Improved long term debt ratio in
to Equity ratio 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 62 94 73.6 Inventory turn over increased in 2009 compared tp 2008 then
turn Over 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 2.08 3.08 12.7 FATO is decreasing through the years of comparison,
Turn Over ( indicating mis management of fixed assets to generate sales,
FATO) or that the company maintains too much fixed assets that are
not much productive

Total 0.87 0.9 0.94 TATO decreased slightly throughout the years of comparison,
Assets the decrease might indicate inefficiency of total assets o
Turn Over ( generate sales , but it should be compared to industry average
TATO) 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.
 Recommendations

Short Menu

 Option One: Franchising of stores

 Option Two: Growth Strategy through new
products and new market opportunities
 Option Three: Vertical Integration
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

Thank you..