Objectives (Stated & Implied)
Mission: Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. 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.
Survival: “Think Differently.”
Current Position: Internal Analysis
Stated and Implied Strategies:
□ Forward Integration
□ Backward Integration
□ Horizontal Integration
X Diversification (Related/Unrelated)
□ Competitive (Cost/Differentiation)
Apple current strategic position is a differentiation strategy. Implications for functional areas:
Marketing: Distinctive and different marketing campaigns have been a strategy of Apple for years to reach customers and teach them about their products.
Production: The bundled packages of solely Apple developed hardware and software during the production process became the identity of the products it released.
R&D: Apple is known for its innovative products and that has a majority to do with its CEO Steve Jobs.
HR: Recruit, train, motivate, challenge, and promote the most talented employees
Current Position: Financial Analysis
Liquidity: Current Assets trends in the balance sheet reflect a strong liquidity position. Also, when we look at the liquidity ratios we see both ratios were well above the industry average which shows Apple Inc. has no problem meeting its short-term obligations.
Capital Structure: Apple Inc. did not have any long-term debt obligations for the periods 2003-2007. The company did not use any financial leverage to raise funds during the period of analysis. This shows the financial independence of Apple Inc. during the years of our analysis.
Profitability: As of 2007, Apple’s profit margin (33.97%) was above the industry average (26.4%), Dell’s (19.00%), and HP’s (23.60%). This indicates that Apple Inc. is a highly profitable company, and out performs its rivals. Compared to the industry, Apple’s ROA is above their average, which speaks for the efficient manner Apple Inc. is using its assets to generate earnings. For the last year, Apple’s ROA was 13.79% vs. industry: 3.35%.
Activity: Compared with the computer hardware industry in 2007, Apple’s inventory was turned over twice as frequently as industry competitors, which is a nice indicator of efficiency.
Other Issues: EPS is increasing which shows a strong position. Trend analysis indicates a growth trend. Analysis of income statement, it’s concluded that Apple Inc. has a strong position financially.
Porter’s Five Forces (+1)
Power of Suppliers: Powerful;
Power of Buyers:
Power of Substitutes:
Strengths: Apple Inc. has maintained a distinct image in the consumer electronics industry. Customers of Apple Inc. are brand loyal and sort of a “cult” following. They offer simple, aesthetic products and deploy the “plug and play” solution. Their products are diversified and offer little threat to viruses. The hard drive based IPod has been called the, “icon of the digital age.” The company has an excellent customer service department and also offers a genius bar (or apple professional) to teach about the usage of their products.
Weaknesses: Low Market Share in software industry.
Loss of Steve Jobs as CEO
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