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 Computers ; 25%
iPod; 42%
Apple TV; 0%
iPad; 10%

iPhone; 23%

iMac

Mac Book Air

iPod

iPhone 4s

iPod Nano

iPhone 5s

iPad

iPhone 5C

Apple Inc. Competitors

Apple has many competitors in the personal
computers industry

Apple Inc.
Competitors
In smart phones
industry

In iPads
industry

Apple Inc.
Competitors

Strategic Group Map

Smartphones SGM
10
9
8
7
6
Price

5
4
3
2
1
0
0.5

1.5

2
Quality

2.5

3.5

Strategic Group Map for

Software

Financial Analysis
Ratio

2010

2009

2008

Comment

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

Profitability Ratios

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
net working
capital

5.01%

2.27%

2.47%

Inventory increased drastically in

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

Leverage Ratios
Debt-to-Asset
ratio

36.40%

33.40%

46.80%

Improved debt ratio in 2009

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
ratio

57.30%

50%

88.20%

Improved debt to equity ratio in 2009

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

to Equity ratio

13.90%

13.70%

21%

Improved long term debt ratio in

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
turn Over

62

94

73.6

Inventory turn over increased in 2009 compared tp 2008 then

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
Turn Over (
FATO)

2.08

3.08

12.7

FATO is decreasing through the years of comparison, indicating

mis management of fixed assets to generate sales, or that the
company maintains too much fixed assets that are not much
productive

Total
Assets
Turn Over (
TATO)

0.87

0.9

0.94

TATO decreased slightly throughout the years of comparison,

the decrease might indicate inefficiency of total assets o
generate sales , but it should be compared to industry average
to determine clear analysis

Issues

1. Product differentiation
In todays 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
Apples 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 Apples 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..