Apple Incorporated

James Belich, Elizabeth Bond, Anthony Cunningham, Willis Green,Ryan Hunter, Erin Evans, Brent Poplin, and Meredith Poole
Survey of Management Dr. Dana Clark April 10, 2009

HistoryofAppleandSteveJobs
As a co-founder of Apple, the life of Steve Jobs coincides with the chronology of Apple. The history of Apple, Inc. would not exist without the success of Steve Jobs, and their histories are one in the same. Therefore, it is necessary that we consolidate the vision of Steve Jobs which acted as a catalyst for what Apple, Inc. is today. Steve Jobs was born in 1955 in San Francisco California and one week later put up for adoption by his unmarried mother who was attending graduate school. Soon after he was adopted by Paul and Clara Jobs and raised in Cupertino, California. Steve Jobs and Steve Wozniak met while working for Hewlett Packard Company in high school. Jobs went on to graduate high school in 1972 and enrolled in Reed College, Portland but soon dropped out to travel through India in search of enlightenment. Returning with a shaved head and wearing traditional Indian clothing Jobs was ready to team with Wozniak to forever change the personal computer industry (Steve Jobs Biography 2009). On April 1, 1976, Steve Jobs, Steve Wozniak and Ronald Wayne created the Apple I personal computer kit as the first product of the Apple Computer Company. Unfortunately for Wayne, after eleven days of the organizations existence, he sold his share of Apple for $800 because of the debt the three had endured during the process of creating the organization. By 1977, Apple Computer became incorporated and was a successful personal computer business based on simplicity and usability under the leadership of Jobs and Wozniak (Steven Jobs 2008). Apple Computers, Inc. became incorporated with a $92,000 investment from Mike Markkula whose intent was to invest more into Apple, with his total investment reaching $250,000 (Kimmel 1998). Later, Michael Scott became the first CEO of Apple Computers, Inc., which confused many as to why Jobs or Wozniak were not chosen. Mike Markkula chose Scott as the first CEO to ensure that the organization would operate efficiently during the establishment years as a corporation, and Markkula believed Jobs and Wozniak were too inexperienced for the job. Scott remained CEO until April of 1983 when John Sculley, former president of PepsiCo, replaced Scott, and filled the position (History of Apple, Inc. 2009). During the 1980s, Apple Computers, Inc. was recognized on the Fortune 500 list (#411) after five years of existence, making it the fastest growing company in history. The Macintosh 128K was introduced to the public during the 1984 Super Bowl commercial which is now legendary. The campaign to launch the commercial was approved by CEO John Sculley for $15 million (Kimmel 1998). The initial sales of the Macintosh 128K were

successful but eventually declined. By September 7, 1984, Apple Computers, Inc. offered common stock to the public for the first time (History of Apple, Inc. 2009). Apples success was noticeable after 1984 but detriments to the organizations success would be unavoidable. After laying off 1,200 employees, corporate tensions began to increase (History of Apple, Inc. 2009). During this time, Jobs acted as a charismatic manager for Apple under chief executive John Sculley; but, in 1985 a power struggle ended with Jobs stripped of his duties by the board of directors so he resigned and sold all but one of his sharesremain[ing] chairman of Apple for some time (Steve Jobs Biography 2009). Steve Jobs and Sculley were not able to work cohesively, and the Apple Board of Directors sided with Sculley which encouraged Jobs to leave Apple Computers, Inc., and start a new company called NeXT. In 1986, Jobs also purchased the computer division of the motion-picture studio Lucasfilm Ltd. for $60 million incorporating the division as Pixar Animation Studios. Pixar became a leader in computer animation and in developing software for advanced computer graphics (Steven Jobs 2008). In 1996, Jobs and Apple were reunited when Apple bought his operating system, NeXT, for $400 million because it was known for being ahead of its time (Lohr 1997). In 1997, Jobs became interim CEO of Apple and quickly began to reverse its falling share of the personal computer market by restoring profitability and introducing new products. The iMac, released on August 15, 1998, became the fastest selling personal computer in history. It is known that Jobs played a key role in the creation and marketing of [the] stylish, one-piece computer which caused the industry to recognize Apple as a competitor and innovator in technology. In fact, Apple sold 278,000 iMacs in its first two months and over 2 million in its first two years which were astronomical numbers for a personal computer in 1998 (Kimmel 1998). With the introduction of the iMac in 1998, Apple had its first profitable year since 1995 (Apple, Inc. History). In 2000, Jobs became the official CEO of Apple and introduced the iPod digital music player the next year which sold 100 million units in six years. The iPod helped create new profitable entities for Apple Computers, Inc. such as iTunes. ITunes is an online store where consumers can download MP3 files of songs recognized in the online catalogue. The iTunes store assisted Apple Computers, Inc. in becoming the market leader in online music services, with over 5 billion downloads by June 19, 2008 (Apple, Inc. History). Between 2003 and 2006, Apples stock prices rose from a mere $6 to over $80 a share which can be attributed to the iPod itself. In January 2007, Jobs announced the development of the iPhone, a cellular telephone that also acted as an MP3 player, a source for internet access, and included Apples unique interface design (Steven Jobs 2008). Apples stocks then soared

to an all-time high of $97.30 a share; later in May 2007, the stock prices surpassed $100 a share, guaranteeing the companys future in the technological market. Under the direction of Steve Jobs, Apple was once again transformed into a leader of emerging technologies (Apple, Inc. History 2008). In more recent news, Jobs is taking a six-month medical leave of absence from Apple (Lashinsky 2009). In 2003, Jobs was diagnosed with a rare and treatable form of pancreatic cancer. On July 31, 2004, the tumor on his pancreas was surgically removed and his prognosis was promising (Elkind 2008). Jobs credits a hormonal imbalance to his current leave and rapid weight loss but many believe that his cancer has resurfaced. During his absence, Apples chief operating officer Tim Cook will be responsible for the corporation, and Jobs will contribute to major strategic decisions and remain CEO. This change has offered a perspective to what Apple could be like if Jobs were to permanently leave. Unlike Jobs, Cook is mild-mannered and disciplined towards business but lacks the vision that Jobs is famous for. However, it is unlikely that Jobs absence will have any impact on the companys near-term plans, given that Apple famously and secretively plots its products years in advance (Lashinsky 2009). Jobs married Laurene Powell on March 18, 1991 and he has three children with her. He also has a daughter with Chrisann Brennan but was never married to her (Steve Jobs Biography 2009).

ApplesMission
The following is Apples Mission Statement: Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market with its revolutionary iPhone. Apples mission is to lead the consumer electronic industry and has done so in the past with revolutionary products like the OS X operating system and the Apple II. Its current goal is to reinvent the music, mobile phone, personal computer and software industries. Other corporations are competing in this technological advancement but Apple plans to be the first. It has established a reputation for providing technology with significant quality superiority in comparison to other corporations. Apple is determined to change and set the standards.

ApplesCurrentProjects
Apple is a company devoted to offering its customers the most advanced consumer electronics to at an affordable price. Since the Apple I computer was developed and brought into the market, Apple has grown, reinvented itself, and taken the consumer electronics market to new heights. Currently, Apple is continuing to develop new and revolutionary products and is setting the standard for other companies. These products include the iPod, the iPhone, the Macbook laptop, the Apple TV and many others. In todays market, if a consumer is planning to purchase an MP3 player, the initial product sought out is the iPod. The iPod has been in the market for many years and has been differentiated and modified countless times to remain the most profitable MP3 product offered. 23 million iPods were sold in the final quarter of the 2008 business term to bring Apple up to its reported profits of $1.61 billion for the year (Wilkinson 2009). The software bundle provided by Apple Inc. for its Mac computers, iLife, is one of Apples greatest breakthrough products. ILife consists of iMovie, iTunes, iDVD, iPhoto, Garadgeband, and iWeb which are for organizing, publishing, and viewing digital content. Though most of the iLife programs were specifically developed for Apple computers, the iTunes program is free and can be used easily on different computer platforms. The iLife 09 software suite provides updates for the entire program group except for iDVD. Paired with the iWork software bundle, which provides desktop publishing applications such as Keynote and Numbers, the newest Apple software applications some of the most desirable in the market and compete heavily with the Windows applications. ILife 09 is Apples solution to its customers curiosity with regards to the initial bundle of software applications received with the purchase of an Apple computer. For an example, iPhoto is equipped with a face recognition tool as well as social networking integrations, and the upgraded GarageBand tool offers music lessons to novice musicians (German 2009). Apple has been able to benefit from its product branding of the iPod. When a consumer wants to purchase an MP3 player, he will think of an iPod first because the word iPod has branded the MP3 player. Consumers know an MP3 player as an iPod and not as an MP3 player. Xerox, Fed-Ex, and Kleenex are all examples of a brand name taking the place of the actual product. This is the goal of many companies because being able to successfully brand a product the way Apple has will increase its visibility in the market and to consumers. In June of 2007, Apple penetrated the mobile phone market with the revolutionary iPhone, a touch-screen camera phone that has a myriad of downloadable applications, internet access, a high quality video player and more.

Though the economy continues to slow, the iPhone brings much revenue with its large number of gaming applications that are selling rapidly. In February 2009, Izatt international held an iPhone gaming course in Utah for developers to learn the skills necessary to make a game for the iPhone and expand iPhones gaming market to new levels (Cohen 2009). Izatt international is a company devoted to the development and education of the iPhone gaming system as well as other mobile consumer electronic games (Izatt 2008). Since the introduction of the iPod and iPhone, the corporation has gained success from another revenue stream that has had a demand increase which correlates to the introduction of those products. Apples accessories profits have skyrocketed with the success of the iPod and iPhone. Consumers have responded heavily to Apples continued development of iPod, iPhone and Mac accessories. The Apple accessory market is huge and growing rampantly fast that websites that review the products can hardly keep up with their releases. Products such as iPod docking stations and the new iBoo allow consumers to listen to their iPods through larger, high, quality speakers. Other products such as high quality printers, mice and keyboards for Macs, are all in place to enhance the consumers product experience (CNET Staff 2007). Though Apple is typically discrete with releasing information about its new products, it is known that the iHoop will join the market soon. Apple has teamed with Spalding to create a full sized basketball goal complete with an iPod docking station and large speakers at its base designed in such a way to resist weather and corrosion. The iHoop is expected to be released online and in stores soon (Spalding iHoop 2009). Accessories continue to drive iPod, iPhone, and Mac profits up as Apple continues to develop and release newer products appeal to consumers. One of Apples newest products is the Apple TV. This is a product that connects a television to a digital media receiver and allows the downloading of television shows, movies, and more to the television through iTunes. ITunes is an entertainment downloading tool provided by Apple to allow millions of consumers to buy music and download it legally to their computers and iPods. Apple Inc. is striving to produce the highest quality electronic products for its customers. It is developing new applications and modifications for the current products in the marketplace to maximize profit. Now that the economy of the United States is in recession, Apple is profoundly searching for new methods to continue its dominance of the consumer electronic market.

ApplesSocialResponsibilities
Social responsibilities benefit an organization, its employees, and most ardently the consumers that purchase products or receive services. Apple, Inc. is an organization that provides various products for entertainment and business purposes; but, as a competitive paradigm in the technological industry, the organization identifies its social responsibility through refurbished goods, environmentally compatible products, and philanthropy. The latest products that can be found on the Apple website are popular consumer products but are rather costly. Another way to purchase the latest technology and save money is paying for refurbished goods. These products still work sufficiently; the only difference is that refurbished products were previously owned and were returned under Apples Return and Refund Policies. According to Accenture, a consulting company, only 5% of returns have defects; therefore most refurbished products are equivalent to the brand new ones (Karp 2008). There are some items that get returned simply because a customer ordered the wrong color or they just did not understand how to use it (Karp 2008). Why should anyone pay $2,499 for the latest MacBook Pro when they can purchase a refurbished one for $1,799? A $700 difference is worth saving. These are the products that are worth buying because the fact that Apple has a wide variety of refurbished products and for decent prices indicates that the organization provides top quality for a discounted rate which will appeal to another demographic. As the technological innovations continue to increase and developed nations become more dependent on the internet and its vehicles, Apple has adjusted its materials for building products. With the arrival of the information age came an increase in e-waste; Apple is not participating in the global neglect of this pollution. Apple now uses aluminum bodies for its products because they are lighter, more efficient, and easier to recycle. According to a quote from an article in the New Zealand Herald, Apple strongly believes that reducing the environmental impact of our business starts with design of our products; therefore, the organization has been slimming packaging and cutting down on the use of polystyrene foam (How Green 2008). The lead content has been reduced from 483 grams to .6 grams in the iMac, and the power consumption in sleep mode was cut from 35 watts to 2.2 watts. In order to adjust the battery, Apple now uses lithium metal batteries which avoid the use of toxic heavy metals. In order to inform others of its adaptations, Apple releases Product Environment Reports and puts restrictions on certain substances used in production (How Green 2008). In addition to these adaptations, the corporation has developed the eco-friendly LED-backlit display [which] is made from arsenic-free glass [and] eliminates the mercury found in LCD screens and uses up to 30% less energy than other notebooks (Kellner).

Perhaps the best environmental friendly feature of the organization is that customers can recycle their products that they no longer use. The organization is fulfilling its social responsibility by allowing customers to recycle pieces of technology, increasing resourcefulness and ultimately assisting Apple in reducing e-waste. Apple provides top quality products for technologically savvy consumers across the world. Apple has developed a process for supporting philanthropy through the purchase of various products. The organization is considered one of the least philanthropic companies in America; but, there is at least one meaningful purchase consumers can make to help Apple support people in need (Stanford Social Innovation Review). Apples Product Red allows money from those iPods to go towards research and support for the AIDS Foundation. This allows for the corporation to give back to the community by showing it cares about global issues that affect many people. Perhaps in the future the corporation will be able to increase its support for national and global philanthropies. From recycled and refurbished products, to supporting philanthropy, Apple, Inc is proving its loyalty to the community, by giving back in these various ways. No organization is perfect but each one has to be socially responsible in order to improve products, services and most importantly its relationships with its consumers.

ApplesInternationalGrowthandOperations
Apple is growing rapidly not just in the United States, but also overseas. It has more than 250 stores in 10 countries, and plans to open 25 new stores in the year 2009 with about half of these new stores being international (Reuters 2009). Apple is giving credit to its International Operations for its 134% jump in the second quarter profits. Sales in the United States were seeing a decline because of the economy; however, the international sales represented 47% of total business profits (Computergram 1990). Right now is a great time to expand into the international market. Apples stores average 4,000 square feet and the organization is opening up new mini-locations that will be between 1,500 to 2,000-square-feet. They will hold mainly grab-and-go and impulse-buy products like iPods and accessories (Apple Insider Staff 2004). These stores would be a great investment overseas to sell the popular items that Apple is famous for. In a mid-2008 conference Apple CFO Peter Oppenheimer planned on opening 35-40 new stores and a large percentage of these would be international. For early August, Apple made definite plans to debut stores in Germany, Switzerland, France and Mexico (Info AppleStore 2004). With all of these plans Apple is showing universal strength. By being competitive internationally and within the United States, this company is setting standards other competitors have to match. 7

ReviewofApplesWebsite

As an innovator in technology, Apple uses its website to promote its latest product and provide information about advancements to potential users. For example, Apple.coms current opening page is an advertisement for the new iPod Shuffle. This is a brilliant marketing strategy because as a product in the Introduction stage of the Product Life Cycle it is imperative that the public be aware of this creation and its capabilities. Apple ensures this by using the advertisement as a direct link to more information about the Shuffle made available for the viewer. This information includes the products special features used to differentiate it from other items in the market, the price, how to purchase the Shuffle, and a guided tour of the product. The opening page also involves direct links to other successful aspects of Apple like the iTunes Store, Hot Headlines which are news releases about Apple, and more information about products and software. The website itself reflects the tastefulness and simplicity that Apple maintains in its original products. The most noticeable color on the website is the fresh white background that is surrounded by metallic silver, dull black, and a clean legible font. Considering that so many of Apples products display its famous graphic interface, it is necessary that the originality seen in Apples software resemble the design of its website. As a retail organization, Apples most important quality is its products which is highlighted in the website. At the top of the webpage are accessible tabs for each of Apples major products, the Mac, iTunes and the iPod, and the iPhone. These tabs guide the viewer to the homepage for each product line. Within each line there are several different items and accessories that are all visually represented on the website followed by a detailed description and price. The Apple website allows for easy navigation and is well-organized, benefiting the customers as they can maneuver easily through the product details. Strategically, Apple also places a store tab at the top of the page that can be easily found by shoppers and allows for buying in one, simple click. Overall, this is a very effective website that displays all of Apples products in a unique way through a practical layout. This corporation has made all of its information accessible and complements the functions and tasks of the organization (Apple 2009).

CurrentFinancialStateofApple
Since the start of the organization, Apple has brilliantly focused on its profitable products making it financially influential compared to other companies. Through 2006-2008, Apple had no individual customer account for more than 10% of [its] net sales. The company also sells many of its products and resells certain third8

party products in most of its major markets. [The organization reaches] customers through itssales force and retail and online stores (Apple Inc. 10). Since 2004, net sales within Apple have had a 292% increase to $32.5 billion, while net income has gone up 1717% to $4.8 billion. Its commitment to designing, manufacturing, and marketing personal computers, portable digital music players, and mobile communication devices has led to Apples success. This span of various products relates to Apples software, services, peripherals, and networking solutions giving it an influential platform (Apple Inc. 36). Apple is a leader in several competitive markets and is clearly focused on providing innovative products and solutions to its customers. Enabling its sales force, the company utilizes a variety of direct and indirect distribution channels to target and differentiate its products as the the value of the hardware, software, and peripheral integration, demonstrate the unique digital lifestyle solutions that are available only on Mac computers (Apple Inc. 37). The most intriguing story found in the financial analysis is the market trends and inferences that can be found on page 86. For example, the Mac net sales tend to still be in the growth stage, yielding about a 138% increase per year. In contrast to the Macs, which are still on the edge of growth and innovation, the iPod seems to be tapering and reaching its saturation point. Though the product line is still yielding a profit and making gains, the numbers reflect that sales are starting to level off and the iPod remains profitable but lacks the market growth it once had. In contrast to the iPod, the iPhone exceeds market potential. The profit gains from iPhone net sales had a 1400% increase since its introduction in 2007 (Apple Inc. 86-90). The future is promising for Apple financially. It has proven that it can succeed through tough economic times in the United States with its influence internationally (See Graphs). With a dedicated vision and array of products, Apple has set a foundation for success and great yields for the future. Apples current financial stability, gives it the potential to act as a paradigm in several areas of the consumer electronics market.

AnalysisofApplesManagerialOperations
Apple is divided into three main divisions of tasks that include hardware, software engineering and retail. Essentially, Apple is a conglomeration of three successful but completely different company types: Microsoft, Dell and The Gap (Monograph 2003). Apple is a classic example of a departmentalized structure. These three departments are individually formed by their functions. The departments are organized by which types of product

they specialize in order to maximize efficiency. In addition to products, geographic location is also an influential aspect of the structure. This model proves to be an effective and efficient way to operate the corporation. At the top of the organizational chart is the CEO, Steve Jobs. As a great entrepreneur and co-founder of one of the largest corporations in the world, Steve Jobs has shaped the infrastructure of Apple, Inc. Jobs supervises every aspect of the organizations products and services. He finds it necessary to be highly involved with various projects at Apple. His vision has led to the unique structure that allows the organization to function efficiently and expand. Under Jobs, Tim Cook has the role of Chief Operational Officer. As COO, Cook is responsible for worldwide sales and operations, management of Apple supply chains, sales activities, and service and support in all markets and countries. Peter Oppenheimer has had the role of Senior Vice President and Chief Financial Officer since 1997. Oppenheimer oversees the basic finances for all the entities of Apple. Working beside Cook and Oppenheimer is a team of Senior Vice Presidents who specialize in various operations within the corporation. A few of these divisions include design, applications, marketing, and software engineering. John Brandon is the Vice President of Apple America and Asia Pacific and supervises the operations in these two significant markets. Beneath Brandon is an administrative team that specializes in Apple America and Asia Pacific. Adjacent to Brandon is a team of managers and directors that specialize in the key components of operations for Apple, Inc. Rather than having a traditional business model that most large international corporations have, Apple combines different structures to allow consistency within the organization. It is very difficult to consolidate the ideas and goals of geographically distant personnel. The chart exemplifies how the organization is unified regardless of distance and responsibilities (See chart). This structure is effectively used and based on the three departments of Apple and the authority throughout the organization (Apple, Inc. Organizational Chart 2009).

HasApplefoundtheOneBestWay?
The best way for Apple to complete a task is to keep the most intelligent and stable executive board to focus on strategic planning and assist the corporation through creativity and stability. Some corporations rely on large quantities of employees with one authority figure to complete tasks whereas Apple, Inc, puts a strong emphasis on its substantial executive board consisting of twelve, intellectually competent members. Each member of the executive board has significant experience and an educational background that indicates his qualifications through academia. 10

For example, Tim D. Cook, Chief Operating Officer, has a M.B.A. from Duke University in addition to a Bachelor of Science degree in Industrial Engineering from Auburn University. Ron Johnson, Senior V.P. of Retail has a M.B.A. from Harvard and a Bachelor of Arts in Economics from Stanford University. Daniel Cooperman, Senior V.P. of General Counsel and Secretary, graduated summa cum laude with highest distinction in economics from Dartmouth College, then attended Stanford University's Graduate School of Business and School of Law, receiving both his M.B.A. and J.D. from Stanford. These are just a few examples of Apples Executive Board and their prestigious qualifications. In addition to the intellect and qualifications of Apples Executive Board it seems to manage the organization sufficiently with the absence of female colleagues. This allows for the Executive Board to run the corporation as a patriarchal society. With the absence of women, Apple has managed to consistently operate the corporation in a masculine manner without a personable environment that correlates to feminine management. The one best way to manage an organization is by having competent and intelligent people implementing change which is made possible from stability. There are no organizations that are perfect and even Apples success does not excuse it from determining which changes are necessary. The best way for an organization to succeed is to make changes. However, changes can only be stimulated from an organization that has structural stability which is determined by the productivity and competence of the Executive Board. A stable Executive Board with an abundance of knowledge set the foundation for changes that ultimately equal an organizations creativity and success.

CEOAnalysisandSkills
Leading the executive board is Steve Jobs, Apples chief executive officer since 2000. Jobs has several skills that contribute to Apples success; in fact, many would say that Apple and Jobs are one in the same. He has listed himself as co-inventor on 103 separate Apple patents and maintains meticulous control in the day-to-day operations of the company (Elkind 2008). It is clear who is in charge of Apples decisions; every idea, suggestion, or modification that approaches - everything goes through Jobs (Schmeiser 2008). He has been labeled the most successful CEO today, considering that he has shaped what entertainment we watch, how we listen to music, and what sort of objects we use to work and play (Elkind 2008). Since he started at Apple, Jobs has become a pop culture icon who is worshiped for his innovations (Schmeiser 2008). He has the ability to get people excited about technology by including them in his enthusiasm. Therefore, Jobs is known for his fantastic salesmanship and 11

inspiring his team to share in his visions. Jobs desire for sophistication is apparent in the design of each Apple product. He is a modernist and a believer in simple elegance and taste when dealing with the aesthetics of his products (Lohr 1997). Although he has led Apple through a technological revolution, Steve Jobs maintains a level of notoriety. According to Apple insiders Jobs has narrowed his interests to the subjects that truly excite him including design, advertising, marketing, public events, and key products like the iPhone and iPod (Lashinsky 2009). It is known that he does not create a personable working environment, and it is difficult to collaborate with him. Jobs is also known for being particularly finicky and domineering towards Apples products. For example, Jobs once rejected a proposed Macintosh circuit board because it looked ugly, even though only service technicians would be the ones to see it (Lohr 1997). Jobs is also infamous for being secretive and controlling about what the public learns about him. When Jobs was diagnosed with cancer in 2003 he manipulated the situation to keep it hidden until after his surgery, a move that posed a significant risk for Apple and its investors. It is well known that Jobs creates a brutal working environment by periodically reduc[ing] subordinates to tears, and fir[ing] employees in angry tantrums. (Elkind 2008). In conclusion, Jobs is known for being arrogant, frank, difficult, smug, and insensitive (Lohr 1997). However, many believe that it is his notoriety that gives Apple the kind of attention and press coverage which sets them apart from other companies (Schmeiser 2008).

ApplesFutureDirectionasanOrganization
In the early stages of the organization, Apple would scramble to release products in order to counter competition and meet market demands. Products like PowerTalk and QuickDraw GX failed to meet the electronic consumer standards after being labeled premature and unorganized once released into the market. Learning from its mistakes, Apple now realizes that timing is its most important marketing tool. Apple uses timing to build excitement about its new products and anticipation about upcoming release dates (Why is Apple 2006). For example, the iPhone was released June 29, 2007. In January 2007, Apple began to tactfully release information and small details about its upcoming product. By doing so, Apple increased buyers anxiety within the market, more than 60 percent of consumers [were] aware of what the iPhone [was] and an unprecedented chunk of those people [were] interested in buying one (iPhone Anticipation 2007). To satisfy consumer inquiries, Apple will now

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release a few details regarding future plans for products. This is done through annual Apple events and weekly product updates to continuously build consumer anticipation (Why is Apple 2006).

Future Apple products include establishing a wireless network for iPod users to detect devices on similar networks. These items do not necessarily include the iPod; they could also be establishing networks for media players, PDAs, or some other types of wireless devices. Users can share various types of data including music, entire albums, photos, computer games, audio and video presentations, news reports, and other media files (Cheng 2007). This creation would allow for Apple to extend its consumer base.

According to Steve Jobs, Apple has been criticized by some environmental organizations for not being a leader in removing toxic chemicals from its new products, and for not aggressively or properly recycling its old products. As our economy becomes environmentally conscious Apple is taking the necessary precautions to be socially responsible. Apple has now eliminated its use of CRTs (cathode-ray-tubes) effectively reducing the companys usage of lead by pounds per unit (Jobs reveals 2007). It has also reduced its use of polyvinyl chloride (PVC), a type of plastic used in computer building, reducing the risk of electrical fire. Apple recycled 13 million pounds of e-waste in 2006 and expects this number to grow to 19 million pounds in 2010. Jobs promises to reveal more regarding the companys environmental policies and efforts for the future. According to Jobs, today is the first time we have openly discussed our plans to become a greener Appleit will not be the last (Jobs reveals 2007).

SWOTAnalysisforApple,Inc.
Apple is a very successful producer of computer software and hardware that leads in its competitive industry. To evaluate the progress, success, and faults of the company, the SWOT analysis is used. The SWOT analysis is a strategic planning tool used to evaluate the strengths, weaknesses, opportunities, and threats to the organization. This model is used to help it identify internal and external areas that need improvement and internal and external areas that prove to be successful. Strengths: Over the years, Apple has grown by offering superior products compared to competitors. Apple has positioned itself to be a pioneer in the personal computer industry. It is one of the original hardware producers in the market that controls both the manufacturing of its products as well as its operating system. Apple is self-

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sufficient and creates its own internal components for the core of its computers. Apple has set standards for high quality products in order to meet customer satisfaction. It is dedicated to research and development in order to create new products, which are expected to make Apples products more efficient and feasible to use. As a result of the companys commitment to excellence, most of its products are compact and simple to operate. Apple is known for its loyal consumers who purchase its products for quality, regardless of price. Apple has ascended to a brand of distinction in the computer industry, which yielded a successful net income of $4.8 billion in 2008. In addition, [the companys] stock price is the highest in the personal computer industry. Apple is financed mostly by its equity. In fact Apple does not have any debt, so investors would bear less risk by holding Apples stocks. The company is well-endowed and capable of acquiring any firm that could enhance the value of the company. Its customer service department is monumental and highly respected by consumers. Apple plans to maintain its status through organizational stability and creativity. (Carrido 2006). Weaknesses: Advanced technology is being developed and produced for customers; therefore, Apple is faced with the difficult task of ensuring consistency and quality within its products. For example, the iPod, which is a global success, had many glitches and technological flaws including battery life and screen faults that plagued iPods when they were first released. Currently, these flaws have been resolved in newer models, though the products are still not perfect. With many other companies creating similar products, it is imperative for Apple to remain competitive by solving technological errors in devices. It is advantageous that Apple continue to invest in its Research and Development department to remain competitive. Apple is a seemingly financially stable organization; its lack of debt is a potential weakness for the infrastructure because it creates potential risk for stock acquisition by other corporations. Opportunities: The employees at Apple are sufficient in their expertise because they predict the target audience for the latest technology. Because of their originality, Apple is known for its innovative thinking. It has developed a product line that is both functional and attractive (Carrido 2006). The organization is spreading beyond the confines of its products and into the lives of its consumers. The Apple iLife applications allow users to connect to multiple programs through one package. ILife provides a well-integrated elegant interface that enables users to tie into iMac, iTunes, iMovie, iPhoto, GarageBand and YouTube accounts. The current opportunity for Apple is the development and campaign of the new iPod shuffle - the worlds first talking MP3 player. Apple has proven its quality by packing 4 gigabytes of memory into a device half the size of the original Shuffle. Another area that Apple

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is pursuing is the use of Intel chips. The Apple Intel chips will allow new machines to run the Windows Operation System and could also be used to develop iTunes and music player technology that can be applied to a mobile phone. Apple must continue to create opportunities through new, innovative software markets and strive to introduce its groundbreaking hardware into these markets. Threats: The computer technology industry is a consistently transforming and highly competitive industry. There are more competitive companies entering the market that Apple has saturated. Microsoft is Apples historic rival, and has managed to maintain its competitive status. In the computer hardware division, there are many competitors such as Hewlett-Packard and Dell. Dell produces low-budget computers and products that appeal to economically cautious consumers. Apple has a higher stock price than Dell and HP but Apples market share and total revenue are significantly lower. It is imperative for Apple to consistently create new products that set financial and technological standards for the computer industry. Apple has a growing international market, specifically in Asia. The exchange rates challenge the organization and create a shift in supply and demand. With the depreciation of the US dollar, the international revenue is declining. The global economy threatens most industries in the global market, which presents a revenue obstacle for Apple (Carrido 2006).

ObservingCompetitiveness:ApplesPorterModel
The Porter Model is a study of the company in question compared to its competition. Apple differentiates itself from the competition by creating products that are unique and lead to innovation among the industry. Apples major competitors are Dell, Hewlett-Packard Company, and Microsoft. In comparison, Apple excels in quarterly revenue growth, earnings per share, price per earnings ratio, price earning to grow in a five year expectancy, and purchases and sales which describes the margin of future traders (Apple Inc. (AAPL) Competitors 2009). For the third straight year, Apple has overwhelmed competition and led Fortunes list of Most Admired Companies for innovation mainly for the development of the iPod, iPhone, and iMac for the year 2008 (Murphy 2008). Apple has led the industry in an entirely different direction and, because of its original products; competitors have now followed with their own versions of several Apple products that model the iPod, iPhone, and MacBook. The creation of the iPod has stimulated the evolution of MP3 players and encouraged competition and advancement. For example, Microsoft created the Zune, an MP3 player to rival the iPod with FM radio, sharing and syncing capabilities, and a larger video screen. To compete with iTunes, Microsoft also has the Zune Marketplace where customers can purchase their MP3 files (Microsoft Zune Review 2009). Dell has offered a$100 rebate 15

program if potential customers would exchange their iPod for Dells DJ MP3 player (Bangeman 2004). The creation of the iPhone has sparked a demand for touch screen development in most rival companies. To contrast, Samsung has developed the Samsung Ultra Smart F700 which has a slide out QWERTY Keyboard, and resembles the iPhone when closed. The Samsung Ultra Smart also has a 5 megapixel camera with auto focus, and the phone also supports the High Speed Downlink Packet Access (HSDPA) network (Samsung 2009). Another famous Apple product is the MacBook, a compact thirteen inch portable laptop. To counter the MacBook in the market, Toshiba has created the U405D-S2874, a thirteen inch laptop that is less expensive than the $1,299 MacBook but has a slower AMD processor, a smaller hard drive, and mediocre integrated graphics (Ackerman 2008). As companies develop their own style of Apple products, it is apparent that none can compete against the innovation and creativity that Apple has established. Through Porters Model, Apple fuctions as a differentiator among its rivals and rival products.

ApplesStrategicBusinessUnits:BostonConsultingGroup Model
The Boston Consulting Group Model is a tool used to measure the productivity of strategic business units on the basis of their relative market share and market growth rate. The idea behind this matrix is that a products market share and profitability are directly linked, and this ratio decides which products within the company are most competitive (Lamb 45). Star products are market leaders and growing rapidly. For Apple, the Star products include the iPhone, iMac, iTunes, and the iPod Touch, Classic, Nano, and Shuffle. These products have transformed the overall direction of the consumer electronics market. In several cases, Apples products have dominated this fast-growing market. As stated before, 23 million iPods were sold in the final quarter of 2008, leading the MP3 player market and propelling Apples profits to $1.61 billion. The iPhone and iPod touch are relatively new products but have proved to be revolutionary by penetrating the mobile phone market and mobile internet provider market. Cash cows are products that have a low market share but generate enough cash to maintain market dominance. The products that are Apples Cash Cows are mainly those of the Macbook and Mac computer variety. Though the Macbook, Macbook Pro, and Macbook Air are popular products, the growth rate for laptops is slow and consistent. Laptops are becoming more popular and Apples laptops are generating large portions of cash in a slow growing market.

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Question Marks in the Boston Consulting Group Model are products that show rapid growth but poor profit margins. For Apple these products are the fairly new ones like Apple TV and iLife 09 because their market growth has yet to be determined. A major question mark for Apple Inc. is AppleTV, simply because there is already a big industry of flat screen televisions (Sanyo, Vizio, and LG) and cable companies (DirecTV, TiVo, Dish Network). Apple might be able to penetrate the television industry but should not make weighted investments. The Time Capsule, an external hard drive, is a device recently released from Apple that, while it appears to be a useful tool, cannot be seen as mobile, like the iPhone and iPod touch, which is a continuous theme that Apple is implementing into the corporation and, at a price $299, it is not economically wise. Dogs are defined as products that have low growth potential and small market shares. For Apple, these are the products that have not been successful in the market, like the Apple Keyboard and the iWork 09. The Apple Keyboard can be seen as a dog, because it has wires. Apples mission is to provide a wireless experience in all technological endeavors that the consumers are exploring, be it music, the Internet, or various applications. The Apple Keyboard was good for the early 2000s, but not for now and or the future. The iWork 09 is equivalent to Microsoft Office 2007 and is a dog for that reason. Majority of users own Microsoft Office instead of iWork, which led to fewer sales and, ultimately, iWorks demise. The Boston Consulting Group Model displays Apples strength in the market because a majority of its products maintain a high market share and are competitive and profitable.

TheFirstThreeStepsweWouldTakeasApplesCEO
As Apples new CEO, the first step that we would take is to make changes to enhance the corporations social responsibility. Some of our ideas include providing more philanthropic options for consumers and direct sponsorship of nonprofit organizations with the purchase of each product. We would also look to increase the education market by placing Macintosh computers in primary and secondary schools accompanied with tutorial programs geared towards children and their curriculum. By implementing, students could become proficient and confident with the interface and continue to use Apple products throughout their educational career. Ideally, the market share will increase, allowing for student discounts on computers and the better promotion of iTunes U, an educational segment of the iTunes store. Our second move as CEO would be to develop our marketing department. As new CEO, our objective would be to increase the number of Apple retail stores, including global expansion. There are over 200 Apple Stores worldwide, a majority of those being in the United States. Internationally, Apples retail stores are present in the 17

United Kingdom (20 stores), Canada (9), Japan (7), Australia (3), Switzerland (2), Italy (1), China (1), and Germany (1) (Apple Retail Store 2009). We think that Apple is not taking advantage of the overseas market and should expand its retail opportunities in several countries like France, India, Austria, Spain, Denmark, Finland, Greece, Ireland, South Africa, Portugal, South Korea, and Netherlands. Also, we plan to increase the number of stores in Italy, Australia, China and Germany. The creation of local Apple Retail Stores cuts shipping costs, provides consumers with the opportunity to test products, and provides a more personal customer service experience. Negative factors of the expansion could include hiring more employees and the overhead costs of building and expansion. Ideally, because the stores would penetrate new markets and raise awareness about Apple products, these factors would pay for themselves. We would increase promotion through sponsorships by donating to educational programs, and increasing advertisements in technology journals, magazines, and also in the music and movie industries. Since several of our products are geared to college students and are used in the athletic community, we would like to sponsor college athletic programs and participate in the Olympics as a sponsor. Our final step as CEO would be to enhance product innovation and increase new developments. One example would be to offer a less expensive cell phone option to the iPhone. Like the Shuffle is to the iPod, the iPhone could implement a slide or flip phone with simplistic features but maintain the prestige of the iPhone. We would also make available multiple networks for the iPhone so that consumers are not contracted to one company. This year, the iPhones contract with AT&T is ending, and a low priced, more reliable contract with a mobile company would be ideal both for Apple and the other entity. Another field of advancement for Apples products would be to provide the low-income market with a cheaper alternative to the MacBook. We would also aim to create a more efficient battery for the MacBook by utilizing our resources in Research and Development. With the High-Definition television market rising, we believe that Apple should create its own HDTV to pursue the home entertainment market. The goal would eventually be to create a complete Apple home entertainment system, including the flat screen HDTV and an efficient digital cable box.

OurThoughtsonApplesManagement
After analyzing Apples Organization we have observed that the companys business model revolves around departments rather than its people. Apples organizational chart is relatively flat, meaning that there is a great span of management within the company. By doing this, Apple creates well-trained employees that are directly involved in the decision making process and therefore contribute to the effectiveness of the company. We 18

agree with Apples flexible organization, because it enables the rapidity of the decision making process and extend its long term strategic planning capabilities. Apple has also been successful in managing change. The corporations accomplishments can be credited to this ability as Apple has radically transformed the consumer market it dominates and adapted its products and management to these changes. However, it seems that Apples management revolves around Steve Jobs. It is obvious that Jobs is the ultimate decision maker for the organization and has the final authority on all Apple products. This is an aspect of Apple that several onlookers find finicky, because Jobs is very specific about what he wants from Apple products. As stated earlier, he has been known to reject proposed projects based strictly on the appearance of their innards (Lohr 1997). In our opinion, this type of leadership is damaging to Apples productivity but also builds to Apples prestige. Apple could develop effective products quicker without this dictatorship and Jobs could remain influential over each department but give inventors more opportunities to experiment and create. The four functions of management consist of planning, organizing, influencing, and controlling which are incorporated within the organization. Apples purpose for planning is to set obtainable goals which include setting technological standards in order to make a profit. Also, the organization plans to continue innovations in order to maintain its loyal customer base and to intrigue more potential customers. The organizing function of Apple relates to the managerial structure and how it implements decisions. The decisions implemented by the managerial structure of the organization are stimulated by developments in each department which ultimately are supervised by Steve Jobs. The corporation influences competitors, consumers, and itself. Competitors are influenced to identify the standards the organization sets and to follow its model. Consumers are influenced to purchase products from the corporation because of branding and quality innovations. And finally, members of the organization are influenced by each other to adopt leadership skills necessary to implement changes and create stability across its departments. The corporation fulfills its first function by controlling the initial plans. By controlling the organizations plans, the members will have to measure the organizations performance to standards that are set by competitors. After analyzing the organizations performance, it is imperative that the proper steps are taken to implement changes thus stimulating creativity and innovation which benefit the consumers and the corporation as a whole.

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AppendixA:Timeline

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AppendixB:FinancialGraphs
Total Mac Sales

16000 14000 12000 10000 8000 6000 4000 2000 Portables 0 2008 2007 2006 Desktops
Desktops Portables Total Mac Sales

(in millions)

Total Mac Sales

Year

iPhone and iPod Sales

10000 9000 8000 7000 6000 (in millions) 5000 4000 3000 2000 1000

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2008 Quarterly Financial Infromation

$12,000

$10,000

$8,000

(in millions)

$6,000

$4,000

2007 Quarterly Financial Infromation

$8,000

$7,000

$6,000

$5,000

(in millions)

$4,000

$3,000

$2,000

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2008 Geographic Net Sales

America Europe Japan

2007 Geographic Net Sales

23

2006 Geographic Net Sales

Net Sales by Operating Segment

$35,000

$30,000

$25,000

$20,000 (in millions) $15,000

$10,000

24

Unit Sales by Operating Segment

$10,000 $9,000 $8,000 $7,000 $6,000 (in millions) $5,000 $4,000 $3,000

Looking Back

$35,000 $30,000 $25,000 $20,000 (in millions) $15,000 $10,000 $5,000 $0 Ne

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AppendixC:ApplesOrganizationalChart

26

AppendixD:BostonConsultingGroupModel

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