Apple, Inc. Business Analysis Part 1 Swot Business Analysis Part 1: Apple, Inc.

Apple is a highly innovated business that entered the business world making computers back in the 1980s. They ventured out in the 2000s making non-PC devices and by the spring of 2010 had a market capitalization of $220 billion dollars. As a mutual fund manager, I have performed a SWOT analysis to determine whether or not to invest in this company. I will identify internal and external stakeholders, evaluate their needs and see how the organization measures up when it comes to satisfying those needs.

Strengths

Apple Inc. has been ranked number one on Fortune Magazines Most Admired list for the fourth year in a row according to CNNMoney (DuBois, 2011). The "The American Customer Satisfaction Index" (2012) website shows Apple with a score of 87 out of 100 points on a scale of 0-100 at the national level, this was a 13% increase from the first year in 1995. Personal Computers and HP both came in second with a score of 78 out of 100.

Apple has intensive employee training in order to provide exemplementry customer service. They focus on understanding what the customer needs and provide a solution, which may be their key to innovating new products. They have an extensive beautifully designed product line that shares functionality. The Apple trademark, apple with a piece missing illuminates when the computer is on which makes it stand out as an apple product. There is a light under the keyboard making it easy to type in the dark, not to mention the laptops are super slim and light making portability easy.

Apple recently created iCloud which is basically a filing cabinet in the sky. When you purchase something from iTunes, no matter what it is, it is stored in iCloud and then you can send it to any of your other devices through WiFi. I think this was brilliant because you have to sync everything to your computer before transferring it to another device; iCloud takes that step out now and makes it more convenient for the consumer. Now Apple is offering airplay, which is streaming of music to any speaker in your house, again no wires to attach.

Apple reported their first quarter revenue at $46.33 billion with quarterly net profit at $13.06 billion ("Apple Reports First Quarter Results", January 24, 2012). Apples online music store, iTunes is the largest music retailer and charges just .99 cents per song and can be downloaded on all of their products.

Weaknesses

Because of Apples success in the marketplace, their competitors are hard at work to produce a product that is comparable and will appeal to consumers. Currently Apple is in litigation with Samsung about their Galaxy phone

and tablet citing that Samsung stole their design. Apple is trying to prevent Samsung from selling them in the U.S. (Levine, December 2, 2011).

Up until the release of the IPhone 4, Apples only authorized retailer was AT&T and it was difficult for customers who wanted an iPhone but had another carrier. Apple is currently involved in the Apple iTunes Antitrust Litigation which states that they have a monopoly on iTunes and music from other sources will not work on the iPod (MacLean, March 22, 2011). With Apples brilliant design and leading in innovations they have failed to make syncing the iPad and iPhone either Wi-Fi or 3G capable, for now the use of a USB cord is still required. Apple TV was not successful and has very limited viewing opportunities, it seems as though they just threw it out there and neglected it.

Apple Inc. outsources labor to build its products to other countries and has recently been in the news after an explosion in a Chinese factory operated by one of its suppliers, Foxconn which killed three people and injured sixteen other. Prior to the explosion on May 20, 2011, at least ten workers committed suicide in 2010 which caused labor groups to give some insight into the situation by complaining about employees being forced to work long hours with minimal compensation (Samuelson, February 19, 2012). In 2005 Apple enacted the suppliers Code of Conduct which was their commitment to make sure that employees would have safe working conditions and would be treated fair. According to "Apple Supplier Code Of Conduct" (2012), The Apple Supplier Code of Conduct requires suppliers to provide safe and healthy working conditions, to use fair hiring practices, to treat their workers with dignity and respect, and to adhere to environmentally responsible practices in manufacturing. Apple sends their employees to do an annual audit of their suppliers to make sure that they were abiding by the Code of Conduct. When issues were found problems that were in violation, Apple worked with the supplier to make sure that the problems were corrected. But with the explosion on May 20, 2011 and after receiving a petition with 250,000 signatures on it demanding an audit of labor practices, Apple has asked the Fair Labor Association to go in and audit both of Foxconns factories in China (Zielenziger, February 13, 2012). After evaluating what I believe to be some challenging weaknesses, I do believe that there are many opportunities for this company that would keep them as the leading business in innovation.

Opportunities

Apple beats out its competition on consumer satisfaction with a score of 87, however they only have about 300 stores worldwide. I believe that there is plenty of opportunity to increase the number of retail stores and increase customer satisfaction. I have a MacBook Pro and I love it, but I am still learning because its operating system is different from what I have used for 20 plus years. When I have a problem, the nearest Apple store is 1 hours away, which means spending a whole day just to take my computer to a retail store.

Apple has the opportunity to expand in the foreign markets, the U.S accounts for most of the revenue that the organization makes with China coming in second. China contributed 16 percent of Apples fourth quarter revenues

(Ogg, October 19, 2011). With that being said, getting aggressive in the foreign market would only boost revenues. Another chance for opportunity would be increasing software and hardware compatibility with other products and opening up more partnerships to be able to offer a more diverse selection of products (i.g. apple TV). With apple TVs limited selection of movies, if a partnership existed with a business that provides movies like red box then the potential of increasing revenues would be good. Apple Inc. has seen and increases in revenues and is in the forefront of their competitors due to their ability to provide a product that appeals to the consumer. Success does not come without threats however. In the next section I will point out possible threats that Apple could face in the future.

Threats

Apple has a product line that is very desirable for consumers and each product complements the other. Competitors like Samsung have released the Galaxy tablet and phone whose designs are almost identical to that of the iPad. As a result, Apple has been in litigation with Samsung over patent infringements. Camm-Jones (February 19, 2012),"Apple's complaint is very concise. Last year's complaint against Samsung had a lot of (very well-crafted) narrative on Samsung's alleged copying of Apple's products. Another threat that Apple could face is repercussion for the treatment of workers at Foxconn. If the workers continue to be treated poorly then people could stop investing in and purchasing Apple products. They may feel that all Apple cares about are the profits and not the workers building the product. I believe that because Apple is such a secretive organization, that the risk of leaks from inside the organization to the public is high. Having a leak within an organization of this caliber could be detrimental to their ability to innovate new products.

Conclusion

This concludes my SWOT analysis of Apple Inc. and based on the results, I would invest in this organization. I think that overall this organization cares about its stakeholders and makes strides to fulfill their needs. Stakeholders of this organization include employees, suppliers, manufactures, customers, retailers, stockholders, U.S. Government, Foreign Governments, media and the competitors. Apple has provided intense training for their employees in order to provide quality customer service for their consumers. By providing quality service to the consumer, they will continue to buy apple products increasing revenue. As far as stakeholders employed at Foxconn, Apple has asked the Fair Labor Association to audit its suppliers overseas to make sure that they are abiding by the terms of the Suppliers Code of Conduct. Apples ability to create a product line that meets the needs of their consumer is what makes Apple a successful organization.

References

Apple Reports First Quarter Results. (January 24, 2012). Retrieved from

http://www.apple.com/pr/library/2012/01/24Apple-Reports-First-Quarter-Results.html

Apple Supplier Code of Conduct. (2012). Retrieved from

http://www.apple.com/supplierresponsibility/code-of-conduct/

Camm-Jones, B. (February 19, 2012). Apple-Samsung Patent Fight 'Huge'. Retrieved from http://www.pcworld.com/article/250212/applesamsung_patent_fight_huge.html

DuBois, S. (2011). World's Most Admired Company. Retrieved from

http://money.cnn.com/magazines/fortune/mostadmired/2011/snapshots/670.html

Levine, D. (December 2, 2011). Insight: Apple vs Samsung lawsuit full of secret combat. Retrieved from

http://www.reuters.com/article/2011/12/02/us-apple-samsung-secrecy

MacLean, P. (March 22, 2011). Apple's Jobs Must Answer Questions in iTunes Antitrust Suit. Retrieved from

http://www.bloomberg.com/news/2011-03-22/apple-s-jobs-must-answer-questions-in itunes-antitrust-dispute.html

Ogg, E. (October 19, 2011). China is now Apples's second-most important market. Retrieved from

http://gigaom.com/apple/china-is-now-apples-second-most-important-market/

Samuelson, K. (February 19, 2012). Worker Rights: The fruits of 1 million's labor. Retrieved from

http://articles.chicagotribune.com/2012-02-19/business/ct-biz-0219-outside-opinion-apple-foxconn20120219_1_foxconn-technology-group-child-labor-laws-labor-issues

The American Customer Satisfaction Index. (2012). Retrieved from

http://www.theacsi.org/index.

Zielenziger, D. (February 13, 2012). Apple, Under Fire, Seeks Fair Labor Probe of Chinese

Plants. Retrieved from

http://www.ibtimes.com/articles/297714/20120213/apple-labor-china-foxconn-slave-contract-manufacture.htm