Introduction

Apple Incorporation is an American multinational company that was founded by

Steve Wozniak and Steve Jobs in 1st April 1976. Steve Wozniak was a dropout from the

University of California, Berkeley, and Steve Jobs was a dropout from Reed College in

Poland, Ore and they started the company in a garage but due to financial constraints a third

partner, Ronald Wayne contributed 10% stake in the Apple company. It headquartered at

Cupertino, California and now the company has 110,000 full-time employees in 2015

(Richardson, A., 2008).

Apple manufactures, designs and offer personal computers, media devices, mobile

communication, portable digital music players to customers, education institutes, businesses,

enterprises and government customers globally. It also offers operating system software e.g.

iOS, OS X, tv OS, watchOS, networking solutions, accessories, services, applications and

third-party digital contents. It also offers iPad, Smartphones, iPhones, tablets, Mac, iLife,

iWork, Apple TV and much more. Apple sells its products through retailers, wholesalers,

online stores, direct sales force, value-added resellers and third party cellular carriers. The

companys financial performance is increasing constantly than the previous years. The

Smartphone share has increased to 13% in 2015. According to Apples 10-K annual report

2015, Apple reported $233.7 Billion revenues in 2015 that were much higher than the$182.7

Billion in 2014. Similarly, the company reported a net income of $53.39 Billion in 2015 that

was higher than the net income of $39.51 Billion in 2014 (Apple Inc., 2015).

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This project is centered on studying the vision, mission, objectives, financial performance,

strengths and weaknesses of the company. After studying company internal and external

factors, and its strategies, mission and objectives will be revised and strategies will be

recommended to implement the revised mission and objectives to further improve the

companys performance in the future. Following are the evaluation of the mission,

objectives and financial and strategic findings of Apple.

History/Timeline of Apple

Apple is making developments on the annual basis since its foundation and

introduction of the Mac till this date with the introduction of Apple Watch.

1974 The idea of Apple was first born

1976 Steve Wozniak, Steve Jobs and financial supporter, Ronald Wayne, founded Apple

1976 First Apple computer was sold

1977 Apple introduced Apple II at the end of 1977, first personal computer with power

supply, standard keyboard and color graphics.

1978 Apple Disk II was introduced that was a 5.25-inch floppy disk, an external drive

store with 110K.

1979 Apple engineers visited Xerox PARC in Silicon Valley for initiating Mac and Lisa

projects with graphical user interfaces.

1980 Apple went public with the largest IPO and almost 40 employees out of 1000

employees became millionaires.

1981 IMB introduced its PC 1565 that was a shock for Apple

1982 Microsoft started Mac development for both Apple and IBM

1984 Apple introduced original Macintosh

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1988 Apple sued Microsoft for infringing copyrights of Macintosh

1990 Apple introduced low-cost Macs in response to overpriced criticisms.

1991 Apple introduced first PowerBook and became the standard bearer in the portable

computers market

1998 Bondi blue iMac was introduced as the fastest Mac model

1999Consumer-oriented iBook was launched with the airport card that initiated Wi-Fi

craze.

2001 Apple introduced First iPod with MP3 and 5GB hard drive that transformed the

music industry

2002It introduced Apple Sauce as iMac 17

2003 iTune music store was opened, Power Mac G5 and Safari

2004-2005 Introduced iPod third generation and mighty mouse, iBook laptop Sabine

2006 Apple announced to use Intels CPUs instead of Mac-based Motorola processors and

used book camp technology. Apple sold Pixar to Disney and Jobs Steve joined Disney,

Introduced iPod touch Azreal.

2007-2011 Apple expanded with iPhone, iPhone 3Gs, Mac app store and first iPad, Apple

TV, MacBook Air and MacBook Pro Athena, iPad 2, iPhone 4S,

2012 Mac used retina display for high-resolution displays and also launched skinny and

slimmer desktop Mac

2013 New Mac Pro workstation that can be fitted in a small aluminum cylinder

2015Apple introduced iPhone 6 Plus and Apple Watch (Hattersley, L., 2014).

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 CASE ANALYSIS

Question 1: Identify the firms apparent current mission. Then briefly review the firms

current objectives and strategies.

Mission Statement

Present mission statement of Apple, Apple designs Macs, the best PCs in the world,

along with OS X, iWork, iLife, and professional software. Apple is a leader in the digital music

transformation with its iPods and iTunes online store. Apple reinvented its mobile phones with

the revolutionary iPhone and App Store, is defining the future of mobile media and computing

devices with iPad. (Jurevicius, O., 2013).

Mission Statement Evaluation

Componen 1 2 3 4 5 6 7 8 9

t
Company Yes Yes Yes Yes
We got 4 out of 9 components of the mission statement and that is not a good mission statement.

Company Objectives

1. Apple has the objectives to launch groundbreaking products continuously, to become a

trendsetter in the market by introducing existing and new products.

2. It has objective to continuously innovate and introduce the future technology movement.

3. Continuously expand the Apple stores chains globally in India and China and make the

products assessable to ex-online, retails channels, big box retailers etc.

4. Maintain premium prices by gaining more market share and enhance profit margins.

5. Generate hype for upcoming products, and expand with a strong brand name (Apple Inc.,

2015).

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Company Strategies

Product Development: Seeking to increase sales by improving present products or services or

developing new ones.

Market Penetration: Seeking to increase sales (market share) for present products and services

in present markets via greater marketing efforts.

Market Development: Seeking to increase sales by introducing present products and services

into new geographic areas (geographic expansion).

Differentiation: Developing a product or service that offers unique attributes that are valued by

customers and that customers perceive to be better than or different from the products of the

competition.

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Question 2: How would you describe the firms current financial condition?

Historical Financial Analysis (Appendix A, Table 1):

Liquidity

The current ratio measures the ability of the company to pay its short-term liabilities with

the current assets. Apples current ratio shows a negative trend from 2013-2015. Quick ratio

measures the liquid assets of the firm and Apple also shows a negative trend over 3 years

(Appendix A).

Asset Utilization Ratios

In the category of asset utilization ratios, inventory turnover shows a negative trends from

2013-2015 because the ratio decrease in 2014 and increases in 2015 but that is still less than

2013. They sell their inventory very quickly in 2013 than 2015. Accounts receivable turnover

also shows irregular trend because first, it decreases and then it increases from 11.96-13.62.

Fixed assets turnover shows positive trend and Total assets turnover shows neutral trend which

means the company is using its assets to generate revenues is same in 2015 and 2013.

Debt management Ratios

This measures the debt ratio in the company that is used to finance the companys

operations. The debt ratio of Apple is showing a negative trend which means that the burden

of debt is increasing. Interest coverage ratio is showing a positive trend for Apple which

means that the ability of the company to pay interest out of the net income on the debts is

increasing.

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Profitability ratios

Apples gross margin and operating margin are showing a positive trend over the

three-year period. Net profit margin is positive. BEP (Basic Earning Power ratio) is showing

a neutral trend by first decreasing to 0.23 in 2014 from 0.24 in 2013 and then slightly

increasing to 0.25 in 2015. Return on assets is also showing positive as it increased from

19.34% to 20.45%. Return on equity is showing a positive trend, which means that more

investors are investing in Apple in anticipation of earnings and profits. Return on equity or

ROE increases from 30.64% to 46.25% during 2013-2015 and showing a positive trend.

Market value ratios

Price to earnings ratio showing negative trend as it is decreasing from 14.1 to 11.4

which means that market is willing to pay less for the Apple stock and investor will pay 11.4

in 2015 for every single dollar to be earned (Yahoo Finance, 2016), price to cash flow ratio

also decreased from 9.7 to 7.5 from 2013 to 2015. Market price to book value ratio are

showing a neutral trend for Apple.

Competitor Financial Analysis (Appendix B, Table 2):

Google is a competitor of Apple in Smartphone market and HPQ is a competitor of Apple

in computers and iPods market.

Liquidity comparison

Current ratio and quick ratio of Apple is lower than the Samsung, Google and

Hewlett-Packard. Google has the higher liquidity to pay its short-term debts from the short-

term assets by having a higher safety margin to cover debts (Daily Finance, 2016).

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Asset Utilization comparison

These ratio measures that how well Apple is using its assets more efficiently than its

competitors. Inventory turnover of Apple is greater than Samsung, Google and Hewlett-

Packard (HPQ), which means that Apple is making more sales than the competitors are

(Yahoo Finance, 2016). Account receivables turnover is also high for Apple, which means

that Apple is collecting receivables more efficiently and receivables are converting into

cash. Fixed asset turnover is slightly higher for Apple than Google and total asset turnover is

slightly lower than Google but higher than HPQ but overall, Apple is utilizing its assets

efficiently compared to all the competitors to generate revenues (Daily Finance, 2016).

Debt Management comparison

Debt to equity ratio measures that how much a company is utilizing debt to finance

its operations other than financing with equity. Apples debt ratio is much higher than

Google but much lower than Samsung. Its mean Google is financing with less debt and thus,

has lower strain to pay interest on debts. Apple has to pay more interest on debt compared to

Google but less interest than Samsung and HPQ that is operating with 78% debt. Googles

interest coverage ratio is higher than Apple (Yahoo Finance, 2016). Apple, though, has low

capacity to cover the interest but still it is strong enough than Samsung and HPQ to pay

interest on debts (Daily Finance, 2016).

Profitability comparison

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 Gross profit margin, net profit margin and operating profit margin of Apple is much

higher than Samsung and HPQ but lower than Google. Google is better to cover its

expenses, cost of goods and still to recover higher profits. Apple is better than Samsung and

HPQ in covering expenses and earning profits. Therefore, overall, Apple is stronger than

Samsung, HPQ but weaker than Google. Apples return on assets and return on equity ratio

is greater than Samsung, Google and HPQ that means, Apple is gaining more return with the

use of equity and assets by efficiently utilizing them (Yahoo Finance, 2016).

Market Value comparison

Investors, to know the financial health of the company and to choose investment

options, use market values. According to the three competitors analysis, investors are sure

that Google is better for investment than Apple, Samsung and HPQ due to its high market

values in terms of P/E ratios and book values and Apple is better for investment than

Samsung and HPQ (Yahoo Finance, 2016).

Overall Financial Health or Evaluation

The above comparison shows that Apple is better than Samsung and HPQ but it is not

better than Google. Apple is showing a neutral trend for its liquidity, asset utilization, market

values because these ratios shows irregular trend by decreasing in 2014 and then increasing in

2015 (Appendix A) Which means that Apple is doing good than the previous year. Debt

management and profitability ratios show positive trend, which means that Apple is managing

debt and paying interest efficiently and also earning profits. Liquidity, asset utilization, debt

management, and profitability, though these ratios are lower than Google but these are higher

than Samsung and HPQ that is Apples strengths and it can utilize these strengths to compete

with Google and it will also enhance Apples market performance.

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Recommendations for Apple

Overall, Apple is a strong company but it is not strong than Google. To compete with

Google, it has to utilize its assets more efficiently and try to reduce the debt burden to

reduce the cost. It has to offer reasonable market prices by not charging customers high

prices but it has to reduce the cost of the manufacturing, so, it will not suffer from loss by

not charging high prices to customers. Its strong brand, profitability margin, and innovation

are its strengths that it is utilized to expand. It should hit the global markets with the

reasonable prices and quality products to overcome its weaknesses of high prices, limited

distribution networks and selling only to niche markets.

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Question 3: Outline and discuss the firms external opportunities and threats, using any

analytical model(s) you believe are relevant.

External opportunities and Threats of Apple

Opportunities for Apple

Opportunities are the external factors that the company can exploit in order to

maintain or increase company competitive advantages. Following are the opportunities for

the company:

1 Expansion of distribution networks

2 Increasing demands for smartphones and tablets

3 Obtaining patents through acquisitions

4 Trend of using smart household appliances

5 New generation of transportation

6 Rising Demand of Cloud Services

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Expansion of distribution networks

It is a big opportunity for Apple to expand its networks either nationally or globally.

Thanks to the development of technology and transportation, it is much more easy to

establish a new channel of distribution now. These expansion opportunities will overcome

the weakness of limited distribution networks. For achieving this opportunity, Apple has to

change its distribution strategy. Wide distribution networks will help the company to reach

and target more customers both nationally and globally (Smithson, N., 2015).

Increasing demand of smartphones and tablets

Smartphones and tablets are becoming of personal device that help people lives

better. Especially with the development of wireless internet, there are so much things we can

do with the smartphones from communication to shopping or schedule our daily tasks.

Apple has many opportunities in this multibillion-dollar market if they can satisfy

customers demand. As a result, Apple sales and revenue would increase rapidly.

Obtaining patents through acquisitions

In 21st century, knowledge is power. Patents is a great tool not only help develop

products but also create barrier that slows down Apples competitors. Obtaining patents via

acquisitions will give Apple big advantages in the market. Moreover, it also saves research

expenses.

Trend of using Smart Household Appliances

With the development of technology, everything is connected via Bluetooth or

Internet to serve people from anywhere. Your washing machine, refrigerator, house, etc. are

connected to your phone that allows you to control everything over the internet. In order to

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sync all devices, Apple can create their own infrastructure and software to enter a new market

that requires huge amount of capital and technology which are already Apples strength.

New generation of Transportation

In order to bring the driving convenience and increase the safety, autopilot car is the

trend of auto industry. This market requires a lot of capital and technology which are the

Apple strengths. Many giants such as Google, Tesla want to explore this market. However,

Apple will have a strong competitive advantages if they decide to enter this market.

Rising Demand of Cloud Services

The potential of this industry is big and Apple really understand it since they are the

big customer for the Cloud Computing providers. The change from the customer to the

provider can save Apple a ton of money and give them more authority to control the data.

More than serving themselves, Apple can provide these services to the small, medium

company or even for individual needs. The benefits and applications of cloud computing is

endless, which is the reason why people call 21st century the cloud computing era.

Threats for Apple Inc.

The major threats that the Apple is facing are from the competitors that can hinder

growth and financial performance of Apple. Apple is facing following threats:

1 Imitation

2 Increase in labor costs in the countries where Apple plants are operating

3 Aggressive competition

4 Gross Margin Pressures

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5 Unstable U.S Dollar fluctuation

6 The Android OS Market Share increase

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Imitation

Apple is facing a great threat of imitation. This threat is very critical because there

are a large number of firms in the industry that can easily imitate the products of the Apple

Inc. There are several regional and domestic companies that are partly or fully imitating the

designs of the products of the Apple that is posing a huge threat for Apple because these

firms are offering the identical yet different products at much lower prices compared to

Apple and resulting in lower sales (Smithson, N., 2015).

Increase in labor costs in the countries where Apple plants are operating

Apples most of the plants are situated in China. Therefore, if China increases the

labor cost, it would be a great threat for Apple. The increase in labor cost will decrease the

profit margin of the company up to a great extent and will enhance the bargaining power of

the labor (Smithson, N., 2015).

Aggressive competition

Apple is facing tough competition because firms are very aggressive in this industry.

Apple is competing with Google, HPQ, and Samsung that are highly competitive firms.

Samsung is using intense innovation to compete with Apple. Aggressive competition puts

pressure on the company to sustain competitive advantage by exploring strong

fundamentals. Apple performance will suffer up to a great extent due to aggressive

competition. Apple should have to take great caution to overcome this aggressive threat

(Smithson, N., 2015).

Gross Margin Pressures

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 A stepped up competition, product shortage or rising cost of material, etc. can cause the

decline in the Apple margin profit. In the technology industry, the price competition is critical

factor that make huge financial impact.

Unstable U.S Dollar fluctuation

Since Apples main factory is in China (Foxconn), the U.S dollar fluctuation can

affect the manufacturing cost of Apple products. Especially, the Yuan currency is kept under

its real value by China government, which can cause unexpected consequences in the future.

Moreover, Apple is global brand which has many retail stores over the world. The U.S

Dollar fluctuation may lead to unfavorable financial impacts to Apples revenue.

The Android OS Market Share increase

One of the competitive advantage of Apple is that they have their own OS (Operating

System). However, their OS X serves only their devices and sometime does not fully

support other OS, which limits their market share. In contrast, Android OS market share

increases rapidly since it supports many devices from smartphones to tablets from many

brand name such Samsung, Nexus, etc.

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Question 4: Outline and discuss the firms internal strengths and weaknesses using any

analytical model(s) you believe are relevant.

Internal Strengths and Weaknesses of Apple

There are many methods that can be used to analyze internal factors of Apple

company such as IFE, Balance Score Card, SWOT, value chain method, etc. However, given

the time constraint, we will use SWOT to examine Apple company.

Strengths:

1. Market leadership

2. Strong Brand Image

3. Marketing and Advertising capabilities

4. Financial Strength

5. Complicated supply chain infrastructures

6. Extensive and Strong U.S.A. distribution channels

Market leadership

Apple is the major market leader with its globally accepted products, iPhone, iPad,

Mac and other services, for example, operating systems OS X, iOS, and iCloud. These are

the major revenue generating products sold by Apple. These products are projected to

increase further growth in revenues in the years ahead (Dudovskiy, J., 2016).

Strong Brand Image

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 Apple has a strong brand image and it is recognized as the most preferred and

priceless brand worldwide having the worth of 122.4 billion USD dollars. Customers

loyalty to the strong brand is also the strength for Apple that is gaining competitive

advantage with its strong brand reputation (Dudovskiy, J., 2016). Below figure 1, is showing

Apples brand strategy model. Figure 1

Marketing and advertising capabilities

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 In 2015, the annual budget for the marketing and advertising of Apple goes to 1.8 Billion

USD dollars that are almost twice than the 933 Million USD dollars in 2011. Although, Apples

advertising budget is not larger than its competitors. Apple uses its advertising budget more

effectively than its competitors do. Apples budget enhanced in 2011 at the time of launching the

new products iPad and iPhone. It is also true that the companys overall budget never increased

than the 1 % of the sales of the company. In the year of 2015, Apple spent only 0.77% of its total

sales revenues on marketing and advertising (Jurevicius, O., 2016). This budget was lower than

the Samsung electronics that spend 1.83 % of their sales on advertising. This entails that Apple

spend less on advertising compared to its competitors but it generates more revenues than the

competitors do. In 2015, Apple brand was awarded as the worlds most valuable brand being sold

globally. According to Forbes, Apple brand valuation growth was 145.3 Billion USD dollars in

2015 and according to Interbrand, Apple brand valuation growth was 170.3 Billion USD dollars

in 2015 (Jurevicius, O., 2016).

Forbes and Interbrand both considered the Apples brand as the fastest growing brand of

the world with the truth that Apple spent much lower on the advertising and marketing budgets.

Apples advertising budget is more effectively utilized than its rivals that give positive results in

the form of strong brand reputation, revenues, brand recognition and awareness. These marketing

and advertising capabilities are the strengths of Apple that other companies do not possess

(Jurevicius, O., 2016).

Financial Strength

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 Apple is a financially strong company. It has generated 233.7 Billion USD dollars

revenue in 2015 and 53.39 Billion USD dollars net income in 2015 that is greater than the

revenue of 182.7 Billion USD dollars revenue in 2014 and 39.95 Billion USD dollars net income

in 2014. Due to having high financial strength, Apple has the opportunities to engage in research

and development of finding innovative designs for gaining a superior competitive advantage

(Dudovskiy, J., 2016).

Complicated supply chain infrastructures

Apple ranked its supply chain operations by the research firm Gartner that is superior in

the world due to its good performance since the last 4 years. With the sophisticated and preferred

management practices, Apple is able to manage its supply chain operations in the global

environments without having many difficulties (Dudovskiy, J., 2016).

Extensive and Strong U.S.A. distribution channels

The United States is the worlds second largest Smartphone market globally that is

covering 44.05% Smartphone market share. The reason for success in the United States is the

extensive and strong distribution channels. Apple is using various distribution channels in

the United States to distribute the products to the customers. Apple is also using direct

distribution channels to deliver products through the direct sales force, retail stores, and

online stores. It is also noted that revenues generating through these retail stores are not only

the sources of the competitive advantage but also the superior customer experience with

buying the high-quality products, that strengthen the brand image and attract more potential

customers (Jurevicius, O., 2016).

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 Along with the direct distribution channels, Apple also has indirect distribution

channels and networks that include third-parties cellular carriers, for example, Verizon, T-

Mobile, Sprint, and AT & T and wholesalers. Its indirect retailers are Wal-Mart, Target,

Amazon Marketplace, Staples, and Best Buys etc. Apple also has some value-added resellers

(Jurevicius, O., 2016). As having the indirect distribution networks, Samsung can only

compete with the Apple.

High-Profit margin

Maintaining high-profit margin is a major strength of Apple. Apple has high profit

margin compared to the industry averages. High-profit margin provides a competitive

advantage to Apple at various levels (Dudovskiy, J., 2016). Apple is maintaining its cash

reserves that allow it to continue operations even at the face of adversaries and times of high

uncertainties. The reserved amount can also be used on extensive research and development

facilities. According to industry analysis beliefs, it is noticed that Apple is not intended to

sell anything but its superior goals is to get the high-profit margins. Below is the detail in

figure 4 that shows that Apple profit margins are enhancing since the last two years. The

reason of increasing profit margins is the increase in the share price of the Apple that is

101.39 with the 39.90 % profit margin in 2014 (Dudovskiy, J., 2016).

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Figure 4

Weaknesses of Apple

In order to improve business performance, Apple should eliminate or reduce the

negative impact of their weaknesses:

1. Higher prices than competitors

2. Technical issues concerning the product functionality

3. Incompatibility of the apples services and products with the other services

and products

4. Closed ecosystems

5. Leadership

6. Pace of Innovation

Higher prices than competitors

Apple products have much higher prices than the other competitors products. For

instance, iPhone 6, 16GB is priced as 539 or $649, the handset 64GB is priced at 619 or

$749 and 128GB is priced at 699 or $849. In comparison to Apple, the direct competitors

products, for example, Samsung Galaxy S5 with extra 128GB micro-SD card is priced only

510 or $670 that is much lower than the 190 or $280 of top spec iPhone 6. Prices are the

major weaknesses for the Apple. Competitors are introducing the identical products and

eroding the Apple premium prices. Customers switch to the products that have the same

features but with lower comparable prices. Apple has to overcome this weakness by offering

products at reasonable prices that can be easily affordable by customers. So they do not

switch to competitors (Dudovskiy, J., 2016).

Technical issues concerning the product functionality

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 Apple brand is sometimes criticized for its technical issues and functionality of the

products. The instances of these technical issues are, for example, the latest iOS 9 operating

system is crashing some Apple devices, there were bugs in the previous version of iOS 8,

and for example, keyboards abruptly disappear. Some customers also complained that 6 Plus

and iPhone 6 curved occasionally and stay in the same position. Such kind of cases of

technical issues has weakened the brand image of Apple brand up to a great extent. This is

an alarming weakness for Apple because people are already complaining about the prices

and if people will not get the expected quality match able to prices, they will switch

definitely to competitors (Dudovskiy, J., 2016).

Incompatibility of the apples services and products with the other services and

products

Apple hardware can only be used in the products that are manufactured by Apple

and cannot be used in the other competitors products and services. For example, most of the

programs that are available on Apple Mac computers, these cannot be used in other

computer devices that are creating customers inconvenience (Dudovskiy, J., 2016).

Closed ecosystems

Customers perceive that Apple has tight control and monitoring of software and

hardware and it is the strength of the Apple but this places an extra burden on Apple and on

its software and security developmental life cycles. Apple is obtaining license agreements

for its App store, app music, iTunes, iBooks etc. Apple has to focus on this more to ensure

the privacy and copyrights. Apple hardware is the major revenue-generating source but to

stay in the competition and due to its closed ecosystems, Apple has to focus on other

businesses of providing the comparable devices as the other competitors provide.

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Leadership

Leadership is also a big weakness for Apple. It is criticized that either the Tim Cook

leadership is sufficient for the Apple to offer the superior devices to sustain competitive

advantage. Steve Jobs created a good example for Apple and he took the Apple at the top of

all the competitors during his second round. During the Jobs leadership, Apple innovated

several products that are still revenue generating for Apple but after Jobs, the innovation of

Apple Watch is still waiting for the market response. Therefore, it is necessary for Apple to

maintain a leadership to create the good reputation of its visionary products in future.

Pace of Innovation

It is an era of highest innovation and Apple created a huge product innovation that is

also a major weakness of the company. Apple has astonishing brands of its products that are

working flawlessly and are designed as the natural and advanced products. These high

products expectations denote that Apple cannot introduce experimental products/services in

the market without hitting badly its brand. If it will do so, that will create a bad image and

customer dissatisfaction (Beattie, A., 2015). These customers expectations about the

Apples products demand as high and swift innovations as the other competitors are

innovating, for example, Google, HPQ, and Samsung. That is why; Apple needs proactive

leadership and collaborative employees to meet the high and changing customers needs to

stay ahead the competition game. Apple should have to be so proactive in leading the

markets that delay in one product release does not affect the companys revenues much. That

is why, Apple is striving to keep an edge in all its product lines but its leading expectations

size is getting smaller with intense innovations (Beattie, A., 2015).

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 Question 5: Based on your analysis:

a. Revise the firms mission and objectives if necessary.

b. Develop and discuss corporate and business strategies that you recommend to achieve the firms

mission and objectives.

Mission and Objective Revisions:

We consider an effective mission statement will address at least seven out of nine

elements of the mission statement. Apple Mission statement is weak because it is more about the

products list rather than the true mission of the company. The company only mentioned the key

offered products without including the concerns for employees, survival, customers, markets,

philosophy, teamwork etc (Jurevicius, O., 2013).

Therefore, by adding these components the revised mission statement of Apple would be

like this.

Apple with its designs, Macs, operating systems, digital music transformation, mobile

phones transformations with iPhone and App Store, will define the future of mobile media and

computing devices and making them assessable to all universal markets and will consider the

interests of the customers, employees, stakeholders. Apple will focus more on survival rather

than highly aggressive innovations.

I think, there is no need to revise the objectives. Objectives are well-defined along with

the strategies to achieve those objectives.

Alternative Solutions or Strategies:

Product development strategy

As Apple uses product development strategy as its main strategies for intensive growth,

so the Apple should offer attractive products for the growth of the market share and for better

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performance (Meyer, P., 2015). As Apples mission greatly emphasize on product development,

so this strategy is better to stay ahead in the new and innovative product developments. This

product development is extensive growth strategy that is critical for the success of the company

through innovation as the company is continuously innovating through the introduction of

iPhone, iPad, and Apple Watch etc. This strategy also focuses on developing the products for the

potential mobile markets. Apple is continuously growing because the introduction of the new

products is generating revenues for Apple on the continuous basis (Meyer, P., 2015).

Market Penetration strategy:

Another strategy for Apple is the Market penetration strategy as part of intensive growth

strategy. This will enable the company to gain higher market share by selling the company

unique products. Apple is currently working on this strategy by selling more iPhone and iPads to

the current and potential target markets. The performance can be good by adding more sellers to

this market. This strategy is good in those markets where Apple has not introduced its products

yet. This strategy aligns with the company generic differentiation strategy because it emphasizes

on capturing the markets in a broader context and covering the markets that are not yet entered.

This strategy will enable Apple to sell more company products to current customers that will also

inspire potential customers to demand the Apples products and Apple will be able to enter in

other market segments (Meyer, P., 2015).

Market Development Strategy:

Market Development Strategy would focus on finding new markets for the existing or

new products. This is somehow, similar to market penetration but it focus more in entering new

markets. This strategy is best suited for Apple to enter into new developing markets with the help

of contracting with sellers in those markets. This strategy would align with the companys

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generic strategy for broad differentiation in reaching the more markets. This strategy will enable

Apple to offer unique products in the new markets (Meyer, P., 2015).

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Question 6: Outline and discuss the specific actions needed for implementation of your

chosen strategy. This should include the following:

a. Specific strategies and long-term objectives in such areas as marketing, human resources,

finance, operations, and information systems as appropriate.

b. Specify specific annual objectives and the policies for achieving these objectives, in areas such

as marketing, human resources, finance, operations, and information systems as appropriate.

c. Specify the results you can expect, including pro forma financial statements.

Recommended Strategy

Product development is the main strategy for growth and agrees with generic strategies.

This strategy can be implemented through innovation in the research and development. Apple is

focusing more on product development strategy rather than developing a product without

defects. It should focus more on bugs and errors that causing the negative trend of the market

rather than merely focusing on developing a product without considering any issues (Meyer, P.,

2015).

So, we recommend to implement product development strategy.

Implementation of Selected Strategy

Management and Operation:

Long term objectives in 5 years for management and operation are increasing the number

of distribution channels by 20% and opening 250 new global stores. Also, company tries to

decrease the cost of the product by 10%.

Management needs to be enthusiasm for technology, projects, and ideas to work while

monitoring customer experiences, leading training and development, and driving sales. Deriving

from 5-year plan, Apple needs to ensure that company more focus on expansion into global

Apple Case Analysis Page 29 of 50

market by reaching at least 4% increase in the number of distribution channels or 50 Apple stores

opening each year. Also, continuing foreign outsourcing and importing provide production at

cheaper costs are both important to reduce 2% in annual production cost.

Marketing:

In next five years, company plans to increase market share by 15%. For the goal of

reaching more customers around the world, Apple should create 4 to 6 active advertisement and

promotional campaigns in five years. Also, using annual conference and events to announce

release and information on each new product before it hits the market is likely another approach

to catch more attention from people. In addition, creating new convenient features or functions

for IPhone or IPad or a way of improving services would help to satisfy customers. This way not

only help Apple achieve annual objectives which is rising 3% market share each year, but also

sustain and expand on strongly branded name.

Human Resources:

Long term objective for human resource always focuses on recognition of human capital

as the resource that drives organizational success. More specific human resources goals are the

inclusion of HR leaders in overall business decision-making and the ability to demonstrate that

investment in HR activities and strategy has a tremendous impact on the companys bottom line.

Besides, Apple should try to increase employee productivity and workforce diversification by

25% in five years.

Happy employees are productive employees. Hence, to reach 5% increase in employee

productivity each year, managers should encourage, inspire or reward good performance as a

motivation for them. Besides, it is important for managers to acknowledge that everyone is

Apple Case Analysis Page 30 of 50

human, and we all need a break from time to time. Thus, understanding and monitoring

employee productivity should be considered with employees health and benefits.

Finance:

The goal of any firm is to continue growth and profitability, and the long-term goal, as

mentioned before, is increasing total revenue by 50% in 5 years. while reducing expenses, Apple

also plans to increase profit and earnings per share by 25% and additional paid in capital by 40%

in 5 years. From those goals, each year Apple should reach at least 10% increase in total revenue,

5% increase in profit and earnings per share and 8% increase in paid in capital. To doing so,

company is better to consider every costs or expenses which can noticeably lower profits. For

instance, Apple could switch to cheaper alternatives for consumables, modifying the quantity

and/or timing of your stock purchases to coincide with higher cash flow periods or arranging a

deferred or periodic payment plan for larger expenses.

Research & Development:

Long term objective in research & development area is to be the leader in technology

innovations. By doing so, Apple plans to decrease the bugs and errors in the software by 80%

and increase production efficiency by 20% in 5 years. By improving qualities of products as well

as services, company hopes to improve the interest and happiness of consumers from the

company.

Apples annual objective is to improve product quality by reducing bugs or errors in software by

16% and increase production efficiency by 4% each year. Company will more concentrate on

researching how demand of customers changes to offer our latest and best products meet their

satisfactions. Moreover, research and innovation also help company seeking opportunities which

is good for company health as well as profits.

Apple Case Analysis Page 31 of 50

Pro-forma Financial Statements:

The Pro Forma Financial Statement is designed to reflect the changes, assumptions and

strategies that we considered. Since Apple will carry out a market penetration strategy, we

assume a net income will increase by 2%. If we increase the marketing and R&D budget will

allow Apple to lower its prices or average cost. If we want the successful implementation of this

strategy then it requires financial resources, human capital, sales forces, and some other

resources. We expect operating expense to decrease 2% in 2016. There will be no change in the

inventory from 2015 to 2016. The projected company will show the positive increase in the

income statement as well as balance sheet except other liabilities and general and administrative

expense.

Apple Case Analysis Page 32 of 50

 Question 7: Recommend procedures for strategy review and evaluation. Include specific

measures that you will utilize.

Projected Financial Ratios:

Our selected strategies mentioned above will positively affect the performance of Apple

in 2016.

In liquidity ratio, current ratio is decreased from 1.11 to 1 and quick ratio increased from 0.89 to

0.98 from the year 2015 to 2016 and that is not a big difference. This shows the firm be able to

pay off its debts as they come due in the coming year.
In asset utilization, they going to have high sales and good inventory turnover ratio when

compared with 2015. Other turnover ratios like AR, fixed assets and total assets showing little bit

downwards but that doesnt make much difference in the overall asset utilization. We can say it

going to manage its assets effectively.

Debt ratio decreases from 0.45 to 0.44 and it indicates less risk when compared with 2015 to

2016.
Profitability ratio shows neutral or positive trend from 2015 to 2016 except for return on equity

and return on assets. Return on assets usually decreasing every year due to the depreciation on

that assets. In the same way return on equity going to decrease from 46.25 to 40.30 from the year

2015 to 2016. Net sales and net income will be good for the Apple Inc.

Balanced Scorecard:

As an important strategy evaluation tool, the balanced scorecard allows firms to evaluate

strategies from four perspectives: financial performance, customer knowledge, internal business

processes, and learning & growth.

Perspective Goal Measurement

Apple Case Analysis Page 33 of 50

FINANCIAL Firm Growth & Profitability Annual Sales Growth>6%
Profit Margin > 37%
Return on Assets>23%
CUSTOMER Value Customer Satisfaction Increase loyal customer 10%
Customer return rate >35%
INTERNAL BUSINESS Organization Efficiency Increase the employee

PROCESSES productivity >10%

Reduces administration

expenses 2.5%
Employee Satisfaction Reduce employee turn over

rate 10%
LEARNING & Support career development Giving skills training class 1

GROWTH per year

Career Advance Program =

1% profits
Support friendly environment Intro ethics training 1 per

and promote diversify year

Rumelts Criteria:

Apple Case Analysis Page 34 of 50

Rumelt provided 4 criteria for evaluating the strategies. Those are as follows:

Consistency:

Product development recommended strategies provides consistent policies and goals for

Apple. Through new products, development and entering into new markets will make the Apple

expand globally and make its products error free or at least decreasing the percentage of defects.

Apple systematic methods for guiding all the processes involved in getting a new product to

market helps to gain high profit margins and high sales. It should also ensure that all the

departments of the organization are contributing to the implementation of the strategies and their

interests are not conflicting with the company goals and policies (Mihailovich, V., 2015).

Consonance:

Product development strategy are suited for the internal environment. The

implementation of these strategy would get an internal response and changes in the customers

demands and expectations. This strategy will enable the Apple to expand and connect on more

new products and customers (Mihailovich, V., 2015).

Advantage:

Product development strategy will help the company to sustain its competitive advantage

over other competitors with covering more secured products. This factor is helpful in ensuring

the better utilization of resources for gaining competitive advantage. The company will enhance

its capacity utilization and reduction of waste. Managers and leader with the superior skills and

capabilities will lead the employees efficiently. As, Apple is highly reputed due to its strong

brand image through product development and at the same time it will be defect free, focusing

on Market development and market penetration strategies will further help it to gain such an

edge on competitors that they could never achieve (Mihailovich, V., 2015).

Apple Case Analysis Page 35 of 50

Feasibility:

Product development strategy will not create problems because it will be implemented

with the cooperation of human resources, marketing, sales, and financial departments of the

company. As the Apple has a good financial condition, so it will not be difficult for the company

to expand into research and development to offer new product lines in the existing markets.

Managers and employees would both assist in implementing the strategies and finding the

potential areas (Mihailovich, V., 2015).

CONCLUSION

Thus, Apple is a global leading company with its strong brand reputation, loyal customers

base, premium prices and replacing computers with its iPhones, iPads etc. Apple has a weak

mission statement that is focusing only on the products and ignoring the customers, employees,

stakeholders, markets etc. and Apples mission statement has been revised to include the

concerns of customers, employees, stakeholders, markets and survival. We conducted historical

financial analysis by using the income statement and balance sheets of the past three years 2013-

2015 and also generated pro forma statements for the year 2016 by considering 15% increase in

revenues and the projected balance sheet was also prepared by assuming the historical growth

percentages. Apple is better than Samsung and HPQ but it is lagging behind Google on some

areas that could be seen from the liquidity, debt management, and profitability and market ratios

comparison of three countries. After conducting the internal and external analysis of Apple and

considering the strengths, weaknesses, opportunities, and threats, we proposed product

development without bugs and errors strategy for Apple to focus more rather than merely

focusing on basic product development strategy. Financial performance of Apple could be

improved by implementing the recommended strategies that can be seen from projected financial

Apple Case Analysis Page 36 of 50

ratios. Apple has to focus more on its assets utilization efficiently so waste and costs could be

reduced to generate more profit margins. This analysis is based on current and historical data.

However, this analysis could be further improved by considering more macroeconomic factors.

Apple Case Analysis Page 37 of 50

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Beattie, A. (2015). Apples Key Weaknesses. Retrieved from

http://www.investopedia.com/articles/investing/072715/apples-key-weaknesses.asp

Bedigian, L. (2014). Could Hewlett-Packard's Sprout Threaten Apple's Dominance With

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dominance-

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methodology.net/apple-swot-analysis/

Hattersley, L. (2014). Apple timeline in pictures - from the launch of the Mac to the Apple Watch.
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pictures-24596/

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https://www.strategicmanagementinsight.com/mission-statements/apple-mission-
statement.html

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https://www.strategicmanagementinsight.com/swot-analyses/apple-swot-analysis.html

MBA Comprehensive Questions. (2002). Troy University: Sorrell College of Business.

Meyer, P. (2015). Apples Generic Strategy & Intensive Growth Strategies. Retrieved from
http://panmore.com/apple-inc-generic-strategy-intensive-growth-strategies

Mihailovich, V. (2015). Richards Rumelt: The evaluation of Business Strategy. Retrieved from
http://artcosolutions.blogspot.com/2012/06/richards-rumelt-evaluation-of-business.html

Morningstar. (2016). Apple Inc. Retrieved from AAPL:

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Porter, M. (2011). Three Steps to Developing a Business Strategy. Retrieved from
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Richardson, A. (2008). Apple Computer, Inc. Retrieved from Apple Computers: This Month in
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https://finance.yahoo.com/q/bs?s=AAPL+Balance+Sheet&annual

Apple Case Analysis Page 39 of 50

APPENDIX A: FINANCIAL RATIOS

Table 1 - Financial Ratios: Historical Comparison

Ratio 2016 2015 2014 2013 Evaluation
Liquidity
Current Ratio 1.00 $1.11 $1.08 $1.68 N
Quick Ratio 0.98 $0.89 $0.82 $1.40 N
Asset Utilization
Inventory Turnover 68.58 62.8202 57.93961 83.45 N
AR Turnover 10.25 13.62 11.96 14.22 N
Fixed Asset Turnover 9.72 10.85 8.82 10.67 P
Total Asset Turnover 0.75 0.89 0.83 0.89 -
Debt Management
Debt Ratio 44.79 0.45% 0.26% 0.14% N
Interest coverage ratio - 99.93 140.28 369.79 P
Profitability
Gross profit margin 40.06 40.06% 38.59% 37.62% P
Operating Margin 30.48 30.48% 28.72% 28.67% P
Net Profit Margin 22.06 22.85% 21.61% 21.67% P
BEP 0.31 $0.25 $0.23 $0.24 -
Return on Assets 16.60 20.45% 18.01% 19.34% P
Return on Equity 40.39 46.25% 33.61% 30.64% P
Market Value
P/E - 11.4 17.1 14.1 N
P/CF - 7.5 11.3 9.7 N
M/B - 4.9 5.8 4.1 P
Evaluation Notation: P=Positive, N=Negative, Dash=Neutral

Apple Case Analysis Page 40 of 50

 Table 2 - Financial Ratios: Competitor Comparison with Google
Apple Samsung Google HPQ Industry Comparison
Liquidity
Current Ratio 1.11 2.47 4.67 1.23 1 W
Quick Ratio 0.89 2.10 4.5 0.92 0.8 W
Asset Utilization
Inventory Turnover 62.82 6.64 - 12.19 18.1 S
AR Turnover 13.62 7.07 7.16 7.6 7.8 S
Fixed Asset Turnover 10.85 2.84 9.22 - S
Total Asset Turnover 0.89 0.85 0.54 0.98 0.8 S
Debt Management
Debt to Equity Ratio 0.45 7.45 0.02 0.78 0.42 W
TIE 99.93 89.45 189.95 - 78.9 S

Profitability
Gross profit margin 40.06% 37.34% 62.44% 23.96 0.23% W

%
Operating Margin 30.48% 13.16% 25.82% 5.29% 0.05% S
Net Profit Margin 22.85% 9.32% 21.10% 4.41% 16.30% S
BEP 24.96% 23.28% 26.21% 4.58% - W
Return on Assets 20.45% 7.91% 11.36% 4.34% 12.40% S
Return on Equity 46.25% 11.16% 14.08% 16.71 31.20% S

%
Market Value
P/E 11.2 9.91 35.1 4.8 17.1 W
P/CF 8 4.68 20.2 3.3 15.3 W
M/B 4.5 3.6 4.5 0.8 5.9 -
Evaluation Notation: S=Strength, W=Weakness Dash=Neutral

Apple Case Analysis Page 41 of 50

APPENDIX B: INCOME STATEMENT AND BALANCE SHEET

Historical Balance Sheet

Apple 31-Dec-16 31-Dec-15 31-Dec-14 31-Dec-13
Cash And Cash Equivalents 25,608,145.88 $21,120,000.00 $13,844,000.00 $14,259,000.00
Short Term Investments 52,886,923.24 $20,481,000.00 $11,233,000.00 $26,287,000.00
Net Receivables 16,562,573.70 $35,889,000.00 $31,537,000.00 $24,094,000.00
Inventory 2,349,000.00 2349000 2111000 $1,764,000.00
Other Current Assets 4,197,283.36 $9,539,000.00 $9,806,000.00 $6,882,000.00
Total Current Assets 99,254,926.18 $89,378,000.00 $68,531,000.00 $73,286,000.00
Long Term Investments 201,825,115.5 $164,065,000.0 $130,162,000.0 $106,215,000.0

1 0 0 0
Property Plant and 27,642,776.80 $22,471,000.00 $20,624,000.00 $16,597,000.00

Equipment
Goodwill 6,293,464.74 $5,116,000.00 $4,616,000.00 $1,577,000.00
Intangible Assets 4,788,987.14 $3,893,000.00 $4,142,000.00 $4,179,000.00
Other Assets 6,834,732.24 $5,556,000.00 $3,764,000.00 $5,146,000.00
Total Assets 6,834,732.24 $290,479,000.0 $231,839,000.0 $207,000,000.0

0 0 0
Accounts Payable 74,634,636.24 $60,671,000.00 $48,649,000.00 $36,223,000.00
Short/Current Long Term 13,530,457.13 $10,999,000.00 $6,308,000.00 $0.00

Debt
Other Current Liabilities 10,997,571.32 $8,940,000.00 $8,491,000.00 $7,435,000.00
Total Current Liabilities 99,162,664.68 $80,610,000.00 $63,448,000.00 $43,658,000.00
Long Term Debt 65,767,690.64 $53,463,000.00 $28,987,000.00 $16,960,000.00
Other Liabilities 41,120,337.30 $33,427,000.00 $24,826,000.00 $20,208,000.00
Deferred Long Term 4,458,075.88 $3,624,000.00 $3,031,000.00 $2,625,000.00

Liability Charges
Total Liabilities 210,508,768.5 $171,124,000.0 $120,292,000.0 $83,451,000.00

4 0 0
Common Stock 34,336,136.80 $27,416,000.00 $23,313,000.00 $19,764,000.00
Retained Earnings 112,473,424.2 $92,284,000.00 $87,152,000.00 $104,256,000.0

4 0
Other Stockholder Equity (532,566.79) ($345,000.00) $1,082,000.00 ($471,000.00)
Total Stockholder Equity 146,824,957.7 $119,355,000.0 $111,547,000.00 $123,549,000.0

3 0 0
Total Financing (L+E) 357,333,726.2 $290,479,000.0 $231,839,000.0 $207,000,000.0

Apple Case Analysis Page 42 of 50

 6 0 0 0

Apple Case Analysis Page 43 of 50

 INCOME STATEMENT

Historical Income Statement

Apple 31-Dec-16 31-Dec-15 31-Dec-14 31-Dec-13
Total Revenue 268,772,250.0 233,715,000.00 182,795,000.00 170,910,000.00

0
Cost of Revenue 161,102,350.0 140,089,000.00 112,258,000.00 106,606,000.00

0
Gross Profit 107,669,900.0 93,626,000.00 70,537,000.00 64,304,000.00

0
Research Development 9,277,050.00 8,067,000.00 6,041,000.00 4,475,000.00

Selling and 16,478,350.00 14,329,000.00 11,993,000.00 10,830,000.00

Administrative
Operating Income or Loss 81,914,500.00 71,230,000.00 52,503,000.00 48,999,000.00
Total Other 1,477,750.00 1,285,000.00 980,000.00 1,156,000.00

Income/Expenses Net
EBIT 83,392,250.00 72,515,000.00 53,483,000.00 50,155,000.00
EBT 83,392,250.00 72,515,000.00 53,483,000.00 50,155,000.00
Income Tax Expense 24,092,460.00 19,121,000.00 13,973,000.00 13,118,000.00
Net Income 59,299,790.00 53,394,000.00 39,510,000.00 37,037,000.00

Apple Case Analysis Page 44 of 50

APPENDIX C: STRATEGIC MATRICES - SWOT MATRIX

APPLE SWOT ANALYSIS STRENGTHS WEAKNESSES

1. Market leadership 1. Higher prices than
2. Strong Brand Image competitors
3. Marketing and 2. Technical issues
Advertising concerning the
capabilities product functionality
4. Financial Strength 3. Incompatibility of
5. Complicated supply the apples services
chain infrastructures and products with the
6. Extensive and Strong other services and
U.S.A. distribution products
channels 4. Closed ecosystems
5. Leadership
6. Pace of Innovation
OPPERTUINITIES Product development Market Penetration strategy:
1. Expansion of strategy: -Develop distribution channel
distribution networks -Product innovation by (W1, O1)
2. Increasing demands design (S2, O2) -Increase budget for
for smartphones and -Huge budget for R&D (S1, Marketing (O2, W6)
tablets O5)
3. Obtaining patents
through acquisitions
4. Trend of using smart
household appliances
5. New generation of
transportation
6. Rising Demand of
Cloud Services
THREATS Market Development Differentiation:
1. Imitation Strategy: - Product innovation by
2. Increase in labor -Develop a new product design (T1, W6)
costs in the countries (Apple Car) (S1, T1) - Research to improve OS X
where Apple plants -Increase budget for perform (T6, W4, W6)
are operating marketing (S3, T3, T6)
3. Aggressive Product Development
competition strategy:
4. Gross Margin -Product innovation by
Pressures design and more convenient
5. Unstable U.S Dollar functions (W2, W3, W6, T1,
fluctuation T3)
6. The Android OS
Market Share
increase

Apple Case Analysis Page 45 of 50

Apple Case Analysis Page 46 of 50
GRAND STRATEGY MATRIX (David, 2005)

RAPID MARKET GROWTH

Apple Inc

Quadrant II Quadrant I

WEAK
COMPETITIV

E STRONG
Quadrant

POSITION III Quadrant IV COMPETITIVE

POSITION

APPENDIX D: EXTRA CREDIT MATRICES

EFE Matrix

Key External Factors Weigh Rating Weighte

t d Score
Opportunities
1. Expansion of distribution networks 0.05 3 0.15
2.Increasing demands for smartphones and tablets 0.15 4 0.6
3.Obtaining patents through acquisitions 0.07 3 0.21
4.Trend of using Smart Devices 0.11 3 0.33
5.Autopilot Car 0.05 3 0.15
6.Rising Demand of Cloud Services 0.08 4 0.32
SLOW MARKET GROWTH
Threats

Apple Case Analysis Page 47 of 50

1. Imitation 0.1 3 0.3
2.Increase in labor costs in the countries where 0.04 1 0.04

Apple plants are operating

3. Aggressive competition 0.15 3 0.45
4.Gross Margin Pressures 0.08 2 0.16
5.Unstable U.S Dollar fluctuation 0.02 2 0.04
6.The Android OS Market Share increase 0.1 4 0.4
Total 1 3.15

IFE Matrix

Key External Factors Weight Rating Weighted

Score
Strengths
1. Market leadership 0.1 3 0.3
2. Strong Brand Image 0.15 4 0.6
3. Marketing and Advertising capabilities 0.1 3 0.3
4. Financial Strength 0.07 3 0.21
5. Complicated supply chain infrastructures 0.09 2 0.18
6. Extensive and Strong U.S.A. distribution channels 0.08 3 0.24
Weaknesses
1. Higher prices than competitors 0.1 2 0.2
2. Incompatibility of the apples services and 0.07 1 0.07

products with the other services and products

3. Technical issues concerning the product 0.04 2 0.08

functionality
4. Closed ecosystems 0.03 1 0.03
5. Leadership 0.1 2 0.2
6. Pace of Innovation 0.07 1 0.07
Total 1 2.48

Apple Case Analysis Page 48 of 50

 QSPM Matrix

Product Market Market

Differentiation
Development Development Penetration
Key Factors Weight AS TAS AS TAS AS TAS AS TAS
Opportunities
1. Expansion of
0.05 4 0.2 - - 4 0.2 - -
distribution networks
2. Increasing demands for
0.15 4 0.6 - - 3 0.45 - -
smartphones and tablets
3. Obtaining patents through
0.07 - - - - - - - -
acquisitions
4. Trend of using Smart
0.11 - - - - - - - -
Devices
5. New generation of
0.05 - - - - - - - -
Transportation
6. Rising Demand of
0.08 - - - - - - - -
Cloud Services
Threats - -
1. Imitation 0.1 2 0.2 3 0.3 - - 4 0.4
2. Increase in labor costs
in the countries where
0.04 - - - - - - - -
Apple plants are
operating
3.Aggressive
0.15 3 0.45 3 0.45 - - - -
competition
4. Gross Margin
0.08 - - - - - - - -
Pressures
5. Unstable U.S Dollar
0.02 - - - - - - - -
fluctuation
6. The Android OS
0.1 - - 2 0.2 - - 3 0.3
Market Share increase
Total 1
Strengths
1. Market leadership 0.1 - - 4 0.4 - - - -
2. Strong Brand Image 0.15 4 0.6 - - - - - -
3. Marketing and 0.1 - - 3 0.3 - - - -

Apple Case Analysis Page 49 of 50

Advertising capabilities
4. Financial Strength 0.07 - - - - - - - -
5. Complicated supply
0.09 - - - - - - - -
chain infrastructures
6. Extensive and Strong
U.S.A. distribution 0.08 - - - - - - - -
channels
Weaknesses
1. Higher prices than
0.1 - - - - 3 0.3 - -
competitors
2. Incompatibility of the
apples services and
0.07 3 0.21 - - - - - -
products with the other
services and products
3. Technical issues
concerning the product 0.04 4 0.16 - - - - - -
functionality
4. Closed ecosystems 0.03 - - - - - - 2 0.06
5. Leadership 0.1 3 0.3 - - - - - -
6. Pace of Innovation 0.07 2 0.14 - - 3 0.21 4 0.28
Total 1 2.86 1.65 1.16 1.04

Apple Case Analysis Page 50 of 50