Final Communication Team Report

October 19, 2017

Jesus Borchardt
Jiatong Chen
Cody Creason
Joey Gray
Isaak Matzdorff
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Executive Summary:
Overview
Apple has recently introduced two iPhones within a very short time span. This has had an
impact on three key stakeholders. The following report will provide Apple with a plan to
successfully release these products to maximize profits, please investors, and manage
production teams. We have always been a company keen on innovation; we must invest in
alternative ways to generate the supply of our phone screens to meet customer demand and
provide our employees with the resources to succeed. We also must stay the course, as our
phones are currently competing with one another, however, in the long run, there are profits
to be made, despite this short-term loss. Finally, we must further widen the price gap
between our two phones to satisfy evolving markets and increase profits. These
recommendations will facilitate improved sales and customer and employee satisfaction.
Implementing these recommendations will allow Apple to roll out our two iPhones almost
simultaneously successfully.

Supplying Phone Screens

To develop effective recommendations, we conducted secondary research. This secondary

analysis showed that we have recently been relying on Samsung as the sole provider of our
iPhone X screen. While we have already partnered with LG to aid with our screen shortage,
we have the opportunity to invest in our production of the screen, which would allow our
development teams to meet the demand and deadlines for the iPhones and further increase
customer and employee satisfaction.

Staying the Course

In our research, we also found that we were prepared for the lack of demand for the iPhone
8. While our phones are currently competing against each other, it is not necessary to panic
and change direction at this point. If we stay the course, we will see a significant cycle of
people upgrading to the new technology in our phones.

Widening the Price Gap

When further examining our secondary research, we found that the current price gap
between our phones was not high enough. Our high-end buyers are willing to spend even
more than the starting price of $999 for the X; while the lower price of $799 for the 8 was
still too steep to attract the lower end of the market. If we raise the gap in both directions,
we can capitalize on more profits in two different market segments.

Implementing the Recommendations

We have provided further details regarding these recommendations as well as a timeline to

implement them for our company. During this time, Apple will continue to be an innovative
company looking to further its imprint on todays society.
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Introduction:
The detailed information below will provide our Director of Communications with a plan to
release the iPhone 8 and iPhone X successfully. It will detail the issues we are having with
our key stakeholders: our production teams, customers, and investors. They have all been
impacted by the current issue, which led us to develop recommendations on how to better
accommodate each group.

We have always been keen on innovation. We must invest in alternative ways to generate
the supply of our phone screens to meet customer demand and provide our employees with
the resources to succeed. We also must stay the course, as our phones are currently
competing with one another, however, in the long run, there are profits to be made, despite
this short-term loss. Additionally, we must further widen the price gap between our two
phones to satisfy more markets and increase profits. These recommendations will facilitate
improved sales and customer and employee satisfaction. Implementing these
recommendations will allow Apple to roll out our two iPhones almost simultaneously
successfully.

*This table displays the different ways our stakeholders are being impacted by our decision to release two
iPhones at the same time.
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Recommendation 1:
Continue to seek other OLED suppliers, similar to what we have done with
LG, and invest in R&D to start developing our screens.
We recommend our company should continue to seek other OLED suppliers, similar to what
we have done with LG Corporation, and invest in research and development allows us to
design our phone screens. We should invest $10.5 billion to develop our factory to produce
OLED screens.

Lack of Supply

Our company has unveiled two different iPhones in the same announcement event for the
first time. We are competing against ourselves in the smartphone industry. This has affected
various stakeholders differently. Our Production Teams will have trouble supplying the
various pieces of each phone and are going to have to continue to pick up the slack for the
lack of screen supply, and our phones will continue to see an increase in demand, especially
in the case of the iPhone X.

This is occurring because we are using Samsung OLED screens for the first time in our iPhone
X model. We will have to rely on our competitor to supply the phone screen. If there arent
enough screens available for the demanded iPhones, we will face a shortage of iPhones. This
seems to be an issue already as our iPhone X model will not be released for pre-order on
October 27th, 2017. Unlike the iPhone X, the iPhone 8 was released on a regular schedule on
September 22nd, 2017. Not only are Production Teams facing issues with our internal
competition, but our customers are as well.

Staying True to Our Culture

At Apple, we take a great deal of pride in our company culture. We envisioned our company
as innovative and committed to our employees and leaders. In our mission statement, we
indicate that We are constantly focusing on innovating. We believe that we produce the
best personal computers in the world, we lead the digital music revolution, and we are
defining the future of mobile media by reinventing the mobile phone. Even though we have
different products, our company has primarily focused on the development of the iPhone.
We focus on creating a culture that encourages employees to be imaginative and develop
products with features that astonish consumers. Our well rounded organizational culture
helps create an environment that allows for innovation.

Currently, we have put our Production Teams in a situation that is unfavorable. This
recommendation will assist in ensuring that we stay true to our company culture and
provide our teams with the resources to succeed.
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Innovating Technologies

We will not see OLED screens from LG for a long time, so we need to do more research and
development in OLED technology. Our company never has the screens for our iPhone
models. We should communicate to our Production Teams that there is much pressure
right now to meet the demand. They should be informed that they will be in a high-
pressure situation but should work with what they can. They need to ensure no supplies
are wasted since we are at a shortage. Eventually, they will have more supplies to assemble
iPhone X models because we will have another supplier and invest in our technology to
produce the phones.

The screen on the iPhone X is by

far the most expensive piece of the
phone.

Retrieved from: https://www.etradesupply.com/blog/what-is-the-production-cost-of-iphone-x/

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Recommendation 2:
Increase the Price Gap between the iPhone 8 and X Models.

To address our concern about competing against each other, we should decrease the price of
the iPhone 8 and increase the price of the iPhone X.

Facing a Dilemma

Our customers have been presented with a situation that causes a dilemma. Do they wait to
purchase the $999 iPhone X or do they purchase the $699 iPhone 8? One of our customers
stated I am not buying this iPhone 8, it has a hefty price tag with no or less innovation. I will
be waiting for the iPhone X..
Recent iPhones have featured no major new modifications, just minor tweaks. As one analyst
stated, Apple seems to be stuck in a phase of iteration thinner, bigger, faster-better-
performing iPhones and iPads and just one all-new product, the Apple Watch, in 2014
Analysts are predicting there to be a ton of people in the market to upgrade to the iPhone X.
The customers have been holding onto the iPhone 6 because they did not feel the need to
update to a device that is very similar to its predecessor.

Are we whom we say we are?

While we publicly state that we are an innovative company, recent data shows that
consumers and analysts feel differently. As an example, previous versions of the iPhone
consistently made dramatic improvements from one model to the next, creating a
tremendous demand. Customers are valued as a huge stakeholder in our business plan. Our
customers are choosing between the iPhone 8 and the iPhone X. Our customers would rather
wait for the innovative device because they believe the iPhone 8 is too similar to the previous
iPhone models.

Willing to Pay Extra

As of now, customers are waiting out for the iPhone X. The iPhone 8 isnt drastically less
expensive than the iPhone X. There has been a reduction in creative, new products and
features, which has resulted in lower than expected sales. Customers do not mind paying
extra for the more innovative phone; however, these customers do have to wait longer for
the more innovative device.
Consumers would, therefore, have the choice of spending less on the slightly improved
device or spending more to obtain the dramatically advanced iPhone X. This strategy would
give customers a clearer path to select the device thats best suited for their needs.
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Recommendation 3:
Continue on the Current Plan

We recommend Apple stay the course for our current iPhone sales plan and inform our
investors; they should not be concerned about the recent stock drops.

Waiting It Out
The iPhone 8s low demand has been a sign that customers are waiting for the release of the
iPhone X, which is expected to go on sale until October 27 of this year. Analysts are already
forecasting an increase in sales of 16% and a boost in profits of 22% when the iPhone X is
released. Currently, we might be experiencing a short-term negative impact on stock price
due to customers waiting for the iPhone X.

Dipping Stock Prices

Shareholders saw stock prices
drop at the release of the
iPhone 8. Typically, share prices
increase with the release of our
new products. Even though our
the stock price has decreased at the
release of the iPhone 8, our share
price was only 10% lower than
our all-time high that we hit in
early September 2017.
Shareholders have been hurt since
the release of the iPhone 8, but they see a rebound coming with the release of the iPhone X.
Sales are forecasted to jump 16%, and profits are predicted to jump 22% next year because
of the iPhone X. Even though our internal competition has currently hurt shareholders, our
internal competition will eventually help shareholders because of the increase in sales and
profits from the iPhone X.

Staying the Course

We firmly believe stockholders should hold onto our stock because, at the release of the
iPhone X, we forecast a strong overall iPhone cycle and a high increase in our stock price. We
can see this as a short-term loss that will end up becoming a long-term gain. Also, our shares
are up by more than 30% this year. Stockholders should not be afraid of holding onto the
stock until the new iPhone is released.
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Next Steps
1. Pursue the sale of two different iPhone models at once
2. Communicate to our stakeholders the advantages of selling two different phones
3. Start spending the $261.5 billion of cash we are just sitting on
4. Recap 2017 sales and 2018 forecasts with investors
5. Start widening the gap in price between iPhone 8 and iPhone x

Projected Budget and ROI

Timeline:
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Conclusion
Our company is currently facing an issue with the release of the iPhone 8 and X at nearly the
same time. While our production teams, investors, and customers have been adversely
affected by this, we have an opportunity to capitalize on this situation. We can further our
research and development, increase our share price, and reach more customers for more
profits if we follow the recommendations provided and turn an issue into a great growth for
our company. In doing so, we would also continue to follow our narratives of being
innovative and committed to our employees.
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References
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Appendices
The following chart is how we derived our $10.5 billion from spending on a factory for OLED
screens:

The following table shows what is each total component price for the iPhone X Production
Budget of the year:

Source: https://www.etradesupply.com/blog/what-is-the-production-cost-of-iphone-x/