Apple Inc.

Sudharshan S Prabhu
Student of MCA, Srinivas University, Mangalore-575001, INDIA
E-mail: sudharshansprabhu@outlook.com

ABSTRACT

Over the last 30 years Apple has taken growth from computer design to developing consumer
electronics. The Apple Inc. was founded by Steve Jobs, Steve Woznaik, and Ronald Wayne in
1970’s. Tim Cook is the current CEO of the company. Apple uses many types of internet
business models. Business to Business E-Commerce is used in the selling of electronic devices
to help operate daily proficiency in other business. Business to Consumer E-Commerce is the
selling of iPods, Computer, and other products to different individuals rather than Business.
Apple’s product line has grown rapidly in last few years. They are selling the products in the
following categories: input device, output device, storage device, computers, and connecting
devices. Apple is known to use a network called Airport Extreme Card picks up a Wi-Fi signal
rather than a broadcast network. Apple is related Bonjor Connection. It is an automatic
connection where computers and devices automatically transmit their own services and listen
for services being offered for the uses for the others. AirPort utility for mac guides you through
the process of connecting to the internet, and you will have your network up and running in
minutes. Apple provides the four fundamental of network security by offering a valid source
of confidentiality with their terms and agreement statement. Apple has their terms and
agreement which explains their integrity and availability. Whether looking up online or calling
the store via phone any answer to any question answered honestly. Their security and access
controls explain MAC OS X Server is built on an advanced architecture to deliver the features
you want with the security you need.

Keywords: Apple Inc., Company Analysis, Internet Business Models, Airport Extreme Card,
Bonjor Connection.
1. INTRODUCTION:
Apple Inc. is an American multinational technology company headquartered in Cupertino,
California that designs, develops, and sells consumer electronics, computer software, and
online services. Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne in April
1976 to develop and sell Wozniak's Apple Ipersonal computer. It was incorporated as Apple
Computer, Inc. in January 1977, and sales of its computers, including the Apple II, saw
significant momentum and revenue growth for the company. Within a few years, Jobs and
Wozniak had hired a staff of computer designers and had a production line. Apple went
public in 1980 to instant financial success. Over the next few years, Apple shipped new
computers featuring innovative graphical user interfaces, and Apple's marketing commercials
for its products received widespread critical acclaim. However, the high price tag of its
products and limited software titles caused problems, as did power struggles between
executives at the company. Jobs resigned from Apple and created his own company. As the
market for personal computers increased, Apple's computers saw diminishing sales due to
lower-priced products from competitors, in particular those offered with the Microsoft
Windows operating system. More executive job shuffles happened at Apple until then-
CEO Gil Amelio in 1997 decided to buy Jobs' company to bring him back. Jobs regained
position as CEO, and began a process to rebuild Apple's status, which included opening Apple's
own retail stores in 2001, making numerous acquisitions of software companies to create a
portfolio of software titles, and changed some of the hardware technology used in its
computers. It again saw success and returned to profitability. In January 2007, Jobs announced
that Apple Computer, Inc. would be renamed Apple Inc. to reflect its shifted focus toward
consumer electronics and announced the iPhone, which saw critical acclaim and significant
financial success. In August 2011, Jobs resigned as CEO due to health complications, and Tim
Cook became the new CEO. Two months later, Jobs died, marking the end of an era for the
company.
2. OBJECTIVES:
Objectives of the case study or IT Analysis is:
 To understand the type of products and services provided by the company.
 To find the overall growth of the company.
 To find the issues in their company products or services that effect their company’s
growth.
 The type of consumers/stakeholders involved in the company.
 To find the different initiative that will help the company’s growth in the current or
future phase.
3. ABOUT APPLE INC.:

Apple is the world's largest information technology company by revenue and the world's third-
largest mobile phone manufacturer after Samsung and Huawei. In February 2015, Apple
became the first U.S. company to be valued at over US$700 billion. The company employs
123,000 full-time employees as of September 2017 and maintains 500 retail stores in 22
countries as of December 2017. It operates the iTunes Store, which is the world's largest music
retailer. As of January 2016, more than one billion Apple products are actively in use
worldwide. Apple's worldwide annual revenue totalled $229 billion for the 2017 fiscal year.
The company enjoys a high level of brand loyalty and has been repeatedly ranked as the world's
most valuable brand. However, it receives significant criticism regarding the labour practices
of its contractors and its environmental and business practices, including the origins of source
materials.
4. SMART PRODUCTS AND SERVICES:

4.1 Mac:

 iMac: Consumer all-in-one desktop computer, introduced in 1998.

 Mac Mini: Consumer sub-desktop computer, introduced in 2005.
 MacBook: Consumer ultra-thin, ultra-portable notebook, introduced in 2006 and
relaunched in 2015.
 MacBook Pro: Professional notebook, introduced in 2006.
 Mac Pro: Workstation desktop computer, introduced in 2006.
 MacBook Air: Consumer ultra-thin, ultra-portable notebook, introduced in 2008.
4.2 iPod: On October 23, 2001, Apple introduced the iPod digital music player. Several
updated models have since been introduced, and the iPod brand is now the market
leader in portable music players by a significant margin. More than 350 million units
have shipped as of September 2012. Apple has partnered with Nike to offer
the Nike+iPod Sports Kit, enabling runners to synchronize and monitor their runs
with iTunes and the Nike+ website.

In late July 2017, Apple discontinued its iPod Nano and iPod Shuffle models, leaving
only the iPod Touch available for purchase.
4.3 iPhone: At the Macworld Conference & Expo in January 2007, Steve Jobs introduced
the long-anticipated iPhone, a convergence of an Internet-enabled smartphone and
iPod. The first-generation iPhone was released on June 29, 2007, for $499 (4 GB) and
$599 (8 GB) with an AT&T contract. On February 5, 2008, it was updated to have
16 GB of memory, in addition to the 8 GB and 4 GB models. It combined a 2.5G quad
band GSM and EDGE cellular phone with features found in handheld devices, running
scaled-down versions of Apple's Mac OS X (dubbed iPhone OS, later renamed iOS),
with various Mac OS X applications such as Safari and Mail. It also includes web-
based and Dashboard apps such as Google Maps and Weather. The iPhone features a
3.5-inch (89 mm) touchscreen display, Bluetooth, and Wi-Fi. On September 9, 2014,
Apple introduced the iPhone 6, alongside the iPhone 6 Plus that both have screen sizes
over 4-inches. One year later, Apple introduced the iPhone 6S, and iPhone 6S Plus,
which introduced a new technology called 3D Touch, including an increase of the rear
camera to 12 MP, and the FaceTime camera to 5 MP. On March 21, 2016, Apple
introduced the iPhone SE that has a 4-inch screen size last used with the 5S and has
nearly the same internal hardware as the 6S.
In July 2016, Apple announced that one billion iPhones had been sold.
On September 7, 2016, Apple introduced the iPhone 7 and the iPhone 7 Plus, which
feature improved system and graphics performance, add water resistance, a new rear
dual-camera system on the 7 Plus model, and, controversially, remove the 3.5 mm
headphone jack.
On September 12, 2017, Apple introduced the iPhone 8 and iPhone 8 Plus, standing as
evolutionary updates to its previous phones with a faster processor, improved display
technology and upgraded camera systems. The company also announced iPhone X,
which radically changes the hardware of the iPhone line up, removing the home button
in favour of facial recognition technology and featuring a near bezel-less design along
with introducing wireless charging.

4.4 iPad: On January 27, 2010, Apple introduced their much-anticipated media tablet,
the iPad. It offers multi-touch interaction with multimedia formats including
 newspapers, e-books, photos, videos, music, word processing documents, video games,
and most existing iPhone apps using a 9.7-inch screen. It also includes a mobile version
of Safari for web browsing, as well as access to the App
Store, iTunes Library, iBookstore, Contacts, and Notes. Content is downloadable
via Wi-Fi and optional 3G service or synced through the user's computer. AT&T was
initially the sole U.S. provider of 3G wireless access for the iPad.
On October 22, 2013, Apple introduced the iPad Air and the iPad Mini with Retina
Display, both featuring a new 64-bit Apple A7 processor.
The iPad Air 2 was unveiled on October 16, 2014. It added better graphics and central
processing and a camera burst mode as well as minor updates. The iPad Mini 3 was
unveiled at the same time.
Since its launch, iPad users have downloaded over three billion apps. The total number
of App Store downloads, as of June 2015, is over 100 billion.
On September 9, 2015, Apple announced the iPad Pro, an iPad with a 12.9-inch display
that supports two new accessories, the Smart Keyboard and Apple Pencil. An
updated iPad Mini 4 was announced at the same time. A 9.7-inch iPad Pro was
announced on March 21, 2016.On June 5, 2017, Apple announced a new iPad Pro with
a 10.5-inch display to replace the 9.7-inch model and an updated 12.9-inch model.

4.5 Apple Watch: The original Apple Watch smartwatch was announced by Tim Cook on
September 9, 2014, being introduced as a product with health and fitness-tracking. It
was released on April 24, 2015. The second generation of Apple Watch, Apple Watch
Series 2, was released in September 2016, featuring greater water resistance, a faster
processor, and brighter display. On September 12, 2017, Apple introduced Apple
Watch Series 3 featuring LTE cellular connectivity, giving the wearable independence
from an iPhone except for the setup process.

4.6 Apple TV: At the 2007 Macworld conference, Jobs demonstrated the Apple
TV (previously known as the iTV), a set-top video device intended to bridge the sale
of content from iTunes with high-definition televisions. The device links up to a user's
TV and syncs, either via Wi-Fi or a wired network, with one computer's iTunes library
and streams content from an additional four. The Apple TV originally incorporated a
40 GB hard drive for storage, included outputs for HDMI and component video, and
played video at a maximum resolution of 720p. On May 30, 2007, a 160 GB hard disk
drive was released alongside the existing 40 GB model. A software update released on
January 15, 2008, allowed media to be purchased directly from the Apple TV.
In September 2009, Apple discontinued the original 40 GB Apple TV and now
continues to produce and sell the 160 GB Apple TV. On September 1, 2010, Apple
released a completely redesigned Apple TV. The new device is 1/4 the size, runs
quieter, and replaces the need for a hard drive with media streaming from any iTunes
library on the network along with 8 GB of flash memory to cache media downloaded.
Like the iPad and the iPhone, Apple TV runs on an A4 processor. The memory included
in the device is half of that in the iPhone 4 at 256 MB; the same as the iPad, iPhone
3GS, third and fourth-generation iPod Touch.
It has HDMI out as the only video out source. Features include access to the iTunes
Store to rent movies and TV shows (purchasing has been discontinued), streaming from
internet video sources, including YouTube and Netflix, and media streaming from an
iTunes library. Apple also reduced the price of the device to $99. A third generation of
 the device was introduced at an Apple event on March 7, 2012, with new features such
as higher resolution (1080p) and a new user interface.
At the September 9, 2015, event, Apple unveiled an overhauled Apple TV, which now
runs a variant of macOS, called tvOS, and contains 32GB or 64 GB of NAND Flash to
store games, programs, and to cache the current media playing. The release also
coincided with the opening of a separate Apple TV App Store and a new Siri
Remote with a glass touchpad, gyroscope, and microphone.
At the September 12, 2017 event, Apple released a new 4K Apple TV with the same
form factor as the 4th Generation model. The 4K model is powered by the A10X SoC
designed in-house that also powers their second-generation iPad Pro. The 4K model
also has support for high dynamic range.
4.7 Software: Apple develops its own operating systems to run on its devices,
including macOS for Mac personal computers, iOS for its iPhone, iPad and iPod Touch
smartphones and tablets, watchOS for its Apple Watch smartwatches, and tvOS for its
Apple TV digital media player.
For iOS and macOS, Apple also develops its own software titles, including Pages for
writing, Numbers for spreadsheets, and Key note for presentations, as part of
its iWork productivity suite. For macOS, it also offers iMovie and Final Cut Pro X for
video editing, and GarageBand and Logic Pro X for music creation.
Apple's range of server software includes the operating system macOS Server; Apple
Remote Desktop, a remote systems management application; and Xsan, a storage area
network file system.
Apple also offers online services with iCloud, which provides cloud storage and
synchronization for a wide range of user data, including documents, photos, music,
device backups, and application data, and Apple Music, its music and video streaming
service.

4.8 Electric vehicles: According to the Sydney Morning Herald, Apple wants to start
producing an electric car with autonomous driving as soon as 2020. Apple has made
efforts to recruit battery development engineers and other electric automobile engineers
from A123 Systems, LG Chem, Samsung Electronics, Panasonic, Toshiba, Johnson
Controls and Tesla Motors.

4.9 Apple Energy: Apple Energy, LLC is a wholly owned subsidiary of Apple Inc. that
sells solar energy. As of June 6, 2016, Apple's solar farms in California and Nevada
have been declared to provide 217.9 megawatts of solar generation capacity. In addition
to the company's solar energy production, Apple has received regulatory approval to
construct a landfill gas energy plant in North Carolina. Apple will use
the methane emissions to generate electricity. Apple's North Carolina data centre is
already powered entirely with energy from renewable sources.

5. Customers and Stakeholders:

Apple considers the interests and concerns of a number of key stakeholders in its policies and
programs for corporate social responsibility. Stakeholder groups impose varying demands in
different aspects of business. In Apple’s case, the following stakeholders are the most
significant:
 Customers/Consumers
 Apple’s Employees
 Investors
  Employees of Suppliers and Distributors

Customers/Consumers. Apple prioritizes customers as its top stakeholders in devising

corporate social responsibility strategies. This stakeholder group is composed of individual and
organizational buyers of Apple products. The main interest of customers is to have effective
and efficient products that are reasonably priced. Apple products have higher price points.
However, Apple’s premium pricing strategy is acceptable because it matches the high quality
and aesthetics of these products. The company also has environmental programs for recycling
and responsible sourcing to address customers’ demands for business sustainability. Thus,
Apple’s corporate social responsibility efforts satisfy the interests of customers as the top
stakeholders of the business.

Apple’s Employees. Employees are the second-priority stakeholders in Apple’s approach to

corporate social responsibility. This stakeholder group is composed of employees at Apple’s
facilities. The main interests of these stakeholders are proper compensation and career
development. Employees as a stakeholder group are important because they directly determine
Apple’s human resource capabilities to innovate and develop profitable products. The firm
addresses the interests of its employees through compensation packages competitive in Silicon
Valley. Thus, Apple’s corporate social responsibility efforts satisfy the concerns and interests
of employees as a major stakeholder group.

Investors. Investors are typically major stakeholders and determinants of corporate social
responsibility programs in businesses. In Apple’s case, investors are interested in maximizing
the returns on their investments. The company effectively addresses this stakeholder group
through excellent financial performance. For example, Apple is now one of the most profitable
companies in the world. The firm maintains high profit margins. Apple also has a strong
financial position, which involves high liquidity through large amounts of cash. The company
has also managed to avoid debt. Based on these corporate social responsibility conditions,
Apple effectively satisfies the interests of investors as stakeholders.

Employees of Suppliers and Distributors. Workers in Apple’s supply chain are also
significant considerations in the company’s corporate social responsibility efforts. These
workers are indirect stakeholders in Apple’s business, but determine the firm’s corporate social
responsibilities. The main interest of this stakeholder group is similar to the interests of Apple’s
own employees, such as proper compensation and job security. Also, this stakeholder group is
interested in ethical employment practices. To address these interests, Apple has a Supplier
Code of Conduct. The company monitors and imposes requirements on the employment
practices of firms in its supply chain. Part of Apple’s policy is to terminate business relations
with suppliers that continue to fail or refuse to satisfy this Code of Conduct. Apple’s 2014
assessment of suppliers shows that 92% of suppliers now comply with the 60-hour workweek
rule. Thus, to a certain high degree, Apple’s corporate social responsibility efforts satisfy the
interests of the stakeholder group of suppliers’ workers.

6. HR Training & Training Strategy: A success of a company is not only a result of

incredible manufacturing capability and great location. Many times, HR strategy becomes the
reason for company to stand strong and grow big to rule the world. Apple is one example of
such company. Great talents and unusual talent management approaches are considered as the
most important reasons why Apple could be the leader in consumer electronics. Actually,
Apple does not open up with company’s HR strategy. It is not hard to understand why company
tries to hide their secret because competition is fierce. However, some people were tried hard
to analyse HR strategy at Apple. They interviewed HR leaders and talked with former workers
to find it out. Recruiting is something that become they key of success. Apple requires all
candidates to be hard worker, committed to the company, and get every precise detail perfect.
Many times, Apple recruit’s high-quality workers from other firms. Some people call it pirate
raiding. Apple is known as a different company in many ways. Instead of promising work and
life balance, Apple is emphasizing hard work for all workers. Instead of promising career
progression, Apple concept is for employees to own their career. Career path is not fully
supported by Apple. Employees must seek information about other jobs in different units
themselves. Apple makes things so different in talent management. Instead of providing
training and development program, Apple make the employees do it themselves. Trainings are
available but Apple does not give or create learning plan for the employees. Apple reinforces
the employees to have strong self-reliant and develop their skills on their own. However, the
strategy seems work well for both company and workers. From the very beginning, workers
know that they could not expect warm family inside the company. They know that they must
become something special to survive. Therefore, without training and development program,
workers already learn, train, and develop themselves. Yet, they do not regret it because they
know that they will receive amazing return if they could give something incredible for the
company. New challenge after a project is another key point of attraction. It could make people
have new spirit and surely will not experience boring. Employees are always pro-active and
curious about what will happen tomorrow. They always prepare themselves to learn something
new that makes life so exciting. With such strategy, Apple should not offer training and
learning program because the employees will seek it themselves. Apple should not create
development program because the employees will develop themselves. This is how Apple
trains their employees to be creative and innovative.

7. Financials: Apple designs, manufactures, and markets personal computers, portable digital
music players and mobile communication devices. It also markets a range of related software,
services, peripherals and networking solutions. The company offers its products and services
to customers in education, consumer, creative, professional, business and government sectors.
In addition, it sells various third-party Macintosh (Mac), iPod, iPad and iPhone compatible
products that include application software, printers, storage devices, speakers, headphones, and
various other accessories and peripherals. Apple offers a range of personal computing products,
which include desktop and portable personal computers, related devices and peripherals, and
various third-party hardware and software products. Additionally, it designs, develops and
markets, its family of iPod digital music players and its iPhone mobile communication devices,
along with related accessories and services such as the online distribution of third-party content
through the company's iTunes Store. At the end of fiscal year 2009, the company operated a
total of 317 retail stores across the world comprising 233 stores in the Sand 84 stores
internationally. The company opened its stores at high-traffic locations in quality shopping
malls and urban shopping districts. The company operates through five reportable segments,
namely, Americas, Europe, Japan, Asia-Pacific and Retail. The activities related to the Retail
segment are not included in America, Europe, Asia-Pacific and Japan segments. The Americas
segment includes both North and South America, while the Europe segment includes European
countries as well as Africa. The Retail segment operates apple-owned retail stores. The Asia-
Pacific segment comprises Australia and Asia excluding Japan. In 2010, the America segment
accounted for 37.56% of the total revenue, followed by Europe (28.66%), Retail (15.02%),
Asia-Pacific (12.66%) and Japan (6.10%).

8. Corporate Social Responsibility: Apple corporate social responsibility (CSR) programs

and initiatives are led by Lisa Jackson, Vice President of Environmental Initiatives, reporting
directly to CEO Tim Cook. It has to be noted that “Steve Jobs wasn’t known for
philanthropy. Some wondered if he made anonymous donations to charity, some criticized him
for his lack of public giving, while others defended him. However, with Tim Cook assuming
Apple leadership in 2011, the focus on CSR aspect of the business was increased to a
considerable extent. Tim Cook is a member of Paulson Institute’s CEO Council for Sustainable
Urbanization, working with other CEOs of top Chinese and Western companies to advance
sustainability in China.

 Apple Inc. Supporting Local Communities: ‘Global Volunteer Program’ was launched
in 2011 to encourage employees to volunteer in local communities. Since its launch more
than USD 78 million was donated to charities and non-profits around the world.

The program has been revised in March 2015 to grant employees the right to choose the projects
in their local communities they would like to contribute.

 Apple Inc. Educating and Empowering Workers

 Apple education and development program is offered free of charge by 18 factories and
more than 280,000 workers took various courses in 2016
 Under the leadership of Denise Young Smith, as Apple’s vice president for HR, Apple
has expanded its employee benefits programs to a considerable extent. For example,
“expectant mothers can take up to four weeks before a delivery and up to 14 weeks after
a birth, while fathers and other non-birth parents are eligible for up to six weeks of
parental leave.
 Labour and Human Rights at Apple Inc.
 Apple enforces The Supplier Code of Conduct that is claimed to be the toughest in the
electronics industry
 Company has achieved an average 95per cent compliance among suppliers to
maximum 60-hour workweek
 Apple has investigated cases of abuses of foreign workers and the company has
required suppliers to reimburse affected “foreign contract workers USD3.9 million in
excessive fees paid to labour brokers, bringing our total reimbursements since 2008 to
USD16.9 million.
 Employee Health and Safety at Apple Inc.
 The company has launched Apple Supplier EHS Academy, an 18-month program that
aims to improve employee health and safety in the industry throughout the globe. 240
suppliers and 270,000 workers have participated in this program.
 Research has been conducted in Apple’s ergonomics department on about 75 jobs
within supply chain to identify ergonomic risks. The research has resulted in improved
standards for managing workstation design changes.

 Apple Inc. and Gender Equality and Minorities

 Apple employees are 32 percent female, 9 percent black and 12 percent Hispanic. Out
of a global workforce of 125,000, 37 percent of new hires in the last 12 months were
women. Out of a U.S. workforce of 80,000, 27 percent of hires came from
underrepresented minority groups in the last year.
 The company reached equal pay to employees in 2016
 Tim Cook is the only openly gay CEO of a Fortune 500 company has been praised as
a strong champion of workforce diversity
 Energy Consumption by Apple Inc.

 Apple is often praised for its environmental records that include decrease of total power
consumption of Apple products by 57per cent, introduction of Mac mini as the world’s
most energy-efficient desktop computer and exceeding ENERGY STAR guidelines
 Apple emerges as the only company that has been awarded with a Clean Energy Index
of 100per cent, according to Greenpeace’s Clicking Clean Report.
 Apple Inc. is sourcing or generating enough renewable energy to cover 93 per cent of
the electricity used at its facilities worldwide
 The company is now 100 per cent renewable energy in 23 countries
 Each Apple data centre around the world runs on 100 per cent renewable energy

 Water Consumption by Apple Inc.

 The company launched Clean Water Program in 2013 and in 2015, 73 supplier facilities
joined the program to increase the efficiency of their water usage
 Cooling systems in company’s date centres can reuse water up to 35 times
 In 2015 the company converted about 120,000 square feet of previously grass lawns to
drought-tolerant landscape, translating to estimated water savings of up to 6 million
gallons per year

Despite the initiatives above, water usage by Apple data centres, retail and corporate facilities
have been consistently increasing during the last three years, as illustrated in Figure 1 below.

Figure 1 Water usage by Apple Inc.[7]

 Waste Reduction and Recycling by Apple Inc.

  Apple offers recycling programs in 99 percent of the countries it operates and the
company has diverted more than 508 million pounds of electronic waste from landfills
since 2008.
 In 2016 the company introduced Liam, a line of robots that can disassemble an iPhone
every 11 seconds and sort its high-quality components so they can be recycled,
 In 2015, more than 99 per cent of Apple product packaging was done from recycled
paper or papers sourced from sustainably managed forests.
 Apple is working with more than 160 recycling companies around the world and in
2015 it collected nearly 90 million pounds of e-waste through its recycling programs.

Carbon Emissions by Apple Inc.

 Apple has caused 34.2 million metric tons of greenhouse gas emissions during the
financial year of 2014. Although the company is working towards reducing carbon
intensity associated with manufacturing and using its products, overall increase of the
numbers of products manufactured and sold has decreased the level of Apple’s carbon
efficiency.
 In 2014, employees took more than 110,312 trips on shared bikes, a 55 percent increase
over 2013
 The company offers employees more than 550 electric vehicle charging ports for free,
an increase of 67 percent compared to the previous year to encourage the usage of
electric vehicles

As it is illustrated in Figure 2 below, the company’s CO2 emissions per product has been
consistently decreasing during the last four years to reach 114.2 kg in 2015

Figure 2 Changes in Apple CO2 emissions per product (kg)[8]

 Apple Inc. and Sustainable Sourcing

  In 2015 more than 60 per cent of paper used in packaging was prepared from recycled
wood fiber.
 The company partnered with The Conservation Fund to protect 36,000 acres of
sustainable forest in North Carolina and Maine and more than 13,000 metric tons of
wood was harvested responsibly.
 Apple aims to contribute to transition up to 1 million acres of forest, across five
southern provinces, into responsible management by 2020

Apple Inc. Report contains a full analysis of Apple corporate social responsibility including
Apple CSR issues. The report illustrates the application of the major analytical strategic
frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain
analysis and McKinsey 7S Model on Apple. Moreover, the report contains analyses of Apple
leadership, business strategy, organizational structure and organizational culture. The report
also comprises discussions of Apple marketing strategy and addresses issues of corporate social
responsibility.
9. Analysis:
Company Background

Name Apple Inc.

Logo

Computer hardware (Mac, iMac, Mac Pro, MacBook, MacBook Air)

Industries Computer software (iOS, OS X, Safari, iLife, iWork, iMovie, iPhoto)
served Consumer electronics (iPod, iPhone, iPad, Apple TV and Mac products)
Digital distribution (iTunes store, iCloud, App Store, Mac App Store)

Geographic
Worldwide (retail stores in 22 countries and online stores in 100 countries)
areas served

Headquarters Cupertino, California, United States

Current CEO Tim Cook

Revenue (US$) 229.234 billion (2017) 6.3% increase over 215.639 billion (2016)

Profit (US$) 48.351 billion (2017) 5.8% increase over 45.687 billion (2016)

Employees 123,000 (2017)

Samsung Electronics Co., Ltd., Amazon.com, Inc., International Business

Main
Machines Corporation, Cisco Systems, Inc., Google Inc., Microsoft
Competitors
Corporation, Dell Inc., LG Electronics, Lenovo Group Limited, Hewlett-
 Packard Company, Sony Corporation and many other computer hardware,
computer software, consumer electronics and Internet companies.

9.1 Strengths:
 Unique ability to design and develop proprietary hardware, software, applications
and services
Apple Inc.’s ability to design and develop its own hardware, software, applications and
services allows the company to introduce unique, innovative and easy-to-use products and
solutions for its customers. Unique, innovative and easy-to-use products and services that
integrate seamlessly into one Apple ecosystem are the reasons why customers buy Apple’s
premium products and enjoy using them. In other words, it creates a competitive advantage
no other company can match.

Apple’s product ecosystem

 Powerful brand supported by strong advertising and marketing capabilities

Apple is the world’s most valuable and recognizable brand. According to Inter brand and
Forbes, the Apple brand is worth US$184.154 billion and US$170 billion, respectively.
Brand value is closely related to its recognition, meaning that Apple is also one of the
world’s most recognizable brands. Their brand recognition is supported by its vast product
ecosystem. Moreover, Apple has a reputation of developing highly innovative, well
designed, and well-functioning products, as well as for delivering a great customer
experience and sound financial performance. The company has been able to achieve such
strong brand recognition and reputation through its strong advertising and marketing
capabilities. Apple’s excellence in creating spectacular marketing campaigns, its superior
advertising capabilities, premium quality products and ability to deliver an excellent
customer experience has allowed the company to build the most powerful brand in the
world.
  Vertical integration

Apple is a vertically integrated company that manages four separate businesses as one. The
company has a hardware business, a software business and it is also a service-provider and
a retailer as well – all integrated into one entity. Apple controls almost the entire supply
chain for its devices. No other competitor manages, or is capable of managing, all four
areas of the supply chain.

 Brand awareness and reputation

Forbes and Inter brand have both listed Apple’s brand as the most valuable in the world in
2015. They valued the brand at US$145.3 billion and US$170.3 billion respectively, and
recognized it as a significantly growing brand in terms of value. This means that the
company’s brand is the most reputable and recognizable in the world. Apple’s leading
position in the smartphone marketplace, its excellent advertising and marketing
capabilities, and the wide ecosystem of its products has led to a brand awareness that cannot
be matched by any other technology company in the world.

 Sound financial performance with one of the strongest cash flows

Apple’s revenue grew on average by 16.44% from 2012 to 2015. During the same period,
the company’s profit grew by 27.94%. This is a very successful growth, considering the
company’s huge size and its total revenues, which reached US$233 billion in 2015. The
company was also able to maintain a high profit margin of 22.84% in 2015, which is
unusual for a company experiencing such a fast growth period. Both its revenue growth
and high profit margin indicate Apple’s ability to efficiently manage its operations.
Apple’s robust cash flow and huge cash reserves are additional financial strengths. The
company had US$205.6 billion in cash reserves and only US$56 billion in long-term debt
in 2015.

Apple’s cash growth (in US$ billions)

2012 2013 2014 2015

Cash 121.251 146.761 155.239 205.666

The company’s growth, net income, cash reserves and low debt provide it with enough
resources to invest in acquisitions, R&D, marketing and other cash-draining activities
without significantly threatening its financial situation.

9.2 Weaknesses

 Overdependence on iPhone sales

In 2015, iPhone sales grew by 52% over the previous year and generated US$155.041
billion in revenue. It is the most important revenue source for Apple, accounting for 66%
of the company’s total sales. This makes Apple very vulnerable to changes in the
smartphone market. Apple’s smartphones are targeting wealthier consumers and its biggest
sales come from developed regions where the smartphones’ markets are already saturated.
For the next few years, Apple will be able to grow its sales due to the fast growth of the
smartphone markets in emerging economies around the world and by the introduction of
new products. However, in the long run, the company will face serious challenges in
growing its revenues.

 Weak direct distribution channels in India

During 2015, 26% and 74% of Apple’s total sales came from direct and indirect distribution
channels respectively. Direct distribution channels include Apple’s retail and online stores.
Indirect distribution channels that Apple uses are third-party cellular network carriers,
wholesalers and retailers. The company’s weakness lies in its direct distribution channels.
India, which is the 3rd largest smartphone market at the moment, has no official Apple
stores.

 Low expenditure on research and development compared to other companies

leads to fewer innovations and products introduced to the market

In the past, Apple has been recognized as one of the most innovative companies in the
world due to the introduction of new product types into the market and the breakthrough
technology used in those products. Yet, for the last few years, Apple hasn’t introduced
anything completely new that would disrupt the market and allow the company to grow
significantly.
Apple’s R&D spending accounted for 3.4% of the company’s total revenue, one of the
lowest rates among its competitors.
R&D spending strongly correlates with a company’s revenue growth and expansion into
new product markets. Therefore, Apple should invest much more into its R&D activities
than its competitors do in order to gain a competitive advantage.

 Incompatibility with other OS

Apple’s proprietary operating systems iOS and OS X are quite different from the OS of
both their Android and Windows rivals. In addition, Apple uses its own design hardware
that is often incompatible with the other manufacturers’ hardware. Sometimes, this
difference in software and hardware adversely affects Apple. Users who are accustomed to
using the Microsoft OS may find it hard to get used to the completely different OS X.
Android users face the same problem when an app that is only available on Google ‘Play’
is not available in the iTunes store.
9.3 Opportunities
 The Internet of Things (IoT) market is expected to grow significantly over the next
decade
Currently, more than 20 billion devices are connected to the Internet and this number is
expected to grow by 50% to 30 billion by 2020. International Data Corporation (IDC)
forecasts that the worldwide market for the IoT will grow from US$655.8 billion in 2014
to US$1.7 trillion by 2020.
Apple has a unique position to take advantage of the growing IoT market. The company
has its own software platform that is the key to managing information from connected
devices. Apple also offers smartphones, wearable gadgets, tablets, computers and many
other hardware products that can be integrated into one ecosystem and controlled via an
Internet connection. Apple could introduce a new OS system, like Google’s Brillo,
designed specifically for the IoT.

 Health-related wearable gadgets could be introduced to the market

In April 2015, Apple introduced its first smartwatch called Apple Watch. This is the first
company’s step into the wearable gadgets market, which is expected to grow by 35% rate
on average each year until 2019. Business Intelligence (BI) analysts also forecast that the
Apple Watch should be the dominant gadget taking a 47% share of the smartwatch market.
With the US$349 price tag, the Apple Watch would bring the company at least US$14
billion in additional revenue by 2019.
Smartwatches are not the only opportunity for Apple in the wearable gadgets market. There
is a trend toward health-related wearable gadgets. The company could introduce its own
range of wearable health gadgets, which for example could monitor calorie intake, sugar
and hydration levels, heart rate and blood pressure, as well as potentially diagnosing many
illnesses or even infusing drugs through the skin.
 Expanding mobile payments market

In 2015, mobile payments facilitated transactions worth US$8.7 billion in the U.S. marketer
predicts that the mobile payments market will grow by 210% in U.S. alone in 2016 and will
reach a value of US$27 billion. These figures show that the mobile payments market will
experience huge growth in the future, making it a very attractive market in which to
compete.
In 2015 Apple introduced Apple Pay, which allows iPhone and Apple Watch users to pay
for their purchases through contactless terminals using near field communication (NFC)
technology. Unfortunately, less than 10% of 12 million terminals in the U.S. are capable of
using NFC. Apple should encourage more businesses to upgrade their terminals, which in
turn would encourage more Apple Pay users.

 The mobile enterprise app market will gain traction as more businesses shift
toward buying subscription-based software

The mobile enterprise market is the next big transformation businesses face after cloud
computing. Enterprises are becoming more cost-conscious when it comes to software
purchases and are increasingly choosing subscription-based software in the cloud over
buying licenses that have to be installed on proprietary hardware.
9.4 Threats:

 Intensifying competition puts pressure on Apple’s market share, revenue and

profits
Apple has always faced strong competition from Microsoft, IBM, HP and Dell in the
personal computing sector and since the launch of the iPhone and iPad, that competition
has increased significantly. Now Apple’s main rivals are Google and Samsung, both well-
funded and experienced competitors which work together to provide the best possible
offerings to compete with Apple’s devices.

 Strong U.S. dollar

Currency exchange rates affect every multinational company, including Apple. The
company earns over 65% of its revenue outside of the U.S.

Current forecasts indicate that the U.S. dollar exchange rate is going to rise further against
other currencies over the next few years. This therefore means that Apple’s revenue and
profits generated outside of the U.S. are likely to decrease when converted to U.S. dollars.

 Lawsuits over patent infringements resulting in damaged brand reputation

Lawsuits over patent infringements happen often in the market, especially in the technology
sector where devices are made of multiple parts and use software with thousands of lines
of code that may have already been patented by another company.

 Risk of data breaches

Apple’s business requires it to collect, store and use customer, employee and its business
partners’ personally identifiable information (“PII”). PII information includes names,
addresses, emails, phones, ID numbers, credit/debit card and other personal information
that is safely stored and protected from outside parties. Nonetheless, data breaches occur
and stakeholder data does get stolen and exposed from time to time.

10. Competitors:

1. Google (GOOG)

 Market cap. 196.76 Billion

2. Hewlett-Packard (HPQ)

 Market cap. 47.62 Billion

3. Research in Motion (RIMM)

 Market cap. 6.76 Billion

4. Dell (DELL)

 Market cap. 30.15 Billion

 5. Amazon (AMZN)

 Market cap. 83.45 Billion

11. Suggestion:
 Collaborate with more technology related industries and companies.
 Aim for more interaction with customer.
 Make the iMac more Compatible.
 Loosen the closed ecosystem approach.
12. Conclusion:
I. Products:
a. High quality technology (software and hardware)
b. Closed ecosystem
c. Innovation
II. Customers:
a. Loyal Customer Base.
13. REFERENCE: