Documents
Resources
Learning Center
Upload
Plans & pricing Sign in
Sign Out

Competitive Analysis

VIEWS: 8 PAGES: 43

									Apple Inc
     Team 5

  Kristen Hodge
  Monica Longer
  Katelyn Reed
Venessa Rodriguez
                             History
• Stephen Wozniak was a member of Homebrew Computer Club
   – Tech savvy people exchanging ideas
• Joined with Steve Jobs and built the Apple I
• Then built Apple II
   – Had fewer ships, high resolution graphics
   – Became popular, was used in schools
• Apple Computer founded in 1976
   – Jobs had to convince Wozniak to turn Apple into
       a company
   – Ronald Wayne was 3rd founder of Apple Computer
       and
     designed first logo-resigned a year later
   – Apple became incorporated in 1977, agency designed colorful logo
            History Continued
• In 1985 Wozniak left Apple and pursued other
  interests
• 1997 Jobs officially returned to the CEO
  position
  – Also serves as a director of Disney
  – Co-Founded Pixar Animation Studios
                  History Continued
• In 2002 Apple formed an alliance with Ericsson and Sun
  Microsystems to develop a way to deliver multimedia content to
  wireless devices like smart phones and PDAs.
   – Apple’s QuickTime video creation software, Sun’s distribution software &
     hardware, & Ericsson’s mobile infrastructure
• In 2003 iTunes launched
• iPod introduced in 2004
• In 2005-2006 made agreements with car manufacturers to
  incorporate iPod accessibility into their new models.
   – Acura, Audi, Chrysler, Honda, Volkswagen, Ford, General Motors, and
     Mazda
• In 2007 Apple Computer was renamed Apple Inc.
   – The iPhone was also introduced to the market
           History Continued
• In 2008 Apple introduced Time Capsule, Mac
  Pro, MacBook Air, MobileMe, iPod touch,
  iTunes 8, the new iPod nano, and the new
  iPod touch
• In 2009 iWork '09 and iLife '09, and upgrades
  of iPhoto, iMovie, GarageBand, iDVD, and
  iWeb were launched.
  – Apple also revealed the new 17-inch MacBook
   Pro
                    Mission
" Apple ignited the personal computer revolution in
  the 1970s with the Apple II and reinvented the
  personal computer in the 1980s with the
  Macintosh. Today, Apple continues to lead the
  industry in innovation with its award-winning
  computers, OS X operating system and iLife and
  professional applications. Apple is also
  spearheading the digital media revolution with its
  iPod portable music and video players and iTunes
  online store, and has entered the mobile phone
  market with its revolutionary iPhone."
                 Employees
• The success of the company rests largely on
  the service, loyalty, and availability of key
  personnel.
• As of September 2009, Apple has
  approximately 34,300 full-time employees,
  and 25,000 temporary employees and
  contractors.
                       Products
• Personal Computers       • Portable Digital Music and Video
•   MacBook® Pro             Players
                               –   iPod® shuffle
•   MacBook®                   –   iPod® nano
•   MacBook Air®               –   iPod® classic
•   Mac® Pro                   –   iPod® touch
•   iMac®                  • Other Products & Services
•   Mac® mini                  –   iTunes® 9
•   Xserve®                    –   Apple TV®
                               –   iLife® ’09
                               –   iWork® ’09
• Mobile Devices               –   Final Cut Studio®
•   iPhone®                    –   Logic Studio®
•   iPhone®3G                  –   FileMaker® Pro
•   iPhone® 3GS                –   Safari®:
                               –   QuickTime®
                               –   MobileMe™
                               –   AppleCare®
              Share Profile
• Trades common shares on NAS with tag AAPL
• Current Price 199.92 per share
• Apple has 900,678,473 shares outstanding,
  7,183,823 closely held shares
• Profit margin is 15.60%
• Return on Equity of 20.50
• Return on Assets of 10.60
• Return on Investment of 20.50
         Organizational Life Style
• Apple believes its unique ability to create its own state-
  of-the art products gives it leverage on the
  competition. To do this continued investment in
  research and development of these products is crucial.
   – Apple spent $1.3 billion in research and development
     expenditures in 2009
   – Apple supports third-party products that compliment its
     offerings through developer programs.
   – Apple's strategy includes growing its distribution network
     to reach more customers and to provide them with high-
     quality products and post sale support.
        Organizational Life Style
• Apple manages its business mainly on a
  geographic basis.
  – Segments in the Americas (North & South Americas),
    Europe (European countries, the Middle East, and
    Africa), Japan, and Retail.
  – The U.S. is Apple's largest geographic marketplace,
    approximately 54% net sales to customers in 2009
• Apple distributes its products by wholesalers,
  resellers, national and regional retailers and
  catalogers.
          Organizational Life Style
• Apple has noticed that historically sales in the first and
  fourth quarters are substantially higher than the other two
  quarters in the fiscal year.
• Compliance with federal, state, local, and foreign laws for
  the protection of the environment has no material effect on
  Apple's capital expenditures, competitive position, or
  earnings. However, in the future it could become material.
   – An instance of how this may become material is customers
     having the ability to return the product at the end of its useful
     life, making Apple responsible for environmentally safe disposal
     or recycling of the products.
   – Some laws of this nature have been passed in countries in
     Europe and Asia, and certain states and provinces in North
     America.
       Organizational Life Style
• Apple’s business markets are characterized by
  rapid technological advances, and as of recent
  years price competition has gained
  momentum. It understands that it is in a
  highly unstable
              Financial Analysis
• To breakdown the company’s financial statements into
  numbers that can be easily understood
• The goal of the financial analysis is to be able to
  evaluate the performance of a company through these
  ratios and then put side by side with its competitors
• These ratios are used to accurately evaluate a
  company’s overall financial health, profitability and
  growth
• Ratios can be separated into three sections: liquidity,
  profitability, and capital structure
        Liquidity Ratio Analysis
• The liquidity ratio analysis is the measure of a
  company’s capability to meet short term financial
  obligations.
• Includes: current ratio, quick ratio, accounts
  receivable turnover, inventory turnover, and cash
  to cash cycle.
• When analyzing liquidity ratios it is ideal to have
  as high of a number as possible because that will
  demonstrate that the company has the adequate
  resources to pay all of their financial
  responsibilities
                    Current Ratio
3.5

 3

2.5

 2                                         Apple
                                           HP
1.5                                        Dell
 1                                         Microsoft

0.5

 0
      2005   2006     2007   2008   2009
              Quick Asset Ratio
 3

2.5

 2
                                         Apple
1.5                                      HP
                                         Dell
 1                                       Microsoft

0.5

 0
      2005   2006   2007   2008   2009
      Accounts Receiveable Turnover
18
16
14
12
                                        Apple
10
                                        HP
8                                       Dell
6                                       Microsoft
4
2
0
     2005   2006   2007   2008   2009
             Inventory Turnover
100
 90
 80
 70
 60                                      Apple
 50                                      HP
 40                                      Dell
                                         Microsoft
 30
 20
 10
 0
      2005   2006   2007   2008   2009
              Cash to Cash Cycle
120


100


 80
                                          Apple
 60                                       HP
                                          Dell
 40                                       Microsoft


 20


 0
      2005   2006   2007   2008    2009
      Profitability Ratio Analysis
• The profitability ratio analysis shows the
  effectiveness of a firm’s ability to produce
  profits.
• Include: net profit margin, return on assets,
  and return on equity.
               Net Profit Margin
0.35

 0.3

0.25

 0.2                                      Apple
                                          HP
0.15                                      Dell
                                          Microsoft
 0.1

0.05

  0
       2005   2006   2007   2008   2009
               Return on Assets
 0.3


0.25


 0.2
                                          Apple
0.15                                      HP
                                          Dell
 0.1                                      Microsoft


0.05


  0
       2005   2006   2007   2008   2009
               Return on Equity
 1
0.9
0.8
0.7
0.6                                      Apple
0.5                                      HP
0.4                                      Dell
                                         Microsoft
0.3
0.2
0.1
 0
      2005   2006   2007   2008   2009
      Capital Structure Analysis
• A capital structure analysis is used to show
  how well a company can finance itself through
  the use of their own assets which are show by
  the debt and equity of the firm
• The most important capital structure ratio is
  the debt to equity ratio which is shown below
                    Debt to Equity
 3


2.5


 2
                                            Apple
1.5                                         HP
                                            Dell
 1                                          Microsoft


0.5


 0
      2005   2006      2007   2008   2009
              Industry Analysis
• Personal computer, mobile device, computer
  software and portable MP3 player industries
  – Rapid Changes
     • Improving technology
     • Customer demand
  – Highly profitable
             Five Forces Model
• Threat of New Entrants
  – Not a significant threat in personal computer industry,
    the others it is more likely
  – Enormous amounts of capital required to be able to
    compete
  – Struggle to keep up with the ever-changing
    technology
  – Overcome economies of scale that the larger
    companies have
  – Brand equity
  – Patents protecting design and technological processes
  – Complementary products
    Five Forces Model Continued
• Bargaining power of customers
  – Very little power
  – Products differ from competitors
  – Business customers have some but it is minimized
    because of retail stores and online sales.
• Bargaining power of suppliers
  – Supplier Diversity Program
  – Apple has multiple suppliers for most products bought
  – 10K lists 48 suppliers that could affect their
    profitability.
     Five Forces Model Continued
• Substitute Products and Services
   – Personal Computers
      • Dell, HP and Sony along with many others
      • Operating system and computer software differentiates Apple
   – iPod
      •   Rio, iRiver, Sandisk, Sony, Phillips and many others
      •   Louder
      •   Hard-drive based
      •   Complementary products
   – iPhone
      •   Blackberry, LG, Samsung, Motorola, Palm, etc.
      •   Full browser
      •   iPod
      •   Only AT&T
      Five Forces Model Continued
•   Rivalry among participants
•   Fierce competition
•   Apple’s marketshare is growing
•   Dell, HP and Microsoft
                    Other Forces
• Complementary products
  – Whole package
     •   Computer hardware
     •   Computer software
     •   Digital media distribution
     •   MP3 player
     •   Phone
     •   Apple TV
  – iPod docks and stereo adapters
  – Applications
        Environmental Factors
• Focus on processes
• Removed toxic materials from new products
  and reduced amount of materials
• Smart Power Management
• Recycling programs
                      Political Factors
• Patents
    – Designs
    – Technological processes
• Trademarks
    – Apple logo
        • Brand recognition
• Piracy prevention on iTunes
• Counterfeit products
    – Reputation
• Government sales and foreign trade policies
• Government cell phone regulations
• Political events, natural disasters, terrorism, public health issues
  could affect Apple, its suppliers or its customers
            Economic Factors
• Despite the economic downturn in 2008 Apple
  reported an increase of 35.3% over 2007’s
  revenues. And, $36,537 million for net income
  in 2009.
• Higher revenues in first and fourth quarters
  – Christmas
  – Back to school
                          Social Factors
•   34,300 full-time employees and 2,500 temporary employees and contractors as of
    September 2009
•   Top executives that range in ages of 40-70 years old. With an average of 54 years
    old.
•   Retail Stores
     – USA
     – Japan
     – Canada
     – UK
•   Operations
     – USA
     – Asia
     – Africa
     – Middle East
     – Australia
     – Europe
     – Canada
     – South America
           Apple Strategies
• Controlling Software
  – Software only compatible with Apple products
  – Other companies are not allowed to make Apple
    compatible computers
     • Example: Franklin computers
  – Cannot copy software and it is difficult for hackers
    to make viruses or other malicious software for
    software
• Controlling software creates loyal customers
             Apple Strategies
• Innovative products
  – Macintosh was first computer with a mouse
  – iPod, iPhone
• Donated computers to schools/ made
  computers easy for students to use
  – The Apple II computer had many applications
  – The Mac was student friendly
                           SWOT Analysis
Strengths                                       Weaknesses


Strong brand image                              Product recalls

Robust financial performance                    Patent infringement

Focus on research and development               Not much free or inexpensive software on the

Very few viruses and other malicious software   market

Opportunities                                   Threats


Smartphones                                     Intense competition

New retail stores                               Uncertain global economic conditions

                                                Declining PC sales

                                                Dependence on specific suppliers
             SWOT Analysis
• The high brand recognition make Retail stores
  possible and they are now a competitive
  advantage
• Smartphones cannot compete with the iPhone
• The focus on R & D has given Apple the edge
  in innovation
            Top Three Competitors
• Microsoft
   – Controls about 94% of Operating Systems
   – Makes products that last a long time, although not “hip”
   – OS is compatible with everything
• Hewlett-Packard
   – Top competitor in PC sales
   – Controls large segment of business market
   – Does not offer other products other than PCs and accessories
• Dell
   –   Weakest competitor of top 3
   –   Provides computers for businesses, schools
   –   Behind HP in PC sales
   –   Does not offer other products other than PCs and accessories
        Do the strategies work?
• The strategy of controlling the software has
  worked well in retaining loyal customers as well
  as protecting the software.
• Relying on new “hit” products has given Apple a
  competitive advantage. However, if the company
  is ever in the follower position a new strategy
  would need to be formed.
• Apple could lower prices on products. Ex. PCs are
  expensive. Apple could gain noncustomers by
  offering an $800 PC.

								
To top