VIEWS: 8 PAGES: 43 POSTED ON: 1/23/2013
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.