Income Statement of Red Bull by mls12752


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									                    ECONOMICS 620
                      Allegheny College
                    Meadville, Pennsylvania

Corporate Strategy and its Effects on Competitive Advantage:
            An Illustration of Apple Computers

Andrew James Cope
April 1, 2009
           Corporate Strategy and its Effects on Competitive Advantage:
                       An Illustration of Apple Computers


                                  Andrew James Cope

                      Submitted to The Department of Economics

                         Project Advisor: Dr. Stephen Onyeiwu

                          Second Reader: Dr. Donald Goldstein

                                   Date: April 1, 2009

I hereby recognize and pledge to fulfill my responsibilities as defined in the Honor Code
and to maintain the integrity of both myself and the College as a whole.

Andrew James Cope…
Andrew James Cope
If A is success in life, then A equals x plus y plus z. Work is x; y is play; and z is keeping
                      your mouth shut.—Albert Einstein Jan. 15, 1950


To the creators of Red Bull: Thank you. Enough Said

To my wonderful girlfriend Hillary whose constant reminders to “Go do work” urged me
to actually go to the library and stop procrastinating.

To the brothers of Phi Kappa Psi for helping me to procrastinate.

To the Phi Psi volleyball court.

To my loving parents who paid my tuition, guided me through school, and will allow me
to continue to live at home after I graduate since I will not find a job in the current

To my grandfather who gave me the two best pieces of advice I have ever received:
      “Always keep your eye on the ball.”
      “If you have to eat shit, take big bites.”

And finally to my advisor Dr. Onyeiwu: Thank you for your guidance and insight on this
project without which I would have been helplessly lost.

List of Figures and Tables

Chapter 1                                                    1
Introduction of the Project

Chapter 2                                                    4
Literature Review

Chapter 3                                                    16
Case Study
      Part I: Apple’s History                                16
      Part II: Financial Analysis                            24
      Part III: Survey Analysis                              32

Chapter 4                                                    34
Summary and Conclusions

      Copy of Survey                                         38
      Survey Results                                         40
      Apple’s 5-Year Income Statement                        45
      Dell’s 5-Year Income Statement                         46
      iPod vs. Mac: Percentages of Apple’s total net sales   47
      Works Cited                                            48

         Table 3.1: Apple v. Dell Net Sales 1999-2008           25
         Table 3.2: Apple v. Dell Gross Margin 1999-2008        25
         Table 3.3: Apple v. Dell Shareholder Equity 199-2008   27

       Figure 3.1: Total Net Sales of iPods and Macs            26
       Figure 3.2: Dell Inc. 5-yr Stock Price                   28
       Figure 3.3: Apple Inc. 5-yr Stock Price                  28


       Many economists have offered their opinions on corporate strategy; however, no

one is more prominent than Michael Porter. His most basic definition of strategy is,

“Performing different activities from rivals or performing similar activities in different

ways.” He expands this concept to include three generic strategies as well as three

strategic positions that firms may implement: needs-based, variety based, and access-

based positioning. An examination of Apple’s strategy and their performance will

determine what strategies it has adopted.

       Apple is a company that was founded in 1977 by Steve Jobs, Steve Wozniak and

Ron Wayne. After decades of volatile performance, Apple has recently experienced an

impressive performance through nearly all aspects of its income statements as well as

provided above-average returns to its shareholders. Through an examination of Apple’s

recent financial performance and a review of results of a survey that I administered, the

purpose of this project is to determine if Apple’s success can be attributed to the

implementation of an effective strategy. Interpretation of these results supports the

hypothesis that Apple’s success is, in fact, due to a strategy, not simply operational


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