Main Features of Apple Inc and Analytical Tool - Case Study Example

A Case Study Report on Apple Inc Introduction This present paper is a case study report on Apple Inc., which is a Multinational Company that has its headquarters at the state of California in the United States of America. The case study report intends to analyze Apple Inc., by presenting the current state of the organization, the organization’s strengths, and weakness, and lastly, the case study report will offer suggestions about the organization’s likelihood of long-term effectiveness. In the analysis of Apple Inc, the case study report will apply an analytical tool, for example, in order to identify the strengths and weaknesses of the company it will be of essence to apply the SWOT analytical tool, and focus only on analyzing the company’s key strengths and weaknesses. In regards to offering suggestions on the organization’s likelihood of long-term effectiveness, the case study report will look into the strategic options that are available for Apple Inc. under the Ansoff Matrix, which can be implemented in order to guarantee continued long-term growth and success of the company. It is significant to note that the case study report will diagnose the current state of the company by checking the company’s financial statistics such as sales and net profit, among others. A review of Apple Inc Apple Inc. specializes in the designing, developing, and selling of personal computers, computer software, and consumer electronics. According to Linzmayer and Linzmayer, the company was established in 1976 and its co-founders included Steve Jobs who was a key figure of the company and rose to become an influential American until his sudden death (23-35). Other co-founders of the company were Ronald Wayne and Steve Wozniak, however, it is pertinent to note that Ronald Wayne left the company in 1977 after selling his shareholding back to the other two co-founders. Linzmayer and Linzmayer, further added that in 1980, the company marked a major milestone as it was listed in the stock exchange through an initial public offering that generated massive capital whilst making the previous shareholders instant millionaires (33-37). OGrady stated that Apple is revered for its distinctive products that include the Mac brand of computers, the iPad, the iPhone, and the iPod (67-77). Furthermore, Apple is ranked at position three in the mobile phone industry and currently, the company is valued at US$626 billion, and it has presence in fourteen countries with more than three hundred retail shops. Additionally, it serves its customers through the iTunes store, App store, iBookstore, and Mac App store, which are online platforms for the company. The current chair of the board of directors is Mr. Arthur Levinson while Mr. Tim Cook is the chief executive officer. Current state of Apple Inc Currently, one can easily agree that Apple Inc is at the peak of its business performance because of the tremendous success that the company has been steadily recording over the past few years. A good example to show the current state of success of Apple Inc was portrayed or it became evident last year when the company launched the iPhone 5 series, which recorded arguable the best sales for a mobile phone brand in the world’s history. In the first day of pre-ordering there were two million sales of iPhone 5 and three million sales of the same phone in the first three days after its launch. Moscartello stated that this tremendous success of the iPhone 5 lead to a sharp increase in the company’s stock price while its public image was significantly boosted considering that the original founder of the company; Mr. Steve Jobs had just died the previous year, which lead to critics casting aspersion against the company future success (14-18). It is critical to note that Apple Inc has also been able to replicate this success in terms of sales in other submarkets where it operates. According to the statistics shown by Moscartello, the company’s net income has been on a steady increase since the year 2005 and in particular, the net income for the company in the year 2012 was nearly doubles that of 2011 (23-33). In specific, in the year 2012, the company had a net income of 41.7 billion compared to 25.9 billion in the previous year and this can largely be attributed to the sales originating from iPhone 5, which had sold more than 26 million units by the last quarter of 2012. Additionally, the company recorded an increase in the operating cash flow to an excess amount of $50 billion and this necessitated the issuance of higher dividends to the company’s shareholders. Also presently, the company’s share prices are trading at an average of $430 per share, which is arguable in the higher rate for blue chip companies. Moscartello stated that the balance sheet records show that the equity level of the company increased significantly in the past year. The liquidity ratio was well above the industry average because it stood at 1.6 confirming that indeed the company has a sound financial health, and the company’s receivables as well inventories are at minimum level same as the liabilities (43-48). Moscartello stated that the company’s performance in terms of sales in major markets across the world is impressive (23). The chart below shows that the company recorded highest revenue from the Unites States market that was nearly equal to the Asia Pacific market, moreover, the company performed considerably well in the European market. The iPhones were the most purchased Apple product in all these major markets as demonstrated in the chart below while the iPod is the least favored product of Apple Inc. Source: http://www.netmarketshare.com Strengths of Apple Inc According to Okumus, one of Apple’s strengths is the range of products that is offers, which are mainly technologically oriented (58-72). The array of products offered by the company has been steadily expanding and the newest inclusion is the iTV, which is also set for a major success in the market. Furthermore, the success of Apple’s range of products is supported by other software, and application services that the company offers. The products as well as the software and computer applications are interconnected thereby making Apple a one-stop shop. This business model has been able to provide the company with much needed customer loyalty, which was proven during the launch of iPhone 5 when millions of customers lined up outside Apple stores in order to be among the first owners of iPhone 5. The other key strength of Apple Inc is the fact that all of its products have leading inventions that makes them unique; this key strength has been the pillar of success for the company over the past few years and the company has been using it as a key marketing strategy. Moscartello further noted that the company has been ranked as the most innovative company in the world, three times in a row (13). The other major strength of Apple Inc is the strong financial base that it has, for example in the last financial year the company had an operating cash flow of more than $50 billion while its profit was well above $41 billion. This strong financial muscle means that the company can afford to have the best research and development department that can guarantee continued innovations, which can propel the company even further. Secondly, the huge financial resources or capabilities means that the company can acquire viable inventions from other external investors and it can even buy out small companies that have viable business that relates with its business. The strong financial base means that the company can be able to acquire the best human resources or workers who can further give it an added competitive advantage. The fourth key strength of the company is the wide presence in major markets across the globe. This numerous Apple stores located in major markets enable the company to have a direct contact with their customer and thereby increase brand awareness while generating high sales. Fifthly, the company’s marketing department has partly contributed to the success of the company because of the strategic marketing practices, which ensures that the company makes high sales during the first few days or hours after a product launch. Weaknesses of Apple Inc Critics of the company lament that Apple products and services are usually highly priced compared to other competing products and services. This argument can be substantiated by the fact that among its three major products that include the iPhone, iPad, and Mac, none of them has any series or model that is mainly produced to cater for the low budget market or persons with smaller disposable income. This weakness can potentially endanger the long-term growth of the company and its market share since other competitors may focus on producing cheap phones that have highly advanced technological features. Another key weakness of the company is the fact that its operating system, which include the iOS and OS X are incompatible with other computer hardware and software. This fact discourages potential customers from using Apple operating systems because of their rigidity or incompatibility with other popular software and hardware. The third weakness of Apple Inc is that from time to time upon release of new brand, model or series there are always reported case of defects in new products, which discourages further sales and damages the company’s reputation. Suggestions about Apple’s likelihood of long-term effectiveness Presently, the long-term effectiveness of Apple Inc is threatened by competition that is mostly emanating from Nokia Plc and Samsung Electronics. These two companies have a wide market share and their sales level equally rival that for that of Apple Inc. In specific, Samsung is the world highest revenue earner in the information technology industry and Samsung and Nokia lead in the mobile phone manufacturing industry. In this regards, Porter suggested that it beneficial to explore the strategic options listed in the Ansoff Matrix, which is presented graphically below (17-24). According to Ansoff, companies usually have four strategic options when pursuing their long-term effectiveness and these options include diversification, product development, market development, and market penetration (113-124). Source: /www.tutor2u.net/business/images/Ansoff Matrix Out of theses four options, two are not viable for the long-term effectiveness of the company because they are already implemented and hence they cannot be suggested. These two are product development, which is described by Yip as the enhancement of products and services to meet customers’ needs and expectations, and the second non-viable option is diversification in terms of both products and market (43-44). Apple Inc already applies the strategic option of diversification, since the company has diversified range of products and it deals in diverse markets. This report suggests that Apple’s likelihood of long-term effectiveness can only be guaranteed if the organization undertakes the strategic option of market development and market penetration. Yip described the strategic option of market penetration as venturing into new markets where the organization did not previously exist and market development involves enhancing the current market of the company by ensuring the current customers remain loyal (52-64). In regards, to market penetration, Apple Inc will have to open new stores in other continents such as Africa and even a production plant in order to reduce cost that could arise from a complex distribution network. By venturing into untapped markets, the company will be increasing its market share, sales levels, and the overall profitability of the company. In regards to market development, the company will be keen on ensuring that their current customers remain loyal and that they are able to attract new customers. Options that may be applied under this strategy include offering discounted products and services, and even increasing the duration of products warranty. Conclusion From this case study report, it is evidently clear that Apple Inc is currently a vibrant company that is at the peak of its performance. The company has an impressive financial standing that increases its capability of even achieving more. Despite have various strengths, the company also has two major weaknesses that threaten its long-term effectiveness in pursing and achieving its mission and objectives. This report has suggested that for Apple to have long-term effectiveness that will enable it achieve its mission and objective, it would be beneficial if it would implement the strategic options of market development and penetration, which can collectively guarantee its long-term success. Works Cited Ansoff, Igor. Strategies for Diversification, Harvard Business Review, Vol. 35 Issue 5, 1957 Print Linzmayer, Owen. and Linzmayer, Owen. Apple Confidential 2.0: The Definitive History of the Worlds Most Colorful Company. (2nd edition). California, U.S: No Starch Press. 2004 Print Moscartello, Angela. "iPhone 5 is Worlds Best-Selling Smartphone." PC Magazine.2013 Print OGrady, Jason. Apple Inc. Corporations That Changed the World. Connecticut, U.S: Greenwood Publishers. 2008 Print Okumus, Fevzi. A framework to implement strategies in organizations, Journal of Management Decision, Vol. 41 Issue 9, 2003 Print Porter, Michael. "From Competitive Advantage to Corporate Strategy". Harvard Business Review (3): 1987 Print Yip George. Using Strategy in Change Your Business Model, Business Strategy Review, Summer, Vol. 15 Issue 12. 2004 Print Read More