Apple's Company Analysis - Research Paper Example

? Company Analysis Company Analysis (Apple) Apple designs, produces and markets movable digital music players, mobile communication and media gadgets, and personal computers. Apple also sells an assortment of correlated software, networking solutions, services, peripherals, and third party digital content and applications (Apple, 2012). SWOT analysis is a tactical formulation method employed to evaluate the strengths, limitations, opportunities and perils in a company. The following is a SWOT investigation for Apple. Strengths; these are features of a firm, which are valuable to realize the objectives. Apple has a sturdy international presence; Apple operates over three hundred stores in eleven nations and has online stores where its highly diversified products are traded (Abraham, 2012). According to Martin (2010), Apple has the strongest brands in the global industry of the information and communication technology. These brands consist of the iPod, iPad, iPhone, and Macintosh line of computers among others. Apple has a sturdy client base largely in the North America; Apple clients are extremely devoted to the Corporation and its brands. Apple has an outstandingly sturdy financial condition; it has experienced expansion in earnings over the years. In 2010, Apple was the fourth international leading mobile dealer, positioned after Nokia, Samsung, and LG Electronics. Weaknesses are features of a firm, which are detrimental to realize an objective. Apple is facing condemnation for its employment, commerce and ecological practices (Hill & Jones, 2012). Apple products are comparatively costly as compared to products of its rivals. It is claimed that the Apple iPod Nano may have flawed screen and batteries; this has damaged the image of this brand and other Apple brands. Apple expenditures on distribution and investment in research and progress tend to be more than those of competitors such as Dell (Hill & Jones, 2012). Opportunities are exterior factors, which are valuable to realize the objectives. Technological improvement of Apple will let the Corporation develop new merchandise and form fresh marketplace segments. Technological enhancement will aid the Corporation to institute efficient manufacturing methods, which will diminish the production expenditures. Apple operates in a hastily changing business; innovation is the solitary way to sustain its competitive advantage and stay in business. Consumers’ preferences alter repeatedly and consequently. Thus, being victorious in this business requires Apple to remain client oriented in the development of brands (Williams, 2010). According to Williams (2010), threats are exterior circumstances, which may impair the objectives. Technological progression obsoletes the manufacturing plants and brands of the corporation. Apple faces a powerful competition, which makes it intricate to uphold the marketplace share. IBM and Dell are amid the sturdy rivals of Apple. The industry is experiencing hostile pricing; there is a price battle among corporations in the industry. Unpredictability of emergent countries currencies generates a trouble for Apple’s commerce in these states. Apple is facing an array of troubles in emergent nations comprising of political shakiness, tariffs and state regulations among others. Apple’s Performance Apple is a market leader in the area of its business and has an ample collection of services and products. The impressive growth of Apple has been ascribed to investment in new software and hardware products and the enhancement of the existing products (Bach, 2007). Apple has also ventured into new markets and improved the existing markets; this has enabled the luring new customers and bringing the best user experience to its clients. High demand of Apple services and products and market expansion has contributed to growth of its net sales (Platt, 2010). In the fiscal year ended September 24, 2011, the Apple net earnings increased from $14,013 millions in 2010 to $25,922 millions in 2011. Net sales of the Corporation for the year 2011 increased by 66% from $65,225 millions in 2010 to $108,249 millions in 2011. Apple’s Mission, Strategy and Goals Apple is dedicated to bringing the finest user experience to its clients via its innovative brands. Apple has exceptional capacity to design and develop its own hardware, operating systems, application software, and services. This capacity offers Apple clients with new solutions and products with superior ease of use, innovative design, and seamless integration. Apple incessantly invests in research and development and advertising and marketing. Apple research and marketing activities are vital in the development and vending of innovative brands and technologies (Apple, 2012). Apple’s Value Chain Resources Apple considers a high quality purchasing experience, with well-informed salespersons who may convey the worth of the Corporation’s services and products; this significantly enhances its capability to lure and retain clients. Apple retail stores are situated at high-traffic places in urban shopping regions and quality shopping malls. Through running its own stores and situating them in enviable high-traffic places, Apple is better positioned to assure a high-quality client purchasing experience and lure new clients (Apple, 2012). Apple provides its clients with highly differentiated and innovative services and products as compared to services and products of its competitors. Apple services and products are relatively expensive as compared to those of competitors. To counter competition in terms of prices, the company’s pricing strategies are based on the geographical operating segments. The threats and competitive advantages of Apple are sustainable through innovation and remaining client oriented in development of products (Abraham, 2012). Apple’s Competitive Advantages There exist two types of competitive advantages an organization may possess; differentiation or low cost. The two competitive advantages together with the extent of activities for which a company seeks to attain them result to three strategies for attaining plausible performance within the industry; differentiation, cost leadership, and focus (Martin, 2010). Apple uses various indirect and direct distribution channels such as online stores, retail stores, third party suppliers and direct sales force. Apple has an extensive distribution network compared to its competitors; this provides the Corporation with a competitive advantage. The stores are designed to enhance and simplify the marketing and presentation of the Corporation’s products and associated solutions (Apple, 2012). The retail stores designs have been developed into a range of sizes to accommodate specified market demands. The stores provide a broad selection of third party products, which complement Apple products. Apple considers that sales of its differentiated and innovative products are improved through employing well-informed salespersons who convey the worth of the software and hardware integration, and reveal the unique solutions obtainable on its products. Apple considers offering direct contact with its clients is a successful way to reveal the advantages of its commodities over those of the rivals. The company’s innovative nature, unique capacity to design and develop brands, and its direct relationship with its customers provides the Company with a competitive advantage (Abraham, 2012). According to William (2010), Apple operates in a rapidly varying business environment; innovation and technological advancement are the solitary techniques to sustain its competitive advantage and remain in business. Consumers’ preferences alter repeatedly and consequently. Thus, being triumphant in this industry requires Apple to linger client oriented in the improvement of brands. Value of Apple Resources Apple impressive performance relies on its brands. The following are the net sales (in millions) of Apple brands for the year 2011, desktops; $6,439, portables; $15,344, iPod; $7,453, other music and associated services and products; $6,314, iPhone and associated services and products; $47,057, iPad and associated services and products; $20,358, other hardware and peripherals; $ 2,330, services, software and other sales; $2,954. The marketplaces for Apple services and products are extremely competitive, and the Corporation is faced by antagonistic rivalry in all its business areas. Therefore, there are products in the market, which are differentiated with Apple products. This implies that Apple resources are not rare since there are services and products offered by other companies in the industry. The utility derived from Apple services and products is almost equivalent to utility derived from services and products provided by other companies in the industry (Abraham, 2012). However, Apple brands are uniquely designed and developed making it difficult for rivals to imitate them. Investment in technology enables the company to exploit its resources. Apple develops its products using teams. Apple products are developed into stages, where teams are assigned specified duties along the development process. This enables the teams to take responsibility of the success or failure of the developed products (Bach, 2007). Ratio Analysis Liquidity ratios provide information about the capacity of a business to meet its instantaneous financial obligations. Quick ratio and current ratio are two frequently used liquidity ratios (Baker, 2011). Current Ratio = Current Assets / Current Liabilities. Apple Current Ratio = $44,988 / $27,970 = 1.6:1. Current ratio assesses whether a corporation has ample resources to reimburse its debts over the next one year. Apple has a current ratio of 1.6:1, meaning that, for every $1 the corporation owes in the short term, it has $1.6 existing assets, which may be converted into liquid money in the short term. Leverage ratios provide an indication of the permanent solvency of the business. These ratios determine the extent to which the corporation is spending long term debt. There are three regularly used leverage ratios namely, debt ratio, debt-to-equity-ratio and interest coverage (Bull, 2007). Debt Ratio = Total Debt / Total Assets. Apple Debt Ratio = $39,756 / $116,371 = 34%. Apple does not heavily rely on debts to finance its operations. Profitability ratios offer diverse evaluations of the accomplishment of the Corporation at generating earnings. Gross profit margin determines the gross earnings generated by sales (Baker, 2011). Gross Profit Margin = (Sales – Cost Sales) / Sales. Apple Gross Profit Margin = $43,818 / $108,249 = 40.5%. Apple generates 40.5% earnings out of sales. References Abraham, S. (2012). Strategic Management for Organizations. San Diego: Bridgepoint Education, Inc. Apple (2012). Apple Finanacial Statements for the Fiscal Year Ended Septermber 24, 2011: Form 10-K. Retrieved from: http://files.shareholder.com/downloads/AAPL/1903124703x0xS1193125-11-282113/320193/filing.pdf Apple Information. (2012). Retrieved from www.apple.com Bach, B. (2007). Implications of Enabling Technologies for Apple Inc.: Cyber Marketing & Enabling Technologies. Santa Cruz, CA: GRIN Verlag. Baker, H.K. (2011). Capital Budgeting Valuation: Financial Analysis for Today’s Investment Projects. New York: John Wiley & Sons. Bull, R. (2007). Financial Ratios: How to Use Financial Ratios to Maximise Value and Success for your Business. New York: Elsievier. Hill, C.L. & Jones, G.R. (2012). Strategic Management: An Integrated Approach. New York: Cengage Learning. Martin, T.F. (2010). Strategic Management. New York: Cengage Learning. Platt, H. (2010). Lead with Cash: Cash Flow for Corporate Renewal. London: World Scientific Publishing. Williams, C. (2010). Management. New York: Cengage Learning. Read More