Management Issues, Polices, Proc - Essay Example

Management Issues/Polices/Proc (Apple Mac) Table of Contents Introduction 3 Financial performance 4 Position in industry 7 Organizational infrastructure 9 Future potential 10 Conclusion 11 11 Reference 12 Bibliography 13 Appendix 14 Introduction Mac or Macintosh is designed, developed and marketed by Apple Inc. Macintosh is the series of personal computers offered by Apple Inc. The first Mac personal computer was developed in the year 1984 that introduced use of mouse and graphic user interface. At the yearly era it attracted customers but in late 90s the market of personal computer was captured by IBM whose machines used to run on MS-DOS and Microsoft Window operating system. To regain the competitive position in the market Apple launched iMac 3G in 1998, this was a unique model because in a single body the monitor and system unit were presented. The model was available in vibrating colored translucent body. This was a turning point of the market condition of Apple and the company regained its attractiveness in the personal computer market. With passage of time the Mac received high brand recognition in its target market that comprises of educational, home and professionals related to creative work. To cater different needs of the customers of Mac, Apple introduced many other models of Mac like MacBook, MacBook Air, iMac, Mac Mini and many others. Apply also offers a vast range of accessories for Mac computers (Apple, “Mac”). Financial performance For determining the financial performance of Mac at first financials of Apple were analyzed. It was found that consecutively in the last years (2007, 2008 & 2009) revenue of the company increased and increase was also noticed in the operating income. In 2009 the net profit of the company turned almost double of what it was in 2008; in 2008 it was $8,235,000,000 and in 2009 went to $4,834,000,000. This indicated that the company’s profitability is constantly increasing year after year. The sale of Mac declined by 3 percent in 2009 as compared to the sales achieved in 2008. The declined in the sales of unit of Mac was 8 percent in the year 2009 against 2008. In the year 2009 net sales of Mac accounted for 38 percent of the total net sales of the company. MacBook Pro performed quite well due to high demand in the market. There was a sharp decline of 23 percent in the sales of Mac desktop in 2009 due to poor demand. This fall was mainly due to shift of demand toward low priced desktops and strong dollar value in international market (Morningstar, p.47) For further understanding certain ratios were calculated and on basis of the result the financial condition of the company was analyzed. It was found that Apple Inc’s profitability improved sharply from 2008 to 2009, as compared to the gross profit ratio the net profit ratio does not show a sharp upward movement. This indicated that though the sales improve in last few years but the company failed to keep tight control on its non-operating expenses. Thus the company needs to pay more attention on its indirect expenses to further improve the net profitability of the company. According to the current ratio as well as quick ratio it appears that the company maintains a healthy liquidity state to meet the short term liabilities, so the risk associated with short term solvency is quite less. As the company is a zero debt company hence the financial leverage is zero. This indicates that the company has no risk of long term solvency and fluctuation in the profitability will be less as compared to a leveraged firm. In the last three years the company issued fresh equity shares to raise capital. Apart from the financial ratios certain other financial indicators like beta of the company was analyzed. At present the company has a beta of 1.52 that indicates that the shares of the company are moderately aggressive and with further improvement in the market condition the shares will provide higher returns to the investors (Yahoo! Finance, “Key Statistics”). This will assist the company to raise more capital through issue of fresh equity share in the market as and when there is requirement of capital. Hence it appears that Apple Inc succeeded in retaining a healthy growth in last few years and thus it has a stable and well balanced financial position in the personal computer industry. Position in industry According to the annual report of the company in 2009 its net sales by operating segments is as follows: It appears that America is the largest market for the products offered by Apple Inc. After America it’s the Europe from where large part of the revenue is generated. Apart from US and Europe the company also receives revenue from other international Due to the recession the economic condition in US and other European nations is still suffering with financial crisis and consumer purchasing power is low. This may directly affect the net revenue and profitability of the company. As per the sales the US based hardware companies can be ranked as follow: Company Rank International Business Machines Corp 1st Hewlett-Packard Company 2nd Dell Inc. 3rd Cisco Systems, Inc. 4th Xerox Corp. 5th Seagate Technology 6th Apple Inc. 7th NCR Corp. 8th EMC Corporation 9th (Data source: Yahoo! Finance, “Competitors”) Among the above given competitors Dell, Hewlett-Packard Company, Microsoft corporation are the major competitors of Apple Inc. As under Mac brand the company mainly offers personal computer range so Dell and IBM gives strong compaction to the personal computers offers under Mac brand. Mac computers are basically designed for the high profile customers who prefer to pay more for high quality features; hence the market share of Mac in the personal computer industry in US does not provide a true picture regarding the sales of the PC. As per the market experts in 2004 the market share of Apple in personal computer industry of US was 6 percent and by 2008 it reached to 14 percent. According to the data published by NPD, in 2009 the market share of Apple was 90 percent of the $1,000+ PCs whereas it was 66 percent in 2008, so the company managed to grow at a faster rate. However Mac was having a market share of 8.7 percent in the US market (Wilcox, “Apple has 91% of market for $1,000+ PCs, says NPD). With passage of time popularity of Mac OS X is gaining market and more and more users are shifting toward Mac OS X as compared to Microsoft Window. In 2009 Mac OS X accounted 11 percent of the web users as compared to 86.8 percent of Windows, whereas 1.3 percent of the users used mobile based browsing. Interestingly the market share of Mac OS X increased by 29.4 percent on the contrary market share of Windows declined by 3.8 percent (OS X Daily, “Mac OS X market share up 29% last year, now 10.9% of web consumption”) (Source: OS X Daily, “Mac OS X market share up 29% last year, now 10.9% of web consumption”) Organizational infrastructure As Mac is one of the very famous brands of Apple hence success of the Mac computer ranges is solely due to the unique organizational structure as well as the organizational culture maintained by the company. At present Apple Inc has certain highly profit making product ranges like Mac, iPod, iPhone, iTunes. The company maintains vertical integration to have a better quality control and also to gain economies of scales. The company sells its products throughout the world through retail stores, online website, direct sales force, third party wholesaler and also through resellers. Business strategy of Apple Inc is “to bring best personal computing, mobile communication, portable music as well as digital music & video experience for the consumers, students, educators, businesses and government agencies through innovative software, hardware, peripherals, services and through internet offering” (Morningstar, p.6). Apple Inc has a formal organizational structure which is quite large in size as a result this affects the communication channels and delays decision making process. The main aim of the company is to develop complex technology hence the human capital is the most valuable resource for the company. As technology is the core competency of the company, hence it is trying to diversify itself in other fields like mobile phone where technology plays a vital role. Apple always had a strong organizational culture that helped the company to be one of the market leaders in PC industry. Future potential Mac computers are more popular in developed counties like US and other European nations, but with passage of time products of Mac are gaining high brand recognition in international markets. The market of personal computer is highly competitive in developed countries where many well known companies are competing with each other but condition is quite different in developed countries where the rate of competition is still low. With economical advancement in developed nation the living standard as well as per capita income is increasing in developed nations and these consumers are getting more concern for brands. So in coming years the company will have a highly potential market in the developing nations. Conclusion Apple-Mac is a well known brand in international software as well as hardware market. Its closest competitors are Dell and Microsoft. Apart from personal computer the company is trying hard to diversify its business in other fields like mobile which is directly related to the core competency of the Apple. In coming few years the market condition will remain quite flat in US and other European countries so company’s revenue might decline in these markets. However the developing countries are growing at a fast rate so demand for high end personal computer will grow. According to the market data Mac OS X is also gaining good demand in US markets. There is a high possibility that in next five years demand for MacBook will grow in developing nations and the company’s market share will grow further in these countries. Therefore Apple-Mac has a bright future in years to come. Reference Apple. Mac. No date. May 09, 2010 . Morningstar. Fiscal Year 2009 verses 2008. October 27, 2009. FORM 10K APPLE INC-AAPL. May 09, 2010 . OS X Daily. Mac OS X market share up 29% last year, now 10.9% of web consumption. March 02, 2010. May 09, 2010 . Wilcox, J. Apple has 91% of market for $1,000+ PCs, says NPD. July 22, 2009. Beta News. May 09, 2010 . Yahoo! Finance. Yahoo! Finance. No date. Apple Inc. (AAPL). May 09, 2010 . Bibliography Glinow, M. V. Organizational Culture. Organizational Behavior. 2nd ed. The McGraw−Hill Companies, 2002. NASDAQ. AAPL: Stock Quote & Summary Data. May 07, 2010. AAPL. . Appendix Read More