Google and Apple - Essay Example

Client’s 19 July Google and Apple have been making considerable progress and these two companies have also redefined innovation, their products have become better and this consistent progress has benefitted both the companies, this paper will compare Google to Apple and it will also analyze their financial strength. According to the latest financial report of Google.inc it has been found that they are in a great position when it comes to debt ratio, the debt ratio is 0.02 which means that they have more assets than debt and the debt can be paid off very easily so the company need not worry about anything as far as the debt ratio is concerned. Financial ratios are extremely important when it comes to analyzing a company, Google has generate a lot of revenue in the last few years, here is a look at their financial ratios and how well they have actually been faring. Following are the most important ratios of the company: Current ratio: 5.8 Quick ratio: 5.6 Asset Turnover: 0.6 Return on Assets: 14.0% Return on Equity: 17.3% All these ratios clearly show that Google inc is financially very sound and there is nothing to worry about for the company but they have several competitors and can’t afford to rest on their laurels. Business Model Employees are more than willing to work for Google because the organization has established itself as one of the best companies in the world, in the year 2007 and 2008 Google was the top company to work for, it is one of the very best companies across the globe, they treat their employees with a lot of respect and they take special efforts to motivate them. All this success is because of their leadership and cross-functional organizational structure. Google employs the rule of “70-20-10” this means the employees can communicate directly with each other, this much improved communication system has been the key to success. Formal channels are normally avoided by the company to avoid any misunderstandings, the staff is always highly motivated because they have a sense of belief that they can contribute immensely towards the company, this sense of belief keeps them motivated and inspires them to keep performing for the company. Apple Financial ratios of Apple are as follows: Current ratio: 1.6 Quick ratio: 1.3 Asset Turnover: 1.2 Return on Assets: 25.6% Return on Equity: 29.5% Debt/Equity: 0.00 Substitutes Barriers to Entry Switching Costs Technology Number of Suppliers Cost Advantages Buyer Willingness Time and Cost of Entry Suppliers Competitive Rivalry Buyers Size of the Suppliers Exit Barriers Buying Volumes Ability to Substitute Switching Costs Price Elasticity Number of Suppliers Number of Competitors Incentives Summary of Analysis Apple has been a revolution, their products have been selling like hot cakes, “it was earlier reported that company is more stable than the US Government.” (Apple has More Money than the US Government) The products sold by apple are mainly for entertainment, there is a lot of competition in this filed, apple is undoubtedly the present leader but things may change within no time. Dell, Hp and Lenovo give apple a run for its money when it comes to computer hardware. Media player and Windows operating system are the two main rivals of apple when it comes to playing music. Creative, Samsung and Sony and a plethora of other companies manufacture small, portable music players which is an answer to apple ipod, since ipods are quite expensive people prefer buying other reliable music players which are way cheaper than the ipod. Barriers to Entry: Some of the most important points which should be considered under this section are as follows: Time and Cost of Entry Knowledge Economies of Scale Technology Other Barriers Fake Stores in China: “Recently it was found that there are several fake stores of apple in China, the fake apple products are bound to cost the company losses.” (Fake Apple Stores in China) Several big companies have lost a lot of money because of counterfeit products sold by the fake sellers. Threat of New Entrants: The following points must be considered under threat of new entrants: Verizon allows streaming audio and video with the help of a software called v-cast New entrants equipped with disruptive technology could affect apple significantly Bargaining Power of Suppliers: Intel, IBM, Motorola and others are big rivals of apple when it comes to processors and computer technology, it could give the new ipad and the iphone a good run for its money Sony, Warner, BMG and others are huge suppliers of music ABC, Fox, Sony and many others are huge suppliers of movies and popular television shows Bargaining Power of Customer: Peer to peer technology provides free music to the customers Distributors may press apple to reduce its price or for better terms Economic downturn will lead to decreased spending of customers Substitutes Present a Substantial Threat: Satellite radio is becoming increasingly popular for music Xbox and the PS3 provide great entertainment, media and music can be enjoyed on these gaming consoles Dvds and Cds provide an alternate source of movies and music Theaters, cable tv and other sources are alternate sources for movies and videos Recommendations for apple: Maintain the same quality but bring down the prices a bit Joint ventures would surely prove profitable plots Focus on knowledge management Open more stores so that customers can easily get their hands on the latest products Work at making the technology better, innovation is the key to success. Modern Day Scenario The following part of the paper will shed light upon the SWOT analysis of Apple. Strengths: Apple continues to lead when it comes to design and performance, these are the strengths of Apple. The modern day systems look fantastic and can carry out several difficult tasks with ease. Weaknesses: Apple continues to be expensive and these days there are a plethora of other options available to customers, the competition has become even tougher these days and the demise of Steve Jobs has left the company in turmoil. Opportunities: If Apple can maintain the same quality and bring down its price a little then it can make even more money and the company will surely grow and become better. Threats: The likes of IBM and other popular companies are still around and they are looking for new ways of taking Apple’s share away and Apple has to be very wary of the same and take appropriate measure so counter the same and keep going from strength to strength. In case of a financial crisis Apple would handle it better then Google because Apple has more savings and operating margin then Google, their debt ratio is also better than Google which would mean that they would have less debt should a financial crisis occur. Works Cited Apple has More Money than the US Government (2012). Tech News. Retrieved from http://tech2.in.com/news/general/apple-has-more-money-than-the-us-government/233292 Fake Apple Stores in China (2012). The Tech Chronicles. Retrieved from Fake Apple Stores in China (2012). The Telegraph. Retrieved from Read More