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Steve Wozniak and Steve Jobs in 1st April 1976. Steve Wozniak was a dropout from the
University of California, Berkeley, and Steve Jobs was a dropout from Reed College in
Poland, Ore and they started the company in a garage but due to financial constraints a third
partner, Ronald Wayne contributed 10% stake in the Apple company. It headquartered at
Cupertino, California and now the company has 110,000 full-time employees in 2015
Apple manufactures, designs and offer personal computers, media devices, mobile
enterprises and government customers globally. It also offers operating system software e.g.
third-party digital contents. It also offers iPad, Smartphones, iPhones, tablets, Mac, iLife,
iWork, Apple TV and much more. Apple sells its products through retailers, wholesalers,
online stores, direct sales force, value-added resellers and third party cellular carriers. The
companys financial performance is increasing constantly than the previous years. The
Smartphone share has increased to 13% in 2015. According to Apples 10-K annual report
2015, Apple reported $233.7 Billion revenues in 2015 that were much higher than the$182.7
Billion in 2014. Similarly, the company reported a net income of $53.39 Billion in 2015 that
was higher than the net income of $39.51 Billion in 2014 (Apple Inc., 2015).
strengths and weaknesses of the company. After studying company internal and external
factors, and its strategies, mission and objectives will be revised and strategies will be
recommended to implement the revised mission and objectives to further improve the
companys performance in the future. Following are the evaluation of the mission,
History/Timeline of Apple
Apple is making developments on the annual basis since its foundation and
introduction of the Mac till this date with the introduction of Apple Watch.
1976 Steve Wozniak, Steve Jobs and financial supporter, Ronald Wayne, founded Apple
1977 Apple introduced Apple II at the end of 1977, first personal computer with power
1978 Apple Disk II was introduced that was a 5.25-inch floppy disk, an external drive
1979 Apple engineers visited Xerox PARC in Silicon Valley for initiating Mac and Lisa
1980 Apple went public with the largest IPO and almost 40 employees out of 1000
1981 IMB introduced its PC 1565 that was a shock for Apple
1982 Microsoft started Mac development for both Apple and IBM
1991 Apple introduced first PowerBook and became the standard bearer in the portable
computers market
1998 Bondi blue iMac was introduced as the fastest Mac model
1999Consumer-oriented iBook was launched with the airport card that initiated Wi-Fi
craze.
2001 Apple introduced First iPod with MP3 and 5GB hard drive that transformed the
music industry
2003 iTune music store was opened, Power Mac G5 and Safari
2004-2005 Introduced iPod third generation and mighty mouse, iBook laptop Sabine
2006 Apple announced to use Intels CPUs instead of Mac-based Motorola processors and
used book camp technology. Apple sold Pixar to Disney and Jobs Steve joined Disney,
2007-2011 Apple expanded with iPhone, iPhone 3Gs, Mac app store and first iPad, Apple
TV, MacBook Air and MacBook Pro Athena, iPad 2, iPhone 4S,
2012 Mac used retina display for high-resolution displays and also launched skinny and
2013 New Mac Pro workstation that can be fitted in a small aluminum cylinder
2015Apple introduced iPhone 6 Plus and Apple Watch (Hattersley, L., 2014).
Question 1: Identify the firms apparent current mission. Then briefly review the firms
Mission Statement
Present mission statement of Apple, Apple designs Macs, the best PCs in the world,
along with OS X, iWork, iLife, and professional software. Apple is a leader in the digital music
transformation with its iPods and iTunes online store. Apple reinvented its mobile phones with
the revolutionary iPhone and App Store, is defining the future of mobile media and computing
Componen 1 2 3 4 5 6 7 8 9
t
Company Yes Yes Yes Yes
We got 4 out of 9 components of the mission statement and that is not a good mission statement.
Company Objectives
2. It has objective to continuously innovate and introduce the future technology movement.
3. Continuously expand the Apple stores chains globally in India and China and make the
4. Maintain premium prices by gaining more market share and enhance profit margins.
5. Generate hype for upcoming products, and expand with a strong brand name (Apple Inc.,
2015).
Market Penetration: Seeking to increase sales (market share) for present products and services
Market Development: Seeking to increase sales by introducing present products and services
Differentiation: Developing a product or service that offers unique attributes that are valued by
customers and that customers perceive to be better than or different from the products of the
competition.
Liquidity
The current ratio measures the ability of the company to pay its short-term liabilities with
the current assets. Apples current ratio shows a negative trend from 2013-2015. Quick ratio
measures the liquid assets of the firm and Apple also shows a negative trend over 3 years
(Appendix A).
In the category of asset utilization ratios, inventory turnover shows a negative trends from
2013-2015 because the ratio decrease in 2014 and increases in 2015 but that is still less than
2013. They sell their inventory very quickly in 2013 than 2015. Accounts receivable turnover
also shows irregular trend because first, it decreases and then it increases from 11.96-13.62.
Fixed assets turnover shows positive trend and Total assets turnover shows neutral trend which
means the company is using its assets to generate revenues is same in 2015 and 2013.
This measures the debt ratio in the company that is used to finance the companys
operations. The debt ratio of Apple is showing a negative trend which means that the burden
of debt is increasing. Interest coverage ratio is showing a positive trend for Apple which
means that the ability of the company to pay interest out of the net income on the debts is
increasing.
Apples gross margin and operating margin are showing a positive trend over the
three-year period. Net profit margin is positive. BEP (Basic Earning Power ratio) is showing
a neutral trend by first decreasing to 0.23 in 2014 from 0.24 in 2013 and then slightly
increasing to 0.25 in 2015. Return on assets is also showing positive as it increased from
19.34% to 20.45%. Return on equity is showing a positive trend, which means that more
investors are investing in Apple in anticipation of earnings and profits. Return on equity or
ROE increases from 30.64% to 46.25% during 2013-2015 and showing a positive trend.
Price to earnings ratio showing negative trend as it is decreasing from 14.1 to 11.4
which means that market is willing to pay less for the Apple stock and investor will pay 11.4
in 2015 for every single dollar to be earned (Yahoo Finance, 2016), price to cash flow ratio
also decreased from 9.7 to 7.5 from 2013 to 2015. Market price to book value ratio are
Liquidity comparison
Current ratio and quick ratio of Apple is lower than the Samsung, Google and
Hewlett-Packard. Google has the higher liquidity to pay its short-term debts from the short-
term assets by having a higher safety margin to cover debts (Daily Finance, 2016).
These ratio measures that how well Apple is using its assets more efficiently than its
competitors. Inventory turnover of Apple is greater than Samsung, Google and Hewlett-
Packard (HPQ), which means that Apple is making more sales than the competitors are
(Yahoo Finance, 2016). Account receivables turnover is also high for Apple, which means
that Apple is collecting receivables more efficiently and receivables are converting into
cash. Fixed asset turnover is slightly higher for Apple than Google and total asset turnover is
slightly lower than Google but higher than HPQ but overall, Apple is utilizing its assets
efficiently compared to all the competitors to generate revenues (Daily Finance, 2016).
Debt to equity ratio measures that how much a company is utilizing debt to finance
its operations other than financing with equity. Apples debt ratio is much higher than
Google but much lower than Samsung. Its mean Google is financing with less debt and thus,
has lower strain to pay interest on debts. Apple has to pay more interest on debt compared to
Google but less interest than Samsung and HPQ that is operating with 78% debt. Googles
interest coverage ratio is higher than Apple (Yahoo Finance, 2016). Apple, though, has low
capacity to cover the interest but still it is strong enough than Samsung and HPQ to pay
Profitability comparison
higher than Samsung and HPQ but lower than Google. Google is better to cover its
expenses, cost of goods and still to recover higher profits. Apple is better than Samsung and
HPQ in covering expenses and earning profits. Therefore, overall, Apple is stronger than
Samsung, HPQ but weaker than Google. Apples return on assets and return on equity ratio
is greater than Samsung, Google and HPQ that means, Apple is gaining more return with the
use of equity and assets by efficiently utilizing them (Yahoo Finance, 2016).
Investors, to know the financial health of the company and to choose investment
options, use market values. According to the three competitors analysis, investors are sure
that Google is better for investment than Apple, Samsung and HPQ due to its high market
values in terms of P/E ratios and book values and Apple is better for investment than
The above comparison shows that Apple is better than Samsung and HPQ but it is not
better than Google. Apple is showing a neutral trend for its liquidity, asset utilization, market
values because these ratios shows irregular trend by decreasing in 2014 and then increasing in
2015 (Appendix A) Which means that Apple is doing good than the previous year. Debt
management and profitability ratios show positive trend, which means that Apple is managing
debt and paying interest efficiently and also earning profits. Liquidity, asset utilization, debt
management, and profitability, though these ratios are lower than Google but these are higher
than Samsung and HPQ that is Apples strengths and it can utilize these strengths to compete
Overall, Apple is a strong company but it is not strong than Google. To compete with
Google, it has to utilize its assets more efficiently and try to reduce the debt burden to
reduce the cost. It has to offer reasonable market prices by not charging customers high
prices but it has to reduce the cost of the manufacturing, so, it will not suffer from loss by
not charging high prices to customers. Its strong brand, profitability margin, and innovation
are its strengths that it is utilized to expand. It should hit the global markets with the
reasonable prices and quality products to overcome its weaknesses of high prices, limited
Opportunities are the external factors that the company can exploit in order to
maintain or increase company competitive advantages. Following are the opportunities for
the company:
It is a big opportunity for Apple to expand its networks either nationally or globally.
establish a new channel of distribution now. These expansion opportunities will overcome
the weakness of limited distribution networks. For achieving this opportunity, Apple has to
change its distribution strategy. Wide distribution networks will help the company to reach
and target more customers both nationally and globally (Smithson, N., 2015).
Smartphones and tablets are becoming of personal device that help people lives
better. Especially with the development of wireless internet, there are so much things we can
do with the smartphones from communication to shopping or schedule our daily tasks.
Apple has many opportunities in this multibillion-dollar market if they can satisfy
customers demand. As a result, Apple sales and revenue would increase rapidly.
In 21st century, knowledge is power. Patents is a great tool not only help develop
products but also create barrier that slows down Apples competitors. Obtaining patents via
acquisitions will give Apple big advantages in the market. Moreover, it also saves research
expenses.
Internet to serve people from anywhere. Your washing machine, refrigerator, house, etc. are
connected to your phone that allows you to control everything over the internet. In order to
that requires huge amount of capital and technology which are already Apples strength.
In order to bring the driving convenience and increase the safety, autopilot car is the
trend of auto industry. This market requires a lot of capital and technology which are the
Apple strengths. Many giants such as Google, Tesla want to explore this market. However,
Apple will have a strong competitive advantages if they decide to enter this market.
The potential of this industry is big and Apple really understand it since they are the
big customer for the Cloud Computing providers. The change from the customer to the
provider can save Apple a ton of money and give them more authority to control the data.
More than serving themselves, Apple can provide these services to the small, medium
company or even for individual needs. The benefits and applications of cloud computing is
endless, which is the reason why people call 21st century the cloud computing era.
The major threats that the Apple is facing are from the competitors that can hinder
1 Imitation
2 Increase in labor costs in the countries where Apple plants are operating
3 Aggressive competition
Apple is facing a great threat of imitation. This threat is very critical because there
are a large number of firms in the industry that can easily imitate the products of the Apple
Inc. There are several regional and domestic companies that are partly or fully imitating the
designs of the products of the Apple that is posing a huge threat for Apple because these
firms are offering the identical yet different products at much lower prices compared to
Increase in labor costs in the countries where Apple plants are operating
Apples most of the plants are situated in China. Therefore, if China increases the
labor cost, it would be a great threat for Apple. The increase in labor cost will decrease the
profit margin of the company up to a great extent and will enhance the bargaining power of
Aggressive competition
Apple is facing tough competition because firms are very aggressive in this industry.
Apple is competing with Google, HPQ, and Samsung that are highly competitive firms.
Samsung is using intense innovation to compete with Apple. Aggressive competition puts
competition. Apple should have to take great caution to overcome this aggressive threat
decline in the Apple margin profit. In the technology industry, the price competition is critical
Since Apples main factory is in China (Foxconn), the U.S dollar fluctuation can
affect the manufacturing cost of Apple products. Especially, the Yuan currency is kept under
its real value by China government, which can cause unexpected consequences in the future.
Moreover, Apple is global brand which has many retail stores over the world. The U.S
One of the competitive advantage of Apple is that they have their own OS (Operating
System). However, their OS X serves only their devices and sometime does not fully
support other OS, which limits their market share. In contrast, Android OS market share
increases rapidly since it supports many devices from smartphones to tablets from many
There are many methods that can be used to analyze internal factors of Apple
company such as IFE, Balance Score Card, SWOT, value chain method, etc. However, given
Strengths:
1. Market leadership
4. Financial Strength
Market leadership
Apple is the major market leader with its globally accepted products, iPhone, iPad,
Mac and other services, for example, operating systems OS X, iOS, and iCloud. These are
the major revenue generating products sold by Apple. These products are projected to
increase further growth in revenues in the years ahead (Dudovskiy, J., 2016).
priceless brand worldwide having the worth of 122.4 billion USD dollars. Customers
loyalty to the strong brand is also the strength for Apple that is gaining competitive
advantage with its strong brand reputation (Dudovskiy, J., 2016). Below figure 1, is showing
USD dollars that are almost twice than the 933 Million USD dollars in 2011. Although, Apples
advertising budget is not larger than its competitors. Apple uses its advertising budget more
effectively than its competitors do. Apples budget enhanced in 2011 at the time of launching the
new products iPad and iPhone. It is also true that the companys overall budget never increased
than the 1 % of the sales of the company. In the year of 2015, Apple spent only 0.77% of its total
sales revenues on marketing and advertising (Jurevicius, O., 2016). This budget was lower than
the Samsung electronics that spend 1.83 % of their sales on advertising. This entails that Apple
spend less on advertising compared to its competitors but it generates more revenues than the
competitors do. In 2015, Apple brand was awarded as the worlds most valuable brand being sold
globally. According to Forbes, Apple brand valuation growth was 145.3 Billion USD dollars in
2015 and according to Interbrand, Apple brand valuation growth was 170.3 Billion USD dollars
Forbes and Interbrand both considered the Apples brand as the fastest growing brand of
the world with the truth that Apple spent much lower on the advertising and marketing budgets.
Apples advertising budget is more effectively utilized than its rivals that give positive results in
the form of strong brand reputation, revenues, brand recognition and awareness. These marketing
and advertising capabilities are the strengths of Apple that other companies do not possess
Financial Strength
revenue in 2015 and 53.39 Billion USD dollars net income in 2015 that is greater than the
revenue of 182.7 Billion USD dollars revenue in 2014 and 39.95 Billion USD dollars net income
in 2014. Due to having high financial strength, Apple has the opportunities to engage in research
and development of finding innovative designs for gaining a superior competitive advantage
Apple ranked its supply chain operations by the research firm Gartner that is superior in
the world due to its good performance since the last 4 years. With the sophisticated and preferred
management practices, Apple is able to manage its supply chain operations in the global
The United States is the worlds second largest Smartphone market globally that is
covering 44.05% Smartphone market share. The reason for success in the United States is the
extensive and strong distribution channels. Apple is using various distribution channels in
the United States to distribute the products to the customers. Apple is also using direct
distribution channels to deliver products through the direct sales force, retail stores, and
online stores. It is also noted that revenues generating through these retail stores are not only
the sources of the competitive advantage but also the superior customer experience with
buying the high-quality products, that strengthen the brand image and attract more potential
channels and networks that include third-parties cellular carriers, for example, Verizon, T-
Mobile, Sprint, and AT & T and wholesalers. Its indirect retailers are Wal-Mart, Target,
Amazon Marketplace, Staples, and Best Buys etc. Apple also has some value-added resellers
(Jurevicius, O., 2016). As having the indirect distribution networks, Samsung can only
High-Profit margin
Maintaining high-profit margin is a major strength of Apple. Apple has high profit
advantage to Apple at various levels (Dudovskiy, J., 2016). Apple is maintaining its cash
reserves that allow it to continue operations even at the face of adversaries and times of high
uncertainties. The reserved amount can also be used on extensive research and development
facilities. According to industry analysis beliefs, it is noticed that Apple is not intended to
sell anything but its superior goals is to get the high-profit margins. Below is the detail in
figure 4 that shows that Apple profit margins are enhancing since the last two years. The
reason of increasing profit margins is the increase in the share price of the Apple that is
101.39 with the 39.90 % profit margin in 2014 (Dudovskiy, J., 2016).
Weaknesses of Apple
3. Incompatibility of the apples services and products with the other services
and products
4. Closed ecosystems
5. Leadership
6. Pace of Innovation
Apple products have much higher prices than the other competitors products. For
instance, iPhone 6, 16GB is priced as 539 or $649, the handset 64GB is priced at 619 or
$749 and 128GB is priced at 699 or $849. In comparison to Apple, the direct competitors
products, for example, Samsung Galaxy S5 with extra 128GB micro-SD card is priced only
510 or $670 that is much lower than the 190 or $280 of top spec iPhone 6. Prices are the
major weaknesses for the Apple. Competitors are introducing the identical products and
eroding the Apple premium prices. Customers switch to the products that have the same
features but with lower comparable prices. Apple has to overcome this weakness by offering
products at reasonable prices that can be easily affordable by customers. So they do not
products. The instances of these technical issues are, for example, the latest iOS 9 operating
system is crashing some Apple devices, there were bugs in the previous version of iOS 8,
and for example, keyboards abruptly disappear. Some customers also complained that 6 Plus
and iPhone 6 curved occasionally and stay in the same position. Such kind of cases of
technical issues has weakened the brand image of Apple brand up to a great extent. This is
an alarming weakness for Apple because people are already complaining about the prices
and if people will not get the expected quality match able to prices, they will switch
Incompatibility of the apples services and products with the other services and
products
Apple hardware can only be used in the products that are manufactured by Apple
and cannot be used in the other competitors products and services. For example, most of the
programs that are available on Apple Mac computers, these cannot be used in other
computer devices that are creating customers inconvenience (Dudovskiy, J., 2016).
Closed ecosystems
Customers perceive that Apple has tight control and monitoring of software and
hardware and it is the strength of the Apple but this places an extra burden on Apple and on
its software and security developmental life cycles. Apple is obtaining license agreements
for its App store, app music, iTunes, iBooks etc. Apple has to focus on this more to ensure
the privacy and copyrights. Apple hardware is the major revenue-generating source but to
stay in the competition and due to its closed ecosystems, Apple has to focus on other
Leadership is also a big weakness for Apple. It is criticized that either the Tim Cook
leadership is sufficient for the Apple to offer the superior devices to sustain competitive
advantage. Steve Jobs created a good example for Apple and he took the Apple at the top of
all the competitors during his second round. During the Jobs leadership, Apple innovated
several products that are still revenue generating for Apple but after Jobs, the innovation of
Apple Watch is still waiting for the market response. Therefore, it is necessary for Apple to
maintain a leadership to create the good reputation of its visionary products in future.
Pace of Innovation
It is an era of highest innovation and Apple created a huge product innovation that is
also a major weakness of the company. Apple has astonishing brands of its products that are
working flawlessly and are designed as the natural and advanced products. These high
the market without hitting badly its brand. If it will do so, that will create a bad image and
customer dissatisfaction (Beattie, A., 2015). These customers expectations about the
Apples products demand as high and swift innovations as the other competitors are
innovating, for example, Google, HPQ, and Samsung. That is why; Apple needs proactive
leadership and collaborative employees to meet the high and changing customers needs to
stay ahead the competition game. Apple should have to be so proactive in leading the
markets that delay in one product release does not affect the companys revenues much. That
is why, Apple is striving to keep an edge in all its product lines but its leading expectations
b. Develop and discuss corporate and business strategies that you recommend to achieve the firms
We consider an effective mission statement will address at least seven out of nine
elements of the mission statement. Apple Mission statement is weak because it is more about the
products list rather than the true mission of the company. The company only mentioned the key
offered products without including the concerns for employees, survival, customers, markets,
Therefore, by adding these components the revised mission statement of Apple would be
like this.
Apple with its designs, Macs, operating systems, digital music transformation, mobile
phones transformations with iPhone and App Store, will define the future of mobile media and
computing devices and making them assessable to all universal markets and will consider the
interests of the customers, employees, stakeholders. Apple will focus more on survival rather
I think, there is no need to revise the objectives. Objectives are well-defined along with
As Apple uses product development strategy as its main strategies for intensive growth,
so the Apple should offer attractive products for the growth of the market share and for better
so this strategy is better to stay ahead in the new and innovative product developments. This
product development is extensive growth strategy that is critical for the success of the company
iPhone, iPad, and Apple Watch etc. This strategy also focuses on developing the products for the
potential mobile markets. Apple is continuously growing because the introduction of the new
products is generating revenues for Apple on the continuous basis (Meyer, P., 2015).
Another strategy for Apple is the Market penetration strategy as part of intensive growth
strategy. This will enable the company to gain higher market share by selling the company
unique products. Apple is currently working on this strategy by selling more iPhone and iPads to
the current and potential target markets. The performance can be good by adding more sellers to
this market. This strategy is good in those markets where Apple has not introduced its products
yet. This strategy aligns with the company generic differentiation strategy because it emphasizes
on capturing the markets in a broader context and covering the markets that are not yet entered.
This strategy will enable Apple to sell more company products to current customers that will also
inspire potential customers to demand the Apples products and Apple will be able to enter in
Market Development Strategy would focus on finding new markets for the existing or
new products. This is somehow, similar to market penetration but it focus more in entering new
markets. This strategy is best suited for Apple to enter into new developing markets with the help
of contracting with sellers in those markets. This strategy would align with the companys
Apple to offer unique products in the new markets (Meyer, P., 2015).
a. Specific strategies and long-term objectives in such areas as marketing, human resources,
b. Specify specific annual objectives and the policies for achieving these objectives, in areas such
c. Specify the results you can expect, including pro forma financial statements.
Recommended Strategy
Product development is the main strategy for growth and agrees with generic strategies.
This strategy can be implemented through innovation in the research and development. Apple is
focusing more on product development strategy rather than developing a product without
defects. It should focus more on bugs and errors that causing the negative trend of the market
rather than merely focusing on developing a product without considering any issues (Meyer, P.,
2015).
Long term objectives in 5 years for management and operation are increasing the number
of distribution channels by 20% and opening 250 new global stores. Also, company tries to
Management needs to be enthusiasm for technology, projects, and ideas to work while
monitoring customer experiences, leading training and development, and driving sales. Deriving
from 5-year plan, Apple needs to ensure that company more focus on expansion into global
opening each year. Also, continuing foreign outsourcing and importing provide production at
Marketing:
In next five years, company plans to increase market share by 15%. For the goal of
reaching more customers around the world, Apple should create 4 to 6 active advertisement and
promotional campaigns in five years. Also, using annual conference and events to announce
release and information on each new product before it hits the market is likely another approach
to catch more attention from people. In addition, creating new convenient features or functions
for IPhone or IPad or a way of improving services would help to satisfy customers. This way not
only help Apple achieve annual objectives which is rising 3% market share each year, but also
Human Resources:
Long term objective for human resource always focuses on recognition of human capital
as the resource that drives organizational success. More specific human resources goals are the
inclusion of HR leaders in overall business decision-making and the ability to demonstrate that
investment in HR activities and strategy has a tremendous impact on the companys bottom line.
Besides, Apple should try to increase employee productivity and workforce diversification by
productivity each year, managers should encourage, inspire or reward good performance as a
motivation for them. Besides, it is important for managers to acknowledge that everyone is
Finance:
The goal of any firm is to continue growth and profitability, and the long-term goal, as
mentioned before, is increasing total revenue by 50% in 5 years. while reducing expenses, Apple
also plans to increase profit and earnings per share by 25% and additional paid in capital by 40%
in 5 years. From those goals, each year Apple should reach at least 10% increase in total revenue,
5% increase in profit and earnings per share and 8% increase in paid in capital. To doing so,
company is better to consider every costs or expenses which can noticeably lower profits. For
instance, Apple could switch to cheaper alternatives for consumables, modifying the quantity
and/or timing of your stock purchases to coincide with higher cash flow periods or arranging a
Long term objective in research & development area is to be the leader in technology
innovations. By doing so, Apple plans to decrease the bugs and errors in the software by 80%
and increase production efficiency by 20% in 5 years. By improving qualities of products as well
as services, company hopes to improve the interest and happiness of consumers from the
company.
Apples annual objective is to improve product quality by reducing bugs or errors in software by
16% and increase production efficiency by 4% each year. Company will more concentrate on
researching how demand of customers changes to offer our latest and best products meet their
satisfactions. Moreover, research and innovation also help company seeking opportunities which
The Pro Forma Financial Statement is designed to reflect the changes, assumptions and
strategies that we considered. Since Apple will carry out a market penetration strategy, we
assume a net income will increase by 2%. If we increase the marketing and R&D budget will
allow Apple to lower its prices or average cost. If we want the successful implementation of this
strategy then it requires financial resources, human capital, sales forces, and some other
resources. We expect operating expense to decrease 2% in 2016. There will be no change in the
inventory from 2015 to 2016. The projected company will show the positive increase in the
income statement as well as balance sheet except other liabilities and general and administrative
expense.
Our selected strategies mentioned above will positively affect the performance of Apple
in 2016.
In liquidity ratio, current ratio is decreased from 1.11 to 1 and quick ratio increased from 0.89 to
0.98 from the year 2015 to 2016 and that is not a big difference. This shows the firm be able to
pay off its debts as they come due in the coming year.
In asset utilization, they going to have high sales and good inventory turnover ratio when
compared with 2015. Other turnover ratios like AR, fixed assets and total assets showing little bit
downwards but that doesnt make much difference in the overall asset utilization. We can say it
2016.
Profitability ratio shows neutral or positive trend from 2015 to 2016 except for return on equity
and return on assets. Return on assets usually decreasing every year due to the depreciation on
that assets. In the same way return on equity going to decrease from 46.25 to 40.30 from the year
2015 to 2016. Net sales and net income will be good for the Apple Inc.
Balanced Scorecard:
As an important strategy evaluation tool, the balanced scorecard allows firms to evaluate
strategies from four perspectives: financial performance, customer knowledge, internal business
expenses 2.5%
Employee Satisfaction Reduce employee turn over
rate 10%
LEARNING & Support career development Giving skills training class 1
1% profits
Support friendly environment Intro ethics training 1 per
Rumelts Criteria:
Consistency:
Product development recommended strategies provides consistent policies and goals for
Apple. Through new products, development and entering into new markets will make the Apple
expand globally and make its products error free or at least decreasing the percentage of defects.
Apple systematic methods for guiding all the processes involved in getting a new product to
market helps to gain high profit margins and high sales. It should also ensure that all the
departments of the organization are contributing to the implementation of the strategies and their
interests are not conflicting with the company goals and policies (Mihailovich, V., 2015).
Consonance:
Product development strategy are suited for the internal environment. The
implementation of these strategy would get an internal response and changes in the customers
demands and expectations. This strategy will enable the Apple to expand and connect on more
Advantage:
Product development strategy will help the company to sustain its competitive advantage
over other competitors with covering more secured products. This factor is helpful in ensuring
the better utilization of resources for gaining competitive advantage. The company will enhance
its capacity utilization and reduction of waste. Managers and leader with the superior skills and
capabilities will lead the employees efficiently. As, Apple is highly reputed due to its strong
brand image through product development and at the same time it will be defect free, focusing
on Market development and market penetration strategies will further help it to gain such an
edge on competitors that they could never achieve (Mihailovich, V., 2015).
Product development strategy will not create problems because it will be implemented
with the cooperation of human resources, marketing, sales, and financial departments of the
company. As the Apple has a good financial condition, so it will not be difficult for the company
to expand into research and development to offer new product lines in the existing markets.
Managers and employees would both assist in implementing the strategies and finding the
CONCLUSION
Thus, Apple is a global leading company with its strong brand reputation, loyal customers
base, premium prices and replacing computers with its iPhones, iPads etc. Apple has a weak
mission statement that is focusing only on the products and ignoring the customers, employees,
stakeholders, markets etc. and Apples mission statement has been revised to include the
financial analysis by using the income statement and balance sheets of the past three years 2013-
2015 and also generated pro forma statements for the year 2016 by considering 15% increase in
revenues and the projected balance sheet was also prepared by assuming the historical growth
percentages. Apple is better than Samsung and HPQ but it is lagging behind Google on some
areas that could be seen from the liquidity, debt management, and profitability and market ratios
comparison of three countries. After conducting the internal and external analysis of Apple and
development without bugs and errors strategy for Apple to focus more rather than merely
improved by implementing the recommended strategies that can be seen from projected financial
reduced to generate more profit margins. This analysis is based on current and historical data.
However, this analysis could be further improved by considering more macroeconomic factors.
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http://www.dailyfinance.com/quote/nasdaq/apple/aapl/financial-ratios
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pictures-24596/
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http://panmore.com/apple-inc-generic-strategy-intensive-growth-strategies
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https://www.loc.gov/rr/business/businesshistory/April/apple.html
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http://panmore.com/apple-inc-swot-analysis-recommendations
Profitability
Gross profit margin 40.06% 37.34% 62.44% 23.96 0.23% W
%
Operating Margin 30.48% 13.16% 25.82% 5.29% 0.05% S
Net Profit Margin 22.85% 9.32% 21.10% 4.41% 16.30% S
BEP 24.96% 23.28% 26.21% 4.58% - W
Return on Assets 20.45% 7.91% 11.36% 4.34% 12.40% S
Return on Equity 46.25% 11.16% 14.08% 16.71 31.20% S
%
Market Value
P/E 11.2 9.91 35.1 4.8 17.1 W
P/CF 8 4.68 20.2 3.3 15.3 W
M/B 4.5 3.6 4.5 0.8 5.9 -
Evaluation Notation: S=Strength, W=Weakness Dash=Neutral
1 0 0 0
Property Plant and 27,642,776.80 $22,471,000.00 $20,624,000.00 $16,597,000.00
Equipment
Goodwill 6,293,464.74 $5,116,000.00 $4,616,000.00 $1,577,000.00
Intangible Assets 4,788,987.14 $3,893,000.00 $4,142,000.00 $4,179,000.00
Other Assets 6,834,732.24 $5,556,000.00 $3,764,000.00 $5,146,000.00
Total Assets 6,834,732.24 $290,479,000.0 $231,839,000.0 $207,000,000.0
0 0 0
Accounts Payable 74,634,636.24 $60,671,000.00 $48,649,000.00 $36,223,000.00
Short/Current Long Term 13,530,457.13 $10,999,000.00 $6,308,000.00 $0.00
Debt
Other Current Liabilities 10,997,571.32 $8,940,000.00 $8,491,000.00 $7,435,000.00
Total Current Liabilities 99,162,664.68 $80,610,000.00 $63,448,000.00 $43,658,000.00
Long Term Debt 65,767,690.64 $53,463,000.00 $28,987,000.00 $16,960,000.00
Other Liabilities 41,120,337.30 $33,427,000.00 $24,826,000.00 $20,208,000.00
Deferred Long Term 4,458,075.88 $3,624,000.00 $3,031,000.00 $2,625,000.00
Liability Charges
Total Liabilities 210,508,768.5 $171,124,000.0 $120,292,000.0 $83,451,000.00
4 0 0
Common Stock 34,336,136.80 $27,416,000.00 $23,313,000.00 $19,764,000.00
Retained Earnings 112,473,424.2 $92,284,000.00 $87,152,000.00 $104,256,000.0
4 0
Other Stockholder Equity (532,566.79) ($345,000.00) $1,082,000.00 ($471,000.00)
Total Stockholder Equity 146,824,957.7 $119,355,000.0 $111,547,000.00 $123,549,000.0
3 0 0
Total Financing (L+E) 357,333,726.2 $290,479,000.0 $231,839,000.0 $207,000,000.0
0
Cost of Revenue 161,102,350.0 140,089,000.00 112,258,000.00 106,606,000.00
0
Gross Profit 107,669,900.0 93,626,000.00 70,537,000.00 64,304,000.00
0
Research Development 9,277,050.00 8,067,000.00 6,041,000.00 4,475,000.00
Administrative
Operating Income or Loss 81,914,500.00 71,230,000.00 52,503,000.00 48,999,000.00
Total Other 1,477,750.00 1,285,000.00 980,000.00 1,156,000.00
Income/Expenses Net
EBIT 83,392,250.00 72,515,000.00 53,483,000.00 50,155,000.00
EBT 83,392,250.00 72,515,000.00 53,483,000.00 50,155,000.00
Income Tax Expense 24,092,460.00 19,121,000.00 13,973,000.00 13,118,000.00
Net Income 59,299,790.00 53,394,000.00 39,510,000.00 37,037,000.00
Apple Inc
Quadrant II Quadrant I
WEAK
COMPETITIV
E STRONG
Quadrant
EFE Matrix
t d Score
Opportunities
1. Expansion of distribution networks 0.05 3 0.15
2.Increasing demands for smartphones and tablets 0.15 4 0.6
3.Obtaining patents through acquisitions 0.07 3 0.21
4.Trend of using Smart Devices 0.11 3 0.33
5.Autopilot Car 0.05 3 0.15
6.Rising Demand of Cloud Services 0.08 4 0.32
SLOW MARKET GROWTH
Threats
IFE Matrix
Score
Strengths
1. Market leadership 0.1 3 0.3
2. Strong Brand Image 0.15 4 0.6
3. Marketing and Advertising capabilities 0.1 3 0.3
4. Financial Strength 0.07 3 0.21
5. Complicated supply chain infrastructures 0.09 2 0.18
6. Extensive and Strong U.S.A. distribution channels 0.08 3 0.24
Weaknesses
1. Higher prices than competitors 0.1 2 0.2
2. Incompatibility of the apples services and 0.07 1 0.07
functionality
4. Closed ecosystems 0.03 1 0.03
5. Leadership 0.1 2 0.2
6. Pace of Innovation 0.07 1 0.07
Total 1 2.48