Running Head: Strategic Audit Report for Apple Company 1

Strategic Audit Report for Apple Company

Liu Shi Hao (Dax)

Embry-Riddle Aeronautical University Worldwide Campus

September 30th, 2015

Running Head: Strategic Audit Report for Apple Company 2

Table of Content

Table of Content-----------------------------------------------------------------------------2

Summary--------------------------------------------------------------------------------------3

History of Apple Company--------------------------------------------------------------4, 5

Mission and Vision Statement for Apple-------------------------------------------6, 7, 8

Corporate Governance

Board of Director-----------------------------------------------------------9, 10, 11

Senior management----------------------------------------------------------------12

External Factors Analysis Summary------------------------------------------------13, 14

Internal Factors Analysis Summary-------------------------------------------------15, 16

Strategic Factors Analysis Summary------------------------------------------------17, 18

TOWS Analysis----------------------------------------------------------------------------19

Implementation of Recommended Strategy--------------------------------------------20

Reference-------------------------------------------------------------------------------21, 22

Summary
Running Head: Strategic Audit Report for Apple Company 2

In my strategic audit report, I am going to analyze Apple Company. Apple

Company is one of my favorite technology companies that produce, develops,

manufactures, and sells smart phones and other high-tech products. One of their

most famous products is iPhone and they also have a lot of other high-tech devices,

such as iPad, iPod, Macbook tablet, Apple TV, Nano, and Apple Watch. In this

report, I would love to introduce Apple Company’s history, the process of how

Apple Company went from almost bankruptcy to a 700 billion dollar market

capacity company, Apple Company’s products, Apple Company’s Mission and

Vision Statements’ analysis, members of Apple’s Board of Directors team and

Senior Management team, Apple Company’s external and internal factors analysis,

Apple’s strategic factors analysis summary, Apple’s TOWS analysis, a

recommended strategy, and my reference page. In my opinion, Apple Company is a

great and long-term company for investors to invest. A lot of people including you

may not believe that Apple is good company, but after reading my strategic audit

report, you will probably change your mind and start investing Apple Company.

Brief history of Apple Company

Running Head: Strategic Audit Report for Apple Company 2

Three people in a garage, Steve Jobs, Steve Wozniak, and Ronald Wayne first

found Apple Company. The name, Steve Jobs, might be the most popular name that

most of the people have heard when they first hear Apple Company. However,

without Steve Wozniak and Ronald Wayne, the world may not have iPhone, iPad,

and iMac today. At the beginning, Steve Jobs tried to convince Ronald Wayne to

take over 10% of Apple Company’s stock and wanted him to be the decision maker

for Apple’s future. However, Wayne backed out 12 days later, and sold his holding

500$, that would be worth $72 billion in today’s stock price.

Apple Company, which is also named as Apple Computer, Inc, is a

multinational company that creates and develops computer software, computer

system, potable smart phones, personal computer, and other electronics. One of the

most famous and well-known products from Apple is their iPhone. IPhone has

different series, such as iPhone first, second, third generation, iPhone 4, iPhone 4s

which is the upgraded version of iPhone 4, iPhone 5, 5s, 5c, iPhone 6 and iPhone 6

plus, and iPhone 6s and iPhone 6s Plus. Apple Company also has other high-tech

electronic devices that people deeply like, such as iPad which has a big screen, iPad

Mini, Apple Watch, Apple TV, iPod and Nano which is used to store music, and

their future Apple Car. Apple Company also has a strong and huge chained retail

store called Apple Store. There are 461-chained Apple store all over the world and

Apple also has a great online music-downloading device called iTunes.

Running Head: Strategic Audit Report for Apple Company 2

Mission and Vision statement analysis for Apple Company

Apple’s current mission statement is “Apple designs Macs, the best personal

computers in the world, along with OS X, iLife, iWork and professional software.
Running Head: Strategic Audit Report for Apple Company 2

Apple leads the digital music revolution with its iPods and iTunes online store.

Apple has reinvented the mobile phone with its revolutionary iPhone and App store,

and is defining the future of mobile media and computing devices with iPad." On the

other hand, Steve Jobs’ mission statement was “To make a contribution to the world

by making tools for the mind that advance humankind.”

From Apple’s current mission statement that created by Tim Cook and

Apple’s Board of Director and management team, I can see that Apple regards its

products as a necessary part in our life. This mission statement includes a lot of

words that relate to “best”, such as “the best personal computers”, “Apple leads the

music revolution”, “Apple has reinvented mobile market”, and “Apple define the

future.” Apple wants to make their products perfect and make their products

involving into our daily life. What Apple wants is that when people are going to

make phone call or send text message, Apple wants everyone to use iPhone; when

people wants to read news online or create word document or power point, Apple

wants customers to use Macbook; and when people feel tired and fatigue from

work, Apple wants people to think about Apple’s iPod and iTunes first to relax. On

the other hand, according to Steve Jobs’ mission statement, I see that Steve Jobs

regarded Apple’s products as a tool to improve the quality of life for mankind. Steve

regarded Apple’s products as something that could help people to change our life

and to make our life better.

Running Head: Strategic Audit Report for Apple Company 2

Apple’s current vision statement is that “We believe that we are on the face of

the earth to make great products and that’s not changing. We are constantly focusing

on innovating. We believe in the simple not the complex. We believe that we need to

own and control the primary technologies behind the products that we make, and

participate only in markets where we can make a significant contribution. We

believe in saying no to thousands of projects, so that we can really focus on the few

that are truly important and meaningful to us. We believe in deep collaboration and

cross-pollination of our groups, which allow us to innovate in a way that others

cannot. And frankly, we don’t settle for anything less than excellence in every group

in the company, and we have the self- honesty to admit when we’re wrong and the

courage to change. And I think regardless of who is in what job those values are so

embedded in this company that Apple will do extremely well.”

For my personal opinion, I think that Apple has a really well rounded vision

statement. Apple Company mentioned that it has been focusing on innovating new

products and I believe that Apple made several achievements on that. For example,

in Steve Jobs’ period, he thought that Apple should not use their huge amount of

cash to do stock buy-back and creating new products that are not related to smart

phones. And Steve Jobs thought that giving money back to investors or large

company shareholders and stock buy-back were wasting money. On the other hand,

not only does Tim Cook support stock buy-back and giving money back to

investors, but he also supports create new products, such as Apple Watch, Apple TV,
Running Head: Strategic Audit Report for Apple Company 2

Apple Pay, and the future Apple Car. The current Apple Company that led by Tim

Cook breaks the traditional business model, instead of living under Steve Jobs’

shade. I like Apple’s spirit “making everything as perfect as possible.” I believe it is

a strong and successful move and I also believe that Apple will create more and

more impressive products that amaze and improve our life.

Corporate Governance

Board of Director team of Apple Company:

1. Timothy D. Cook

CEO of Apple Company

Nationality: United States of America

Internal directors
Running Head: Strategic Audit Report for Apple Company 2

Has been the company since August 2011

2. Arthur D. Levinson, Ph.D.

Chairman of the board and Chief Executive Officer

Nationality: United States of America

External director

Former chairman and CEO of Genentech

Served as the Chairman of Genentech, Inc from September 1999 to September 2014

3. Andrea Jung

Joined Apple’s board of directors on January 7th, 2008

Canadian-American

External director

Became President and CEO of Grameen America in April 2014

4. Ronald D. Sugar, Ph.D.

Former Chairman of the Board and CEO of Nonthrop Grumman Corporation.

External director

Appointed to Apple’s Board of Directors on November 17th, 2010 and served as the

Chairman of the Audit and Finance committee.

Nationality: United States of America

5. Albert A. Gore Jr.

Former Vice President of the United States

Running Head: Strategic Audit Report for Apple Company 2

External directors

Joined Apple’ Board of Director on March 19th, 2003

Nationality: United States of America

6. Susan L. Wagner

External directors

Co-founder and directors of Black Rock

American

Joined Apple on July 17th, 2014

Serve as Audit Committee

7. Robert A. Iger

Chairman and CEO of The Walt Disney Company

Joined Apple’s Board of Directors on November 15th, 2011

Served as Nominating Committee Chair Audit Committee

Nationality: United States of American

Running Head: Strategic Audit Report for Apple Company 2

Senior Management team of Apple Company:

1. Tim Cook – CEO

2. Angela Ahrendts – Senior Vice President Retail and Online Stores

3. Eddy Cue – Senior Vice President Internet Software and Services

4. Craig Federighi – Senior Vice President Software Engineering

5. Jonathan Ive – Chief Design Officer

6. Luca Maestri – Senior Vice President and Chief Financial Officer

7. Dan Riccio – Senior Vice President Hardware Engineering

8. Philip W. Schiller – Senior Vice President Worldwide Marketing

9. Bruce Sewell – Senior Vice President and General Counsel

10. Jeff Williams – Senior Vice President Operations

 Running Head: Strategic Audit Report for Apple Company
External Factors Analysis Summary:
FACTORS
OPPORTUNITIES
O1 High demand of Apple’s
iPhone 6, iPhone 6 plus,
iPad, Mac tablet and Apple
Watch
O2 Extensive amount of cash
flow Apple has that can be
used for acquiring other
companies, developing new
products, and stock buying-
back.
O3 Apple Pay usage
O4 Rapid growth of
smartphone, tablet, and
mobile payment market in
2
WEIGHT RATING WGTD COMMENTS
(Out of 1) (1-5) SCORE
Every year Apple launchs its new
iPhone, it is always a hign demand
0.15 5 0.75 from all over the world. Especially,
the launch of iPhone 6 and 6 plus
has a tremendous demand
One of the biggest advantage of
Apple company is that it has a lot of
cash that cannot be used within a
0.1 5 0.5 short period of time. Apple could
utilize these cash to develop new
iPhone, make Apple Watch better,
and create more new technology on
their products
0.08 4 0.32 Apple Pay is a smart idea. It could
make Apple company becoming the
third transcation party, which means
that Apple could hold the money,
and then release it.
China and India are growing fast.
Apple could find a good
0.1 4 0.4 opportunity and market in both
 Running Head: Strategic Audit Report for Apple Company 2

Asian and Indian contries

O5 More and more providers
of parts, such as screens,
camera, processor, and
metal shell, for Apple
Company
Parts are cost. More provider or
0.05 4 0.2 supplier could give Apple more
options to choose which company
to use. And also, decrease the cost
of purchasing parts

THREATS
T1 Overdepending on the sale China is a big market, and could
of iPhone 6 and 6 plus in help Apple making a lot of profit.
China market 0.15 5 0.75 However, if Apple overdepends on
Chinese market, there will a
obvious downtrend for Apple when
the demand in China decreases
T2 The growth and It is a potenial risk for Apple
development from other Company. Microsoft’s surface and
competitors 0.15 4 0.6 Chinese XiaoMi smartphone are
growing really fast.
T3 Decreasing sale on iPad According to news that I have read
and iPad mini 0.05 3 0.15 recently, the sale of iPad is
decreasing. Less innovation may be
the problem
T4 Currently strong U.S dollar More than 30% sale comes from
0.12 4 0.48 oversea. If dollar is more and more
valued, Apple may face decrease in
revenue
T5 Less and less innovation Even though, iPhone 6 and 6 plus
ability 0.05 4 0.2 made a great success, investors and
consumers are still looking for more
new technology

TOTAL SCORES 1.00 4.35

Running Head: Strategic Audit Report for Apple Company 2

Internal Factors Analysis Summary:

FACTORS WEIGHT RATING WGTD COMMENTS

SCORE
STRENGHTS
S1 Innovative products 0.15 4 0.4 Apple Company has great
and innovative design and
management team. Their
smart phone, iPhone,
make the traditional
market different and their
iPad even make some
people give up laptop
S2 Brand loyal 0.05 4 0.2 Apple has loyal groups of
customers customers. Some people
even lined up in front of
apple’s retail store
overnight before new
iPhone release.
S3 Virus free IOS 0.10 4 0.4 Apple creates IOS system,
system which is the fastest system
and is virus free. Apple
helps customers to avoid
getting virus when they
use their phone and
laptop.
S4 Apple looks for 0.15 3.5 0.35 Not only does Apple
diversified Company focus on
development for their developing on their smart
products phones, but they also
develop iPad and music
system. Also, they start
developing Apple car that
Running Head: Strategic Audit Report for Apple Company 2

will blend into our life in

S5 Apple try to make 0.05
their products as
aesthetic as possible
the future.
3 0.15 For example, the first
edition of iPhone is
rounded edge, and then it
becomes cutting edge, and
then the screen becomes
bigger. Especially, Apple’s
logo is a talented design.
The logo is simple, but
aesthetic and has
representativeness.

WEAKNESSES
W1 Decreased market 0.10 3 0.3 The demand of iPad
share for iPad started decrease last
quarter because they
haven’t developed much
technology on it.
W2 Low market share in 0.10 4 0.4
their software
industry
W3 Expensive price for 0.10 4 0.2 Their new iPad, which is
their iPad iPad pro cost over 1000
dollar and it does not have
64 GB memories. 64 GB
memories is what most
people buy.
W4 Declined sale for 0.10 3 0.15 Mac book laptop is one of
iMac their main source for
income.
W5 Less focus on 0.10 3 0.3
marketing issue to
create awareness

TOTAL SCORES 1.00 2.85

Running Head: Strategic Audit Report for Apple Company 2

Strategic Factors Analysis Summary:

SWOT FACTORS WEIGHT RATING WGTD COMMENTS

# SCORE
S1 Innovative products 0.15 5 0.75 Apple Company has great
and innovative design and
management team. Their
smart phone, iPhone,
make the traditional
market different and their
S2 Apple try to make 0.1 4 0.4 For example, the first
their products as edition of iPhone is
aesthetic as possible rounded edge, and then it
becomes cutting edge,
and then the screen
becomes bigger.
Especially, Apple’s logo is
a talented design. The
logo is simple, but
aesthetic and has
representativeness.
S3 Apple looks for 0.1 4 0.4 Not only does Apple
diversified Company focus on
development for developing on their smart
their products phones, but they also
develop iPad and music
system. Also, they start
developing Apple car that
will blend into our life in
the future.
W1 Decreased market 0.1 4 0.4 The demand of iPad
share for iPad started decrease last
quarter because they
haven’t developed much
technology on it.
W2 Declined sale for 0.1 3 0.3 Mac book laptop is one
iMac of their main sources for
income.
O1 High demand of 0.15 4 0.6 Every year Apple launchs
Running Head: Strategic Audit Report for Apple Company 2

Apple’s iPhone 6, its new iPhone, it is

iPhone 6 plus, iPad, always a hign demand
Mac tablet and from all over the world.
Apple Watch Especially, the launch of
iPhone 6 and 6 plus has a
tremendous demand
O2 Extensive amount 0.1 4 0.4 One of the biggest
of cash flow Apple advantage of Apple
has that can be used company is that it has a
for acquiring other lot of cash that cannot be
companies, used within a short period
developing new of time. Apple could
products, and stock utilize these cash to
buying-back. develop new iPhone,
make Apple Watch better,
and create more new
technology on their
products.
T1 Overdepending on 0.1 4 0.4 China is a big market, and
the sale of iPhone 6 could help Apple making
and 6 plus in China a lot of profit. However,
market if Apple overdepends on
Chinese market, there will
a obvious downtrend for
Apple when the demand
in China decreases.
T2 The growth and 0.05 4 0.2 It is a potenial risk for
development from Apple Company.
other competitors Microsoft’s surface and
Chinese XiaoMi
smartphone are growing
really fast.
T3 Currently strong 0.05 3 0.15 More than 30% sale
U.S dollar comes from oversea. If
dollar is more and more
valued, Apple may face
decrease in revenue.
TOTAL SCORES 1.00 4.00
 Running Head: Strategic Audit Report for Apple Company 2

TOWS Analysis:

Apple Company TOWS Analysis

Internal Factor Strengths (S) Weaknesses (W)

S1: Innovative products W1: Decrease market share of iPad

External Factors S2: Aesthetic products W2: Products recall influence company’s
reputation and add expenses.
Opportunities (O) SO Strategies WO Strategies

O1: High demand of S1/O1-Apple has good management, W1/O2- Apple has a huge amount of cash in their
smart phones engineering, and design team. They work hand. Not every company has such huge amount o
O2: Huge amount of together to create high-quality smart phone and cash. Apple could use these cash to develop new
cash flow make it impressive. That’s the sale of every product and new technology on their iPad, so that
generation of their iPhone will hit new peak. the sale of iPad could rise. The sale of iPad is one
of Apple’s main incomes and is also one of the
most favorable products that customers like.
Threats (T) ST Strategies WT Strategies

T1: Over depending S2/T2- Apple designs aesthetic products,
on Chinese market especially their iPhone. However, Apple
T2: The growth and Company sometimes over depends on Chinese
development from market. For example, Apple adds rose-red color
other competitors for iPhone 6s, which most Chinese ladies like.
Creating new technology on the phone is more
important.
W2/T2- Right now in the current market, there are
a lot of competitors against Apple Company and
their products, such as Microsoft’s Surface agains
iPad; Samsung’s Galaxy and Nokia’s Lumix agains
iPhone. If Apple has too much recalls due to bad
software, it is cost too much expense and delay th
production line. Also, it is going to be bad for
Apple’s reputation and give other competitors
chance to catch up.
Running Head: Strategic Audit Report for Apple Company 2

Implementation of Recommended Strategy

According to the TOWS matrix and other matrix, I think that Apple Company

has an experienced, talented, and united management and design team and Apple

has a huge amount of cash in hand. So I would suggest that Apple Company could

put more attention and focus on upgrading its current products and developing new

products. Recently, I read new about the sale condition of Apple’s iPad. I realized

that the sale of iPad has already decreased. And right, Apple is going to launch its

iPad Pro. In my opinion, in order to occupy both smart phone and small and big

tablet market, Apple should forecast what people need and why the sale of iPad has

decreased. iPad, which belongs to small tablet market, is one of the main incomes

for Apple Company and people deeply like it. So I think Apple should send a team

or a group to socialize normal people who buy Apple products, and get to know

them why they like Apple, why some of them don’t like Apple, Apple products’

advantages and disadvantages, and feedbacks. Or Apple could set up a website

opening to people, so people could go to the website and submit their own feedback

and thinking for Apple Company. Not only would this help Apple Company know

where their disadvantages at, but it would also help Apple Company to provide and

develop better and better products.

Reference
Running Head: Strategic Audit Report for Apple Company 2

1. Investopedia. (n.d.). What is Apple's current mission statement and how does it

differ from Steve Job's original ideals? Retrieved from

http://www.investopedia.com/ask/answers/042315/what-apples-current-mission-

statement-and-how-does-it-differ-steve-jobs-original-ideals.asp.

2. Rowland, C. (2015, September 3). Apple’s Vision Statement & Mission

Statement - Panmore Institute. Retrieved from http://panmore.com/apple-mission-

statement-vision-statement.

3. Apple - Press Info - Apple Leadership. (n.d.). Retrieved from

http://www.apple.com/pr/bios/.

4. Rawlison, N. (2015, August 19). Apple History: the story of Apple - Features -

Macworld UK. Retrieved from http://www.macworld.co.uk/feature/apple/history-of-

apple-steve-jobs-mac-computer-1984-3606104/.

5. Salugee. (2009, May 29). Apple Computer Inc.(Case Study). Retrieved from

http://www.scribd.com/doc/15908770/Apple-Computer-Inc-Case-Study#scribd.

6. Apple - Investor Relations - Leadership & Governance. (n.d.). Retrieved from

http://investor.apple.com/corporate-governance.cfm.
Running Head: Strategic Audit Report for Apple Company 2

7. Apple - Press Info - Sue Wagner Joins Apple's Board of Directors. (n.d.).

Retrieved from https://www.apple.com/pr/library/2014/07/17Sue-Wagner-Joins-

Apple-s-Board-of-Directors.html.

8. Blodget, H. (2013, August 3). Apple's 'Mission Statement' - Business Insider.

Retrieved from http://www.businessinsider.com/apples-new-mission-statement-

2013-8.