(There seemed to be less ratios this time. Am I correct or did I miss something? ) Important facts in this case (company, industry, competition, etc)? The company dropped “computer” from its name in 2007, reflecting its role as a consumer electronics powerhouse. Apple generated approximately $625 of revenue from each of the 40 million iPhones it sold in 2009. It generated $164 of revenue for every iPod sold, $1,279 for every Mac, and $665 for every iPadIn 1983, Apple entered the Fortune 500 at #411 after being in existence for only five years, making it the fastest growing company in history.
Most PC manufacturers were rivals to Apple, like Dell, Alienware, Gateway etc. but of course you can also factor in Microsoft as a rival to their Operating System (OS X/XP). But in recent years they have branched out considerably, into online media (iTunes, MobileMe, iPhone) so you can factor in Napster and other legal music download sites, Hotmail and Gmail, and Nokia, Samsung, Blackberry and alike. Also, they rival in the server markets with HP, Sun, SGI and IBM with regards to High Performance Computing, Webserving, Centralised storage (which also brings further rivals like Brocade and Sanrad).
There's also networking, the Airport lines now rival Cisco, Netgear and alike. So, they now have a very diverse range of products, and there are many rivals that are fighting with Apple in those markets. | Environmental & Competitive Scan| External factors outside the direct control of the company, but which affect the company. External factors create opportunities and threats to which the company must respond. (e. g. , political, demographic, environmental, political, global, legal)Economic DepressionHigh Inflation RateWeb PiracyMusic Download sites other than I-tunesShort Product Lifecycle| Competitive factors that impact the company (e.
g. , nature of competition, characteristics of existing competitors, potential new competitors, substitute products, bargaining power of suppliers and customers)Strong competition from Dell HP and Toshiba for laptop salesMedia PiracyThreat to be undercut by low priced importsLong lasting economic depressionHigh speed of technology development| What are the critical success factors in this industry? How well does this company address those critical success factors? Their drive to think outside the box and change the way people interact with technology and benefit from technology.
With Apple, it's not about new product features. It's all about how to fill customer needs in a totally different way. They raise the bar by offering new solutions to old problems not just different variations of the same solutions. The original Mac computer, and each iteration that followed, made it easier and more comfortable for non-geeks to connect to 21st century technology. The iPod changed the way music was distributed and the iPad the way books are distributed and the way people communicate with each other.
Apple sets the bar at a high level with each product release and forces competition to copy what they've done and try to improve it. By the time they do this, Apple is on to the next new release forcing everyone to play catchup again. The basic difference, once again, is a corporate culture that rewards thinking outside the box and encourages risk but not at the expense of quality or design. In essence: 1. Design 2. Innovation 3. Simplicity 4. Cultivating Passionistas (and understanding them) 5.
Owning platform| Internal Scan – what are the company’s internal strengths and weaknesses relative to critical success factors, the competition, and the environment? (Include financial ratios)| Internal strengths Ecosystem Lock-in & a Captive MarketApple’s products have worked best with other Apple products. Traditionally, this has been one biggest advantages and disadvantages of using Apple products, as it has caused Apple to either lock-in or alienate first time buyers. Apple Loyalty equal to Stockholm SyndromeFocus on Developed MarketsDistribution Strategy Pricing StrategyTimingApple is valued at $567.
28 billion on the market, and they didn’t get to where they are by snoozing, they got their by being an industry trailblazer and consistently innovating. The company possesses one of most globally recognized brands, right up there with Coca-Cola and McDonald’s. Brand loyalty is incredible, people will line up in the freezing cold overnight just to be one of the first to get their hands on the new iPhone, iPad, or Mac. The company is irrationally undervalued, with a price to earnings ratio of 13. 68, significantly lower than slower growing companies like Coca-Cola and McDonald’s.
The company’s year over year growth is still fast-paced, in the double-digit area for the past couple of years, and the company has just recently paid out its first dividend, which annualized at current prices yields around 1. 75%. | Internal weaknessesSome analysts say that without legendary founder Steve Jobs at the helm innovation may slow, as Tim Cook is a good CEO but just not the same. Apple operates and sells items in one of the most competitive sectors in the world, and will always have competition that will offer something very similar for a bit less.
Competition from deep-wallet companies such as Google, Microsoft, and Amazon may sometimes lead to the compression of margins. Recent problems from their main supplier and producer, Foxconn, has caused investors to get weak in the knees as shipment dates have been pushed back and customers who pre-ordered devices have been faced with several week waiting periods. While this can be used as an advantage if an investor is smart, the recent price movement in the stock has been volatile, rising $100 and then falling $100 in less than 3 months.
| As you consider this company, what do you see as its sustainable competitive advantage(s), (i. e. , what core competencies does this company have that competitors will not be able to imitate/improve upon in the foreseeable future)?. Intense Current CompetitionThe top four PC vendors are HP, Dell, Acer and Lenovo, which accounted for 55% of the worldwide shipment. Apple faces fierce competition from these companies. Nonetheless, with its innovative and stylish products, it’s no wonder that they set a higher price than other companies.
The innovation and the technology advances help Apple win in the competition. 2. Threat of new entrance: lowThe strong branding awareness of the existing companies and the high starting investment prevent the entry of the new competitors. 3. Threat of substitute products: highAlthough there are many substitute products in the market, the Apple products are differentiated from others. Especially its own operation system hindered the substitute products. In the other words, customers need to get the apple products when they use Apple PCs.
The iPod, iPhone and iPad products play dominant roles to promote the PCs’ sales. 4. Bargaining power of suppliers: lowAccording to the reading material, there are two types of suppliers: Those that made products with a few sources-Microprocessors and Operating system, and those made products with many sources, such as memory sticks, disk drives and keyboards. 5. Bargaining power of customers: highAs the switching costs are low, buyers have strong powers in this position. All in all, Apple always differentiated itself on innovation and design. Instead to meet buyers’ taste, they...
| What strategic recommendations would you make to this company (i. e. , where should they go and how should they get there)? Given the external environment and sociocultural and technological trends and Apple’s unique strengths including the firm’s resources and capabilities including unmatched industrial design teams, talented device engineers, patents and innovation dealing with user interface and usability a logical next step for Apple is to develop a market defining convergence device, likely a smaller more portable, cost efficient tablet.
Apple’s internal engineers should use what the firm has learned from its iPhone, iPod, and Mac lines to develop an intuitively usable device packed with useful functions leveraging Apple’s iTunes Store content including the ecosystem of third-party applications developers to unleash the full potential of the platform. The award winning design team can leverage its talent to create the next must-have product regarded for its design simplicity and elegance making it not only a functional device, but a fashion statement.
Apple’s close work with its preferred OEM partners will make the tablet a reality, focusing on build quality and dependability| Financial Ratio Analysis (Option: Use Financial Ratios CD for calculations)| Current Year| Previous Year| Change| Industry Averages| Comments on this ratio| Liquidity RatiosCurrent ratioQuick ratio| 1. 61. 6| | | 1. 61. 6| The debt paying ability of Apple is the same as the Industry Average. The liquidity is average. Apple is right in line with the average. | Leverage RatiosDebt-to-Asset ratioDebt-to-equity ratioTimes interest earned| 0.
00| | | 0. 07| Apple is way under the debt/equity average of the industry. | Activity RatiosInventory turnoverAvg. collection periodTotal asset turnoverFixed assets turnover| 70. 5| | | 68. 0| Apple has more turnover than the average, meaning they sell more products. | Profitability RatiosGross profit marginOper. profit marginNet profit marginReturn on assetsReturn on equity| 40. 524. 022. 741. 7| | | 39. 122. 725. 842. 2| Apple has a higher profit margin than the average. Their sales are higher than the average. Net income/revenue.
Apple is higher than average, more than adequate. Apple has an average asset pool. Decent ratio. Apple tends to reinvest earnings a little more inadequately than most. | Revenue/ ExpenseSales revenueCost of salesOperating profitNet Income| 39. 0053. 70| | | 36. 3054. 40| Apple product sales are higher than the average, After bills are paid, their average is slightly less than the average. They need better debt management. | References David, F. (2013). Strategic management: A competitive advantage approach (14e). Upper Saddle River, NJ: Pearson Education, Inc.