The History and Business of Apple Inc - Assignment Example

? Apple Inc. Symbol: AAPL Sector: Technology Industry: Computer Hardware and Software -11 "There's an old Wayne Gretzky quote that I love 'I skate to where the puck is going to be, not where it has been.' And we've always tried to do that at Apple. Since the very very beginning. And we always will" (Steve Jobs, CEO, Apple Inc.). Apple Inc. incorporated in 1977, is the world’s largest technology company who introduced first personal computer. The company has a variety of customer focused products and services across a large no. of diversified and differentiated platforms. Apple has been a successful and leading company by market capitalization among their rivals. The company did not do well in past because of its weak leadership and wrong strategies but over a decade, but they are performing relatively well in industry for their innovative product offerings and customer centered approach. For this, Apple has formulated and implemented strong and effective business strategies which reap great rewards for the company. Apple has emerged as a brand which is loved by their customers. This report illustrates deep analysis of Apple’s products, strategies, structure, growth, performance, competition and environmental analysis and gives the complete idea of how the company is performing and what they should do to make improvements in future. Apple Inc. Table of Contents Title Page No. 1. Company History………………………..……………………………………………...……..4 2. Company Description……………………………………………..…………………………..4 3. Company Mission…………………………………………………..…………………..……..5 4. Company Strategy…………………………………………………..………………………....5 5. Company Structure and Growth……………………………………..………………………..6 6. Current Financial Performance...…………………………………………..……...…………..7 7. Marketing: Positioning, Strategy and Performance………………………..……...…………..7 8. Analysis of Competition…………………………………………………..…………………..7 9. HR Policy and Strategy………………………………………………..………..……………..8 10. Links to the Environment…………………………………………………….....……………..8 11. Final considerations…………………………………………………………...……..………..9 -Bibliography………………………………………………………………………...………..9 -Appendixes………………………………………………………………………...………..10 Company History Apple Inc., formerly Apple Computers, was founded in 1976 by Steven P. Jobs and Steve Wozniak and was converted to public ownership in 1980. It is the company who introduced first personal computer in 1982 with John Sculley as the CEO of Apple. In 1985, Steve Jobs had to leave Apple because of a management shakeup. After that, Apple’s started turning up as a failure. In 1994, Macintosh line was released but Apple still could not turn up to be profitable and continuing taking huge losses. By the time, Steve Jobs had founded NeXt and Apple decided to acquire NeXT in 1996, and this way Steve Jobs brought back to Apple as a special advisor, who later became CEO of Apple. In 1998, iMac released from where Apple started leading the computer industry. Over the last decade, Apple has redefined the cellphone business through the iPhone, the music business through the iPod, and the entertainment and media world through the iPad. On Oct. 5, 2011, the company announced the death of Mr. Jobs, due to pancreatic cancer. In August 2011, Timothy D. Cook became the company’s chief executive.  Company Description Incorporated in 1977, Apple is a California based corporation that designs, manufactures and markets personal computers, mobile communication and media devices, and portable digital music players, and sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. Apple has introduced a wide portfolio of brands including iPhone, iPod, MacBook Air and iPad and operates through 317 retail stores (including 233 retail stores in the US and 84 in other parts of the world). The Company has approximately 60,400 full-time equivalent employees and an additional 2,900 full-time temporary employees and contractors (Apple Inc., 2011). Products and Services Apple offers a wide range of personal computing products, mobile communication and media devices and portable digital music players, which include Mac, iPod, iPhone, iPad, Apple TV etc. Although Apple is basically a hardware selling business but the Company offers its own variety of related software, services, peripherals, networking solutions and third-party hardware and software products also. Software products include proprietary operating system software for the Mac (Mac OS X), proprietary mobile operating system (iOS), and server software and application software for consumer, SMBs, and education, enterprise and government customers. AppleCare offers a range of support options including assistance integrated in software products, printed and electronic product manuals, online support including comprehensive product information as well as technical assistance, and the AppleCare Protection Plan (“APP”) which is a fee-based service that typically includes two to three years of phone support, hardware repairs and dedicated web-based support resources. In addition to selling applications and digital content through the App Store, Mac Store, App iTunes Store and iBookstore, they sell a variety of third-party Mac, iPod, iPhone and iPad compatible products including application software, storage devices, printers, headphones, speakers, and various other accessories and peripherals, worldwide through its retail stores, online stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers, and value-added resellers (Apple Inc., 2011). Business Organization Headquartered in Cupertino, the US, Apple manages their business primarily on a geographic basis. Their reported operating segments based on the nature and location of their customers; consist of the Americas, Europe, Japan, Asia-Pacific and Retail providing similar hardware and software products and similar services. The results of Retail segment do not include the results of the Americas, Europe, Japan and Asia-Pacific reportable segments. The Americas segment includes both North and South America; the Europe segment includes European countries, the Middle East and Africa; the Asia-Pacific segment includes Australia and Asian countries, other than Japan; and the Retail segment operates Apple retail stores worldwide (Apple Inc., 2011). In 2006, Apple made an announcement about building a second campus and in June, 2011, the company provided details related to the architectural design of the new building and its surroundings. Company Mission According to Apple's Investor Relations:  “Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.” This can be a focused mission statement for Apple Inc., which is repeated and sometimes revised in their press releases. Company Strategy Innovation… Apple has been working on giving new and better experience to their customers, for which they have increased their spending on research and development for innovative, improved and competitive product and service offerings. Apple’s ultimate purpose is not creating computer devices, but strategic focus is on changing things for better through innovative products and technologies. The company has been creating a new product type or completely changing the products that already exit in market. Macintosh was the first computer and iPhone is a great realization of Smartphones. This reflects their overall strategy of differentiation which is about creating better products and different from their competitors. Apple is basically hardware and software selling company having competencies in developing their products through diversification which allows sharing of resources across multiple businesses, and ultimate getting competitive advantage in terms of cost saving. Macintosh, iPad, iPhone, iPod and AppleTV are Apple computers that run OS X, Apple’s operating system. This way Apple has been engaged in creating a variety of platforms sharing resources and each complementing the other. They have gradually shifted from a product to a platform (a combination hardware, software and services) and this platform strategy gives consumers a complete package to use different and complementary Apple products. The product integration is another effective strategy that drags customers from competitors as they can use Apple products with different services integrated into them and has been proved cost effective for Apple (Baxter, 2010). The major success of Apple has been a result of becoming a mobile company from just a computer selling company. PC market has been mature but mobile market has a lot more opportunities to work on for Apple. Moreover, Apple’s other strategies such as marketing strategy, branding strategy and HR strategy should be integrated with their corporate strategy in order to achieve their overall mission. Company Structure and Growth Much of the success of Apple was a result of efforts from Steve Jobs, the co-founder and former CEO of the company. Apple needed not have a traditional corporate structure and culture, and did not think of having organizational hierarchy as most of the departments have been directly reporting to Steve Jobs. He had been at the centre of the corporate structure and driving the whole organization, even handling P&L of the company, by taking centralized approach of decision making which has led Apple to be the most influential organization in the world. After Jobs resignation, Tim Cook became Apple’s next CEO. The simple organizational chart of Apple is shown in Appendix I of this paper (Fortune, 2011) Apple has become substantially successful since their iPhone release in 2007. The increase in their market share had led Apple to be no. 1 by market capitalization. Apple stirred up with the personal computer Apple II in the 1970s and reinvented it in the 1980s with the Macintosh. Today, Apple leads the industry in innovation with their outstanding computers, operating system and professional applications. Apple growth strategy is about creating new products for new customers (Dahl, 2010). They entered the mobile phone market with their revolutionary iPhone and are also leading the digital media revolution with their iPod portable music player and video players launched in 2001 and iTunes online store. Launched in 2010, iPad’s success has proved to make Apple a next growth market and since then Apple has been growing at a fast rate. Apple had total assets about $116m in 2011 and it has potential to grow 50% in next two years, according to some analysts. Apple announced huge profits for fiscal year 2011 under leadership of Tim Cook, as Jobs had died. There are no significant changes taken place in organizational structure up till now, but they can make changes therein overtime. Current Financial Performance Apple’s business and marketing strategies have proved to bear fruit for the company as Apple has turned out to be successful after years of failures and huge losses. As of Sep, 2011, Apple has EPS of $28.04 as compared to that of $15.41 in 2010. Net sales during 2011 increased by $43 billion to $108 billion or 66% compared to that of 2010 which was $65 billion, mostly because of record-breaking sales of Mac, iPhone, iPad and their applications (Apple Inc., 2011). Even though their product sales are not huge in volume as the competitors, but Apple’s cost of sales of approx 59.5% of sales in 2011, is much lower than that of their competitors which show they have cost competitiveness over other players in the industry. Despite of higher product prices than those of competitors’ products, Apple’s profits have been greater as compared to the competitors. Apple has raised more equity than their liabilities which is another factor of its outstanding financial performance as they do not have to lose profits in terms of cost of debt. Expenditure on R&D department is part of their financial strategy because of which they come up with new products frequently. Apple’s future financial condition and operating results depend on their ability to continue to develop and sell innovative products and services in each of the markets it operates through. Enclosed are the financial highlights of Apple in Appendix II of this paper (Apple Inc., 2011) Marketing: Positioning, Strategy and Performance The slogan “Think different” has told all about Apple’s approach to innovation, design, integration and ease of use. Apple has positioned itself in the minds of customers as a company delivering value and high-quality products. Today people are so loyal to Apple’s products that ones who once use an Apple product do not want to switch to competitors’ products. This is mostly because of Apple’s branding strategy which is about innovation, imagination, lifestyle, passion, and hopes, dreams and aspirations through technology. Its branding reflects simplicity and consistency in terms of basic architecture. They create consistent but with large portfolios of different innovative brands with strong design (Marketing Minds, 2011). Although Apple’s products are adequate enough to market themselves as they deliver what customer wants before and after a purchase. For example, MobileMe is a fee-based service that keeps consumer data across multiple devices over air. People who have lost their mobile phones can recover their products. This service is very effective and customer focused but it should be free so once customers start using their product with such integrated service in the product, no one will think to switch to competitors’ products (Baxter, 2010). Apple believes attracting and retaining customers ability is greatly enhanced by high-quality buying experience. They have a large number of retail and online stores which sells its product as well as resells third-party products. A store only for Apple has been a very good strategy for brand positioning. Apple stores keep all of Apple products where consumers can have great experience of brand values in non-pressure environment and can get help on Apple’s products. Apple’s stores are located in quality shopping malls and urban shopping territories at high-traffic locations. The stores are designed to simplify and enhance the presentation and marketing of the company’s products and related solutions which help a lot in attracting new customers. Analysis of Competition Apple is working in an industry of aggressive competition as technology has been rapidly growing and frequent product introductions and advancement in the existing ones are what the markets are characterized by. Apart from technological innovation, the market players are competing on market share by cutting prices and lowering profit margins. Price aggressiveness, new and frequent product offerings, developing strong design and technologies, rapid adoption of technological and product advancements by competitors, and sensitivity for consumers and businesses are characteristics of such industry. Apple’s product prices are relatively higher in the market because they do not go for cutting prices as it can badly affect the company’s financial condition and operating results, and also their brand image can get hurt which reflects in their pricing. Apple’s main competitors are PC manufacturers Dell, Gateway, Alienware, etc. In server markets with respect to High Performance Computing, Apple is facing competition with Hewlett-Packard, Acer, IBM, Sun, SGI, Brocade and Sanrad. However, Microsoft is a rival to Apple’s operating systems. However Apple has been branched into online media, so other websites are also considered as their rivals. Companies promoting their own digital music and content products and services, including those offering free peer-to-peer music and video services are significantly competing Apple’s digital content services. Other competitors may include Napster, Hotmail, Gmail, etc. Because Apple has diversified range of platforms, there are many players in markets that are competing with the company. Human Resource Policy and Strategy Human resources are a very important asset of any organization and critical for an organization to develop and implement the right kind of HR strategy in order to succeed in marketplace (Dessler et al, 2008). Human resource strategy has been critically important for Apple as the company’s past performance analysis shows that the company faced downturn because of people who and sometimes their strategies were not suitable for the company. Apple’s main concern is hiring people who possess innovative thinking and want to bring change for better. They always want their employees to be highly knowledgeable with technology, patient, committed to Apple’s products and ready to adopt change when it happens. Apple has been known to be a good employer as they value their employee by appreciating and appraising them and provide them with good corporate culture. Some employees feel that Apple has a wrong human resource strategy of maintaining secrecy as the employees are treated strictly and even punished for information leaking. (Dessler et al, 2008). Apple considers it critical too when hiring its store employees as they want such personnel who take extraordinary care for walk in applicants and ready to provide service patiently. Apple’s stores employ experienced and knowledgeable personnel to provide product advice, service and training to their customers. Moreover Apple does not want to share much information about its human resource as this is a place for severe competition and secrecy has been very important as to get successful among other players in the industry. Links to the Environments Apple had been criticized for environmental impacts of its product in terms of polluting coal power of the banks of servers. Environment groups have kept pressure on Apple to control their gas emission and heavy metal pollution. So the company has been working on ways to overcome that problem by minimizing the harmful impact of its products on environment. For this, they developed and formulated their first environmental policy in 1990 and every year since then, they have been striving to make their products more energy efficient, eliminated many toxic substances, and embraced renewable energy in their facilities. As a result, Apple became the first company in the industry to report comprehensive calculations of their total carbon footprint including environmental reports for every product. Apple claims that each of their products meets the energy guidelines of the Energy Star specification as they started measuring and reporting their entire carbon footprints from 2009. Apple is straining to consider their stakeholders’ values by giving proper attention to social corporate responsibility. Final Considerations Since its Incorporation, Apple Inc. faced waves in their performance over years mainly because of their corporate strategies from top management. Apple had been facing severe deprivations in the past, but the company could regain its market position when Steve Jobs, co-founder and former CEO of Apple took the office and drag the company out of being a disaster and turn it to be a most influential and favored organization. The company tried not to revise the past mistakes and worked on potential opportunities with extraordinary effective strategies for the company, to be a successful venture. Apple believes in change and manages their strategies and position according to the changing world and competition in the industry they are working in. This approach has been very effective in terms of their success and serves as a role model for others. “Stay Hungry, Stay Foolish” (Whole Earth Catalog 1974, quoted by Steve Jobs in 2005) Bibliography CRUIKSHANK, J. L. (2006). The Apple way. New York, McGraw-Hill. http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=165248. O'GRADY, J. D. (2009). Apple Inc. Westport, Conn, Greenwood Press. Websites: Apple Inc. 2011. Annual Report 2010-2011, (online). Available from: http://www.apple.com, Retrieved on November 6, 2011. Baxter, Kyle, June 16, 2010, Apple’s Mobile Future: Corporate and Business Strategy, (Online), Available from: http://tightwind.net/2010/06/apples-mobile-future-corporate-and-business-strategy/, Retrieved on November 6, 2011. Lashinsky, Adam, August 25, 2011, How Apple works: Inside the world's biggest startup, (online), Available from: http://tech.fortune.cnn.com/2011/08/25/how-apple-works-inside-the-worlds-biggest-startup/, Retrieved on November 6, 2011. Inside CRM, 11 Effective Strategies Apple Uses to Create Loyal Customers, (online), Available from: http://www.insidecrm.com/features/strategies-apple-loyal-customers/, Retrieved on November 6, 2011. Appendixes Appendix I Source: Fortune, 2011 Appendix II Source: Apple Inc. Read More