Good Apple Incorporation Report Example

COMPANY OVERVIEW

Apple Inc., an American multinational organization, located in the middle of the Silicon Valley focuses on the designing and development of the personal computers, software as well as electronic products like the MP3 players and iPods. The main products by Apple Inc. are iMac, iPhone, iPod and iPad while it is revolutionizing the iPhone since its creation. Steve Jobs and Stephen Wozniak established Apple Inc. in Cupertino, California on April 1, 1976 (Elliot, 2012). The company operates in more than 317 retail stores that are located in 10 countries around the globe. The products of company are sold throughout the globe and its distribution network includes online stores, retail stores, wholesalers, third-party cellular network carriers, and direct sales force. Apple has made possible for the consumers to download music videos,

ORGANIZATION & MANAGEMENT APPROACH

With the global evolution and technological advancements in the recent years, new ways of organizing business processes have been identified. Companies are bombarded with both domestic as well as foreign competitive forces. So, it has become highly critical to build such management models which helps the business to survive in an international competition. The managerial and organizational approach helps the management to guide through strategies and ensure high efficiency by reducing problems that could arise due to lack of planning and organizing in large businesses (Elliot, 2012). Apple uses geographical structure to manage and organize its business. It is a traditional structure where people form groups to work on similar products or customers in the same geographical location. Apple has categorized its operating segments by Europe, Japan, Americas, and Asia-Pacific. The Middle East and Africa are included in the Europe segment. The company is a large corporation with all types of managers like line managers, staff managers, functional managers and even general managers who cater to complex areas. Despite being a traditional structured business, Apple is also a learning organization where the management focuses on ongoing learning and development throughout the business (Rothaermel, 2013). Some of the critical values for the company are teamwork, participation, information sharing and learning. It is one of the organizations that constantly reviews and seeks ways to improve through current trends. The trends prevalent in the technology business like pursing unique design, demanding excellence, marketing and ensuring ease of use have been a part of Apple Inc. since inception. Considering that Apple makes its own hardware and software, it is the only company with vertical integration that is also one of its greatest strategic advantage over other firms. Apple has been titled as the most innovative company for nine years in a row (Baer, 2014).

SWOT ANALYSIS

SWOT analysis for any particular company stands for the Strengths, Weaknesses, Opportunity and Threat, that can provide help in strategy formulation of the business while analyzing both the internal and the external environments (Rothaermel, 2013). The first strength as identified by Wharton (Elmer-DeWitt, 2012) is the technological edge of Apple Inc. over its rivals. All the Apple products tend to be highly successful: while iPhone is being associated with status-oriented class, iTunes and iPod are a wonderful source of revenue generation for the company. Another strength for Apple is its expertise is both software and hardware industries where it is not dependent upon any other company. Apple products are categorized as luxury items therefore leaving almost no room for direct competition. Apart from the price, the design of products is simpler and user-friendly; therefore, grabbing more brand loyalty. Further, the higher dedication to research and development is also its major strength.
All the disadvantages that cause hindrance to the business are its weaknesses. One of the biggest weakness is a poor market relationship. But what hurts more is that all Apple products are short-lived due to which huge capital investment is required for constant maintaining and ongoing research and development (O'Grady, 2009). Moreover, the company has a minimal marketing presence through advertisements and grabs less attention of the local customers as compared to customers outside USA.
Opportunities have an affect both on the present condition of the business as well as in the future. The biggest opportunity is the rapid growth in population of the world and the elimination of geographical boundaries in trade due to which many new markets are being opened. This is also making drastic increase in the purchasing power of the common man due to which the market for luxury products is flourishing. Another opportunity is the rising trend of online sales where company can avoid costs while reaching more potential customers (O'Grady, 2009). The Apple products have created a hype among the younger population seeking new technology and luxury.
The rising number of competitors especially in laptop industry can be a source of threat for Apple Inc. Another significant threat is the ease of free download of music for customers as compared to purchase from iTunes. Apple products are luxury items but this can also be a threat as there are cheaper substitutes available in the market. During 2010 to 2012, the pay level for workers at Foxconn rose three times which means that there would be likely increase in the prices of Apple products (Elmer-DeWitt, 2012).

ANALYZING COMPANY PERFORMANCE

The revenue of the company has increased from $65,225 million in 2010 to $182,795 million in 2014. The net income has risen from $14,013million to $39,510 million over the five year period (Morningstar, 2015). The liquidity ratios of the company deteriorated in 2012 but then again rose in 2013. Though the company has a traditional structure in practice, but it is a highly adaptive organization and has changed in response to the country trends. The management encourages teamwork and worker empowerment which leads to expert staff that acts as a competitive advantage for the business. The workers are motivated to innovate and challenge the status-quo while taking more control over their jobs. The adaptive nature of work ensures sustainability of the company in a competitive environment. It is due to this approach that company has 18.01% return on assets as of 2014 and a return on equity of 33.61% while having a 21.61% net margin in the year 2014 (Morningstar, 2015). The profitability ratios improved in 2012 but then deteriorated in 2013 and similar was the case with equity ratios. Apple was enlisted among the top ten Fortune 500 companies in May 2013. Considering the trend and common size analysis, Apple Inc. has a performance above average. As is evident from the balance sheet, the company is performing above the average of industry in terms of its Common Equity, Total Assets and Retained Earnings. The Net Sales and Gross Income of the company is more than its competitors.

RECOMMENDATIONS

After analyzing the organizational design, trends, performance and the managerial approach of Apple Inc., it is clear that the organization has the most appropriate design so that it can accomplish the proposed objectives and missions. The company needs to form joint-ventures and build on the expertise of its staff by practicing knowledge management. The biggest threat for the company is its high-pricing strategy so, Apple must try to lower the cost of its products while ensuring that the standards of quality are maintained. Innovation and uniqueness requires constant adaptation and so, it is highly recommended that Apple should re-engineer its processes to seek ways for improvement. The staff is the key to innovation and cannot be imitated by the competitors so, retaining staff and building on their expertise is highly recommended. Improving quality of work life for the staff and developing human skills would help the firm to generate better jobs (Rothaermel, 2013). Moreover, Apple should focus on aggressive marketing and offer price reductions time to time to grab more attention.

References

Baer, D. (2014). The 50 Most Innovative Companies in The World Read more: http://www.businessinsider.com/most-innovative-companies-2014-2014-10#ixzz3UB29d8J5. Business Insider. Retrieved from http://www.businessinsider.com/most-innovative-companies-2014-2014-10
Elliot, J. (2012). Leading Apple with Steve Jobs. Hoboken, NJ: Wiley.
Elmer-DeWitt, P. (2012). By the numbers: Apple’s fiscal 2012 annual report. Fortune. Retrieved 12 March 2015, from http://fortune.com/2012/11/01/by-the-numbers-apples-fiscal-2012-annual-report/
Morningstar. (2015). Income Statement for Apple Inc. (AAPL) from Morningstar.com. Retrieved 12 March 2015, from http://financials.morningstar.com/income-statement/is.html?t=AAPL®ion=usa&culture=en-US
O'Grady, J. (2009). How Apple Inc. changed the world. Mumbai: Jaico.
Rothaermel, F. (2013). Strategic management. New York: McGraw-Hill Irwin.