1

Key facts
Company name
Head office
CEO
Phone
Fax
Web address
Revenue (USD Mn)
Financial year end
Employees
NASDAQ National Market

Apple Inc,
1 Infinite Loop Cupertino, California 95014 USA
Tim Cook
408 996 1010
4089742123
http://www.apple.com/
182,795.000 (2014)
September
92,600 (2014)
AAPL

Ticker
Main Competitor

Samsung Electronics Co. Microsoft Corporation,

Dell Inc.

1. Overview
Apple, Inc. is an American company which established in 1977 and
headquartered in Cupertino, California. The company employs 92,600 people as

of September 27, 2014 and designs, manufactures and markets mobile

communication, media devices, personal computers, and portable digital music
players as well as computer software, accessories, services, networking
solutions, and third-party digital content and applications. (Apple Inc. Form 10K). The company is obliged to providing the best user experience to its
customers by means of its creative hardware, software and service. Apple, Inc. is
actually four different successful companies all wrapped up into one. Its a
hardware company, a software company, a services company, and a retail
company. It dominates all the fundamental critical parts of the chain applied to
make and sell products. (Vergara, 2012).
1.1. Products
iPhone, ipad and ipod are the companys lines of smart phones, multi-purpose
tablets and portable digital music and media players respectively and they are
based on Apples iOS Multi-Touch operating system. These products work with
the iTunes Store, the App Store and iBooks Store for purchasing, organizing and
playing music, movies, TV shows, podcasts, books and apps. In addition to apps
delivered with iOS, free downloads of iLife and iWork apps for iOS are available
with all products. Moreover, Mac is another companys line of computers
whether desktops or laptops. Macs are based on the OS X operating system and
include Mail, Safari web browser, Messages, Calendar, Reminders, Contacts and
the iLife apps. (Apple Inc. Form 10-K).
1.2. Services

Apple provides its customers with a wide range of support that includes technical
assistance, online support and printed and electronic manuals. (Apple Inc. Form
10-K). This support can be obtained by phone, chat, email, setting up a repair or
making a Genius Bar appointment. Moreover, every Mac and Apple display
comes with a one-year limited warranty and up to 90 days of complimentary
telephone technical support in addition to the other types of supporting plans
such as the AppleCare Protection Plan (APP) and the AppleCare+ Protection Plan
(AC+). (Apple support).
1.3. Market
Apple determined its operating segments based on the nature and location of its
customers. For that reason, the companys retail stores are typically located at
high-traffic locations in quality shopping malls and urban shopping districts. In
addition, the company manages its business primarily on a geographic basis
through five operating segments which are Americas, Europe, Japan, Asia-Pacific
and Retail. The Company sells its products and resells third-party products
directly to consumers and small-mid-sized businesses (SMBs) through its retail
and online stores and its direct sales force and indirectly through distribution
channels, such as third-party cellular network carriers, wholesalers, retailers and
value-added resellers. (Apple Inc. Form 10-K).
1.4. Customers
The consumer, (SMB), education, enterprise and government markets are
primarily the companys customers. Therefore, the company believes that the

knowledgeable salespersons can reinforce the sales of its products by conveying

the value of the hardware and software integration and illustration the unique
solutions that are available on its products. Moreover, the companys retail
stores are designed to simplify and enhance the presentation and marketing to
ensure a high quality customer buying experience and attract new customers.
(Apple Inc. Form 10-K).

2. Facts and History

Apple was established on April 1st, 1976 by Steve Jobs, Steve Wozniak and
Ronald Wayne to sell the Apple I personal computer kit. In 1977, Apple Computer
Inc is officially founded and Apple II is publicly introduced. In 1980, Apple III is
released at National Computer Conference. (Mesa, 1997). In the early eighties,
the company encountered stiff competition from the PC market and internal
difficulties which led to critical management changes. In 1984, Apple introduced
its first mouse driven PC and the Macintosh. (Datamonitor, 2011). In 1994, Apple
was able to compete because of launching the PowerPC chip based PowerMac
with the speed of Intel's PC processors, but when Microsoft launched Windows 95
in 1995, Apples performance declined and as a result it lost $68 million. Later,
an agreement was made with Microsoft and followed with the appearance of MS
Office on Mac PCs. In the following years, an alliance was formed combined
Apple, Ericsson and Sun Microsystems to create a standard format for delivering
multimedia content to wireless devices. In 2003, Apple launched its iTunes music

store. A year later, Apple signed licensing agreements with three of the largest
European independent music labels, Beggars Group, Sanctuary Records Group
and V2. In the same year, the fourth generation iPod portable is publicly
introduced. During the period (2005-2006), the company cooperated with some
American, European and Japanese car companies to deliver iPod with their car
stereos for 2006 model in addition, the company collaborated with some air
companies to integrate iPod with in-flight entertainment systems. A year later,
the company changed its name to Apple Inc, and released its revolutionary
product, iPhone. In the following years, Apple introduced iPhone 3GS with new
features. In 2012, Apple launched iPhone 5 that comes with iOS 6 the worlds
most advanced mobile operating system. (Apple Introduces iPhon 5, 2012). In
2104 Apple reached the peak when introduced iPhone 6 with chip Apple A8 that
has two billion transistors and App Store now has over 1.3 million applications.
(Apple Pre-Event, 2014).
3. Operation Segments
Each company has its own management reporting frameworks and operating
segments identification relies on the perspective with which the company's top
management reviews its performance and makes resource-allocation decisions.
Apple declares its segments based on geographic areas and identifies its
operating segments as "generally based on the nature and location of its
customers, i.e. Americas, Europe, Japan, Greater China, Rest of Asia Pacific and
Retail."(Jan, 2103).

4. Strategic Planning Used

4.1 Vision Statement of Apple
"Man is the creator of change in this world. As such he should be above systems
and structures, and not subordinate to them."
Apple lives this vision via the technologies it develops for consumers and
corporations. It seeks to make its customers masters of the products they have
bought. It lives it by guarantee that its employees grasp the vision and seek to
achieve it. Apple has put objectives in place to continuously move forward and
carried out strategies to achieve these objectives and assured that the right
marketing, financial and operational structures are in place to apply the
strategies.
4.2 Mission Statement of Apple
Apple designs Macs, the best personal computers in the world, along with OS X,
iLife, iWork, and professional software. Apple leads the digital music revolution
with its iPods and iTunes online store. Apple reinvented the mobile phone with
its revolutionary iPhone and App Store, and has recently introduced its magical
iPad which is defining the future of mobile media and computing devices.

4.3 Values

The qualities, customs, standards, and principles are the values that rule Apple's
business conduct and the company believes that these values will help it and its
employees succeed.
4.3.1.
The Values that Govern Apples Business Conduct
Empathy for Customers
Apple offers excellent products that fill real needs and provides permanent
value. Moreover, the company is interested in solving customer problems and
deals fairly with competitors and meets customers and vendors more than
halfway.

Aggressiveness - Achievement

Apple determines aggressive goals and drives its employees hard to fulfil them.
The company understands that this is a unique time, when its products will
change the way people work and live.

Positive Social Contribution

Apple makes products that increase human ability, freeing people from exertion
and helping them obtain more than they could alone. But beyond that, the
company expects to make this world a better place to live.

Innovation - Vision

Apple was built on innovation, providing products that were new and needed.
Therefore, it accepts the risks inherent in following its vision and continuously
works to improve leadership products that command the profit margins.

Individual Performance

Individual commitment and performance above the standard are expected and
each employee can and must make a difference.

Team Spirit

Teamwork is fundamental to Apple's success because the job is too big to be

done by an individual. Therefore, employees are encouraged to interact with all
levels of management, sharing ideas and suggestions to improve Apple's
effectiveness and quality of life.

Quality and Excellence

At Apple, quality management is critical to its continued success. Therefore,

Apple's products are built at level of quality, performance, and value that enable
it to earn the respect and loyalty of its customers.

Individual Reward

Apple recognizes the contribution of its employees to its success, and share the
financial rewards that come from high performance. Also, it recognizes that

rewards must be psychological as well as financial, and seeks for an atmosphere

where each person can share the adventure and excitement of working at the
company.

Good Management

Management is responsible for creating a productive environment. Therefore,

the attitudes and behaviors of managers toward their people are primary
importance and employees should be able to trust the motives and integrity of
their supervisors. (Apple Employee Handbook, 1993)
4.4 Investment in Research and Resources
The environment of manufacturing mobile phones, computers, media devices
and other electronics products is highly competitive. Apple believes that the
investment in researches and developments is essential to growth and
competition in the marketplace. Therefore, the company continuously develops
new technologies in order to enhance existing products and to expand the
range of its product offerings. Table 5.1 shows the investment in research and
development (Apple Inc. Form 10-K, 14, 13, 12).
Table 1
The investment in research and development for 2014,
2013 and 2012
Year
2014
Research and Development (dollars 6,041

2013
4,475

2012
3,381

in million)
Real Estate Holdings (million

19.1

17.3

19.7

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square feet)
Number of Employees

92,60

84,400

76,100

5. SOWT ANALYSIS
5.1 Strengths
Apple is obliged to providing the best user experience to its customers by
means of its creative hardware, software and service. Apple, Inc. is actually four
different successful companies all wrapped up into one. Its a hardware
company, a software company, a services company, and a retail company.
Apple has over the years placed standards for high quality products to meet
customer satisfaction. It is devoted to research and development to create new
products, which are expected to make Apples products more efficient and
practical to use. Consequently Apple's commitment to superiority, most of its
products are compact and simple to operate.
5.2 Weaknesses
High dependence on iPhone and iPad product lines. According to Apples annual
report 2014 the net sales of iPhone and iPad together accounted for 72.36%,
72.12%, 72.1% of the total revenues in FY 2014, 2013 and 2012 respectively.
Therefore, dependence on these product lines increases the business risk and
any future decline in the net sales of iPhone and iPad could impact the
company's performance. Also, the prices of Apple products are relatively high,

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especially in the presence of large companies such as Samsung, which

increases the likelihood of switching customers to other companies.
5.3 Opportunities
The rapid increase of population will increase the demand on new technology
products especially the young population who have a craze for any new
technology gadget. This can be considered as a good opportunity for Apple to
expand its business and open many new markets. The launch of Apply Pay
which is a new mobile payment service that allows users to add their credit or
debit card on file from their iTunes Store account .The launch of Apple Pay is
expected to provide new growth opportunities for the company in the medium
to long term.
5.4 Threats
Many of the Apple's products include third-party intellectual property, which
requires licenses from those third parties. There is, however, no assurance that
the necessary licenses can be obtained on acceptable terms or at all. Failure to
obtain this kind of licenses could prevent the Apple from selling certain products
or otherwise have a negative impact on the companys financial condition and
operating results. Apple is encountering challenges in its overseas markets. For
example, Chinese government has declared plans to build its own Linux-based
processor to minimize the dependence on Apples computers.
6. Performance Metrics

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Apple considers market share growth and gross margin as external and internal
performance metrics. Each one of these metrics represents a tool that reflects
the productivity of the company in terms of typical performance by investing its
resources. Growth of market share is directly associated with total sales and net
income of the company which can be affected by changing in the number of
employees who have been hired, research and development expenses and/or
building space of retail stores that have been leased. Whereas, Gross margin is
directly associated with the cost of production. According to Apple's annual
report 2014, the results of the financial performance of the company indicated
that the increasing of factors R&D, building space of retail stores, and the
number of employees will increase the total sales which increases the market
share of the company. Charts 1, 2 and 3 illustrate the relationship between the
total sales and the number of employees, R&D and building spaces in the last
five years. (Apple Inc. Form 10-K. 2014).

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Chart (1)

Chart (2)

Chart (3)

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7. Recommendations
Focus on opening retail stores in foreign markets that Apple has
disregarded which can be done by surveying which countries Apple has
not entered. Entry into these markets can enable Apple to access to

neighboring markets and direct competition with Apples products.

Some of Apple's products need to be redesigned to allow customers
from purchasing its products at reasonable prices. Otherwise, there is a
real threat that it will continue to lose market share. According to
Forrester Research the percentage of customers who believe that
better pricing outweighs brand loyalty has been steadily increasing,

(Manning et al, 2007).

Apple should be more flexible regarding its product's colors especially
in its smartphones. While competitors are offering a plenty of colors,
Apple offering limited choices. For instance, Apple is offering just three
choices for their high-end iPhone 6 and iPhone 6 Plus which are silvergold, silver- white, and space gray- black. Limiting consumer choices

could impact negatively if this strategy persists too long.

8. Conclusion
It can be concluded that Apple is well developed in a way of its products and
services towards customers. Apple has innovated its products and taking the
lead of the other company such as Google and Samsung. However, as
technology continues changing it could easily be left behind by the next newest
thing.

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References
1.

Apple Annual Report Form 10-K. (2012). Retrieved from:

2.

http://investor.apple.com/secfiling.cfm?filingid=1193125-12-444068&cik=
Apple Annual Report Form 10-K. (2013). Retrieved from:

3.

http://investor.apple.com/secfiling.cfm?filingid=1193125-13-416534&cik=
Apple Annual Report Form 10-K. (2014). Retrieved from:

4.

http://investor.apple.com/secfiling.cfm?filingid=1193125-14-383437&cik=
Apple Employee Handbook. (1993). Retrieved from:

5.

http://www.seanet.com/~jonpugh/applevalues.html
Apple Introduces iPhon 5. (2012). Retrieved from:

6.
7.
8.

http://www.apple.com/pr/library/2012/09/12Apple-Introduces-iPhone-5.html
Apple Pre-Event, 2014. Retrieved from: http://www.apple.com/live/2014-sept-event/
Apple Support. Retrieved from: https://www.apple.com/support/
Datamonitor, (May, 2011). Apple Inc. Company Profile. Retrieved from:

9.

http://www.shabakati.net/sites/default/files/travel_adv_files/reporte-anual-de-apple.pdf.
Jan, Obaidullah. (2013). Operating Segments. Retrieved from:

http://accountingexplained.com/financial/statements/operating-segments
10. Manning, H., Temkin, B., Bodine, K, Dorsey, M., & Geller, S. (2007, September 12). Topic
overview: customer experience. Forrester Research. Retrieved from:
11. http://www.forrester.com/rb/Research/topic_overview_customer_experience/q/id/43140/t/2
12. Mesa, Andy F. (1997). Apple History Timeline. Retrieved from:
http://applemuseum.bott.org/sections/history.html
13. Moorman, Christine. (July, 2012). Why Apple Is a Great Marketer. Retrieved from:
http://www.forbes.com/sites/christinemoorman/2012/07/10/why-apple-is-a-great-marketer/
14. Vergara, Raymond Allan G. (2012). Samsung Electronics and Apple, Inc.: A Study in Contrast
in Vertical Integration in the 21st Century. Published in American International Journal of
Contemporary Research