Apple inc

Chapter-1 Introduction

a) Overview of the Organisation

The company was founded on April 1, 1976, and

incorporated as Apple Computer, Inc. on January 3, 1977.

The word "Computer" was removed from its name on

January 9, 2007, the same day Steve Jobs introduced the

iPhone, reflecting its shifted focus towards consumer

electronics.

Apple Inc., formerly Apple Computer, Inc., is an American

multinational corporation headquartered in Cupertino,

California that designs, develops, and sells consumer

electronics, computer software and personal computers.

Apple is the world’s-second largest information company by

revenue after Samsung Electronics, and the world’s-Third

largest phone maker after Samsung and Nokia. Fortune

magazine named Apple the most admired company in the

United States in 2008, and in the world from 2008 to 2012.

However, the company has received criticism for its

contractor’s labor practices, and for Apple's own

environmental and business practices.

As of May 2013, Apple maintains 408 retail stores in

fourteen countries as well as the online Apple Store and

iTunes Store, the latter of which is the world's largest music

retailer.

b) Profile Of The Organisation

Founded: April 1, 1976

Founder(s): Steve Jobs

: Steve Wozniak

: Ronald Wayne

Type: Public

Industry: Computer Hardware: Computer Software

: Consumer Electronics

: Digital Distribution

Headquarters: Apple Campus, 1 Infinite Loop, Cupertino California, U.S.

Number of locations: 406 retail stores

Area served: Worldwide

Key people(s): Tim Cook (CEO)

: Arthur D. Levinson (Chairman)

: Steve Jobs(Founder, former CEO)

Revenue: US$ 156.508 billion (2012)

Operating income: US$ 055.241 billion (2012)

Net income: US$ 41.733 billion (2012)

Total assets: US$ 176.064 billion (2012) Employees: 80,000 (2013)

Website: Apple.com

Products: -1. Mac

a) MacBook Air

b) MacBook Pro

c) Mac Pro

d) Mac Mini

e) iMac

2. iPad

3. iPad Mini

4. iPod

a) iPod Shuffle

b) iPod Nano

c) iPod Classic

d) iPod Touch

5. iPhone

a) iPhone 4

b) iPhone 4s

c) iPhone 5c

d) iPhone 5s

6. Apple TV

7. iWatch

Softwares: -

1. Safari

2. iPhoto

3. iTunes

4. Facetime

5. Siri

c) Issues Of The Organisation Increasing competition

Apple’s key competitors are Google, Samsung, Microsoft and

many more. Google’s Android has more marketshare than Apple’s

iOS and in the phone making Apple is facing strong competition

from Samsung.

Criticism for Apple maps

Apple launched its Google Maps replacement and while that’s not

much time to overhaul such a massive undertaking. Apple Maps

were a catastrophe as they majority of the times were not accurate

and directed its users or stranded them at some unknown place.

Patent War

d) SWOT Analysis

Strengths Weaknesses

Customer loyalty combined with expanding

closed ecosystem

Apple is a leading innovator in mobile device

technology

Strong financial performance

($10,000,000,000 cash, gross profit margin

43.9% and no debt)

Brand reputation

Retail stores

Strong marketing and advertising teams

High price

Incompatibility with different OS

Decreasing market share

Patent infringements

Further changes in management

Defects of new products

Long-term gross margin decline

Opportunities Threats

High demand of iPad mini and iPhone 5

iTV launch

Emergence of the new provider of application

processors

Growth of tablet and smartphone markets

Obtaining patents through acquisitions

Damages from patent infringements

Strong growth of mobile advertising market

Increasing demand for cloud based services

Rapid technological change

2013 tax increases

Rising pay levels for Foxconn workers

Breached IP rights

Price pressure from Samsung over key

components

Strong dollar

Android OS growth

Competitors moves in online music

market

Opportunities Threats

High demand of iPad mini and iPhone 5

iTV launch

Emergence of the new provider of application processors

Growth of tablet and smartphone markets

Obtaining patents through acquisitions

Damages from patent infringements

Strong growth of mobile advertising market

Increasing demand for cloud based services

Rapid technological change

2013 tax increases

Rising pay levels for Foxconn workers

Breached IP rights

Price pressure from Samsung over key

components

Strong dollar

Android OS growth

Competitors moves in online music market

Strengths

1.Customer loyalty combined with expanding closed ecosystem.

While at first Apple’s closed ecosystem was a weakness for the

business, this has now changed. First, Apple now has a full range of

apps, software and products that are interlinked and support each

other. Second, new products and supplements will be released

soon (iTV), hence expanding the ecosystem. Third, Apple has a

strong customer loyalty, which increases due to Apple’s closed

ecosystem, which, in turn, is supported by customer loyalty. So the

combination of Apple’s expanding closed ecosystem and customers’

loyalty increases firm’s competitive advantage.

2.Apple is a leading innovator in mobile device technology. Apple has

been chosen as the most innovative business in the world for the 3rd

time in 2012. Company’s core competency of producing innovative

products is the strength the company builds upon and is able to bring

the most innovative products to the market.

3.Strong financial performance ($10,000,000,000 cash, gross profit

margin 43.9% and no debt). Apple’s financial performance is one of

the best among many companies. Currently Apple has no debt and is

not directly affected by interest rates or credit markets.

Weaknesses

1. High price. Apple’s products cost much more than its

competitors devices. Some critics argue that the price is not justified.

When there’s such a fierce competition, Apple products price becomes

a weakness because consumers can easily opt for similar quality but

lower price products.

2. Incompatibility with different OS. The iOS and OS X are quite

different from other OS and uses software that is unlike the software

used in Microsoft OS. Due to such differences, both in software and

hardware, users often choose to stay with their accustomed software

and hardware (Microsoft OS and Intel hardware).

3. Decreasing market share. The less market share Apple has, the

less it can influence its potential customers and persuade them to jump

into using Apple’s closed ecosystem products.

Opportunities

1.High demand of iPad mini and iPhone 5. iPad mini sales will

increase Apple’s market share in the tablet market and, will

strengthen firm’s competitive advantage.

2. iTV launch. iTV launch will support Apple TV sales and the

products’ ecosystem.

3.Growth of tablet and smartphone markets. Growth of tablet and

smartphone markets is a good opportunity to expand firm’s share

in these markets.

Threats

1.2013 tax increases. Tax increases in USA in 2013 will negatively

affect Apple.

2.Rising pay levels for Foxconn workers. Pay levels for Foxconn’s

workers already rose 3 times from 2010 to 2012. Foxconn is the

main manufacturer of Apple products and the rising pay level for

Foxconn’s workers will likely raise the prices for Apple products.

3.Breached IP rights. The companies that breach Apple patents

might not be discovered soon and may benefit from it, while

weakening Apple at the same time.

Major players in this field: -

1. Google

2. Microsoft

3. Samsung

1. Google: - o Google Inc. is an American multinational corporation

specializing in Internet-related services and products.

o Google was founded by Larry Page and Sergey Brin while

they were Ph.D. students at Stanford University.

o Vision

Focus on the user and all else will follow.

o Mission

Google’s mission is to organize the world’s information

and make it universally accessible and useful.

2. Microsoft: -o Microsoft Corporation is an American multinational

software corporation headquartered in Redmond,

Washington that develops, manufactures, licenses, and

supports a wide range of products and services related to

computing.

o The company was founded by Bill Gates and Paul Allen on

April 4, 1975. Microsoft is the world's largest software

maker measured by revenues. It is also one of the world's

most valuable companies.

3. Samsung: - o Samsung Group is a South Korean multinational

conglomerate company headquartered in Samsung Town,

Seoul. It comprises numerous subsidiaries and affiliated

businesses, most of them united under the Samsung brand,

and is the largest South Korean chaebol (business

conglomerate).

o Samsung was founded by Lee Byung-chul in 1938 as a

trading company. Over the next three decades the group

diversified into areas including food processing, textiles,

insurance, securities and retail.

o Notable Samsung industrial subsidiaries include Samsung

Electronics (the world's largest information technology

company measured by 2012 revenues, and 4th in market

value).

Chapter-2Research

Methodology

Objectives:-

To analyze the consumer electronics and find the future growth

opportunities. To set up different parameters on the basis of which the

consumer electronics companies will be compared so as to select one best

company. To carry out the company analysis of the selected company and

to suggest whether it is a viable investment option. To look at the

historical performance data of the company and estimate the future

performance of stocks. Looking at this information to gain an insight on

the company s future performance. It is a method of evaluating a security

by attempting to measure its future performance by examining related

economic, financial and other qualitative and quantitative factors. To

estimate a value that an investor can compare with the security's current

price and figure out what sort of position to take with that security.

Scope: -

The scope of this project is limited to only one sector i.e. Consumer

Electronics.

This project is concerned with only one sector of companies in the stock

market. The project does not extend its scope to any other sector of

companies. Source of information for this project is only secondary data.

LIMITATIONS OF THE STUDYSince the road to improvement is never ending, so this study also suffers

from certain limitations. Some of them are as follows:

Scope of project is limited in the sense that only Apple has

been taken for consumer research.

The extent of the survey was New Delhi only. So the

suggestions or arguments given in the report may not hold

true for other locations in India.

Questionnaire method involves some uncertainty of response. Co-

operation on the part of informants, in some cases, was difficult to

presume.

Because of time constraints and reserve constraints, a mix of

convenient sampling and Judgement (Probability & Random)

sampling was used.

Also because of above-mentioned constraints, the sample size

chosen for the survey was 100 people.

RESEARCH METHODOLOGY: -

Research is often described as an active, diligent and systematic process

of inquiry aimed at

Discovering, interpreting and revising facts. This intellectual

investigation produces a greater understanding of events, behaviors or

theories and makes practical applications through laws and theories. The

term research is also used to describe a collection of information about a

particular subject, and is usually associated with science and scientific

method.

BASIC RESEARCH:

Basic research is also called as fundamental or pure research. Its primary

objective is the advancement of knowledge and the theoretical

understanding of the relations among the variables. It is exploratory and

often driven by researcher’s curiosity or interest. It is conducted without

any practical end in mind. Basic research often lays down the foundation

for further applied research.

Chapter-3Analysis Of The

Organisation

Foundation and Incorporation (1970-80) Apple was incorporated January 3, 1977, without Wayne, who sold

his share of the company back to Jobs and Wozniak for $800.

Multi-millionaire Mike Markkula provided essential business

expertise and funding of $250,000 during the incorporation of

Apple.

During the first five years of operations, revenues doubled every

four months, an average growth rate of 700%. The Apple I was

sold as a motherboard, which is less than what is today considered

a complete personal computer. The Apple I went on sale in July

1976 and was market-priced at $666.66 ($2,690 in 2013 dollars,

adjusted for inflation)

The Apple II, also invented by Wozniak, was introduced on April

16, 1977, at the first West Coast Computer FaireIt differed from its

major rivals, the TRS-80 and Commodore PET, due to its character

cell-based color graphics and an open architecture.

While early models used ordinary cassette tapes as storage devices,

they were superseded by the introduction of a 5 1/4 inch floppy

disk drive and interface, the Disk II.

In the end of the 1970s, Apple had a staff of computer designers

and a production line. The company introduced the Apple III in

May 1980 in an attempt to compete with IBM and Microsoft in the

business and corporate computing market.

On December 12, 1980, Apple went public at $22 per share,

generating more capital than any IPO since Ford Motor Company

in 1956 and instantly creating more millionaires (about 300) than

any company in history.

Lisa and Macintosh (1981–85): - Apple began working on the Apple Lisa in 1978. In 1982, Jobs was

pushed from the Lisa team due to infighting. Jobs took over Jeff

Rankin’s low-cost-computer project, the Macintosh. A race broke

out between the Lisa team and the Macintosh team over which

product would ship first.

Lisa won the race in 1983 and became the first personal computer

sold to the public with a GUI, but was a commercial failure due to

its high price tag and limited software titles.

In 1984, Apple next launched the Macintosh. Its debut was

announced by the now famous $1.5 million television commercial

"1984". It was directed by Ridley Scott and was aired during the

third quarter of Super Bowl XVIII on January 22, 1984.

The Macintosh initially sold well, but follow-up sales were not

strong due to its high price and limited range of software titles. The

Macintosh was the first personal computer to be sold without a

programming language at all.

In 1985 a power struggle developed between Jobs and CEO John

Sculley, who had been hired two years earlier. The

Apple board of directors instructed Sculley to "contain" Jobs and

limit his ability to launch expensive forays into untested products.

Rather than submit to Sculley's direction, Jobs attempted to oust

him from his leadership role at Apple.

Decline (1986–97): - During this time Apple experimented with a number of other failed

consumer targeted products including digital cameras, portable CD

audio players, speakers, video consoles, and TV appliances.

Enormous resources were also invested in the problem-plagued

Newton division based on John Sculley's unrealistic market

forecasts.

Ultimately, none of these products helped, as Apple's market share

and stock prices continued to slide. Microsoft continued to gain

market share with Windows focusing on delivering software to

cheap commodity personal computers while Apple was delivering

a richly engineered, but expensive, experience.

Apple relied on high profit margins and never developed a clear

response. Instead, they sued Microsoft for using a graphical user

interface similar to the Apple Lisa in Apple Computer, Inc. v.

Microsoft Corporation. The lawsuit dragged on for years before it

was finally dismissed. At the same time, a series of major product

flops and missed deadlines sullied Apple's reputation, and Sculley

was replaced as CEO by Michael Spindler

In 1996, Michael Spindler was replaced by Gil Amelio as CEO. Gil

Amelio made many changes at Apple, including extensive layoffs.

[64] After numerous failed attempts to improve Mac OS, first with

the Taligent project, then later with Copland and Gershwin, Amelio

chose to purchase NeXT and its NeXTSTEP operating system,

bringing Steve Jobs back to Apple as an advisor.

On July 9, 1997, the board of directors ousted Gil Amelio after

overseeing a three-year record-low stock price and crippling

financial losses. Jobs became the interim CEO and began

restructuring the company's product line.

Return to profitability (1998–2005): On August 15, 1998, Apple introduced a new all-in-one computer

reminiscent of the Macintosh 128K: the iMac. The iMac design

team was led by Jonathan Ive, who would later design the iPod and

the iPhone. The iMac featured modern technology and a unique

design, and sold almost 800,000 units in its first five months.

On May 19, 2001, Apple opened the first official Apple Retail

Stores in Virginia and California. On July 9, they bought Spruce

Technologies, a DVD authoring company. On October 23 of the

same year, Apple announced the iPod portable digital audio player,

and started selling it on November 10. The product was

phenomenally successful — over 100 million units were sold

within six years.

In 2003, Apple's iTunes Store was introduced, offering online

music downloads for $0.99 a song and integration with the iPod.

The service quickly became the market leader in online music

services, with over 5 billion downloads by June 19, 2008.

Transition to Intel (2005–07):- At the Worldwide Developers Conference keynote address on June

6, 2005, Steve Jobs announced that Apple would begin producing

Intel-based Mac computers in 2006. On January 10, 2006, the new

MacBook Pro and iMac became the first Apple computers to use

Intel's Core Duo CPU.

By August 7, 2006 Apple had transitioned the entire Mac product

line to Intel chips, over one year sooner than announced. The

Power Mac, iBook, and PowerBook brands were retired during the

transition; the Mac Pro, MacBook, and MacBook Pro became their

respective successors.

On April 29, 2009, The Wall Street Journal reported that Apple

was building its own team of engineers to design microchips.

Apple introduced Boot Camp to help users install Windows XP or

Windows Vista on their Intel Macs alongside Mac OS X.

Apple's success during this period was evident in its stock price.

Between early 2003 and 2006, the price of Apple's stock increased

more than tenfold, from around $6 per share (split-adjusted) to over

$80. I

n January 2006, Apple's market cap surpassed that of Dell. Nine

years prior, Dell's CEO Michael Dell said that if he ran Apple he

would "shut it down and give the money back to the shareholders."

Although Apple's market share in computers had grown, it

remained far behind competitors using Microsoft Windows, with

only about 8% of desktops and laptops in the US.

Widespread success (2007–11):- Apple achieved widespread success with its iPhone, iPod Touch

and iPad products, which introduced innovations in mobile phones,

portable music players and personal computers respectively. In

addition, the implementation of a store for the purchase of software

applications represented a new business model.

Touch screens had been invented and seen in mobile devices

before, but Apple was the first to achieve mass-market adoption of

such a user interface that included particular pre-programmed

touch gestures.

On April 2, 2007, Apple and EMI jointly announced the removal of

DRM technology from EMI's catalog in the iTunes Store, effective

in May, Other record labels followed later that year.

Post–Steve Jobs era (2011–present):- In June 2011, Steve Jobs surprisingly took the stage and unveiled

iCloud, an online storage and syncing service for music, photos,

files and software which replaced MobileMe, Apple's previous

attempt at content syncing.

Apple has achieved such efficiency in its supply chain that the

company operates as a monopsony (one buyer, many sellers), in

that it can dictate terms to its suppliers.

On August 20, 2012, Apple's rising stock rose the company's value

to a world-record $624 billion. This beat the non-inflation-adjusted

record for market capitalization set by Microsoft in 1999. On

August 24, 2012, a US jury ruled that Samsung should pay Apple

$1.05 billion (£665m) in damages in an intellectual property

lawsuit.

In March 2013, Apple announced a patent for an augmented reality

(AR) system that can identify objects in a live video stream and

present information corresponding to these objects through a

computer-generated information layer overlaid on top of the real-

world image.

Chapter-4Findings &

Recommendations

Findings:-

Apple cannot market iPhones in Brazil because another company

owns the trademark.

The Brazilian telecommunications company IGM Electronica owns

the brand Gradiente, which filed for exclusive rights to the name

“iPhone” in 2000, before Apple had produced its iPhone. It took

seven years but eventually the rights were granted, and the G-

Gradiente iPhone was launched in 2007.

According the Financial Post, Apple Inc. grew richer than Uncle

Sam, having more cash on hand than the entire U.S. had spending

room. This was due to the debt ceiling crisis of July 2011. Apple

Inc. boasted cash reserves of $75.88 billion while Washington had

an operating balance of $73.77 billion.

A major difference, however, is that Apple’s figure refers to its

reserve of cash, the government’s value is the amount of spending

room it has before reaching an arbitrary debt ceiling.

Apple now has the highest market value of any private company in

the world. Apple once had more cash in the bank than the US

Treasury had money to spend.Apple Inc. is sitting at $416.6 billion.

Exxon-Mobile is second at $400.4 billion.

Apple has more than 300 stores in 11 countries, and its retail

division has become a hugely important part of the company's

business, selling millions of iPods, Macs, iPhones, and iPads.

Recommendations:-

Scale up its production capabilities.

Every time Apple releases a hot new gadget, customers can't get it. This

is a consequence of Apple's legendarily precise just-in-time

manufacturing system. Apple never wants to make more devices than it

will sell, so it ramps up manufacturing in lock step with demand. That

reduces its inventory costs and thus boosts its profit, but Apple's

production is still too slow to keep up with instant spikes in demand. Is it

possible for Apple to build products any faster than it does now? If

money is no object, sure: It could set up factories in many different

countries and it could invest in next-generation production capabilities

that might pump out iPhones even faster (for instance, robotic assembly

lines, which have the added benefit of not raising any concerns about

factory conditions).

Build or buy a cellular carrier.

The iPhone is Apple's biggest product, but Apple sells almost all of its

phones in partnership with carriers whose prices it doesn't control. Those

costs are the biggest piece of a smartphone purchase, and, in the U.S. and

many other places around the world, they have remained relatively stable

for years. Your cellular carrier's technology and customer service also

leave a lot to be desired. Steve Jobs once said that Apple's goal is to "own

and control the primary technology in everything we do." Cellular data

service is a key such technology, and Apple should make it a goal to own

and improve that service. It could start small, building infrastructure that

boosts iPhone service in congested cities, but with enough investments it

could build a network of its own, thus improving current carriers' service

and prices through competition.

High demand of iPad mini and iPhone 5. iPad mini sales will increase Apple’s market share in the tablet market

and, will strengthen firm’s competitive advantage.

iTV launch.

iTV launch will support Apple TV sales and the products’ ecosystem.

Growth of tablet and smartphone markets. Growth of tablet and smartphone markets is a good opportunity to expand

firm’s share in these markets.

Bibliography

1. http://en.wikipedia.org/wiki/Apple_Inc.2. http://www.strategicmanagementinsight.com/swot-

analyses/apple-swot-analysis.htm

3. http://www.forbes.com/companies/apple/

4. http://www.strategicmanagementinsight.com/swot-

analyses/apple-swot-analysis.html

Books:-

1.Steve Jobs by Walter Isaacson