Apple Matrik Space

8/13/2019 Apple Matrik Space

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Apple Inc.

Team Members:

Dimitriadis SavvasGazis Nikolaos

Koukou Katerina

Teterina Xenia


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Case Abstract

Apple Inc., originally Apple Computer, Inc., is an American multinational

corporation headquartered in California that designs, develops, and sells consumer

electronics, computer software and personal computers. The company was founded on April1, 1976, and incorporated on January 3, 1977. The word "Computer" was removed from its

name on January 9, 2007, to reflect its shifted focus towards consumer electronics. Its best-

known hardware products are the Mac line of computers, the iPod, the iPhone and the iPad.

Its software includes the OSX and iOS operating systems, iCloud, the iTunes media

browser, the iLife and iWorkcreativity and production suites.

Apple is the world's third-largest mobile 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 widespread

criticism for its contractors' labor practices, and for its environmental and business

practices. As of August 2012, Apple has 393 retail stores in fourteen countries as well as the

online Apple Store and iTunes Store. It is the largest publicly-traded corporation in the

world by market capitalization, with an estimated value of US$626 billion as of September

2012. The Apple market cap is larger than that of Google and Microsoft combined. As of

September 24, 2011, the company had 60,400 permanent full-time employees and 2,900

temporary full-time employees worldwide; its worldwide annual revenue in 2010 totaled

$65 billion, growing to $108 billion in 2011.


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Vision Statement

Webelieve that we are on the face of the earth to make great productsand that's not changing. We are constantly focusing on innovating. We

believe in the simple not the complex. We believe that we need to ownand control the primary technologies behind the products that we make,and participate only in markets where we can make a significant

contribution. We believe in saying no to thousands of projects, so thatwe can really focus on the few that are truly important and meaningfulto us. We believe in deep collaboration and cross-pollination of ourgroups, which allow us to innovate in a way that others cannot. Andfrankly, we don't settle for anything less than excellence in every groupin the company, and we have the self-honesty to admit when we'rewrong and the courage to change. And regardless of who is in what jobthose values are so embedded in this company that Apple will doextremely well.

Timothy D. Cook

Apples CEO


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Mission Statement

Apple designs Macs, the best personal computers in the world, along with OS X,

iLife, iWork and professional software. Apple leads the digital music revolutionwith its iPods and iTunes online store. Apple has reinvented the mobile phone with

its revolutionary iPhone and App Store, and is defining the future of mobile media

and computing devices with iPad.


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EFE Matrix

Opportunities Weight Rating Weighted

Score

1 Global smartphone market is on fire 0,10 4 0,40

2 Increase in worms and viruses on PCs so the antivirus solution can

be developed by Apple0,05 4 0,20

3 Possible ventures with other companies 0,02 2 0,04

4 Downloadable music and MP3 players are highly marketable 0,02 2 0,04

5 The online computers sales is rapidly increasing 0,04 3 0.12

6 The laptop and tablet market growth is high 0,07 3 0.21

7 Constant growth of PC and mobile phone industry 0,05 4 0.20

8 Huge untapped market to expand to 0,07 3 0,21

9 Growing demand for internet music and other online programs

(cloud based services)0,02 2 0,04

10 Robust outlook for mobile advertising market 0,05 3 0,15

11 Strong growth in smartphone segment. 0,07 3 0,21

12 Open market in gaming console industry to compete with PS3 and

Xbox0,01 1 0.01

13 Growing market of Green and energy efficient products 0,01 2 0.02

The worldwide smartphones

market segment is forecast to

record strong growth in

coming years. The shipments

for smartphones are expected

to exceed 400 million globally.

The number is expected to

reach approximately 850

million by the end of 2013.

Apple is the third largest

player in the smart phonemarket segment in the US

since launching its first mobile

device, iPhone, in 2007.

The demand for tablets is

increasing over the years.Globally, tablet shipments are

expected to touch 150 million

units by 2013. Apple launched

the iPad in January 2010. In

FY2010, the iPad generated $5

billion in revenues andshowed unit sales of 7.5

million. In the first quarter of

2011, iPad sales were 7.33

million.

Global smartphone market is on fire

The laptop and tablet

market growth is high


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Threats Weight Rating Weighted

Score

1 Economic recession can have a significant negative effect on the

company due to higher prices of its products0,09 2 0,18

2 Rising popularity of Google Android and Windows ecosystems in

the mobile and tablet space 0,06 2 0,12

3 Intense competition from Dell, HP, Sony and Toshiba0,03 2 0,06

4 Dependence on specific suppliers 0,02 2 0,04

5 Companies not seeing Apple as compatible with their software 0,04 1 0,04

6 Downloading free music from other online source without paying

cost is common it may impact the iTunes sales0,02 1 0.02

7 Microsoft launched Microsoft Windows 7 and 8 which are gaining

market share

0,05 2 0.10

8 The growing tablet market is competing with ipad0,02 3 0,06

9 Apple is involved in several legal actions 0,06 3 0,18

10 High product substitution0,03 2 0,06

TOTAL 1,00 2.71

Increasing popularity of Android may affect

the attractiveness of Apples iOS affecting the

market share o

f Apple. The Google Android

operating system (OS) for smartphone is

gaining rapid popularity. With the acquisition

of Android Inc. in 2005, and the subsequentlaunch of Googles mobile OS Android

changed the competitive landscape of

smartphone business globally. Moreover, the

online application store for Android

applications Android Market is growing at a

rapid pace. The Android Market currently

offers approximately 250,000 apps, comparedto 350,000 offered by Apples App Store,

although Android has been a late entrant in the

market.

Rising popularity of Google

Android and Windows ecosystems

in the mobile and tablet space

Apple is involved in several

legal actions

Apple is involved in several legal

actions, including lawsuits alleging

patent infringement and antitrust

violations. Many of the suits are from

smaller companies, but notable plaintiffs

include Nokia. These lawsuits present a

threat because of the possibility of

unfavorable judgments and the ongoing

costs associated with legal defenses.


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IFE MatrixStrengths Weight Rating Weighted Score

1 iTunes Music Store is an excellent source of revenue, especially with the

iPod and the accessibility on Windows platform. 0,03 3 0,09

2 Apple Computers have good brand loyalty and image by setting high

standards for quality and use.0,09 4 0,36

3 Partnership with Intel Computers in 2006Present (Intel's

microprocessors)0,04 2 0,08

4 Strong Research & Development Department driving innovation, creating

its own software (free of viruses) and hardware 0,10 4 0,40

5 Creators of high tech technology such as iphone or imac 0.07 4 0.28

6 Holds 5% market share and is 4thlargest player in mobile phone market. 0.08 3 0.16

7 18.5% market share of global smartphone market 0.09 3 0.27

8 Robust financial performance. (strengthens investors confidence and

provides capital for future growth avenues)

Low debtmore maneuverable.0.08 4 0.32

9 Entering into new product lines ex: Laptops to iPhones and iPads 0,03 3 0,09

10 Excellent distribution network globally to make its products accessible

online and stores0.04 4 0.16

11 The iOS has given it a lead as compare to its competitors 0.02 3 0.06

Apple has a strong focus on research and

development (R&D) as continual

investment in R&D is critical for the

development and enhancement of

innovative products and technologies. In

addition to evolving its PCs and related

solutions, the company continues tocapitalize on the convergence of the PC,

digital consumer electronics and mobile

communications by creating and

refining innovations, such as

the iPod, iPhone, iTunes Store, Apple

TV and iPad. The companys R&D

expenditure was $1,782 million, $1,333

million and $1,109 million in FY2010,

2009 and 2008, respectively. The

companys research and development

spending is focused on further

developing its existing Mac line of

personal computers.

Strong Research & Development

Department driving innovation, creating

its own software (free of viruses) and

hardware

Strong brand image provides an edge over

regional and global competitors. The

Apple brand is well recognized among

most consumers. Apples products enjoy a

high level of brand awareness and brand

recognition throughout all its markets.

This is evident with the rapid sales of new

Apple launches. For instance, net sales

of iPad and related products and services

was $5 billion and unit sales of iPad were

7.5 million during 2010

Apple Computers have good brand

loyalty and image by setting high

standards for quality and use.


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Weaknesses Weight AS TAS AS TAS AS TAS

1Weak relationship with Microsoft. (low product

compatibility)0,05 0 0,00 0 0,00 0 0,00

2Apples market share is far behind from major

competitor Microsoft.0,07 0 0,00 3 0,21 2 0,14

3Its high priced products and accessories make them

inaccessible to many of customers0,04 3 0,12 2 0,08 4 0,16

4

It has less presence in B2B market, as compare to its

competitors like Dell and HP. It can be seen that Apple

mainly focuses on B2C so its losing large chunk of

market

0,03 0 0,00 0 0,00 0 0,00

5Comes without expandable memory and the battery is

fixed (in mobile products)0,01 0 0,00 0 0,00 0 0,00

6 Former CEO Steve Jobs died 0,04 3 0,12 1 0,04 0 0,00

7 Coming off of the failure of two items apple tv andmac mini 0,02 3 0,06 0 0,00 0 0,00

8 Patent infringement. 0,02 1 0,02 0 0,00 0 0,00

9Not shareholder friendly (did not declare or pay cash

dividends in either 2011 or 2010)0,04 0 0,00 0 0,00 1 0,04

10 Product recalls. 0,01 2 0,02 0 0,00 0 0,00

TOTAL 2,36 2,10 3,02

Apples market share is

far behind from major

competitor Microsoft.

Patent infringement

lawsuit may affect

financial condition and

operating results. The

company is involved in

legal complaints relating

to patent infringement.

For example, in January

2010, Nokia filed a

revised suit againstApple with the US

International Trade

Commission (ITC),

alleging that Apple has

infringedNokiaspatent

s in almost all of itsmobile phones,

portable music players,

and computers.

Patent infringement.


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Competitive Profile Matrix

CPM Apple Microsoft Dell Samsung Nokia

Critical Success factors

Weight Rating Score Rating Score Rating Score Rating Score Rating Score

Store Locations 0,10 4 0,40 3 0,30 2 0,20 2 0,20 3 0,30

Financial profit 0,12 4 0,48 4 0,48 2 0,24 2 0,24 2 0,24

Consumer loyalty 0,10 4 0,40 2 0,20 2 0,20 3 0,30 3 0,30

Market penetration 0,11 3 0,33 4 0,44 2 0,22 4 0,44 3 0,33

Advertising 0,07 3 0,21 4 0,28 2 0,14 3 0,21 3 0,21

Product variety 0,09 2 0,18 3 0,27 3 0,27 4 0,36 4 0,36

Market Share 0,11 2 0,22 4 0,44 2 0,22 3 0,33 3 0,33

Product quality 0,08 4 0,32 3 0,24 4 0,32 3 0,24 2 0,16

Price competitiveness 0,10 1 0,10 3 0,30 3 0,30 3 0,30 4 0,40

e-commerce 0,06 4 0,24 4 0,24 2 0,12 2 0,12 1 0,06

Employee dedication 0,06 4 0,24 3 0,18 3 0,18 2 0,12 3 0,18

Totals 1,00 3,12 3,33 2,41 2,86 2,87


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Financial Ratio Analysis

Apples Annual Report indicates that its business industry is Computer Hardware

and its sector is technology. Yet, many analysis consider Apple as being a direct

competitor with other hardware manufacturers such as Hewlett-Packard and even

Google, yet there is no comparison between Apple and other phone-related

manufacturers or devices, through 38% of its business is driven by iPhone and

related products. So, such competitors like Samsung or Nokia, should be stronglyconsidered due to the fact that they run its businesses in the same field. This usually

happens and is always a challenge when companies have wide product lines with a

different marketing mix in each line, like Apple which both belongs to the industry

of Computer Hardware and Telecommunication Services.


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Ratios Apple Google HP Industry

Market Cap 498.3 174.48 89.80 320.58

% Qtrly Rev Growth 82.70 26.60 3.60 24.30

$ Revenue 108.249 31.12 127.16 87.45

%Gross Margin 39.07 64.97 24.14 39.07

$ EBITDA 36.02 12.16 18.25 26.73

%Operating_Margin 29.02 34.35 10.49 31.92

$ Net Income 25.92 8.85 9.12 N/A

$ EPS 27.68 27.29 3.92 20.99

Employees 46,600 26,316 324,600 100,300

Price / Earnings 11.9 20.1 -4.9 13.6

Dividend yield% 1.0 N/A 3.9 1.3



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Ratios APPLE DELL HP SAMSUNG GOOGLE INDUSTRY

Profitability Ratios

Gross Margin (%) 40,05 22,3 24,14 25,2 64,97 39,07

Operating Margin(%)

29,02 5,6 10,49 9,7 34,35 31,92

Return on Assets (%) 27,07 6,9 -4,7 8,93 11,8 8,03

Return on equity (%) 41,67 41,86 19,8 11,89 15,5 23,9

EBIT Margin (%) 35,6 6,4 -3,1 N/A 28,1 16,75

Leverage 1,5 4,5 3,7 N/A 1,3 2,75

Liquidity Ratios

Current Ratio 1.61 1,49 1,1 1,46 3,9 1,9

Quick Ratio 1,35 1,26 0,6 0,72 3,7 1,5

Working Capital per

share ($)20.32 7.44 2.7 N/A 128.99 38.9

Other Ratios

Earnings per share 27.68 3.49 3.21 48.03 6.53 15.5

Receivable Turnover 19.9 9.97 6.1 7.60 7.0 10.1

Assets Turnover 1.1 1.4 1.0 1.2 0.6 1.06

Interest Coverage 15.6 15.6 N/A N/A 161.1 64



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Financial Year 2012 2011 2010 2009 2008

Earnings per share

($)44.15 27.68 15.15 6.29 9.08

Profit Margin (%) 26.67 23.95 21.48 19.19 14.88

Return on equity(%)

42.84 41.67 35.28 31.27 27.19

Return on Assets(%)

23.70 22.28 18.64 17.34 12.22

Price per sales 3.50 2.92 3.20 2.5 4.41

Price per Earnings 11.89 12.31 15.10 19.04 30.17

Price to book ValueRatio

4.16 4.12 4.37 3.39 6.81

Book Value pershare ($)

126.1 82.64 52.31 35.32 23.74

Gross Margin (%) 43.9 40.5 34.4 40.1 34.3

Operating Income($ mil)

55,241 33,792 18,387 11,744 6,271

Operating Margin(%)

35.3 31.2 28.2 27.4 19.3

Assets Turnover 1.07 1.13 1.06 0.99 1.00


The table below shows some financial statement data for Apple during the last five years

0

5

10

15

20

25

30

35

40

45

50

2008 2009 2010 2011 2012

Return on Equity

Gross Margin

Operating Margin

Return on Assets

Trend of Apples basic ratios during 08-12


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Below are provided the most important determinants of the organization overall strategic position.SPACE MATRIX

Internal Analysis

Competitive Position (CP)

External Analysis

Industry Position (IP)

Market Share -6 Profit Potential 6

Product Variety -2 Growth Potential 6Product quality -1 Financial Stability 5

Customer loyalty -1 Resource Utilization 5

Control over suppliers and distributors -3

Competitive Position (CP) Average -2,6 Industry Position (IP) Average 5,5

Market share: Apple has a very low market share according

to S&P industry survey for 2009

Product variety: Apple offers a wide range of technological

products, including iPads, iPods, iPhones, iTunes, PCs and

more. Apple is perhaps the best known first mover

company ever, as the firm has a 35-year history of being the

first to introduce blockbuster, successful new products.Product quality: Apple meanly focuses on its products quality

using the most recent technologies and innovations

Costumer loyalty: The i-halo effect has been synonymous

with Apple for the last years. In basic terms its definition is

customers who buy an i-product, become hooked on Apples

products and their ease of use.

Control over suppliers and distributors: Apple already has a

very efficient network of distributors and suppliers andintents to develop it further

Profit potential: today Apples profit potential is at the same

level as industry but according to the trend observed from

2008-2012 it shows that Apple will soon exceed the industry

Growth potential: demand in computer hardware products is

expected to increase

Financial stability: Apple has minimum long-term debts andliabilities that shows its financial stability

Resource Utilization: Apple makes reasonable management

of its human and material resources


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SPACE MATRIX

After illustrating the SPACE

Matrix it is obvious that the

company should follow

aggressive strategies. This

means that Apple should

implement backward, forward,

horizontal integration, as well

as market penetration, market

development, product

development and diversification

(related or unrelated).

XX5,5 + (-2,6) = 2,9

YY5,8 + (-3,5) = 2,3

(X,Y) = (2,9 , 2,3)

i


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QSPM: Quantitative Strategic Planning Matrix

It determines the relative attractiveness of various strategic alternatives

Create a new

game console

(strong R&D

department)

Acquire Red

Hat Linux

or/and Maxtor

or Western

Digital

Develop newproduct lines in

China andIndia

Opportunities Weight AS TAS AS TAS AS TAS

1 Global smartphone market is on fire 0,10 0 0,00 0 0,00 2 0,20

2Increase in worms and viruses on PCs so the antivirus

solution can be developed by Apple0,05 0 0,00 4 0,20 0 0,00

3 Possible ventures with other companies 0,02 4 0,08 3 0,06 1 0,02

4Downloadable music and MP3 players are highly

marketable

0,02 2 0,04 0 0,00 0 0,00

5 The online computers sales is rapidly increasing 0,04 0 0,00 3 0,12 0 0,00

6 The laptop market growth is high 0,07 0 0,00 3 0,21 2 0,14

7 Constant growth of PC and mobile phone industry 0,05 0 0,00 1 0,05 4 0,20

8 Huge untapped market to expand to 0,07 2 0,14 0 0,00 4 0,28

9 Growing demand for internet music and other onlineprograms (cloud based services)

0,02 3 0,06 0 0,00 0 0,00

10 Robust outlook for mobile advertising market 0,05 0 0,00 0 0,00 0 0,00

11 Strong growth in smartphone segment. 0,07 0 0,00 0 0,00 2 0,14

12Open market in gaming console industry to compete with

PS3 and Xbox0,01 4 0,04 0 0,00 0 0,00

13 Growing market of Green and energy efficient products 0,01 0 0,00 0 0,00 1 0,01

A i R d


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Create a new

game console

(strong R&D

department)

Acquire Red

Hat Linux

or/and Maxtor

or Western

Digital


China andIndia

Threats Weight AS TAS AS TAS AS TAS

1Economic recession can have a significant negative effect

on the company due to higher prices of its products0,09 2 0,18 3 0,27 4 1

2Rising popularity of Google Android and Windows

ecosystems in the mobile and tablet space0,06 0 0,00 2 0,12 0 2

3 Intense competition from Dell, HP, Sony and Toshiba 0,03 3 0,09 2 0,06 4 3

4 Dependence on specific suppliers 0,02 0 0,00 1 0,02 3 4

5Companies not seeing Apple as compatible with their

software0,04 3 0,12 2 0,08 0 5

6Downloading free music from other online source without

paying cost is common it may impact the iTunes sales0,02 0 0,00 0 0,00 0 6

7Microsoft launched Microsoft Windows 7 and 8 which are

gaining market share0,05 0 0,00 2 0,10 0 7

8 The growing tablet market is competing with ipad 0,02 0 0,00 0 0,00 0 8

9 Apple is involved in several legal actions 0,06 0 0,00 0 0,00 0 9

10 High product substitution 0,03 1 0,03 0 0,00 3 10

Acquire Red


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Create a new

game console

(strong R&D

department)

Acquire Red

Hat Linux

or/and Maxtor

or Western

Digital


China andIndia

Strengths Weight AS TAS AS TAS AS TAS

1 iTunes Music Store is an excellent source of revenue, especiallywith the iPod and the accessibility on Windows platform.

0,03 0 0,00 0 0,00 0 1

2Apple Computers have good brand loyalty and image by setting

high standards for quality and use.0,09 2 0,18 0 0,00 0 2

3Partnership with Intel Computers in 2006Present (Intel's

microprocessors)0,04 1 0,04 3 0,12 2 3

4Strong Research & Development Department drivinginnovation, creating its own software (free of viruses) and

hardware

0,10 4 0,40 2 0,20 1 4

5 Creators of high tech technology such as iphone or imac 0.07 2 0,14 0 0,00 0 5

6Holds 5% market share and is 4thlargest player in mobile phone

market.0.08 0 0,00 0 0,00 2 6

7 18.5% market share of global smartphone market 0.09 0 0,00 0 0,00 2 7

8

Robust financial performance. (strengthens investors

confidence and provides capital for future growth avenues)

Low debtmore maneuverable.

0.08 3 0,24 2 0,16 4 8

9Entering into new product lines ex: Laptops to iPhones and

iPads0,03 4 0,12 0 0,00 2 9

10

Excellent distribution network globally to make its products

accessible online and stores 0.04 3 0,12 0 0,00 4 10

11 The iOS has iven it a lead as com are to its com etitors 0.02 0 0,00 0 0,00 0 11

A i R d


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TOTAL 2,36 2,10 3,02



Create a new

game console

(strong R&D

department)

Acquire Red

Hat Linux

or/and Maxtor

or Western

Digital


China andIndia

Weaknesses Weight AS TAS AS TAS AS TAS

1Weak relationship with Microsoft. (low product

compatibility)0,05 0 0,00 0 0,00 0 0,00

2Apples market share is far behind from major competitor

Microsoft.0,07 0 0,00 3 0,21 2 0,14

3Its high priced products and accessories make them

inaccessible to many of customers0,04 3 0,12 2 0,08 4 0,16

4

It has less presence in B2B market, as compare to its

competitors like Dell and HP. It can be seen that Apple

mainly focuses on B2C so its losing large chunk of market

0,03 0 0,00 0 0,00 0 0,00

5Comes without expandable memory and the battery is fixed

(in mobile products)0,01 0 0,00 0 0,00 0 0,00

6 Former CEO Steve Jobs died 0,04 3 0,12 1 0,04 0 0,00

7Coming off of the failure of two items apple tv and mac

mini0,02 3 0,06 0 0,00 0 0,00

8 Patent infringement. 0,02 1 0,02 0 0,00 0 0,00

9Not shareholder friendly (did not declare or pay cash

dividends in either 2011 or 2010)0,04 0 0,00 0 0,00 1 0,04

10 Product recalls. 0,01 2 0,02 0 0,00 0 0,00


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Develop new product lines in China and India

This strategy aims to handle the high cost structure of products, as well

as to expand the product lines, which is a major opportunity. By establishing

new product lines in China and India, Apple will implement its high

technological competencies, which combined with the low labor cost of

China and India, will manage to reduce the overpricing of its products and

will gain a competitive advantage among other companies.

Apple has to focus on the global market, and both China and India are

two of the most populated countries in the world and they are experiencing

lately, increased use of computers and computer technology products. The

economies of the said countries are rapidly improving with more disposable

income than ever before.

Currently, all of Asia, accounts for about 5% of Apples total revenue;

however, with more advertising and focus on China and India, can be fullyexploited because the market has no prejudices yet. If tapped properly, these

two countries can provide significant revenues for Apple in the future. This

is the alternative strategy that should be followed by Apple among the other

two, due to the highest total attractive score it took, at the QSPM process.


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Epilogue

Apple, is arguably the most successful company ever in many respects.

But there are major financial risks with being the premier first mover in any

industry. Rival firms across the globe are getting better and better at quickly

duplicating successful Apple products and offering them at lower prices.

Success of Apples iPad, iPhone and Macs new versions, helped Apple toreplace Microsoft as the worlds most valuable technology company in 2010.

Apple thinks that there is yet room for improvement, to substitute the

already created wonders.

Innovation never stops.


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Apple Matrik Space

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