Name of Company

April 15, 2019 Critical Thinking

Name of Company: Apple Inc
Your Name: Christopher
Course: BOH4M
Date: 5.23.2018
Business Report
By Christopher Liu
1. Introduction:
The story of Apple was about three guy Steve Jobs, Steve Wozniak, and Ronald Wayne who established the company together in April 1976. In December 1980, the Apple went to public, then in January 1984, Apple Macintosh was released to the public and achieved big success. In 1985, Steve Jobs was expelled by Apple due to power struggle, but he came back to Apple in 1997. After that, there were series of products was launched by Apple, iMac (1998), iPod 3(2003), iPhone and iPodtouch (2007), iPad(4.6.2010) and iPhone 4(6.8.2010). In August 2011, Apple’s market value exceeded XOM (Exxon Mobil) and became the biggest Listed company around world. Unfortunately, Steve Jobs ended his extraordinary life in October 2011. Then, Tim Cook became the new CEO of Apple and launched only one new and impressive product Apple Watch in 2015. In 2016 and 2017, Apple was the world’s top 500 company and ranked ninth. Recently, Apple is the world’s top 500 company and ranked fourth in May 12, 2018
Nowadays, Apple’s world corporate headquarters are located at 1 Infinite Loop, Cupertino, CA, 95014. As of 2016, Apple Computer Company was operating brick-and-mortar retail stores in more than 18 different countries around the world, which mainly located in the USA, Canada, Australia and China. However, Apple was operating 23 additional Internet retail shopping websites around the world as of January 2016. As of 2017, the total number of Apple employees had reached more than 123 thousand (only counting full-time equivalent).
Moreover, the products were provided by Apple are usually are electronic devices such as iMac, iPhone, iPod, iPad and Apple Watch, which are all famous around world. It is not only due to the quality of products is extraordinary but also Apple spends a lot of money on advertisement to publicity. The services were provided by Apple are iTunes (all-in-one digital music program), iCloud (cloud storage), iOS (Apple’s own software system) and App Store (Download Apps), which are all considered as internet service and information service.
Last but not the least, Apple’s target market is not about a type of group such as young people or business. Apple thinks their customers have some same characteristics and points, which is a premium market with household income around $100k/year, aged 18 – 35 (roughly half of all Apple users are under 34), users are typically more creative than analytical, corporations still tend to lean towards PCs, high-end buyers in high-end shopping centers, users looking for simplicity and users who want an all in one system (phone, computer, tablet, etc). In order to follow the trend of world economy, Apple has finally come up with an idea of what to do with all of the cash it has on hand. According to the company, it will initiate both dividends and a stock-buyback program to reward investors for staying loyal over the years.

2. Mission Statement:Apple’s current mission statement is “Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. I think this statement is really excellent, and Apple has been already working on it. It’s clearly to show that Apple wants to create some new technologies for benefiting the human kind. Apple wants to people work and live in a more convenient way. For example, new edition of Apple Watch has been able to replace most of functions of the smartphone, which means that we may can just take watch as a smartphone to use. I think that’s really beneficial to our lives.

3. Corporate Culture/value:
1. Moderate Combativeness. Apple’s organizational culture has moderate combativeness. This feature is linked to Steve Jobs and his combative approach to leadership. (give employees competitive work environment to motivate them but not stressful)
2. We believe that we’re on the face of the Earth to make great products. (Make great quality product for customers)
3. We participate only in markets where we can make a significant contribution. (Make contribution to the society and promote economic development)
4. PEST Analysis:
PEST analysis shows that on political and legal, the Apple is limited a lot by both of local policy and foreign policy. Therefore, in this point, Apple faces some disadvantages, which needs Apple to seriously deal with them. In the economical, the increases of labour cost and exchange rates causes the Apple’s products rise the prices and economic downturn will also let Apple’s sales decrease. In the social, Apple needs to deal with different cultures and customs, once Apple is inclined to one certain region, Apple will lose some customers in other countries. In the technological, Apple will have a lot of competitors such as Google and Samsung in the future market. Moreover, the fast development of technology is both of opportunity and threat. If Apple can firstly introduce their new and progressive product, Apple will be an invincible position in the future market. However, if they cannot do that, Apple will definitely lose too much which I even cannot predict. Therefore, high income with high risks can be a good description for the future technology market.

Political and Legal
1. Apple strongly rely on lower cost manufacturing in China. (limited by Chinese government policy)
2. An increase in US corporate taxes.
3. Apple’s manufacturing and markets depend on China, which makes Apple is vulnerable to political unrest in China.

4. Apple could become the target of growing nationalism and anti-Americanism in China, which could decrease its market share.

Economical
1. Increasing of labor costs in China could rise the expense of Apple’s products.

2. Slow developing middle-class incomes in some developed countries, such as the United States, could decrease the potential market spaces for higher-end consumer goods such as iPhone and iPad made by Apple.

3. The strong U.S. dollar could increase exchange rates, which will increase the expenses for Apple to manage business in some markets like Europe and China.

Social
1. Lack the strong emotional loyalty to Apple products around young people, which drives sales of Apple.

2. Apple’s music marketing strategy has created resentment which causes some public criticism from major recording starts, company’s picture could be stained.

3. Apple has close association with China, which could indirectly lose some potential clients in other regions, such as North America and Europe.

Technological
1. Competitors such as Google and Samsung have showed a strong ability to duplicate Apple’s products and services. A lot of Apple’s signature services and products are no longer unique and special.

2. Apple’s own developing operating system can limit the various applications being available to iPhone’s users.

3. Increasing use of cellphones and tablets will decrease demand of Apple’s computer (iMac).

5. SWOT Analysis:
SWOT Analysis shows us how Apple really good at and what are their weaknesses. Firstly, Apple is one of largest Listed company in the world, there is no doubts that Apple has great capability on advertising, brand loyalty and cash flow. However, they cannot update their products timely and less sale channels in India, which will cause Apple will gradually lose competitive right in the future market. The opportunities of Apple will be the expansion and development of internet and mobile in the future, which means once Apple can successfully produce more advanced products, Apple can take many advantages in the future market. Unfortunately, more and more competitive market environment and some issues on Apple’s products now will bury a serious hidden danger for Apple in the future. Therefore, Apple must firstly solve the issues on their products and develop their products timely, which is the only way to avoid threats in the future.

Strengths (Internal factor supports company to development)
1. Advertising capabilities, which can improve brand awareness and create huge demand for the company’s products
2. Strong and extensive distribution channels in the USA.

3. Vertical integration
4. Brand awareness and reputation
5. Stable financial performance with one of the strongest cash flows Weaknesses (Internal factor reduces company performance)
1. Overdependence on iPhone sales
2. Less distribution channels in India
3. Low investment on research and development, compared with other companies causes fewer innovations and advanced products, which can be released to the market.

4. Incompatibility with other operating system.

Opportunities (External factor promotes the growth of business and gains more profits)
1. The Internet of Things (IoT) market will grow significantly over the next decade
2. Health-related wearable accessory could be released to the market in the future.

3. Expanding mobile payments market
4. The mobile enterprise app market will be more thriving, because more businesses toward buying subscription-based software. Threats (External factor usually lower business performance and hamper the growth of business.)
1. More intensive competition puts more pressure on market, will decrease the profits and sales of Apple.

2. Strong U.S. dollar
3. Lawsuits over patent infringements will decrease brand reputation
4. Risk of data breaches
6. Porter’s Five Force:
Threat of New Entrants (The threat of a new organization entering the industry is high when it is easy for an organization to enter the industry):
I think there is a high possibility that there are some company are threats to Apple. For example, Google has introduced its smartphones which can be good choice for the consumers who cannot afford Apple products(iPhone). Even Amazon also provides competing product like Kindle and their own smartphone Fire. Another point, there are a lot of Chinese smartphone brands also provides good quality smartphone with less costly than iPhone. Therefore, Apple will faces serious threats in the future market, the market share of Apple is facing big challenge now.

Bargaining Power of Suppliers (How easy it is for suppliers to drive up prices):
I think there is a low possibility that Apple could be jeopardized by suppliers increasing their prices which in effect will make your company’s product higher. In fact, Apple has managed a complex chain of suppliers that are spread globally over several nations including US, China, Taiwan, Japan, Brazil, Mexico and several other small and big nations. Due to the large numbers of supplier, the ability of bargaining is extremely limited. Otherwise, the products of Apple cannot develop entirely by any individual supplier. For example, the core is from the USA, screen is from Korea and assembled by China. By the way, suppliers also do not want to lose own their business collaboration with Apple (a huge global company), so the threat of integration by suppliers has no way to be real. Therefore, the ability of bargaining for supplier is very slight and Apple has their own absolute decision right, which means Apple would not increase the prices of their products due to suppliers.

Bargaining Power of Buyers (The cost to them of switching from your products and services to those of someone else.):
I think there is a moderate possibility that buyers will look somewhere for the product considering consumers are always looking for better pricing and differentiation of products. While the bargaining power of individual customers in the case of Apple or its competitors is low, it is not so in the case of customer groups or markets. For example, Apple has lost huge market share on Asian computer market to their competitors such as Lenovo. Therefore, Apple started to devote to create new and unique products to deal with these threats. However, following the social media sites on the internet, consumers may easily excess more information about other competing companies, so the clout of customers has increased and the clout of Apple has decreased. One important point which is beneficial for Apple is brand loyalty, which causes the sales of iPhone has increased. Based on all these factors, we can consider that the ability of bargaining for customers is moderate, in this point Apple and Apple’s customers have nearly same right.

Threat of Substitutes (The ability of your customers to find a different way of doing what you do):
I think there is a moderate possibility for Apple product line being easily substituted with something else. Actually, this threat has kept growing for Apple over time, because there are some brands are continuously to grow in smartphone market such as Huawei and Vivo (China), which have already introduced low to mid-priced smartphones. Although, the brand loyalty of Apple is very high, but Google and Samsung also have their own products with high-efficient and attractive design, which creates some potential threats to Apple. Another point, the brand loyal has also continuously decreased little by little in other foreign countries, and Apple has barely no solutions or methods to prevent. The only way to deal with this situation is creating more powerful and unique product than other competitors. Therefore, I consider the possibility of threat of substitutes is moderate or even higher (not too much).

7. BCG Matrix:

iPhone and Apple Watch
iPhone is old series of products to Apple. However, it still has plenty potential growth space. Among the manufacturers of smartphone, Apple has been ranked at the second position, which directly indicate that iPhone has high market share. Due to some sale mistakes of Apple on international market, the sales of iPhone dropped, especially in China. However, iPhone can be continuously developed for the future of smartphone market. At least, iPhone cannot be old-fashion for a long time due to the unique iOS system. According to Hahn (2015), Apple watch is likely to hold a main position in the wearable accessory industry in future. The future belongs artificial intelligence, as the important key to the future. Since smart watch market is growing and booming, the smart watch can could be considered as the Star.

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iMac
Since iMac was released by Apple, it never held a dominant position in the market of PC industry. In 2016, the sales of iMac have declined significantly. The old competitors such as Lenovo seems constantly lead first on this field. If Apple’ s management level cannot come up with a good idea, the series of iMac products may fail in the near future. However, once Apple could have huge breakthrough on iMac product, it still can become a new star product for Apple. Therefore, iMac was pointed as question mark by me.

iTunes
iTunes can be considered as the cash cow for Apple. The iTunes allows the customers to have access to digital music files and download them. Although there are different portals which offer the customers access to digital music. However, iTunes still has a main position in the industry. Based on Bostic (2013), Apple has attained more than 60 percent of the market share. In 2012, there are 44 million people in the US have gained access to a minimum of one digital music file per person, which directly shows how popular it was. The digital music industry is in a mature phase, so iTunes can continuously earn money for Apple Inc. -476252286000
iPod
iPod can be considered as dog for Apple. iPod had become the popular product for a long time in the past time. However, due to the development of technology which directly causes the change of market. iPod has become less and less popular than before, and the sales of iPod has clear decreasing now. iPod had made a lot of profits for apple in last few years, when it was first launched by Apple. Taking these two factors into consideration, Apple can stop to invest more on this product, because it barely has chance to bring further growth chance for Apple. That’s why I think iPod is a dog product for Apple now.

8. Conclusion:
Based on what I mentioned above, I think Apple should be more innovative and creative in the future. Since there are a lot of competitors have appeared now, it will cause more competitive market environment in the future. If Apple wants to stand out from these competitors, being unique and creating extraordinary products will be the only way to be successful. Therefore, as for the company, Apple must make some changes on strategies. According to Pest Analysis, Apple should be close with China to lower the expenses on producing their product. Apple also should pay more attention to Africa zone, because Africa is new place for all brands smart to enter. If Apple can firstly take advantage on this region, it will bring unpredictable profits for Apple. Another important is investing more on the exploration of new products, which is the only way to defeat the biggest competitors Google and Samsung. According to SWOT analysis, Apple has high brand loyalty, and the needs of technology market in the future, which gives a plenty growth space for Apple. However, due to less channels to distribute to India and strong US dollars, the profits of Apple seem has decreased a lot. Therefore, Apple shouldn’t invest more on European Market and put more attention on India market. Based on Porters Five Forces, I think Apple shouldn’t pay more attention to the new entrants. In the contrast, Apple needs to focus on how defeat old and strong competitors such as Google and Samsung by developing greater products or providing greater service. Based on BCG Matrix, I think Apple can use the money which was earn by iTunes (cash cow) to invest on iPhone and Apple Watch (Star) for competing with others in the future market. Once these two products were firstly updated by Apple, Apple can directly take dominant position in the future market for a long time and also can have extra money to invest one iMac (question mark) for becoming a new star to Apple. The iPod (dog) should be abandoned immediately, it is not for erasing the possibility of lose but also for saving money to invest on other potential products. I believe that if Apple can put these suggestions into practices right now, it will not only let Apple to stay competitive in the future, but also have huge opportunities to monopoly the future market.
9. Corporate Social Responsibility:
Website information?
Apple corporate social responsibility (CSR) programs and initiatives are led by Lisa Jackson, Vice President of Environmental Initiatives, reporting directly to CEO Tim Cook. There are some points and data can display that Apple always contributes to environment and social charity.

Environment:
Apple offers recycling programs in 99 percent of the countries. Apple used these programs has diverted more than 508 million pounds of electronic waste from landfills since 2008.
Apple always devotes on saving resource and recycling for responding sustainable development plan of USA.
In 2015, more than 99% of Apple product packaging was done from recycled paper or papers, which were all from sustainably managed forests.
Apple is working with more than 160 recycling companies around the world and it collected nearly 90 million pounds of e-waste through its recycling programs in 2015.
Apple launched Clean Water Program in 2013 and since more than 8 billion gallons of water have been saved by suppliers
Cooling systems in company’s date centres can reuse water up to 35 times
In 2015, the company converted about 120,000 square feet of previously grass lawns to drought-tolerant landscape, translating to estimated water savings of up to 6 million gallons per year.

Social:
Apple Supporting Local Communities: Global Volunteer Program’ was launched in 2011 to encourage employees to volunteer in local communities.
Since its launch more than USD 78 billion was donated to charities and non-profits around the world.

The program has been revised in March 2015 to grant employees the right to choose the projects in their local communities they would like to contribute.

Apple other CSR Initiatives and Charitable Donations:
The company has planted more than 9000 drought-tolerant trees in Apple Park in Cupertino
In 2017 Apple donated USD 1 million to Southern California Wildfire Recovery Efforts
The multinational technology company raised more than USD 3 million for Hurricane Harvey Relief Efforts in August 2017.

My analysis:
Summary:
These points and information on the website directly display that Apple is not only a company which bring the technology to people and promote the economic development in the world, but also make their own great efforts for the human future and philanthropy. I think that Apple has gone ahead on corporate social responsibility than other companies. However, I still want to give some my own recommendations to Apple on corporate social responsibility in the future. If Apple can donate some money on the development of new medicine or public healthcare, it will push the Apple’s reputation into the top level. Therefore, Apple will not only can gain more profits in the future market, but also can leave unforgotten memories on human history. That’s the way how a wonderful and large company looks like.10. Bibliography:
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10. Pratap, A. (2018). Apple Five Forces analysis (Based on Porter’s 5 Forces model). online cheshnotes. Available at: https://www.cheshnotes.com/2017/02/porters-five-forces-analysis-of-apple-inc/ Accessed 23 May 2018.

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