Business profile
Apple Inc was formerly known as Apple computer, Inc and was founded in 1976. A multinational electronic corporation is based in the United States of America with its headquarters based in California Cupertino. It was then incorporated in 1977 as Apple computers, Inc a year after foundation. Apple Inc manufactures electronics, and computers and computer software. Some of the products that have placed Apple Inc in the limelight throughout the world include the Mac computers, the iPhone Smartphone, the iPod music player and the iPad computer tablet. Others include the iOS and OSX operating systems as well as the safari and iTunes website browse (Linzmayer 23). Due to the unique revolutionary products that have been developed by Apple Inc, the company is now among the most admired company in the world in particular the United States. In fact, only Samsung electronics that ranks higher than Apple Inc in the information technology industry throughout the world.
Apple sells its products through retail outlets and online store. Worldwide, Apple Inc has over 408 outlets that are found in more than fourteen countries. Moreover, Apple Inc joined the top ten lists of the fortune 500 companies in the world. It was placed number six in Jan 2013 up 11 places from the previous ranking in the year 2012 (Linzmayer 27). Its total revenue for the year 2012 totaled $156 billion with the total worth of the company estimated at about $414 billion as at January 2013. The company has been ranked second in share trading throughout the world. It has also become a major employer creating over 72,000 fulltime and permanent jobs and over 3,000 part-time employees throughout the world.
Steve Jobs, Ronald Wayne and Steve Wozniak founded Apple Inc in 1975. The company was founded with an objective of selling the Apple 1 computer kit that had been designed by Wozniak. These computer kits were hand built and were presented to the public for the first time at homebrew computer club. It is important to note that Steve Jobs and Steve Wozniak had met in the UC Berkeley and the Reed College. Both of them dropped out of school. The two had developed a working relationship as Wozniak allowed Jobs to work with him in designing boxes that made it possible for the two to make long distance calls for free. The two had also sold some of these boxes to consumers. The Apple 1 computer that was designed by Wozniak in 1976 had neither power supply nor a keyboard. To start the company, Job and Wozniak had to sell their two most valuable assets, a van and a calculator. Selling these assets raised $1,300, which was used to set-up the company (Linzmayer 45). They first worked in Jobs garage. Job and Wozniak sold 50 Apple 1 computers to a local supplier before making a further 200 sales to a computer hobbyist in the same year. Each computer was sold at $666. Later in the same year, Wozniak started to work on the Apple 11 that was premeditated to appeal to the larger market instead of just selling to computer hobbyist. Due to the revolutionary idea of the two partners, they hired computer enthusiasts. Most of those hired were still in school. Their work was mainly to design software and assemble circuit boards. Jobs also decided to change to computer housing from the traditionally metal boxes to a much presentable plastic casing (Warmate-Igwe 1).
Jobs always wanted to make the company big and therefore consulted a retired electronics engineer Mike Markkula. Mike had previously worked as a marketing manager for Intel Corporation. Mike helped Jobs to come-up with a business plan and also bought a third of Apple Inc for about $250,000. He also brought in Mike Scott to work as the president of the company. Wozniak continued to work as a full time engineer in Apple Inc. In order to bolster sales in the company, Jobs employed Regis McKenna who was a successful public relations manager at the Silicon valley. His role was to come up with an effective advertising strategy for Apple Inc. He is the one who designed the company logo and begun the advertisement of the personal computers using the consumer magazines. The Apple marketing team was instrumental in its growth and acceptance within the industry. By the end of June 1977, the annual Apple 11 sales reached an impressive $1million mark (FundingUniverse 8). The revolutionary technology was also evident as Apple 11 was the first computer to ever use color graphics and be able to use a television set for a computer screen. The revolutionary and creative products made by the Apple Inc made the company to perform well and better than their competitors. For example, the use of an expansion slot for Apple 11 made the computer more versatile in comparison to the other computers that were being made at that time. To boost its competitive ability, Wozniak developed the apple 11 Disk 11 to replace the cassette tapes that were being used to store information and read in the initial Apple 11 computer as well as the other computers that were being made by the other companies. The company then went on to make several other innovations that has pushed the company up to where it is today. In 1979, the Apple 11+ was invented. It had a much bigger memory and was easier to start-up. Additionally, the Apple FORTRAN was introduced in the year 1980, and later on several other innovative products like the Apple 111, Imac, iPad, iPhone, iTunes have emerged. This has seen the company rise to being one of the biggest players with the electronic and mobile industry (FundingUniverse 1).
Apple Inc went public in the year 1980 with an initial offer of 4.6 million shares that were trading at $22 per share. The shares were totally sold-out within few minutes. In 1981, a second share offer of 2.6 million shares was floated. Just like in the previous occasion, all the shares were quickly sold out within some few minutes. By the end of the year 1980, Apple had shown signs of breaking in to the office market that had been dominated by IBM. However, the company success was not without challenges and struggles (FundingUniverse 8). To begin with, a power struggle within the company led to job being stripped off all his duties in 1985. This was after a disagreement ensued between him and Scullery. Therefore, Job who was by this time acting as the chairman of the Apple Inc lost control of the company and subsequently resigned from the company. In bitterness and show of defiance for the treatment he got from directors, Jobs sold 6.6 million shares and remained with only one share. He sold his shares at about470 million. Jobs used the money he got to acquire Pixar for about$5 million and also acquired NeXT Inc. both companies became a success
Under Scullery leadership, Apple continued to rise and in 1987, the company issued its inaugural corporate stock divided. In June 1987, the Apple share stock also split. The company also acquired other companies between the year 1988 and 1989. The companies acquired during this period include Neshoba Systems, style ware and Orion network Systems. Thus, Amiga and Atari were Apple’s main competitors in the 1980s but the IBM PC became a major competitor to the Apple products in the 1990s. The competitive ability of the IBM PC was as a result of the development of the windows 3.0 (FundingUniverse 1). Apple however responded to the competition by making various innovations that includes the various lines of Macintosh. These innovations included the Quadra, perfoma and Centris. Jobs presence was now felt as the marketing of these products were not done rightly. The management of the company was also starting to fall and Apple was now being considered as one of the poorly run company within the industry. This hurt the company’s growth and development with some of its retailers failing to sell or even display their products. Even though the Apple products were much cheaper and user friendly, poor marketing led to the impression that the products were of poor quality and much more expensive as compared to the products of its competitors (LinzMayer 43).
In 1991, Apple entered into a partnership deal with its main competitor in the PC industry IBM. They formed the AIM alliance that wanted to make a revolutionary computing platform the Preo. The system would use the Apple software on the Motorola and IBM hardware. This forced Apple to rewrite some of its software in order to make them usable in Emulation (Warmate-Igwe 1). Even though, Apple refused an offer from IBM to sell them the company. Though the company continued to make revolutionary products like the Palm pilot, pocket Pc and the Newton, its growth rate slowed down since the departure of Jobs. Meanwhile, Jobs was continuing with the rebuilding of NeXT Company.
In 1996, Apple purchased NeXT”s operating system. And in December, Apple bought NeXT from Steve Jobs. This brought Steve Jobs back to the company he founded and the NeXT became the operating system of the Mac OSX. During the same year, the company introduced the Apple Store that formed the web based selling point of the Apple products (Warmate-Igwe 11). Moreover, Gil Amelio who had been acting as the CEO of the Apple Inc was replaced by the board in July 1997. Steve Jobs was appointed to spearhead the restructuring of the company and its product line using his innovative and revolutionary leadership skills. Steve jobs worked as the CEO until August 2011 when he resigned from the position.
It was during the tenure of Steve that Apple Inc entered in to a deal with Microsoft (LinzMayer 52). Microsoft gave Apple $150million and committed itself to releasing a Microsoft for the Macintosh. The deal also agreed to settle a long-standing dispute concerning Apples patents rights that Microsoft had been claimed to have infringed upon. Internet explorer was also to be shipped in as the default browser for the Macintosh. Before resignation, Steve had managed to bring back the company in to a strong growth and showing in the market with the company having a 2.46 billion market capping. The quarterly revenues for the previous quarter stood at $1.7 billion and the company had a cash reserve of about $1.2 billion.
The table below shows Apple performance for the last five quarters
(source: https://www.google.com/finance?fstype=ii&q=nasdaq:aapl)
Organizational structure
The below picture represents the organizational chart of Apple Inc
(source: http://www.google.com/imgres?imgurl=http://mediaserver.pulse2.com/uploads/2011/08/Screen-shot-2011-08-25-at-5.04.56-AM.png&imgrefurl=http://pulse2.com/2011/08/25/apple-publishes-new-organizational-chart/&usg=__6lrxoO6_Id_-Ms0ANj6AGdpgo0s=&h=628&w=506&sz=247&hl=en&start=1&sig2=waI6IyWtJWXDi0cp8RAPPw&zoom=1&tbnid=yCyeUSvb0YatIM:&tbnh=137&tbnw=110&ei=eib6UbyrHYSaO6zCgLAI&itbs=1&sa=X&ved=0CC8QrQMwAA)
N.B. Steve Jobs has since been replaced as a director following his death in 2011.
FINANCIAL STATUS
Apple is the second largest seller of Smart phone in the world
Worldwide Smartphone Sales to End Users by Operating System in 4Q12 (Thousands of Units)
(source: http://www.gartner.com/newsroom/id/2335616)
In the mobile phone sales, Apple ranks third after Samsung and Nokia respectively
Worldwide Mobile Phone Sales to End Users by Vendor in 2012 (Thousands of Units)
(source: http://www.gartner.com/newsroom/id/2335616)
Business analysis
Apple Inc can be termed as one of the prime companies throughout the world. Apple Inc has its main strength, weakness, opportunities and threats as shown by the below SWOT analysis chart.
SWOT ANALYSIS
As indicated in the chart above, Apple Inc achieves its success fueled by the quality of the goods it produces. Most of their products have a powerful brand and therefore are able to create customer loyalty. The company also has a long standing history that draws customers to its products (LinzMayer 47). However, the company sells its products at a much higher cost than those of its competitors like Samsung. The company is also rigid in its approach to the use of software, as most of its products cannot be run under other software. If the company is to continue with its upward trend, it has to fully take advantage of the rising demand for tablets and smart phones as well as the rising integration of Smartphone with Mac are by corporate. Also, Apple does have some threats facing their hold on the market (Warmate-Igwe 18). The company faces direct completion by companies who are also making cheaper and customized smart phones.
Based on the company’s performance in the industry, Apple Inc can be termed as an organization with a strong human, economic and cultural base that supports its growth. The company has now set a strong customer base that a loyal to its products. In the past, the company has been able to withstand both economic and managerial challenges and stand strong. Furthermore, the company can now be said to be facing various challenges that may challenge its growth and development (Warmate-Igwe 31). Some of the challenges the company now faces include
- Precedent
- Direct completion
- Global economic changes
- Departure of Steve Jobs
- The challenge of variety and exclusivity
Precedent
Since its inception, Apple Inc has been able to lay a strong and consistent precedent that is defined by success, quality products and substantial margins. The company is therefore expected to continue with this trend. Though it is possible to do so, the company has to deal with the challenge of high expectations from economic analysis, consumers and the market at large. The smart phone industry has over the past years been dominated by Apple Inc; this is a precedent the company has to challenge on all fronts to maintain. Thus, the precedent set by early company leaders is also a major challenge that will face the company over the next couple of years. The culture that they set in and outside the company is such high that the current leaders are sometimes regarded as not being able to cope with.
Direct Competition
Competition is a challenge that the company has been able to handle well since it was founded. Not many competitors have been outdoing Apple Inc over the years as its products have been termed as being innovative and revolutionary. Nevertheless, apple faces stiff competition from Android smart phones currently. Besides, the current trends show that more Android smart phones were sold as compared to the iphones in the year 2012. Adroid smart phones accounted for about 48% of the total Smartphone market share. However, Apple remains the biggest Smartphone manufacturer. This is because smart phones that runs on android are made by different companies while those running on Apple software are only manufactured by Appl. Samsung has continued to raise its market share and can now be termed as a major competitor that Apple is going to face over the next years (Nielson 1).
Cheap Smartphone are also a threat that is facing Apple. Currently apple has the most expensive Smartphone. Cheap Smartphone especially from China have emerged and are also becoming popular in the market. This is a challenge that Apple has to overcome in order to retain its large market share.
Global economic changes
Economic changes affect every business. Even though apple has a large reserve that can act as a cushion for any global economic decline, the cost of its products and the emergence of cheaper alternatives might make its competitive ability to decline. If economic wellbeing of the consumers goes down, Apple could face a challenge in competing with companies offering cheap products especially in the third world and developing countries.
Departure of Steve Jobs
Since the departure and subsequent demise of the Apple Inc founder, subsequent leadership has been viewed as unable enough to replace him. Though Tim Cook is qualified and experienced enough to take the company to greater heights, he will face the challenge of trying to assert himself and his leadership ability in the company for some years to come.
The challenge of variety and exclusivity
Currently, there are over seventy android phones in the United States of America. They are suited to personalized lifestyle that also meets mobile phone needs. In contrast, there are very few Apple Smart phones. This is a challenge that Apple has to overcome in order to be able to effectively retain the lion share of the market as it has done in the past.
Strategic objective to be implemented
The Apple Inc mission states that "Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software (Nielson 8). Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced iPad 2, which is defining the future of mobile media and computing devices." It shows that Apple has always been determined to make revolutionary products that will make the company be at the helm of the technology industry. To effectively achieve this, a new strategic objective of improving competitiveness should be adapted. This is to enhance the company’s competiveness especially in the smart phone industry that is being threatened by its competitors.
In line with the current performance of the company in relation to the industry, I propose a change of the mission statement to “maintaining market share through innovation and enhanced competitiveness” this new mission statement will ensure that the company focuses on maintaining its market share in all fields of operation (Gartner 34). It will also ensure that the strategic objectives employed will be aimed at dealing with the rising completion rather than continually making new products and losing its market share.
Recommendations
Increasing competiveness will also require that Apple boosts its distribution channel and retail service. This will make its product reach more people and corporate. Apple should also consider making its OS available for use by other hardware providers. This is what has made Android use more prominent that the Apple OS.
Some of the urgent steps that need to be taken
Step 1
Changing the mission of the organization to “maintaining market share through innovation and enhanced competitiveness” in order to reflect the current state of affairs. This should be done as soon as possible to ensure that the company continues to enjoy its market share on the smart phone industry that is being threatened.
Step 2
Communicating the desired change of mission to all the stakeholders involved. This will ensure that all the stakeholders are part of the revolution that will drive change and enhance competitiveness
Step 3
Put in place new strategic objectives that ensures competitiveness through diverse product line on the smart phone industry as well as improving the product delivery, marketing and pricing
Works Cited
FundingUniverse, "History of Apple Computer, Inc. – FundingUniverse." Find Funding with Banks, Investors, and Other Funding Sources | FundingUniverse. N.p., n.d. Web. 1 Aug. 2013. <http://www.fundinguniverse.com/company-histories/apple-computer-inc- history/>.
Gartner, "Gartner Says Worldwide Mobile Phone Sales Declined 1.7 Percent in 2012." Technology Research | Gartner Inc..n.d. Web. 1 Aug. 2013. <http://www.gartner.com/newsroom/id/2335616>.
Linzmayer, Owen W.. "Apple Confidential 2.0: The Definitive History of the World's Most Colorful - Owen W. Linzmayer - Google Books." Google Books. N.p., n.d. Web. 1 Aug. 2013. <http://books.google.co.ke/books?id=mXnw5tM8QRwC&printsec=frontcover&dq=history+of+Apple+pdf&hl=en&sa=X&ei=Iiz6UaCvMYOS4ASEs4CgBw&redir_esc=y#v=onepage&q=history%20of%20Apple%20pdf&f=false>.
Warmate-Igwe, Naomi. " Apple Inc.: Comparing The Company’s Performance In The Last Three Fiscal Third Quarter Periods - AAPL, BIDU, QCOM - Foolish Blogging Network ." The Motley Fool. N.p., n.d. Web. 1 Aug. 2013. <http://beta.fool.com/chizy/2013/07/26/apple-inc-comparing-the-companys-performance-in-th/41638/>.
