An Assessment of Apple’s Global Performance Essay

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1. ) How would you measure Apple’s recent ( last 3 old ages ) planetary public presentation?

Apple’s last three year’s of fiscal public presentation are “OK”… non dramatic but possibly declarative of great things to come. After a rather hapless twelvemonth in 2001 for which “global economic conditions” is listed as the cause in their 2001 SEC filings ( Apple.com accessed through the www.apple.com web site, 2002 through 2004 have shown consistent net incomes, albeit non particularly big 1s. The twelvemonth prior, 2000, was possibly the last twelvemonth that the “bubble” as it has came to be known was still integral. With this position, Apple or any other company in the computing machine or engineering concern, enjoyed far larger net incomes in during the late 1990’s. The terminal of this epoch is best marked by the events of 9-11 though the foundation of the bursting of this bubble had been laid long earlier through the now celebrated words of Alan Greenspan, in which he indicated the bubble was caused by the “irrational exuberance” of continued US and other stock market additions.

In the period since the ‘bubble bursting’ , Apple has seen important additions in gross revenues. Apple has seen additions in gross revenues of about 11 % in both 2003 and 2002. In add-on, 2004 marked a twelvemonth in which additions of over 30 % were seen over the twelvemonth prior.

Apple Computer –

2000-2004 Abbreviated Income Statements

2004

2003

2002

2001

2000

Domestic

$ 4,893

$ 3,636

$ 3,272

$ 2,936

$ 4,146

International

$ 3,386

$ 2,581

$ 2,470

$ 2,427

$ 3,827

Net Income

$ 8,279

$ 6,217

$ 5,742

$ 5,363

$ 7,973

Cost of Gross saless

$ 6,020

$ 4,499

$ 4,139

$ 4,128

$ 5,817

R & A ; D

$ 489

$ 471

$ 446

$ 430

$ 380

All Other

$ 1,494

$ 1,178

$ 1,092

$ 830

$ 990

Entire Expenses

$ 8,003

$ 6,148

$ 5,677

$ 5,388

$ 7,187

Internet

$ 276

$ 69

$ 65

– $ 25

$ 786

Key Statisticss

2004

2003

2002

2001

2000

ROA

4 %

1 %

1 %

13 %

Roe

6 %

2 %

2 %

22 %

Indexed Comparison of Gross saless Growth to Expense Growth – 2000-2004

2004

2003

2002

2001

2000

Gross saless %

1.04

0.78

0.72

0.67

1.00

COS %

1.03

0.77

0.71

0.71

1.00

100.34 %

100.82 %

101.22 %

94.79 %

100.00 %

Gross saless is non the lone step of fiscal public presentation as any addition in gross revenues must besides be weighed against the extent to which disbursals besides rose. In the tabular array above, labeled “Indexed Comparison of Gross saless Growth to Expense Growth” , it is evident that income is so lifting faster than disbursals. Though thisisgood intelligence, a possible job is that they are merely liftingsomewhatfaster than disbursals. Such as scenario is potentially hazardous. By running a sensitiveness analysis, it becomes evident that a 4-5 % addition in the cost of goods sold ( COS ) entirely would make an twelvemonth of losingss. In add-on, were other disbursals such as forces costs were to see an addition, there is even less of a border for tolerance in addition in the cost of goods sold.

Extenuating the slightly lower borders that one would anticipate, particularly given the Apple value proposition of “innovation/product differentiation” , is the capacity for making value that Apple possesses. This is reflecting in the operating statement as over three times the net income in 2004 as the old twelvemonth. These net incomes are mostly the consequence of the turning love and captivation for the iPod and its brethren, the iPod Mini and, in 2005, the iPod Shuffle. While something of an stray music interface, the turning success of the iPod bodes good for the full company based upon non merely swerve gross revenues but the fact that 19 % of those who try/buy an iPod “go Mac” and do the switch from a PC-based system ( hypertext transfer protocol: //www.forbes.com/business/businesstech/2005/03/18/0318automarketscan10.html ) .

In decision, while many of the fiscal prosodies indicate that Apple’s public presentation over the past three old ages has non been leading, there are indexs in the fiscal study such as increasing gross revenues, continued investing into R & A ; D for the “next thing” every bit good as a stock that late had a split and a P/E ratio of 65 that lead one to the rational decision that Apple is on the manner to even brighter yearss.

2. ) Evaluate the resources ( possessed/controlled ) by Apple. Which, if any, could be considered strategic? Justify your reply.

There are a figure of potentially profitable resources possessed or controlled by Apple. In sing which of these are strategic, that is, which are a beginning ofsustainablecompetitory advantage, it is utile to first consider and specify the standards for such as factor. First, to be considered sustainable, the resource must such that is lasting and non needfully the more ephemeral “economic rents” . In the instance that the resource Department of Energy produce short-run gross by a agencies such as invention, in a house with a sustainable beginning of such advanced procedures that created the specific merchandise should be considered to hold a “sustainable” beginning of competitory advantage.

Another agency of measuring resources is to find is they arerare. By this, it is meant that resources that are non scarce can non be a beginning of advantage as, by definition, everybody would hold it.

Additionally, a sustainable resource should besides beinimitable, that is hard to copy of reproduce. A man-made agencies of accomplishing this is through patents, hallmarks or right of first publications. Other agencies to bring forth ‘hard to imitate’ resources would include any other “exclusive” procedure, geographically convenient location or similar.

Finally, the last making of competitory advantage is that most areorganisationalin nature. A specific leader may be magnetic but persons are capable ‘getting hit traversing the road’ . Groups or squads that work together or develop procedures are much difficult to emulate and the indefinite lifetime of the corporate organisation can be put to good usage.

In consideration of these factor, Apple possesses a figure of assets that qualify as being strategic in nature. One such resource is the organization’s civilization. Many beginnings will mention the now-infamous corporate cliche of early in Apple’s history when a plagiarist flag flew at site where the MacIntosh was being developed in the early-mid 1980’s. This represents a important facet of the civilization at Apple. Basically, they viewed themselves as “mankind’s merely hope” to a great calculating experience. This was reinforced by one of the most memorable SuperBowl commercials of all time when, in 1984, Apple presented and Orwellian scene in which everyone was reduced to being kindred to a “PC clone” and the hero of world colorfully bursts into the scene to bespeak that there is a ‘choice’ . This friendly, advanced civilization that produced the first GUI ( in writing user interface ) that everlastingly changed the manner we expect to interact with computing machines is the same civilization that produced the iPod household that is taking the success of today’s Apple.

Another factor that should be considered to be strategic is the engineering of Apple. Not merely that they are ‘high-technology’ computing machines but the patented and proprietary systems for which they are known. Though Apple may be a distant 2nd topographic point to the Windows-Intel Personal computer market leader, maintain in head that, harmonizing to Steve Jobs, Apple CEO and co-founder:

…Apple is the lone Personal computer company left that makes the whole doodad – hardware and software… we own one of merely two high-volume runing systems in the universe. Everyone wholly overlooks this. Microsoft has come to believe that offering an operating system is like publishing money. Well, Dell can’t print money. Compaq can’t print money. But, Apple can publish money( Yoffe & A ; Kwak 1999, p. 14 ).

An plus that should beconsideredto be strategic CEO and co-founder Steve Jobs. While he could, theoretically, by hit by a train at any minute ( and that is what makes his choice questionable ) , he has non merely served to assist get down the company but basically came back to run the company after a twine of other main executives. His accomplishments are legendary and possibly no 1 has as great of an involvement in maintaining Apple as a traveling concern as does he. At the really least, he is akeyplus that is strategic in nature is merely do to his ability to keep the civilization that he helped to make.

In add-on, one must see what Appledoes. They are both merchandise pioneers and makers but possibly what they are best known for is “user interfaces” . Whether it is the first “GUI” , the click-wheel of an iPod or the close fact that Apple computing machines “don’t crash” , Apple seems to convey the computing machine to people instead than coercing people to come to the computing machine. While apparently merely semantic, there are distinguishable beginnings of competitory assets in bothwhatandhowApple goes to market.

Though one can place the beginnings of sustained competitory advantage, one can non to the full deploy them unless there is a coincident apprehension of the competitory environment in which the company operates. By using Porter’s “five forces” theoretical account, a thorough scrutiny of the context the house competes in can be had. Listed below are each of the “five forces” and brief remarks sing the contemporary Apple:

  • Menace of New Entrants– In the field of computing machines or runing systems, Microsoft has such a domination that this is extremely improbable. Despite this domination, runing systems such as MacOS X and Linux have a ‘niche with potential’ . In the sphere of music devices such as the iPod, there are presently a host of “me-too” participants that seek to emulate the easy to utilize interface and first-mover advantage enjoyed by the Apple merchandises.
  • Menace of Potential Substitutes– This is a enormous beginning of competitory force per unit area as in respects to hardware and package, Microsoft and the assorted hardware manufacturers/distributors such as Dell, HP, IBM, and Gateway among others are all “computers” every bit far as the functional user is concerned. Further, for the most portion, the “PC” rivals have much lower entry monetary value points to accomplish “having a computer” , albeit with much less manner and assuredness that one might bask with an Apple merchandise.
  • Dickering Power of Suppliers– This competitory force exerts comparatively small force per unit area as Apple is significantly vertically integrated.
  • Dickering Power of Buyers– As most purchasers are single consumers, this is a comparatively undistinguished influence. Regardless, the cyberspace has become the voice of the market place in which one client, satisfied or otherwise, has wield a important influence.
  • Competitive Competition– This isreallyimportant force despite Apple holding a less than 5 % market portion. As it ever has, Apple sees itself as possibly a lone holdout, maintaining the populace from absolute laterality from the inferior experience of PC’s.

In drumhead, Apple possesses a figure of cardinal strategic resources yet is presently limited in their successful deployment in the market place, chiefly due to the utmost competitory force per unit area that exist in a Windows/PC dominated market. Continued development of the resources which are true beginnings of competitory advantage can merely better Apple’s place.

  1. On a visit to an Apple shop in London, you find yourself stuck in the lift with Steve Jobs. The applied scientist says you will hold to wait 10 proceedingss before they can acquire the lift to work once more. Based on your analysis of the above two inquiries, what would your remarks be to Steve? Your aim is to be offered a extremely paid consultancy function. Ten proceedingss are the equivalent to one side of an A4 ( 500 words ) – guarantee you do non transcend this bound.

A Nonreversible Conversation in an Elevator with Steve Jobs… .

Funny that we should be stuck here for a bit…I have, along with a few spouses, late completed a spot of a survey on Apple and it truly dawned on me that a large portion of the Apple success narrative is [ and continues to be ] that Apple does non concentrate onwhatto make but insteadhowto make it.

Apple systematically takes the undertakings that people are passionate about and reworks that passion from a forced techno-mechanical interface into thefloworchannelthat it can be.

For illustration: Personal computer computer science and the MacIntosh… what it is compared to what it can be… . CD’s, wireless, music hearing, the same narrative with the iPod.

If I were to be Steve Jobs for the next… 8 proceedingss and state you about my two latest merchandises, FlA? and Gruv, I want YOU to state me what you see… . What do these merchandises do? How do they assist people “flow” and “groove” ? What is it that people donowthat they need some aid with? What “flows” and “grooves” that YOU can interface with engineering to do better? Possibly more intense? Longer? Faster? What do you see? How can these merchandises work together? Can they work with the iPod? The Mac?

The bottom line is that FlA? and Gruv already exist… likely in the heads of your employees. They are already there… they merely need to acquire out. As you know, “the Apple way” , your people and what you’ve already done are your greatest strategic assets. These are the 1s that are capable of giving your Apple and border. “Edge”… another product… it already exists excessively. You tell me, what do you believe “the Edge” does? Where does it suit in your life? Can it suit in your pocket? Does it pass on with FlA? and Gruv?

By now, you get the thought. I would wish to run into with a group of your employees and be a portion of the squad to assist maintain the universe from being assimilated into mindless Microsoft ringers. I think that within two hebdomads, I would be able to sketch to you precisely what needs to be done. With a spot longer than that, I could state you whatcan nonbe done and so you could work on that besides.

Annotated Plants Consulted

www.apple.com. Accessed March 25, 2005. [ Utilized to acquire current merchandise information and many links to assorted facts and figure including 2000-2004 cardinal fiscal steps ]

“Apple’s 2001 Annual Report ( AAPL 10-K405 9/29/2001 ) ” .

hypertext transfer protocol: //www.snl.com/interactive/html.asp? F=1488798.HTML & A ; T=AAPL & A ; Y=10 % 2DK405 & A ; D=9 % 2F29 % 2F2001 & A ; S=1 & A ; V=DMZ1 # sequence1. Accessed March 25, 2005. [ A nice retrospective expression at THE twelvemonth with hapless financial public presentation ]

hypertext transfer protocol: //finance.yahoo.com/q/ks? s=AAPL. Accessed March 25, 2005. [ Current stock monetary values and assorted fiscal information ]

hypertext transfer protocol: //www.forbes.com/finance/mktguideapps/compinfo/CompanyTearsheet.jhtml? tkr=AAPL. Accessed March 25, 2005. [ Current stock monetary values and assorted fiscal information ]

“Apple Could Grow Global Personal computer Market Share To 5 % In 2005” . hypertext transfer protocol: //www.forbes.com/business/businesstech/2005/03/18/0318automarketscan10.html. Accessed March 25, 2005. [ A good overview of Apple’s planetary competitory state of affairs ]

Porter, M. ( 1985 ) .Competitive Scheme: Techniques for Analyzing Industries and Rivals. The Free Imperativeness: Boston, Massuchusetts.

“Pirate Flag” . hypertext transfer protocol: //www.folklore.org/StoryView.py? project=Macintosh & A ; story=Pirate_Flag.txt. Accessed March 25, 2005. [ The narrative of the MacIntosh squad and the Pirate Flag ]

Yoffe, D. and M. Kwak. ( 1999 ) . “Apple Computer 1999” .Harvard Business School Case Study, ( 9-799-108 ). Harvard Business School Publishing: Boston, Massachusetts.

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