Business Analysis of Apple, Inc, Research Paper Example

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Research Paper

Introduced in 2001, iPod sales reached 100 million by 2007, and the products diversified quickly from music to videos, podcasting, and most recently to the ubiquitous iPhone (Eicher, et al, 2009, p. 1). Apple, Inc’s sales revenue comes from sales of hardware (such as iPods, Macintosh computers, iPhones, iPads), software (operating systems), peripheral products and accessories, digital content (such as iTunes store sales), and  service and support (Rich, et al, 2011, p. 17). The Apple Corporation has positively benefited from the iPhone product in many different ways. This device has revolutionized cellular technology and how consumers use cell phones for a variety of purposes.  Most importantly, Apple has emerged as one of the leading mobile phone manufacturers, with few products coming close to its power and capabilities.

Apple’s Financial Health

In the first quarter of 2008, Apple’s sales have been 2.3 million Macs – a growth rate that was 2.5 times greater than that of the overall PC market, according to IDCfigures(O’Grady, 2008, p. 162). Apple grabbed 6 percent of the U.S. PC market in the first quarter of 2008, according to IDC, up from 4.9 percent in 2007 (p. 162). In the last quarter of 2008, Apple placed revenues of $7.5 billion and netprofitsof more than $1.1 billion (O’Grady, 2008, p. 163). Gross margin was 32.9 percent, decreased from 35.1 percent in the year-earlier quarter. Global sales accounted for 44 percent of the quarter’s revenue (p. 163).

Apple’s performance increased in the wake of stalled industry growth, as the business experienced a 38.5 percent gross margin as compared to 40.9 percent in the year-ago quarter (Apple, 2011).  Furthermore, the business reported sales of 16.2 million iPhones, which exceeded industry and organizational expectations representing 86% increase over the last year quarter (Apple, 2011).

Of those, “4.13 million Macs were sold during the last quarter, an increase of 23 percent in last year quarter” (Apple, 2011).Apple’s expects revenues of about $22 billion in the last quarter of 2011, with an increase in earnings per share of about $4.90” (Apple, 2011). This unexpected surprise has boosted Apple’s growth, and conservative estimates regarding earnings are likely to be surpassed.

Apple’s Technological Advantages

Apple’s resources are rooted in the technology that is produced throughout the business.  Furthermore, corporate knowledge and experience have advanced the organization in highly competitive ways.  As the iPhone evolved as a formidable competitor in cellular technology, the resources supporting this development continue to exceed industry expectations. There are considerable benefits for Apple, as the iPhone offers tremendous advantages and capabilities over the competition, and users have gained access to a variety of resources that support the device and its technology-based features. In many ways, Apple offers a complete package, unlike many other technology-based manufacturers, who merely offer pieces parts without supporting the entire picture (Vossoughi, 2008).

Perhaps the biggest competitors of Apple on computer hardware are Dell, Compaq, and HP. Apple’s earlier switch to Intel forced her to be more competitive on price, and when it did sales raised(O’Grady, 2008, p. 155). For the very first time, users of Windows were heavily defecting on Mac platform (p. 155).When it comes to computer software, one of the biggest competitors of Apple is, of course, Microsoft. Competition has arguably been good for both.

Apple got off to such an earliest and strongest start with iPod that it still rules the industry. The top five MP3 players in market as of February 2008 were Apple with huge 72.3 percent, SanDisk with 9.7 percent, Creative Labs with 2.7 percent, Samsung with 2.5 percent, and Microsoft with 4 percent (O’Grady, 2008, p. 157).

How Globalization Affect Apple

Apple’s key market segments are comprised of a diverse consumer base, including a variety of income levels. In addition, a much younger series of consumers continues to latch onto Apple’s core products, including the iPod and iPhone for personal use. These key demographics have been integral in Apple’s successful journey in recent years, as the business has watched many of its products outsell the competition at exponential rates (Lee et.al, 2007). On the other hand, Apple’s global business market segments are relatively weak in comparison, as the compatibility of the Mac continues to cause many problems in office environments. It is necessary for Apple to consider how its most popular products continue to attract ever increasing numbers, while attempting to balance these needs with that of its profitability. In particular, Apple’s iPhone product has created new opportunities to attract market segments that might not have been discovered in the past. Specifically, business organizations have gained an interest in the iPhone as a possible form of internal and external communication for employees.

Benchmarking Analysis

Apple’s key stakeholders are comprised of a number of groups, including its customers, employees, and investors. More than ever, Apple’s consumer market is unique, which has led to more diversified consumer needs and preferences (Lee et.al, 2007). In the wake of these needs it has become increasingly important for Apple to develop effective relationships with its consumers, particularly when their needs have not been satisfied (Lee et.al, 2007). According to the Lee et al (2007), “With an iPod, starting from just $79, Apple has gained popularity amongmillions of mainstream consumers, and many of whom, have gone on to purchase Macs and iPhones”. From this perspective, it is necessary to consider that additional support mechanisms will be required if the organization is likely to continue its current cycle of growth. Strategies must evolve that improve customer service for all purchased Apple products. Without this mechanism in place, key stakeholders are likely to acquire a negative impression of the business.

Apple’s key market segments are comprised of a diverse consumer base, including a variety of income levels. In addition, a much younger series of consumers continues to latch onto Apple’s core products, including the iPod and iPhone for personal use. These key demographics have been integral in Apple’s successful journey in recent years, as the business has watched many of its products outsell the competition at exponential rates (Lee et.al, 2007).  On the other hand, Apple’s business market segments are relatively weak in comparison, as the compatibility of the Mac continues to cause many problems in office environments. It is necessary for Apple to consider how its most popular products continue to attract ever increasing numbers, while attempting to balance these needs with that of its profitability. In particular, Apple’s iPhone product has created new opportunities to attract market segments that might not have been discovered in the past. Specifically, business organizations have gained an interest in the iPhone as a possible form of internal and external communication for employees.

Apple has not been adversely affected by recent economic trends in the same fashion as other technology manufacturers, despite mixed earnings reports. However, Apple’s store segment has experienced tremendous growth, with March returns showing an increase of 74 percent, despite the economic squeeze on many members of the consumer population (Szep, 2008). It is believed that the new generation iPhone, rumored to be introduced in the coming months, will attract new consumers to the fold, with considerable opportunities to enhance business growth, particularly in corporate environments. The organization is in a strong competitive position to make waves for the foreseeable future, as the business continues to expand its portfolio and to consider how next generation iPhones will support the business and its reputation.

References

Apple Press Info. (2011). Apple Reports First Quarter Results. Retrieved from http://www.apple.com/pr/library/2011/01/18Apple-Reports-First-Quarter-Results.html

Eicher, Theo S., & Mutti, John H., & Turnovsky, Michelle H. (2009). International Economics. Taylor & Francis. 1-10

Jade, K., and Marsal, K. (2005). Employees offer mixed reactions to Apple corporate Life. Retrieved from http://www.valuewiki.com/w/AAPL#Corporate_Culture

Lee, L., Burrows, P., and Woyke, E. (2007). A bruise or two on Apple’s reputation. Retrieved from http://www.businessweek.com/magazine/content/07_43/b4055070.htm?chan=search

O’Grady, Jason D. (2008). Apple Inc. Abc-Clio. 150-160.

Rich, Jay S., &Jones, Jefferson P., &Heitger, Dan L., &Mowen, Maryanne M., &Hansen, Don R. (2011). Cornerstones of Financial & Managerial Accounting. Cengage Learning. 17-20.

Szep, J. (2008). Apple’s largest US store highlights growth strategy. Retrieved from http://www.guardian.co.uk/business/feedarticle/7517614

Valuewiki. (2008). Apple, Inc. Retrieved from http://www.valuewiki.com/w/AAPL#Corporate_Culture

Vossuguh, S. (2008). Apple: more than a pretty face. Retrieved from http://www.businessweek.com/innovate/content/jan2008/id2008014_858681.htm?chan=search

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