Company Analysis of Apple Inc. (Essay Sample)

Company Analysis of Apple Inc.
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Company Analysis of Apple Inc.
Background
Apple Inc. is a major manufacturer of computers and electronic products with its company’s headquarter in Infinite Loop, Cupertino, California. Currently, Apple Inc. has an international presence of more than 300 retail stores in different continents. Apple Inc.’s reportable operating segments including retail, are in Asia-Pacific, Europe and the America. The company’s founders, Ronald Wayne, Steve Wozniak, and Steve Jobs, started the company in 1977 and its first business involved selling various handmade computer parts. The company’s first computer kit, the Apple I, was unveiled in 1976 and sold for $666.66. As Apple Inc. grew, the company diversified and started to focus on manufacturing personal computers. However, the company had trouble marketing some of its products during the 1980s. For instance, Apple Lisa, the Newton, and Mac I were unsuccessful and this resulted in a decline in the company’s stock prices (Daniels Fund Ethics Initiative, 2011).
The dwindling performance coupled with internal conflicts between the company’s founders resulted in the ouster of Steve Jobs from the company. The company’s performance continued declining, and in 1997 Steve Jobs returned to the company to bolster its performance. Jobs started Apple Inc.’s transformation into a major computer and electronics company by introducing the “closed door” policy into Apple Inc.’s corporate culture, and this was meant to protect the company’s copyrights. Jobs also introduced a flattened organizational structure that increased his interaction with his employees. The company changed its name from Apple Computer Inc. to Apple Inc. and this indicated that the company would focus on other products such as consumer electronics and software.
Currently, the company has fully expanded its range of products to include various consumer electronics such as iPods, iPads, and iPhones, as well as related applications and software such as iOS, iCloud, and Mac OS among others. In addition, Apple Inc. sells and delivers its products through its online stores such as Mac App Store, iBookstore, App Store, and iTune Store. Apple Inc. also sells its products through direct sales forces, retail stores, and third-party cellular network carriers among others. The company’s clienteles include governments, small and mid-sized businesses (SMB), and multinational organizations. Apple Inc.’s financial year lasts for 52 or 53 weeks and ends on the last Saturday of September. Although Apple Inc. is a dominant company in the electronics and personal computers industry, the company faces various challenges and risk factors such as potential supply chain disruptions, worldwide competition, fluctuating consumer demand, and variable global economic conditions.
The Securities and Exchange Commission (SEC) regulates Apple Inc. on the stock market. Apple Inc. also complies with several regulatory requirements such as the telecommunications regulatory requirements and the Electromagnetic Compatibility (EMC). In the U.S., the company complies with part 15 and 68 of the CFR 47. Apple Inc. usually displays compliance logos on its products to show its compliance and certification from various regulatory authorities. For instance, the company displays a Federal Communications Commission (FCC) logo or number on its products. The company is also regulated by other agencies such as the Consumer Financial Protection Bureau (CFPB) which investigates issues of unethical practices at various organizations (Hiltzik, 2014). In addition to regulation by various agencies, Apple Inc. also cooperates with various organizations including the Environmental Protection Agency (EPA). Apple Inc. has invested renewable energy, and this has enabled the country to reduce its carbon footprint by 3% between 2012 and 2013 (Phillips, 2014).
The Industry Structure
Apple Inc. operates in the electronics and computer industry in which it manufactures and sells a wide variety of electronic products such as phones and tablets as well as various software. Manufacturing companies seeking to invest in the electronics and computer industry require a massive capital base due to the high entry costs in the industry. Consequently, the electronics industry is characterized by oligopolistic competition between the major companies operating in this industry. The number of companies operating in the electronics and computer industry is low since the high entry costs prevent many companies from entering this industry. The critical factor in ensuring the success of any company in the electronics and computer industry is innovation, and this requires companies operating in the industry to conduct research and sustain continuous development (Johnson et al., 2012). Apple Inc.’s main competitors in the phone and tablets segment include Samsung, BlackBerry, Palm, and LG. The company’s main competitors in the computer segment are HP and IBM.
Apple Inc. has significantly diversified its products, and the company has interests in different segments in the electronics and software industry. Apple Inc. is a major manufacturer of consumer electronics, and the company is renowned for its iPhone, iPad, and iPod products. The iPhone is one of Apple Inc.’s best-selling products, and it includes a range of smartphones that incorporate different useful features into one product. The iPads are Apple Inc.’s range of multipurpose tablets that include the iPad mini and the iPad Air. The iPods are the company’s line of digital media players and include the iPod shuffle, the iPod nano, and the iPod touch. The iPads, iPhones, and iPods use Apple Inc.’s iOS Multi-Touch operating system. The company also deals in the distribution of digital content through its Mac App Store, iCloud, App Pay and the iTunes Store. Some of the software sold by Apple Inc. include the Final Cut Pro, iWork, iLife, and Logic Pro X among others. The diversity of Apple Inc.’s products has enabled the company to remain competitive in the highly dynamic electronics and software industries. Despite the stiff competition from other companies such as BlackBerry, LG, and Samsung, Apple Inc. continues to thrive, and this is due to the company’s culture of promoting creativity and innovations.
Organizational Structure
Apple Inc. has a relatively flat and simple organizational structure with a CEO at the helm of the company. The CEO has direct control over every department under the Senior Vice Presidents who include the Global Communications manager, Product Marketing manager, Software Engineering manager, Retail manager, Operations manager, iOS software manager, Design manager, Chief Operating Officer (COO), Legal Officer, and Chief Financial Officer (CFO). What is more, Apple Inc. lacks a matrix structure and the responsibilities of the managers in various departments are straightforward. The decisions made by the top executives is quickly relayed to the lower ranking employees. This helps the company to adapt to any conditions in the market or implement new ideas into its processes and products.
Strategy
The company uses the differentiation strategy to ensure that it remains competitive in different markets and segments. Apple Inc. produces a wide variety of products including smartphones, computers, computer accessories, music players, and various applications among others. The company also focuses on innovativeness and high-quality products to ensure that it remains competitive in its market segments in various regions. Price sensitivity reduces as consumers’ loyalty to various brands increases (Hitt, Ireland, & Hoskisson, 2014). Apple Inc.’s products are normally characterized by great design and appealing graphics. This has enabled the company to create a strong brand loyalty among its customers who are willing to pay higher prices for Apple’s products even when cheaper alternatives are available. Internationally, Apple Inc. standardizes its products in various markets, and this enables the company to avoid production surcharges of manufacturing more variations of its models.
Microeconomic and Macroeconomic Environments
Apple Inc. boasts of a wide diversity of employees with varying skills and experiences. Apple Inc.’s dominance over its competitors has been successful due to the company’s innovative products. The company employs highly talented individuals in its product design departments, and it also invests heavily in research and development. Due to the innovativeness of Apple Inc. and attractiveness of its products, the demand for the Apple Inc.’s products is usually high. However, such demand for a company’s products may have negative consequences on its performance. For instance, JuÌ€rgens (2000) notes that the inability of the company to meet its demands resulted in a massive quarterly loss for Apple in 1996. In most cases, customers make preorders for the company’s products such as the iPhones and iPads. The awareness of Apple Inc.’s iPhones is exceptionally high, and customers usually have details about the specifications of the phones even before they are introduced in the market.
As the smartphone market expands, Apple Inc. has responded by introducing new models such as iPhone 6 and iPhone 6 Plus. Apple Inc. has also significantly reduced the prices of its earlier phone models such as the iPhone 3GS. Since 2007, the company has experienced a surge in the demand of its iPads and iPhones and in some instances, Apple Inc. experiences difficulty in meeting the demand for its products. For instance, the demand for the iPhone 6 and iPhone 6 Plus has been extremely high in the Asian markets such as China...