Brief Jobs (chairman) tried to convene the board to

Brief
History and Introduction

Apple Inc. was founded in
1976 by Steven Wozniak and Steven Jobs when they began to sell a crudely
designed personal computer called Apple 1. In 1983, the Board of Directors
hired John Sculley as both CEO and president of Apple. Then in 1985, Steve Jobs
(chairman) tried to convene the board to get rid of Sculley and failed. He
resigned afterwards. Later in 1993, the board decided to remove Sculley as
current CEO and put the current Chief Operating Officer, Michael Spindler, in
the president spot. Then in January of 1996, the board asked Spindler to resign
and chose Gil Amelio to take his place. Then in 1997, the Apple board
terminated Amelio’s employment and hired Steve Jobs as interim CEO. In the next
few years, Steve Jobs turned Apple around and made their quarters profitable.
The company’s share price reached a high of $70 under Steve Jobs leadership. In
August of 2011, Steve Jobs resigned as CEO and became chairman of the board and
suggested Tim Cook (COO) to be the replacement.

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This case project on Apple
is based on the most recent information available online (2013-2017) and this
is what our evaluations, ratios and SWOT analysis’ results will be based upon.

Product
Information

The 1976 Apple 1 was a
crudely designed personal computer. Apple followed this model up to two years
later with the Apple 2. Then in 1984, the Macintosh was introduced but lacked
the speed, power and software capability to compete. Three years later (1987)
Apple introduced a new Macintosh. The Macintosh desktop line included the Mac
Pro, iMac and Mac Mini, while the notebook line included the MacBook Pro,
MacBook and MacBook Air. Despite this, most users preferred a PC that ran
windows 3.0 and Word. In 1991 and 1994, the first-generation notebooks were
released and were called the PowerBook and PowerMac family. In 1998, the iMac
was introduced and one year later an iBook line of notebook computers came out.
Then in 2001, the iPod was released and had modest sales until the launch of
the iTunes website in 2003. In 2010, the iPod line included the Shuffle, Nano,
Classic, and the Touch. This helped Apple get a 70% market share among all
legal online music download services. The successes of the iPod helped Apple
enter the market for smartphones in June 29, 2007 with the successful launch of
the iPhone, which was named invention of the year by the Time magazine. In 2008
and 2009, the iPhone 3G and the iPhone 3Gs were both introduced to the mobile
phone market. Then in June of 2010 the IPhone 4 was created.  The iPhone 6 was introduced in September of
2014 and the 6S in September of 2015. In addition, the development of the app
store helped developers build applications for current iPhones and sell them
for a small fee. In April of 2010, Apple introduced the tablet line to great
success. The iPad line is now on the 4th generation and includes the Pro, Mini
and Air. Apple, also recently made a jump into the watch industry by developing
the Apple watch in 2015.

Mission
Statement

Apple’s mission statement
is very specific, detailed, narrow and accurate when describing the company’s
situation and goals. It is also worth pointing out that this mission statement
is a departure from Steve Jobs’ original mission for the company: “To make a
contribution to the world by making tools for the mind that advance humankind.”
Apple’s 2015 mission statement has changed from a broader picture towards a
specific reflection of what it wants to achieve in terms of products and
services: “Apple designs Macs, the best personal computers in the world, along
with OS X, iLife, iWork and professional software. 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 is defining
the future of mobile media and computing devices with iPad.” (Farfan, 2017).

External Factor
Evaluation (EFE) Matrix

The EFE matrix, External
Factor Evaluation, is a tool for evaluating the business’ main opportunities
and threats. This evaluation allows people to understand how the company can
reach a competitive advantage within the industry or what the company can do to
prevail over its competitors. Also, by looking at the threats, the company
knows what the most important issues are and how to overcome these risks.

Opportunities

Opportunities are
external improvements the company can make to increase profits. As far as the
opportunities go, the company could take advantage of the following in order to
consolidate its market position:

1) Invest significantly
in the Internet of Things (IoT). According to Wikipedia, the so-called IoT is a
fast-growing market since today machines, smartphones, air conditioners or any
other electronic devices are connected via Wi-Fi and/or Bluetooth. The Internet
of Things is a highly lucrative market, where all the technology companies
compete to gain market shares. Nowadays, more than twenty billion devices are
connected to the Internet, and this number is expected to rise by 50% in 2020
to 30 billion. Apple, given the leadership position it currently enjoys, has an
excellent opportunity to invest in the growth of this market. The company, in
fact, has its own software platforms through which it can analyze all
information deriving from its customers’ devices; this allows the company to
satisfy the problems presented by customers in a more prompt and resolute
manner.

2) Market introduction of
additional gadgets. In April 2015, Apple introduced the first smartwatch,
called Apple Watch. This was the first step in the market of wearable gadgets,
which is expected to grow by 35% per year until 2019. According to Business
Intelligence (BI) analysts, the flow of these gadgets will reach 148 million
prototypes, of which 70% will be smartwatches. BI analysts also believe that
Apple will capture a dominant market share in the market, around 47%. The
company, in the future, will have the opportunity to launch new gadgets
specially created for the well-being and health of the client, for example by
monitoring the calories taken during the day, the level of sugar in the body or
even the level of hydration (Bhasin, 2018). Furthermore, according to the World
Health Organization, 9% of adults suffer from diabetes; this could be a great
opportunity for the company as, investing in this field, Apple Inc. could have
the opportunity to enter into a new business, creating devices to monitor the
disease.

3) Expansion in the
“mobile payments” market. In 2012, mobile payments facilitated
transactions worth USD 12.8 billion. Some analysts say that this sector will
grow by 48% annually until 2019, reaching 90 billion dollars only in the United
States. These numbers show how this market can become highly attractive and
highly competitive in the coming years. Many large international competitors
are offering special apps to facilitate the purchase of their products and / or
services through mobile payments, such as PayPal, Square, Softcard and Google
Wallet. Many companies are interested in this type of payment, because in this
way they can bypass credit card companies, which receive a fee for each
transaction. On the other hand, customers can take advantage of a fast and
secure service. Therefore, Apple’s mobile payments market will produce
benefits, not only from a revenue growth point of view, but also through the
improvement of the user’s experience.

Threats

Threats can limit or
reduce the financial performance of companies. The threats that could weaken
Apple’s economic and financial foundation are the following:

1) Increase of
competition. Apple has faced strong competitive pressure from Microsoft, IBM,
HP and Dell in the personal computer and smartphone industries when it decided
to launch the iPhone and iPad. The smartphones market is never saturated,
indeed every year it is in continuous and constant growth, and this is the main
reason why this business is characterized by an increasingly higher competition
thanks to the continuous and rapid changes that technology innovations lead to.
In emerging countries, competition is based more on price, product
characteristics and price/performance ratio rather than product quality and
reliability (Bhasin, 2018). This means that Apple will probably lose the battle
against Android in emerging countries, given the products’ high price. Android
OS, with the help of Samsung, Huawei, Lenovo and LG, is growing rapidly and is
the best-selling smartphone in emerging markets. The result of all this is that
app downloads in Google Play have increased, generating a significant increase
in revenues. This certainly represents a serious threat for a multinational
such as Apple, given that in 2015 Google saw its revenue increase by about 19.9
billion dollars thanks to investments made in emerging countries.

2) The increase of the
dollar exchange rate could negatively affect the company’s revenues and
profits. In 2015, the company earned $ 151,983 billion, or 65% of its total
revenue, outside the United States; this means that a large part of its revenue
comes in the form of other currencies. Usually the company, after making
various gains all over the world, converts the sums into dollars to calculate
total revenues and profits. Now, if the dollar exchange rate rises in value,
this may represent a real threat to a multinational such as Apple, since, once
converted into dollars, revenues and profits will have a lower value compared
to the level initially estimated.

3) Increase of the causes
of patent violation, which could damage brand reputation. As already mentioned,
Apple operates in a highly competitive sector, where innovation is the key to
success. Innovation is usually patented in order to protect it from external
imitations. Compared to its closest rivals, Apple has a reduced number of
patents and invests a little but well in R & D (Bhasil, 2018). Therefore,
by patenting more, the company can not only better protect its innovations, but
it can seek a better positioning in the market. However, given the complexity
of the sector and the number of patents currently existing, it remains almost
impossible, even for a company like Apple, not to violate, at least once,
existing patents belonging to its competitors.

External
Audit – Competitive Profile Matrix (CPM)

CPM, or the CPM Matrix,
stands for Competitive Profile Matrix and is a powerful strategic analysis
tool. CPM allows business owners, stockholders and other interested parties to
see the strengths and weaknesses of all major competitors in an industry on a
single page (David, 2015). The CPM table features a list of critical success
factors, and each of them is given a certain weight depending on the industry
we are in. Among the Apple’s strongest critical success factors, we find Financial
profit, Market penetration, and Market share which are rated 4, 3 and 2 respectively.
Therefore, Apple Inc. scores 0.48, 0.33, and 0.22 in these three areas.  Among the success factors with a lighter
weight, instead, we find E-commerce, Employee dedication, and Advertising whose
scores are 0.24 for the first two and 0.21 for the last one. This information
shows how Apple is doing and the importance assigned to the main success
factors. When we analyze its strongest competitors, we can see how Microsoft is
the only one that gets close to Apple’s final score. In fact, Microsoft’s score
is 3.22, while Apple’s final score is 3.35 (when adding all the scores
together). Dell, Samsung and Nokia are behind the two giants with a score below
3.0. These data will be shown in a table that I will integrate to this paper
during Phase 2.

Internal
Assessment – IFE Matrix

The IFE matrix, Internal
Factor Evaluation, is a tool for the evaluation of the business’ main strengths
and weaknesses. Financial ratios are an important component for the internal
evaluation. The table below shows the main financial ratios for Apple Inc.: