Apple,

Inc. 1

Case 4
Wanda Woloszyn
BAM 479 Siena Height University
March 26, 2016

TABLE OF CONTENT
Introduction..3
Case Statement.3
Vision Statement..3
Mission Statement Evaluation.......3-4
Milestones........5
External Assessment...5-10
Internal Factor Evaluation.....10-14
SWOT Analysis..14
Industry Analysis...15-16
Financial Analysis.16-23
Competitive Strategy.23-25
Strategic Alternatives.25-29
Recommendation30-31
Implementation...31-33
Financing.33-35
Conclusion36
References.........37
Appendix...38

Apple, Inc. 3

Introduction
It is hard for people to imagine a company like Apple, Inc. ever needing a strategic plan to help it
pull ahead of its competitors, but all companys can fall to competitors without the proper
strategic planning.

Case Statement
Apple, Inc. faces competitors in an industry that require a large amount of capital for research
and development, with a demand to gain an edge in the personal computing industry through the
use of innovative ideas and technology.

Vision Statement
Apple, Inc. vision is committed to bringing the best personal computing experience to students,
educators, creative professionals, and consumers around the world through its innovative
hardware, software, and Internet offerings (David, pg.263).

Mission Statement
Apple, Inc. is committed to protecting the environment, health, and safety of our employees,
customers, and the global communities where we operate. We recognize that by integrating
sound environmental, health, and safety management practices into all aspects of our business,
we can offer technologically innovative products and services while conserving and enhancing
resources for future generations. Apple, Inc. strives for continuous improvements in our
environment, health, and safety management systems and in the environmental quality of our
products, processes, and services (David, pg.263).

List Mission Statement Evaluation Components that are satisfied

Component

Component

Component

Component

Component

Component

Component

Component

Component

Customer

Products/
Services

Markets

Technology

Concern for
Survival, growth,
profitability

Philosophy

Self- Concept

Concern for
Public image

Concern for
employees

yes

yes

yes

yes

yes

yes

yes

yes

yes

Rationale for Components included as well as excluded

The table above shows that Apple, Inc. has a strong Mission statement. The mission statement
has thoughts for product and services, markets, technology, customers, employees, philosophy,
growth, public image, and self-concept. The statement shows products and services with it
emphasizing innovative products and services. The statement global communities show markets
where we operate. Global is Apple, Inc. market. The statement offer technologically innovative
products and services show technology. The statement committed to protecting the environment,
health, and safety of our customers shows customer. Also being concerned about the planet and
the people in the surrounding areas by Apple, Inc. shows how important the workers are, because
most people work and live in the same town so it is a great feeling knowing that your company
believes in your town. Philosophy is shown in the statement that Apple, Inc. is more than just
about money it cares about the environment, health, and safety of the public. Growth is shown by
the statement future generations. The statement protecting the environment shows public
Image. Self-Concept is shown through the statement that strives for continuous improvement.

Apple, Inc. 5

Milestones

Apple, Inc was establish by Steve Wozniak and Steve Jobs in 1976, when Wozniak extended his
building box invention into another box called Apple I (David, pg. 263). Below you can find a
list of Apple, Inc. Milestones (David, Pg. 262, 263) & (Apple, Inc).
1978- Introduced the Apple 2e and 2c
1980- Launched Macintosh
1990- Introduced PowerBook a 17 pound machine with 12 hour battery life
2010- Apples market capitalization surpassed Microsoft for the first time.
2011- Sold 20 million Ipads since the April 2010 debut.
2011- Apple became the most valuable company in the world surpassing
Exxonmobile.
2014- First weekend Iphone sales top 10 Million, set new record.
2015- Apple announces new environmental initiative in China.
2016-Apple opening Europes first IOS App Development center in Italy.

External Assessment
There are several opportunities presented that could help personal computing product retailers.
Along with these opportunities there are also threats that could work against the companys
success. Below is the External Factors Evaluation Matrix that shows some of the opportunities
and threats that effect personal computer product retailers.




Key External Factors

Opportunities
1. Product development

2. Technology

3. Social

4. Opportunity for green business
operations

5. Distribution

6. Pricing

7. Consumer preference

8. Opportunity for growth

Threats
1. Competitors

2. Economy

3. Legal

4. Generational differences

5. Online shopping

6. Technological advances

Weight

Rating

Weighted
Score

.12

.48

.10

.40

.02

.20

.05

.05

.08

.24

.05

.10

.09

.36

.07

.21

.08

.32

.06

.12

.09

.27

.07

.07

.06

.12

.06

.24

TOTAL
1.00

3.18

Personal computing product retailers have several opportunities to help the company
outshine its competitors and be successful. One of those opportunities is product development.
This environmental factor is key for retailers because with innovative thinking the company has
the opportunity to develop products ahead of competitors. I put this weight at .12 to show the

Apple, Inc. 7


level of importance that product development has in the personal computing product retail
market and because it is one of the important opportunities for a company to take advantage of in
order to gain a lead on competitors. I rated this factor at 4 because it seems the personal
computing product retailers have a superior response on the opportunity of product development.
Another opportunity is for technology. This environmental factor is key for the company
because with innovative technology the company could expand into several other markets. I put
this weight at .10 to show the level of importance technology has in the advancement of the
market. I rated this factor at 4 because it seems the company has a superior response on
technology.
The social opportunity is another key environmental factor for computer product retailers
because it could help the company to improve customer relations through a positive experience. I
put this weight at .02 to show the level of importance customer relations has on the companys
success. I rated this factor at 1 because it seems the companys in the industry have a poor
response on the social opportunity.
Developing green business operations adds importance to protecting the environment.
The introduction of green business practices could help Companys develop new customers
relationships over the companys competitors who do not already have environmentally friendly
business practices. I put this weight at .05 to show the level of importance the green business
operations has on the companys outlook of the importance of the environment. I rated this factor
at 1 because it seems the company have a poor response on green business operations.
Expanding distribution offers immediate availability to personal computer consumers and
over time builds brand loyalty for the companys consumers. We put this weight at .08 to show
the level of importance distribution has in the retail market and because it is important in the

availability of products. I rated this factor at 3 because it seems the company have an above
average response on the opportunity of distribution.
Another opportunity is pricing, having competitive pricing gives the company the chance
to attract a wider customer base. I put this weight at .05 to show the level of importance the
pricing has on a wide range of the customer base. I rated this factor at 2 because it seems the
company have a below average response on the opportunity of pricing.
Allowing consumer preference is another environmental factor that is important for
personal computer product retailers because having a well-liked brand develops a consistent
customer base. I put this weight at .09 to show the level of importance consumer preference is in
the retail market and because it allows for the continued growth of loyal returning customers. I
rated this factor at 4 because it seems the company has a superior response on the opportunity of
consumer preference.
Having an opportunity for growth gives companies a chance to develop businesses in
additional areas. With the growth of the personal computer retailer more consumers have an
opportunity to purchase the product. I put this weight at .07 to show the level of importance that
growth has in the retail market and because it is an important opportunity to help personal
computer retailers reach a larger customer base. I rated this factor at 3 because it seems the
company has an above average response on the opportunity of growth.
Personal computer product retailers have several threats that could hinder the company
compared to its competitors. Dell, Hewett Packard, and Microsoft are just a few of the industries
leading competitors, having innovative and trending technology that offers comparable products
and services can give them a leading edge. I put this weight at .08 to show the level of
importance this threat has on the retail market and because it is a large threat on the industries

Apple, Inc. 9


business. I rated this factor at 4 because it seems the companies have a superior response on the
threat of competitors.
The current status of the economy is another environmental factor that personal computer
product retailers face due to high unemployment rate and consumers less likely to spend money
on non-essential goods. If money is spent on non-essential goods, consumers are more likely to
spend money on inexpensive products. I put this weight at .06 to show the level of importance
this threat has on the retail market and because it could cause the reduction of sales and profit.
We rated this factor at 2 because it seems the industry has a below average response on the threat
of the economy.
Legality plays a role in any personal computer product retailer. For example the retailers
protecting the privacy of their customers have brought to life some legality. I put this weight at
.09 to show the level of importance this threat has on the retail market and because the legality
that could arise for the company. I rated this factor at 3 because it seems the company has an
above average response on the threat of legality.
Generational differences are another environmental factor that this industry also faces.
Multiple Generations have different wants and needs, which can create many variations among
consumers in the market. It makes the chances of having overstock greater. I put this weight at
.07 to show the level of importance this threat has on the retail market and because of the large
variety of products needed in the company. I rated this factor at 1 because it seems Apple has a
poor response on the threat of generational differences.
Online shopping affects Personal computer industry consumers having access to several
types of products all from the comfort of their own home, it makes the market much more
competitive. We put this weight at .06 to show the level of importance this threat has on the retail

market and because of the accessibility of other online retailers. We rated this factor at 2 because
it seems the industry has a below average response on the threat of online shopping.
Finally technological advancements affect Personal computer industry consumers having
access to products with advanced technology. We put this weight at .06 to show the level of
importance this threat has on the retail market and because of the accessibility of other
technology. We rated this factor at 4 because it seems the industry has a superior response on the
threat of advanced technology.
The total weighted score of 3.18 should be interpreted by management that it is well
above the average of the midpoint, so personal computer product retailers are doing really well
by taking advantage of opportunities while avoiding threats. Retailers could use improvements
on generational differences as well as being more aware of the economy. Since a weighted score
of 4.00 is the best a company can get, retailed have a slight amount of improvement they can
make.
Internal Factor Evaluation

There are several key factors that demonstrate areas where Apple, Inc. have both strength and
weaknesses that could have an effect on the companies ability to become the worlds leading
retailer for personal computer products. Below is the Internal Factors Evaluation Matrix that
shows some of the strength and weakness that affect Apple, Inc.
Key Internal Factors

Strengths
1. Multiple products
2. Revenue Increase 52%
3. 70% net income increase
4. Increase sales in US 29%
5. U.S and international market
6. Inventive marketing strategies
7. Brand Recognition

Weight

Rating

.10
.08
.06
.06
.05
.07
.09

4
4
3
4
3
4
4

Weighted
Score

.40
.32
.18
.24
.15
.28
.36

Apple, Inc. 11


8. 233 retail stores in the US
.07
4
.28
Weaknesses
1. No president of divisions
.04
2
.08
2. 84 international retail stores
.06
2
.12
3. 38% sales driven by Iphone
.08
2
.16
4. 26% sales driven by desk top
.08
2
.16
5. Small portion in the international market
.07
2
.14
6. Depends heavily on US market
.09
1
.09
TOTAL
1.00

2.96

Apple, Inc. has strengths to help the company outshine its competitors and stay
successful. One of those strengths is, Apple Inc. provides multiple products. This internal factor
is key for Apple, Inc. because with multiple products they have a larger variety for customers. I
weighed Apple, Inc.s multiple products at .09. This shows the level of importance that the
multiple products have on the retail market and because it is an important strength for this
company to take advantage in order to gain a lead on competitors. This factor was rated at a 4.00
because the multiple products are a major strength for Apple, Inc.
Another strength is Apple, Inc. revenues increase 52%. This internal factor holds
importance for Apple, Inc. because having increase revenues helps build the company into a
bigger brand. I decided to weigh Apple, Inc.s 52% increase in revenues at a .08 due to its affect
on the success of the company. The importance of having revenues increased to 52% rates this
factor at 4.00 because this is a major strength for Apple, Inc.
The 70% net income increase is another key internal factor for Apple, Inc. because net
income increase shows a stronger demand for products. I decided that this internal strength
weighed .06 on the companys success. This factor scored a rating of a 3.00 because this is a
minor strength of Apple, Inc.
Apple, Inc.s increase of sales in the US by 29% is a key internal factor because it shows
the strength of the US market and their importance on the success of the company. I decided to

weigh Apple, Inc.s increase of sales in the US at .06 to show the level of importance the
increase sales in the US has on the companys outlook for future growth. This factor was rated a
4.00, because increase in US sales by 29% is a major strength for Apple, Inc.
Another strength is US and International markets. This internal strength weighed in at .05
to show the level of importance the diverse market has on the impact of the companys overall
success. I decided to rate this factor at a 3.00 because this factor is a minor strength for Apple,
Inc.
Having inventive marketing strategies gives Apple, Inc. a competitive advantage above
other retailers in the industry, because of this factor; it helps to give customers the desire to have
the products. I decided to weigh this internal strength .07, because inventive marketing strategies
have a high level of importance in the retail market and there is an opportunity for Apple, Inc. to
reach a new customer base. Inventive marketing strategies was rated a 4.00 due to this factor
being a major strength for the company.
Over the years, Apple, Inc. has developed brand recognition for its worldwide market.
Weighted score, for Apple, Inc. is .09, with that being said it is one of the companys strengths. I
decided to rate this internal factor at a 4.00 because having brand recognition is a major strength
for Apple, Inc.
Another strong internal quality that Apple Inc. takes pride in is its 233 US retail stores.
Apple, Inc. gains revenues while offering a lot of jobs in the US. As a total weighted score for an
internal factor, Apple, Inc. scored a .07 for 233 US retail stores. The company would not be able
to generate as much revenues without the business in the US market. The company has been
rated a 4.00 due to its being a major strength for Apple, Inc.

Apple, Inc. 13


With strengths, come some weaknesses for Apple, Inc. one of those weaknesses include
No president of divisions, which creates a slight gap with the industry. It was decided that this
internal weakness should be scored a .04 with no president of divisions this was rated a 2.00, as a
company Apple, Inc. needs to work on closing the gap of not having the lead in divisions.
Apple, Inc.s only has 84 international retail stores. This internal weakness weighed at
0.06. The company has confidence that in future years to come that it will be able to increase the
amount of business in the international market. The company has been rated a 2.00 due to its
being a minor weakness for the company.
With having 38% of it sales coming from Iphones, Apple runs the risk of losing a large
portion of sales if competitors develop a better and more innovative product. The level of
importance for this internal weakness was weighed at a 0.08 because the companys sales hold a
key role in the companys existence. I rated this factor a 2.00, because it is a minor weakness for
the company.
With having 26% of it sales coming from desktops, Apple runs the risk of losing a large
portion of sales if competitors develop a better and more innovative product. The level of
importance for this internal weakness was weighed at a 0.08 because the companys sales hold a
key role in the companys existence. I rated this factor a 2.00, because it is a minor weakness for
the company.
Another weakness that Apple, Inc. has is small portions of international markets.
The level of importance for this internal weakness was weighed at a 0.07 because the company
has a chance for expansion with the introduction into more international markets. I rated this
factor a 2.00, because its a minor weakness for the company.

These lead into the next highly important weakness of the IFE matrix, which is
depending too much on the United States market to fund the company. The weight is a 0.09
because of how important to the company the United States is to keep it going. Also it has a
rating of 1.00 for a major weakness, because if the company goes global they are more divided
so it doesnt have to rely on any one area.
The total weighted score of 2.96 should be interpreted by management that it is a well
above the average of the midpoint, Apple, Inc. is doing well by using the companys strengths
while creating a strategy to fix its weakest areas. Apple, Inc. could use improvements on
developing a larger percentage of the companys market outside the U.S. as well as create a
bigger disbursement of the sales of desktops and Iphones to other product. Since a weighted
score of 4.00 is the best a company can get, Apple, Inc. still has a little improvement they could
do, but with strategic maneuvers the company could start working toward a higher weighted
score.

SWOT Analysis
There are several key factors that demonstrate areas where Apple, Inc. have both strength,
weaknesses, opportunities, and threats that could have an effect on the companies ability to
become the worlds leading retailer for personal computer products. The key Strength is having
multiple products. This helps Apple, Inc. have the ability to attract different client bases. The key
weakness is depending to heavily on the US market because that means the company will suffer
in a low economy. The key opportunity that Apple, Inc has is product development because this
is what keeps customers loyal to the Apple products. The key Threat is competitors because they
can be developing innovative products and maybe at a lower cost. I think Apple, Inc. does a
really good job at managing both avenues because they are truly future driven.

Apple, Inc. 15

Industry Analysis

The Porters Five Forces Models of competitive analysis is a widely used approach for
developing strategies in an industry (David, pg. 75).
The Rivalry among competing firms in the industry is High. With the amount of money
put into research and development by all competitors, this could create the ability for rivals to
surpass the innovative advances of Apple. With the low cost to switch between brands and
products this has enlarged the threat of rival competitors in the industry (Investopedia). The top 7
competitors in the technology industry include Microsoft, Google, Cisco Systems, Inc., Apple,
IBM, Intel, HP, and Dell, (Ranker, 2016). Microsoft leading with Market shares at $264B,
Second is Google at $210B, Then Cisco Systems at $189B, Next comes Apple at $162B, Then
comes IBM at $159, Next is Intel at $155B, Finally in last comes Hewlett Packard at $112.57B
(Ranker, 2016).
With the needed capital to enter this industry, this makes the potential entry of new
competitors a lot lower than other industries (Investopedia). Another huge hurdle for entry of
new competitors to this industry is the need to establish a well-known product over the already
establish products in the industry (Investopedia). A good example of this is the failed attempt of
Microsoft to compete against the Ipod with the Zune. Microsofts challenged Apple, Inc. Ipod
with the introduction of the Zune in 2006 with the inability to penetrate the market that is 77
percent dominated by Apple, Microsoft abandoned the Zune (Dilger, 2011). Another good
example of this is the successful attempt of the introduction of Samsung with Android entering
in the smartphone market. Android is projected to ship 1.15 billion giving it 79.4% of the entire
smartphone market this year (Information Week, 2015).

With the emerging products produced from competitors with a lower cost for these
comparable products this makes the potential development of substitute products more likely for
Apple. With the introduction of tablets and other products offering similar technology this allows
for customers to substitute these products for a similar more cost efficient product.
The low cost to switch suppliers and the ability for Apple, Inc. to select from a large
range of different suppliers weakens the bargaining power of Apple, Inc. suppliers
(Investopedia). Although with a few large competitors within the industry this also helps to add a
bit of strength to the bargaining power of Apple, Inc. suppliers. Another important factor that
affects the bargaining power of suppliers for Apple, Inc. is Apple, Inc. remains a major customer
for all the companys suppliers (Investopedia).
Apple does face the threat of bargaining power of consumers due to the lower switching
cost to competitors products, though the lose of any one customer is a weak force the bargaining
power with collective bargaining is strong (Investopedia). With the large capital Apple, Inc. puts
into research and development this helps keep brand loyal customers making the overall
bargaining power of consumers a low force for apple.

Financial Analysis
Growth Rate

Sales for Q/Q of last year show that the industry was at 1.50 and Apple, Inc. was at 1.70
interpreting that the company had a comparable year with the rest of the industry. Stating the
companys earnings/revenue was profitable for Apple, Inc. over the industry and other
competitors by a small margin of .20. The same data is supported with the Net Income
YTD/YTD of last year and the net income of Q/Q. Apple, Inc. was able to surpass others in the
industry by a demonstrating innovative and future thinking.

Apple, Inc. 17


The strength of the company is shown even more with the data from the 5 years annual
average of sale, because Apple, Inc. was a lot lower when the rest of the industry was at a high of
107.75. The financial data helps show that Apple, Inc. is maybe behind the rest of the industry in
total for sales.

Price Ratios

Current price-earnings ratio: indicates a dollar amount that an investor can expect to put
into a company in order to receive companys earnings. For Apple, Inc. the current P/E ratio is
11.31, which is .54 lower than the industry average. Investing in this company would show that
as an investor, they would receive a little under the return with Apple, Inc. as they would from
the average of the industry.
The price earning ratio highs were 24.10 for the industry verses Apple, Inc. with 14.15.
As an outsider, one might interpret that the company has not been doing as well in the industry
as other companies, however the company seems to be on an upswing since the low at one point
was 9.77.
Price to sales ratio: Compare the stock prices verses the revenue. For Apple, Inc. the
current P/S ratio is 2.59, which is 0.81 higher than the industry. It shows that for the last 12
months Apple, Inc. has had a greater return to its stockholders than the industry.
The price/book value: Shows how well a company is doing with market price of shares
over asset value. Apple, Inc. is higher than the industry at 4.59 with the industry being 3.46.
This shows, that people who are investing in the company are receiving great dividends
compared to the stock price. Whereas if an investor were to look at a lower P/B value they could
get in on base floor and watch it sky rocket with another company in the industry that could be a
diamond in the rough.

Profit Margins

Gross margin ratio: a profitability ratio compares the gross margin of a business to the
overall net sales. Compared to the market, Apple, Inc. has a higher gross marginal ratio of
40.13%, compared to the overall industry of 39.97%. This indicates that Apple, Inc. could have a
bit higher measure on the profitability on selling its inventory and merchandise compared to the
industry.
A pre-tax margin: A companys earnings before tax on total sales and revenues in a
percentage. Apple, Inc. has a high pre-tax profit margin of 30.93% compared to the industrys
overall margin of 30.39%. It can be assumed by these figures that the company is very profitable
due to its higher value compared to the industry.
Net profit margins: Measure the remaining revenue after all its operating expenses,
interest, taxes and preferred stock dividends have been deducted from the companys total
revenue in a percentage. Compared to the industry Apple, Inc. has a little higher net profit
margin of 22.87% and the industry has a margin of 22.46%. The figures indicate that the
company is as profitable comparable to the industry.
Average gross margin of 5-year annual average: Measured by a companys gross profit
compared to its net sales. Apple, Inc. has a margin of 40.10% compared to the industrys margin
of 39.90%. One could assume that Apple, Inc. retains more on each dollar of sales to service
verse its other costs and obligations.
Average pre-tax margin 5-year annual average: A companys earnings before tax,
comparing total sales or revenue as a percentage. Apple, Inc. has a high margin of 31.40% verse
the industry with 30.89%. It can be assumed by the financial figures that Apple, Inc. is as
profitable as its leading competitors in the industry.

Apple, Inc. 19

Financial Ratios
The debt to equity ratio: (D/E) indicates that a portion of the shareholders equity and debt

is being used to finance a companys assets. Apple, Inc. has a low D/E ratio .41 showing
consistent with the industry D/E ratio of 0.41.
The current ratio: A financial ratio that measures if a firm has enough valuable resources
to pay off its debt within the next year. The companys current ratio is 1.00, which matches the
overall industry ratio of 1.00.
A quick ratio: Used to gauge a companys liquidity; this compared the amount of total
cash, marketable securities, and accounts receivables to the amount of current liabilities. Apple,
Inc. show a quick ratio if 0.82 compared to the overall market of 0.82. This would indicate that
the company is able to liquidate at a comparable rate to the industry.
An interest coverage ratio: Uses the debt ratio and profitability ratio to determine how
easily a company can pay interest against its outstanding debt. Apple, Inc. has an interest
coverage ratio of 83.77, while the overall industry interest coverage ratio is at 82.36.
The leverage ratio: measures how companies rely on having a mixture of owners equity
and debt to finances its operations. This ratio measures how much capital comes in as a form of
debt such as loans and other financial obligations. Apple, Inc. has a leverage ratio measuring at
2.29 compared to the industry measuring at 2.32 it can be assumed that the company has few
financial obligations.

10-Year Summary

Over the past 10 years Apple, Inc. has showed steady continuous growth. The company
shows an increase in sales. Net profit was increasing pretty steadily until about 2012 then it
dropped off a bit and has continued steady since. Apple, Inc. has shown a steady increase in

book value/ share. Also having shown a bit of ups and downs for return on equity and return on
assets with an overall increase for both.

Investment Return Ratios

Return on Equity: The ability to generate profits from the shareholders investment.
Apple, Inc. shows a rate of return at 42.71% or 43 cents of profit for every dollar of investors
money. This is a little above the industry return on equity, which is approximately 42 cents per
investor dollar. Apple, Inc. shows a much higher ability to generate profit without needing as
much capital.
Return on assets: The ability to earn a return on investment in assets. Apple, Inc. shows a
rate of return on assets at 19.36% or $19.36 of net income for every dollar invested in assets.
Apple, Inc. is above the industry with $18.80 of net income for every dollar invested. It can be
assumed that Apple, Inc. manages assets to produce greater amounts of net income more so than
others in the industry.
Return on capital: The ability to generate profit from it capital employed. Apple, Inc.
shows a rate of return on capital at 29.64% or $29.64 of profit for every dollar invested in
capital. Apple, Inc. is a bit below the industry with $30.18 of profit for every dollar invested in
capital. Knowing this information, one may assume that Apple, Inc. does a good job of using the
companys capital as well as long term financing strategies.

Management Efficiency

Inventory Turnover: This figure shows how efficient a company controls its inventory.
Apple, Inc. shows a rate of 59.43 times. This means that Apple, Inc. sold its inventory
approximately 60 times during the year. Compared to the industry inventory turnover that is

Apple, Inc. 21


approximately 50 times during a year. Apple, Inc. maintains a great grasp on inventory control,
while setting a higher rate of inventory turnover than the industry.
Income/Employee: This figure shows the amount of revenues per employee. Apple, Inc.
shows a much lower rate of productivity per employee at 88.46 thousand than the industry at
164.49 thousand. This means that each employee at Apple, Inc. contributes approximately
88,000 in revenues.

Growth Rate (%)

Sales (Revenue)
Q/Q (Last Year)
Net Income
YTD/YTD (Last Year)
Net Income
Q/Q (Last year)
Sales (Revenue)
5-Year Annual Average
Net Income
5-Year Annual Average

Price Ratios
Current P/E Ratio
P/E Ratio 5-Year High
P/E Ratio 5-Year Low
Price/Sales Ratio
Price/Book Value

Profit Margins (%)

Gross Margin
Pre-Tax Margin
Net Profit Margin
Average Gross Margin
5-Year Annual Average
Average Pre-Tax Margin
5-Year Annual Average

Financial Ratios
Debt/Equity Ratio
Current Ratio
Quick Ratio
Interest Coverage
Leverage Ratio

Investment Returns

Company
1.70

Industry
1.50

35.10

21.18

1.90

1.87

29.08

107.75

30.70

23.96

Company
11.31
14.15
9.77
2.59
4.59
Company
40.13
30.93
22.87
40.10

Industry
11.85
24.10
12.23
1.78
3.46
Industry
39.97
30.39
22.46
39.90

31.40

30.89

Company
.41
1.00
.82
83.77
2.29
Company

Industry
.41
1.00
.82
82.36
2.32
Industry

Return on equity %
( 5 year average)
Return on assets %
(5 year average)
Return on capital %
(5 year average)

Management Efficiency
Income/ Employee
Inventory Turnover

42.71
(39.00)
19.36
(22.70)
29.64
(33.30)
Company
88.46k
59.43

42.15
(37.37
18.80
(20.90)
30.18
(32.81)
Industry
164.49k
49.80

These ratios show us that Apple, Inc. is financially strong with Net income. Apple shows
a weakness with 5-year annual sales Revenues. Apple, Inc. has a rate of return on capital of
29.34 showing Apple, Inc. has the capability to raise needed short-term and long term capital
through equity. Apple demonstrates they have sufficient working capital through the return on
equity. Capital budgeting procedures that Apple, Inc. uses seem to be an effective tool for Apple.
With Apple, Inc. dividends exceeding the industry the dividends payout policy is reasonable.
With the continued financial incline Apple, Inc. has shown this indicates a good relations with its
investors and stockholders. The management shows a good understanding for increasing
inventory turnover for the company, but they fail to show significant understanding of ways to
increase income per employee.

Questions answered by Apple, Inc. financial ratios

Apple, Inc. demonstrates financial strength by demonstrating the ability to easily pay

interest against it debt, while showing a financial weakness of how much capital comes in as a
form of debt such as loans and other financial obligations.
Apple, Inc. shows the ability to raise needed short term capital by the ability to create
sales revenues and can raise needed long-term capital through equity.
Apple, Inc. has sufficient working capital shown by the companys ability to generate a
profit from the companys working capital.

Apple, Inc. 23


Capital budgeting procedures used for Apple, Inc. seem to demonstrate the effectiveness
of having these procedures in place.
Apple has reasonable dividend payout policies that make them really attractive for
investors.
With most of Apple, Inc. investment ratios exceeding those of others in the market this
demonstrates a positive relationship with investors and stockholders.
From the looks of the management efficiency ratios Apple, Inc. could use some
assistance to train and help improve the firms financial managers
Competitive Strategies

Opportunities
1. Product development
2.Technology
3. Social
4. Opportunity for green
business operations
5. Distribution
6. Pricing
7. Consumer preference
8. Opportunity for growth
Threats
1. Competitors
2. Economy
3. Legal
4. Generational differences
5. Online Shopping
6. Technological advances

Strengths
1. Multiple products
2. Revenue Increase 52%
3. 70% net income increase
4. Increase sales in US 29%
5. US & International market
6. Inventive marketing
strategies
7. Brand Recognition
8. 233 retail stores in the US
SO Strategies
1.Develop multiple products in
the technology industry
(S1,O1,O2)
2. Use inventive marketing
strategy, pricing, consumer
preference, and brand
recognition to increase sales
and revenues
(S2, S4, S6, S7, O6, O7)

Weaknesses
1.No President of divisions
2. 84 international retail stores
3. 38% sales driven by Iphone
4. 26% sales driven by desktop
5. Small portion in the
international market
6. Depends heavily on US
market

ST Strategies
1. Use inventive marketing
strategies and brand
recognition to attract people
from all generations.
(S6, S7, T4)
2. Use multiproduct innovation
to make technological advances

WT Strategies
1. Use online shopping to
become more competitive in
the international market and
create the reliance of multiple
economies instead of a
majority on the US market.
(W5, W6, T2, T5)

WO Strategies
1. Be innovative with product
development to spread sales on
different products (O1, W3,
W4)
2. Use opportunity for growth
to expand the international
market
(O8, W2, W5, W6)

against competitors.
(S1, T6, T1)

2. Develop a president of
divisions to increase sales in
multiple areas of the company
to help surpass the
technological advances of
competitors
(W1, W3,W4, T1,T6)

I have used the matching strategies to formulate possible strategies to help Apple, Inc. become
the leading personal computer product retailer over its competitors. Below is a rationale for the 2
strategies from each category.
SO Strategies
Apple, Inc. uses top-secret innovation centers to inspire multiple products in technology. Apple
often continues to innovate already well profitable products to keep loyal customers interested in
their products as well as create new advanced and different products. Apple invest heavily in
marketing and promotional campaigns using direct mail, print media, TV commercials, internet
advertising, product placement, and social networking websites (David, pg. 266). The exposure
gained through the use of these marketing strategies helps Apple, Inc. maintain brand recognition
while increasing sales and revenues.
WO Strategies

Apple, Inc, takes pride in being innovative with products ahead of their competitors. Producing
additional products to broaden the profits of sales through more products will help Apple to
spread the sales among multiple products instead of earning a majority of sales from just a few of
the companys products. Apple can take advantage of international markets to open up a big
opportunity for growth.

Apple, Inc. 25


ST Strategies
Through strategic and innovative marketing and a well-known brand recognition Apple, Inc. has
the opportunity to close the gap of generational differences that exist with technology. When
focusing on multiple products instead of just one this helps Apple, Inc. make technological
advances ahead of competitors.

WT Strategies
Apple, Inc. can broaden their online shopping capabilities to expand more into international
markets. This will help Apple have a broadened reliance on multiple economies to help spread
out the reliance of success on other economies besides just the US economy. Incorporating a
president of divisions could help increase the sales in multiple areas of the company by having a
specific person that focus on where this attention is needed, this could help the company to
develop technological advances over competitors.


Strategic Alternatives

1. Develop a new
search engine to
compete with
Google

Key Factors

Weig
ht

AS

TAS

.12

.48

2. Improve
product
functionality to
spread sales
among multiple
devices

3. Open additional
retail store in India

AS

TAS

AS

.24

TAS

Opportunities
1. Product

Development
2. Technology

.10

.40

.40

.40

3. Social

.02

.04

.04

4. Green
operations

.05

5. Distribution

.08

.24

.08

6. Pricing

.05

.20

.20

.20

7. Consumers
preference

.09

.09

8. Opportunity
for growth

.07

.28

1. Competitors

.08

.32

.32

2. Economy

.06

.18

3. Legal

.09

4. Generational
Differences

.07

.07

.14

5. Online
Shopping

.06

.18

.24

.24

2
.18

.27

Threats

6.
Technological
advances
Strengths

.06

.18

1. Multiple
products

.10

.30

.40

2. Revenue
increase 52%

.08

3. 70% net
income
increase

.06

Apple, Inc. 27


4. Increase
sales in US
29%

.06

.05

6. Inventive
marketing
strategies

.07

.28

.28

7. Brand
recognition

.09

.27

8. 233 retail
stores in US

.07

1. No president
of divisions

.04

.08

2. 84
international
retail stores

.06

.24

3. 38% sales
driven by
Iphone

.08

4. 26% sales
driven by
desktop

.08

5. Small
portion in the
international
market

.07

6. Depends
Heavily on US
Market

.09

.36

Total

1.00

5. U.S. and
International
market

.27

.36

Weakness

2.31

2.63

3.51

The Qualitative Planning Matrix (QSPM) can be reviewed above. I have constructed three
alternative strategies for Apple, Inc. to consider. These strategies consist of develop multiple
product innovations in the technology industry, use innovation with product development to
spread sales among multiple products, and use opportunity for growth to expand into the
international market. All these strategies could provide Apple, Inc. with the needed edge to
expand in the market over their competitors.
Within the Qualitative Planning Matrix is the attractiveness score of each strategy that I
have came up with for Apple, Inc., the strategy with the highest attractive score indicates which
strategy will work best for Apple, Inc., helping the company to become the leading personal
computing company among its competitors.
The first strategic alternative in the Qualitative Planning Matrix is developing multiple
product innovations in the technology industry. With the need for changing technology to offer
multiple functionalities within the same brand this alternative is a very attractive alternative to
show innovation among multiple product lines. Apple has made strides with the innovation of
their operating system to develop products that can provide all the important and necessary
functions within several Apple, Inc. products. I think the focus of this strategy is where Apple,
Inc. would need to apply this type of innovation into a device that would be a whole different
kind of product that no competitor has introduced in the technology industry yet. The total
attractiveness score for this alternative is 2.31
The second strategic alternative in the Qualitative Planning Matrix is being innovative
with product development to spread sales among multiple products. Since a majority of Apple,
Inc. sales comes from a couple of the companys products, it is important for Apple, Inc. to be
innovative to attract higher sales among multiple products. Since the Iphone carries a majority of

Apple, Inc. 29


the sales produced for Apple, Inc., it is important for Apple to develop a strategy that could help
the company spread their sales among other Apple products. Apple, Inc. would need to focus this
strategy on innovative marketing as well as innovation among other products within their brand,
to help them become more appealing to consumers. The total attractiveness score for this
alternative was 2.63.
The last strategic alternative in the Qualitative Planning Matrix is use opportunity for
growth to expand in the international market. Apple depends very heavily on the US economy
with expansion in the international market Apple, Inc. will not have to rely so heavily on just the
US economy. This will also help Apple, Inc. become larger by providing the opportunity to reach
a greater customer base. Apple has around 84 retail store internationally, though their products
are available online for these customers, the introduction of more retail stores in other countries
could also bring awareness for their brand as well as other products they offer. Apple, Inc. would
want to focus on areas where these stores would show the most effectiveness for the company
along with the biggest growth. The total attractiveness score for this alternative was 3.51.
Ethical and Social Responsibility

Apple, Inc. customers relations rely heavily on the ethical consideration Apple
demonstrate while conducting everyday business. Apple, Inc. must demonstrate the utmost ethics
when considering expanding further into international markets. It is important for Apple to be
both understanding and prepared for the entry of retail stores into new cultures. The best way for
Apple, Inc. to continue to demonstrate a high level of ethics is by continuing to put their
customers first.

Recommendation

The strategic alternative with the greatest total attractive score is that of the use opportunity for
growth to expand in the international market.
The expansion of the customer base would allow Apple, Inc. to reach a different dynamic
of customers which could help to become an even larger named brand around the world while
providing the opportunity for Apple, Inc. to provide additional products. Often times people from
different places, could use a range of different functionalities, this helps Apple, Inc. to relate
some of their products that might not be needed as much in the current markets, to a new
spectrum of clientele.
Leading us into promote the sales of additional product by opening up the market to
additional areas that could have different types of needs. Since Apple does have a majority of
their business in the US, with the expansion of their international market this could show to be
beneficial at divvying up the sales among multiple products, instead of relying so heavily on both
the Iphone and desktops sales.
The introduction of new products, through the expansion into any new market could
bring new ideas for products that may better suit the customer. This could help lead research and
development into new ideas that could prove to be desired by current Apple customers.
The dependency on multiple economies helps provide Apple, Inc. with better opportunity
for growth even when one economy may struggle, others could flourish allowing Apple, Inc the
opportunity for continuing growth.
Apple, Inc. can gain innovative ideas and technology through the entrance into a new
market, by studying the wants and needs of new customers in these regions. With ideas gained
from these new markets this could prove helpful for Apple, Inc. with Research and development

Apple, Inc. 31


not only for the new market but also in markets they currently serve. With the added
international retail stores this could provide Apple just the edge they need to exceed the
companys competitors.

Implementation

The implementation plan for Apple, Inc. to use opportunity for growth to expand the

international market will need to be precisely communicated and implemented with people
throughout the company, while continually monitoring all factors of the project to insure the
financial budgets are maintained as well as deadlines met. Below I will explain the role of each
of the key participants in the implementation of the strategic plan. This strategy could help to
expand the customer base, promote the sales of additional product, the introduction of new
products, and the dependency on multiple economies. This strategy not only holds the highest
attractive score, but this also could minimize some of the threats and weaknesses while
maximizing the Strengths and Opportunities of Apple, Inc.
The Chief Executive Officer Tim Cook will begin the implementation plan by
coordinating and communicating the plan with all other members of the company, through the
use of a company announcement before beginning the execution of the expansion of a Apple,
Inc. retail store in the international market.
Following the communication of the strategy by Mr. Cook, Luca Maestri Vice President
and Chief Financial Officer will follow up with the communication of the financial plan for
implementing the expansion in the international market, as well as operational details of the up
coming plan. The operational plan will lay out all the key factors and groups involved in making
this plan practical.

With the financial plan developed and communication, next comes the role of Senior
Vice President of World Wide Marketing for Apple Philip Schiller. Philip Schiler is responsible
for sharing the marketing plan that will be used to attract business for the expansion into the
international market, as well as demonstrating how they will be able to stay within the given
budget for marketing.
The role of the research and development group of Apple, Inc. is responsible for sharing
the strategy and plans they intend to investigate in order to determine if they will develop new
products, procedures, or make improvements to existing products.
The Vice president of Human Resources for Apple, Inc. Denise Young Smith takes the
role of training and development, employee relations, and hiring for the expansion of
international markets.
To make sure that all factor are implemented it will be imperative for the communication
of the progress throughout the implementation of the expansion. In an effort to insure the smooth
implementation of this plan I have provided below a short summary of the task and expectations
of each group.
Executives: Communication of strategic plan company wide as well as the execution and
timeline plans.
Finance: Communication of the $7.2 Billion being used to develop the project as well as
allocating how these funds will be split up.
Marketing: Promote and attract new and existing customers to the new international location in
India.
Research and Development: Research the demographic to determine the needs and kinds of
products desired by customers, then develop additional products to meet these needs.

Apple, Inc. 33


Human Resources: Acquire talented and a driven team of professional to help grow the new
location in India.
The communication of this plan is important so all employees are aware of the process as
well as progress obtained during the implementation of the plan. The estimated cost of $7.2B is
based on acquiring a space to house the retail store, construction and renovations required to
meet the needs of the store, purchase inventory, promote marketing and advertisement, hire and
train new employees, research and development within the targeted area, and obtain required
permits and regulator requirements from local government. In order to complete this plan in an
organized and timely manner all the people we have discussed will need to perform their
required roles in a sufficient manner.
Financing

Apple, Inc. can consider a few alternatives for raising capital in the EPS/ EBIT analysis. Which
include Common Stock financing, debt financing, or a combination.
o Amount required- $7.2 Billion
o EBIT Range- 50,291 73,248
o Interest Rate- 3.5%
o Tax Rate- 36%
o Stock Price- $105.00 per share
o # of shares- 5.54B
EPS/EBIT Analysis ( In Billion)
Debt Financing

Common Stock Financing

Recession
EBIT

50,291

Normal
53,867

Boom

Recession

73,248

50,291

Normal
53,867

Boom
73,248

Interest
EBT
Taxes
EAT

1,760

1,885

2,564

50,291

53,867

73,248

48,531

51,982

70,684

18,094

19,392

26,369

17,471

18,714

25,446

32,197

34,475

46,879

31,060

33,268

45,238

5,608

5,608

5,608

5,540

5,540

5,540

5.74

6.18

8.36

5.61

6.01

8.17

# of
Shares
EPS

70% Stock 30% Debt

Recession

Normal

70% Debt 30% Stock

Boom

Recession

Normal

Boom

EBIT

50,291

53,867

73,248

50,291

53,867

73,248

Interest

1,232

1,320

1,795

528

566

769

EBT

49,059

52,547

71,453

49,763

53,301

72,479

Taxes

17,661

18,917

25,723

17,915

19,188

26,092

EAT

31,398

33,630

45,730

31,848

34,113

46,387

# of
Shares

5,588

5,588

5,588

5,560

5,560

5,560

EPS

5.62.

6.02

8.18

5.73

6.14

8.34

Data retrieved from stock-analysis

The analysis of the above chart shows that Apple, Inc. selling more shares is the best way for
them to obtain the capital needed to expand in the international market. The EPS is the highest
under the selling more shares option. This chart shows us that the second best option is 70%
Debt- 30% Stock.

Year
Sales Revenues
COGS

Projected Financial Statement

1
2
3
170,910
182,795
233,715

4
287,659

106,606

141,490

112,258

140,089

Apple, Inc. 35


SGA
10,830
11,993
14,329
14,715
Depreciation
7,946
11,257
9,803
14,729
Operating
15,305
18,034
22,396
23,754
Expense
Taxes
10,880.28
10,531
16,955
33,470
Net Profit
19,343
18,722
30,143
59,501
Data used from Apple Investor report

Tax Rate: 36%
Starting Sales:
Sales Growth Rate: 7.03%
Cost of Goods Sold %: 1.01
SGA %: 10.3
Depreciation: 4.6%

The above projected income statement shows data for four years, this shows an expected
7.03% increase in sales revenues from the suggested strategic plan of expanding a retail
store into India. Cost of goods has shown an increase of 1.01% from the recommended
strategy, while taxes remained at a consistent 29%.

Retrieved from MSN.Com

Conclusion

In Conclusion Apple, Inc. suggested strategy of expanding the international market by opening
an additional retail store in India according to all the required steps of the implementation
process is a very realistic and reachable through the combined efforts of all departments of
Apple, Inc. With a lot of research and development mixed with marketing techniques this
strategy could really help Apple, Inc. grow in the international market helping them to expand
the company. An important thing to note is that strategic planning takes the efforts of all
members of Apple, Inc. and not just any one department. They all bring their own parts into the
planning.

Apple, Inc. 37

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Appendix: