Fortune 2

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1 Strategic Analysis: Apple Inc. Your name Institutional affiliation Course Date

2 Strategic Analysis . An analysis of key financial ratios is essential in determining financial performance of any organization. Apple’s current ecosystem includes home devices, iPad, Mac, iPhone, wearables and a range of accessories and services. The organization managed to progress due to its high technical innovation, minimalistic designs and creative product advertisements under the leadership of the former CEO Steve Jobs. Apple is the modern most valuable brand. The organization enjoys a base of loyal customer base. The huge customer base has enabled the organization to experience unparalleled growth from the value of $8 billion in 2004 to over $270 billion in 2020 ("Apple Cash Flow from Operating Activities 2010-2021 | AAPL", n.d.). Apple brand is currently valued at $612 Billion. Apple makes an annual revenue of $365.82 Billion and spends $21.91 Billion on research and development. This high expenditure on research is the reason for its leadership in innovation. iPhone is the leading global product of Apple Inc and contributes to more than 57% of revenue as of financial report for Q 4 ’21. Apple iPads follows with a cumulative of 38% of global shipments.

3 Apple made net sales of $365.82 billion in 2021 financial year. This is a slight increase from the historical record of $74.52 billion in 2020. The annual revenue of apple has quadrupled in the last ten years as shown in the graph below. At the central of Apple’s technological leadership is its leadership and vision that is based on continuous technological innovation and intelligent strategies of product marketing. Apple has successfully changed the computing to the next-generation device industry, the organization will manage to sustain its growth only if they continue to be the innovative leader and utilize effective marketing strategies. With respect to this, Apple must focus on diversification and cost- effective strategies that sustains its innovation based on new market demands. The organization

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4 should also utilize its large capital based and established brand image to explore new markets while also focusing on making their products more universal by unlocking their products’ full value to their customers. Despite these growth, Apple remains to be the tech company with the largest market gap as of June 2020 ("U.S. tech and internet company market cap 2020 | Statista", 2022). As highlighted earlier in the financial analysis, Apple has three main revenue streams; iPad, iPhone and MAC. The performance of the organization has been shaped by various external and internal factors. The most important factor is the tech environment. The open format of other organizations like Microsoft and IBM presents apple with a bigger challenge given that their device is Macintosh. However, several environmental factors have also enabled it to achieve its success. One of the main factors that has facilitated the success of Apple Inc. is customer assessment and knowledge. By knowing how customers think, what they desire and how they make decisions provides Apple with the information to know what to provide for the customers. Apple ensures that they provide customers with a vale for money experience. To ensure that they maintain their lead, Apple must be successful in making their customers to have a desire to own their product by rewarding their customers with more than tangible product. Product support and good customer can enhance the perception of value for money. Focus on customer satisfaction enables the organization to come up with innovative products. This is why the organization invests heavily on research and development. This practice allows the organization to innovate successful business solutions (He, 2021). Additionally, Apple is working to create good software solution for its customers since their

5 product is differentiated. The provision of software solutions ensures that Apple remains as a strong competitor in the tech industry. Analysis of Strategy: Applying Porter’s strategy framework. Threat of new entrants. Threat of entry is relatively low due to high initial capital investment and challenge of establishing a trusted brand. Level of competition. Apple has a number of companies that they compete directly, this makes the level of competition high. All these organizations have placed high stakes on research and development. Buyers bargaining power . Individual bargaining power is low; however, collective bargaining power is high. Apple manages this force by continuously investing in research and development to be able to develop new and unique products. This helps them to maintain the loyalty of its customers. Supplier bargaining power. Suppliers bargaining power is low/weak. Apple has a large number of potential suppliers who can supply sufficient materials. Apple is free to choose from a large pool of suppliers. Threat of substitutes. The threat of substitutes is low since most of the substitutes have limited capabilities. Apple has successfully differentiated its products.

6 Recommended strategies. Apple should consider redesigning its mission statement. Mission and vision statements of an organization can help direct the organizational strategy. They provide goals and purpose, which are essential elements of strategy. The mission statement outlines the audience of the enterprise and what the customers finds as essential. Apple’s mission statement is poorly outlined. However, the organization has managed to be successful. Maybe by rediscovering the mission statement, the organization shall improve. Apple should also consider improve its supply chain. Apple is still short in supply chain and ability to penetrate into new markets. Most customer find it difficult to acquire the product since most must visit the apple store to acquire an apple device. Apple should also improve their software production and availability. Apple products are still limited software-wise despite various efforts to develop consumer software. Basic software should also be free. Implementation of the strategy. On the mission statement, Apple should consider using relevant concepts and ideas to critically evaluate the organization mission statement. Realization of this requires direct involvement of the organizational leadership. Apple should as well consider partnering with more distributors to improve availability of their products and overall market reach. This will also make a huge contribution to research and

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7 designs since it is through direct contact with customers that the organization will be able to listen to customer’s dissatisfaction. Apple Inc. should as well increase investment in generation of free software for both iPhone and Mac. Availability of a wide variety of applications encourages customers to acquire the product. Too much in-app purchases increase the overall cost of maintenance of the devices which discourages most consumers.

8 References Apple Cash Flow from Operating Activities 2010-2021 | AAPL. Retrieved 16 April 2022, from https://www.macrotrends.net/stocks/charts/AAPL/apple/cash-flow-from-operating-activities He, M. (2021, March). Analysis of iPhone’s Marketing Strategy. In 6th International Conference on Financial Innovation and Economic Development (ICFIED 2021) (pp. 669-672). Atlantis Press. U.S. tech and internet company market cap 2020 | Statista. (2022). Retrieved 16 April 2022, from https://www.statista.com/statistics/216657/market-capitalization-of-us-tech-and-internet- companies/

Fortune 2

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