HW#4
Make a recommendation on what Apple should do
Apple should prioritize its expansion in the services segment and leverage its existing strengths in hardware. Apple should further invest in enhancing and developing its suite of services like Apple TV+, Apple Pay, Apple Music, etc. and explore new avenues like privacy-as-a-service. By leveraging its hardware strengths and prioritizing expansion of its services, Apple can continue innovation, diversify its revenue streams, and create distinctive value propositions for customers across its ecosystem. In an evolving technology landscape, Apple can position itself for ongoing success.
How are we going to get started
Apple can get started by allocating resources towards strategic partnerships, talent acquisition, and research and development. This could include bolstering investment in current services, putting time into new projects like self-driving cars, and emphasizing collaboration between its services and hardware divisions. Appl can also focus on effective customer engagement and marketing strategies to enhance loyalty and uptake towards its services.
How much will it cost, how are they going to pay for it
Based off Exhibit 1a, Apple’s Research and development expenditure for the 2019 period is $16,217, which represents about 6% of net sales. Apple could allocate a proportionate amount or slightly higher to further invest in R&D for new ventures and services. Apple could use its total cash, cash equivalents, and marketable securities, which amounts to $100,557, to fund strategic partnerships and acquisitions. However, they do vary widely depending on the scope of the deals. When looking at enhancing its current services, like Apple Pay, Apple would have to use research & development expenses, infrastructure investments, marketing costs, and regulatory compliance. It could cost several hundred thousand or over a million to enhance its services.
Apple will have to balance between its funding strategic initiatives and ensuring it maintains enough liquidity to support its everyday operations, other investment opportunities, and strategic acquisitions. When deciding to use its cash reserves. Apple needs to assess the potential uncertainties and risks that could impact its future liquidity
needs and cash flows. Apple’s liquidity position may temporarily reduce if using a huge portion of its cash reserves for investment purposes. However, Apple should be able to replenish its cash reserves gradually over time, given Apple’s consistent cash generation and profitability from its operations.
In response to this, competitors may face increased pressure as Apple may draw customers away from competitors due to its new and improved services. Also, competitors may need to reassess their own priorities and strategies. They could
