Business Analysis of Apple Inc. free essay sample

Business Analysis of Apple Incorporated Sarah Norton MGT/521 May 16, 2011 Jerry Davis Business Analysis of Apple Incorporated Apple Incorporated is a company that has made their mark in designing and marketing electronics, computer software, and personal computers. Some of Apple Incorporated’s most notable products include the Macintosh computer, the iSeries; iPod, iPhone, and iPad. Along with these computer applications Apple Incorporated also runs the iTunes store; a multimedia site where music, movies, and television shows. There branding genius has led to $65. 23 billion dollars in sales in 2010. Looking at Apple Incorporated as a mutual fund manager it is important to perform a business analysis of the company to decide if it is wise to invest in this company. SWOT Analysis The strength of Apple Incorporated includes strong brand image and marketed financial performance. Weaknesses of Apple Incorporated are product recall and the competitive market of electronics including IBM, HPQ, and Dell. Opportunities for Apple Incorporated include demand for smartphones and continued growth of need for mobile computers as society has become more mobile and needs for technology flourish. We will write a custom essay sample on Business Analysis of Apple Inc. or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Threats to the growth of Apple Incorporated include competition, dependence on specific suppliers, and environmental concern that Apple Incorporated is not a green company. The stakeholders of Apple Incorporated include shareholders, lenders, apple employees, manufacturers and their employees, customers, suppliers, and the music industry. All stakeholders have unique interests in the productivity and development of Apple Incorporated products. Shareholders are looking for growth and the chance to gain a return on their investments. As the company grows and earns more money stock goes up and gives shareholders confidence in Apple Incorporated Lenders have vested interest on success and innovation of Apple Incorporated because the institutions want the company to succeed and can repay debts earned. Employees of Apple Incorporated need the business to succeed so they can continue to have solid jobs in the industry. There are currently 46,660 full-time and 8000 part-time employees at Apple Incorporated. Manufactures and their employees need Apple Incorporated to continue to make product to keep their businesses flourishing and retain employment. Suppliers of Apple Incorporated products need the business to flourish so they can bring product to market. Last the music industry has vested interest in Apple Incorporated to continue to provide services that will expand their businesses and revenue. Currently music labels earn approximately 70% of the revenue- driven by downloading signed artist music. With the music industry’s reliance on moving with technology for profit, they see a need to fulfill customer’s wants of being able to get the music he or she want to purchase with speed and ease. The importance of all stakeholders who would be affected by Apple Incorporated’s growth and development makes it very important to evaluate wisely SWOT data to see if it would be acceptable to invest further in the company. Investing in Apple Incorporated Apple Incorporated’s strength’s lies in its branding platform. Their logo of a bitten apple is recognized globally. The iSeries continues to be in high demand and held as the gold standard. Sleek, colorful design and touch screen application are some of the offerings brought to market from Apple Incorporated Sales have continued to explode with each new generation of products released. Apple Incorporated continues to work on more innovated products that would allow for multiple systems usage on one computer. This would allow the customer to use Apple Incorporated MacIntosh PCs in conjunction with Microsoft. This would allow the customer a choice to use the best application to complete projects and mesh existing paperwork together. Apple Incorporated’s financial performance continues to grow exponentially earning $24,578 million total revenue in 2007 to $42,905 million total revenue in 2009. This is a growth rate of 32. 1%, giving shareholders confidence in the growth of Apple Incorporated. The weaknesses of Apple Incorporated include product recall; Apple Incorporated’s products are complex in nature and made by third party manufacturers. When recalls ensue it is damaging to Apple Incorporated’s reputation and can lead the customer to one of many competitors. Apple Incorporated must stress the importance of quality control and provide immediate rectification to any products that do not produce acceptable standard. Apple Incorporated continues to capitalize on the need of mobile phones and PC’s. As businesses continue to grow globally, immediate feedback is desired and communication is essential. Some common threats to Apple Incorporated’s success are problems that plague most businesses; competition, many brand name companies are following the trends of Apple Incorporated development. Apple Incorporated has to continue to be on the forefront of innovative ideas. Specific suppliers not living up to high standard must be investigated and may lose the ability to provide Apple Incorporated services to the customer. They perform monthly audits and training to their supplier staff for proper treatment and expectations in the workplace. Apple Incorporated has been scrutinized in the past for not being a green company. Apple Incorporated has addressed the concerns about being environmentally friendly and posts updates of their progress directly on their website. Apple Incorporated have also began a on old system by back program, producing energy efficient products which take little energy to run, added motion sensor lighting to their plants, and provide transit incentives for all United States employees to car pool or use biodiesel commuter buses. Financial Analysis Comparison To understand the financial means of a company, reviewing the income statement, balance sheet and cash flow clearly defines if the company is worth investing in. When considering investing money and time to a particular company, it is good to compare that companies financial reports with their biggest competitors. Financial Report: Companies |Apple 2010 |Apple 2007 |IBM 2010 |IBM 2007 |Dell 2010 |Dell 2007 | | INCOME STATEMENT- all number’s in millions Total Revenue |65,225 |24,578 |99,870 |98,786 |61,494 |57,420 | |Gross Profit |25,684 |8,152 |46,014 |41,728 |11,396 |9,516 | |Operating Income |18,385 |4,407 |18,150 |13,516 |3,433 |3,070 | |Income Before Tax |18,540 |5,006 |19,723 |14,489 |3,350 |3,345 | |Income After Tax |14,013 |3,495 |14,833 |10,418 |2,635 |2,583 | |Net Income Before extra items |14,013 |3,495 |14,833 |10,418 |2,635 |2,583 | |Net Income |14,013 |3,495 |14,833 |10,418 |2,635 |2,583 | | BALANCE SHEET Total Current Assets |41,678 |21,956 |48,116 |53,177 |29,021 |19,939 | |Total Assets |75,183 |25,347 |113,450 |120,432 |38,599 |25,635 | |Total Current Liabilities |20,722 |9,280 |40,562 |44,310 |19,483 |17,791 | |Total Liabilities |27,392 |10,815 |90,404 |91,960 |30,833 |21,196 | |Total Equity |47,791 |14,532 |23,046 |28,469 |7,766 |4,439 | |Total Liabilities Shareholder’s Equity | 75,183 | 25,347 | 113,450 | 120,430 | 38,599 | 25,635 | | CASH FLOW Cash From Operating Activities | 18,595 | 5,470 | 19,549 | 16,088 | 3,969 | ,969 | |Cash From Investing Activities | -13,854 | -3,249 | -8,507 | -4,675 | -1,165 | 1. 003 | |Cash From Financial Activities | 1,257 | 739 | -12,429 | -4,740 | 477 | -2,551 | |Net Change in Cash | 5,998 | 2,960 | -1,522 | 6,969 | 3,278 | 2,492 | | The above data outlines a stark contrast between all three competitors. Looking at the income statement; Apple Incorporated’s total revenue grew from $25 million in 2007 to $65 million in 2010. In compa rison, IBM’s total revenue only grew from $98 million in 2007 to $99 million in 2010. Although IBM’s revenue is considerably higher they have stayed flat over the past four years where Apple Incorporated has more the doubled. Dell’s revenue in 2007 was $57 million and $61 million in 2010. This is very small increase in four years and Apple Incorporated has now surpassed Dell in revenue earned. Looking at net income, Apple Incorporated has grown from $3. 5 million to $14 million, this a market gain of three times their total profit in four years. IBM and Dell have stayed flat and not markedly increased their net incomes. Comparing the balance sheets of each company, the total liabilities and share holder equity has again grown three times for Apple Incorporated from $25 million in 2007 to $75 million in 2010. IBM has decreased from $120 Million in 2007 to $113 million in 2010. Dell has not decreased but has shown marketable change going from $25 million in 2007 to $38 million in 2010 compared to Apple Incorporated. Cash flow between 2007 and 2010 for each company is vastly different. Apple Incorporated net change in cash went from $3 million to $6 million. IBM’s cash flow decreased from $7 million to -$1. 5 million and Dell’s growth was again minimal from $2. 5 million in 2007 to $3 million in 2010. Analyzing the financial data of the three companies, Apple Incorporated, IBM, and Dell it becomes apparent that Apple is far exceeding expectations of growth and development in the past four years. With new products in the pipeline and investing $14 million in 2010 in to new product development compared to IBM’s investing of $8. 5 million and Dell’s $1 million, it gives shareholders confidence that Apple Incorporated will continue to grow and become a strong leader in the business. Investing in Apple Incorporated’s Future. Evaluating the SWOT information and the financial comparison of their biggest competitors, Apple Incorporated, will continue to be a market leader. Committed to growth, innovation, development, and green initiatives, weighing the increased profitability over the past years and the production of new software that can be used on all systems from Macs to Window’s application, it appears that Apple Incorporated would be a great company to invest in. References Abimbola, T. (2010). Brand Strategy as a Paradigm for Marketing Competitive. Journal of Brand Management, 18( ), 177-179. Apple Inc. (2011). Apple and the Environment. Retrieved from http://www. Apple. com Schultz, P. , Helicoid, D. Journal of Critical Incidents, 3( ), 42-49.