Apple Inc

By Author: Sherry Roberts
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Apple Inc. is bound to grow and become a major competitor in the market. The company’s emphasis on quality over quantity enables the company to acquire a niche in the highly competitive IT market. Apple should uphold its research and creativity so as to continue manufacturing products that match customer needs.
Overview of Company
Apple is a multinational that focuses on the manufacture of consumer electronics, software, and commercial servers. The company’s core products include the iPhone smartphone, iPad tablet computer, and the Macintosh line of computers. Founded in 1976 by Steve Jobs and Steve Wozniak, the company has become a strong competitor in the information technology industry. Apple competes with giants such as Microsoft, Samsung, Dell, and Google. Apple continued success is because of its commitment to introduce the best personal and music experience to its broad clientele. Apple product line indicates that the company caters for individual, professional and business needs.
Financial Analysis
The financial analysis of Apple Inc. will focus on the 2005 financial performance. The company ...
... released its 2005 financial results in the 4th quarter of September 2005 with recordings of the highest revenue in the company’s history. The company recorded revenue of $3.68 billion and a net quarterly of $430 million the shareholders also received $.50 per diluted share. In 2004, the company had realized revenue of $2.35 billion and a net profit of $106 million. The shareholders received $.13 per diluted share. In 2005, the gross margin rose to 28.1 % compared to 27% in 2004. It was evident that the company’s business strategy to expand to international market bore fruits. In fact, the 2005 financial reports indicated that international sales accounted for 40% of the 4th quarter revenues. For instance, Apple shipped and sold 1.2 million Macintosh and 6.5 million iPods in the 4th quarter of 2005 (Apple, 2015). In general, Apple realized an overall revenue of $13.93 billion and a net profit of $1.335 billion representing a 68% and 384% annual growth respectively. Steve Jobs led the employees of the company in celebrating the highest financial performance in Apple’s history with the promise of improving the performance in the future. By the end of 2005, the company had renewed its efforts to manufacture new products that meet specific client needs. Apple also reported a 48% year-over-year growth in the shipment of more products by the end of the 4th quarter of 2005.
Summary of 2005 and 2004 overall financial performance
Two fiscal years ended September 24, 2005 2005 2004
(Amount in millions)
Net sales $ 13,931 $ 8,279
Net income (loss) $ 1,335 $ 276
Earnings (loss) per common share:
Basic $ 1.65 $ 0.37
Diluted $ 1.56 $ 0.36
Cash dividends declared per common share $ — $ —
Loss per share (in thousands):
Basic 808,439 743,180
Diluted 856,780 774,622
Cash, cash equivalents, and short-term investments $ 8,261 $ 5,464
Total assets $ 11,551 $ 8,050
Long-term debt (including current maturities) $ — $ —
Total liabilities $ 4,085 $ 2,974
Shareholders’ equity $ 7,466 $ 5,076

The 2005 financial analysis of Apple represents an organization that focuses on continued growth and success. For instance, the tremendous increase in net sales is an indicator that the company (Apple) is giving its competitors a run for their money. The EBITDA indicators from 2005-2009 indication an increase from USD 1.8 billion to USD 8.3 billion. A rise in EBITDA indicates an increase in consumer preference for Apple’s products. Apple’s 2005 financial health and performance reflect a company with a very low risk and very high growth rates. The chance of growth is because of the ability of Apple to remain high against its competitors. Additionally, Apple’s policy on the non-payment of dividends enables the company to reinvest its earnings (Apple, 2015).
Firm Analysis
Internal Analysis
The main strength of Apple is its dedicated customers. An organization thrives based on its ability, to capture and maintain their customer. It would appear difficult for a company to succeed in the highly competitive IT industry due to the presence of IT giants. However, Apple managed to capture and retain its customers over the years. The emphasis on innovation ascertains that the organization manufacture products that meet the customer’s specification. Additionally, innovations ensure that the organization can keep up with the technological changes in the market. To-date, Apple remains a leading innovator in mobile devices technology. Techno-savvy customers seek the most recent technologies when making their purchases. Apple thus gets to enjoy the advantage through its loyal and techno-savvy employees. Apple also boasts of a strong financial performance. The $1.3 billion 2005 profit is an indicator of subsequent improved performance for the organization. An organization that can realize profits can sustain itself in terms of managing its expenses and putting additional capital for expansion. Additionally, an organization can use its profits to expand its product portfolio.
Apple engages in extensive research that ensures that the company remains ahead in terms of manufacturing products that the customers need. Apple also boasts of a strong brand reputation that enables the company to make sales even in new geographical locations. According to Bracey (2012), the reputation of a business is critical for its survival. An organization has a positive reputation if it maintains high levels of ethical standards, records high financial performance and focuses on satisfying customer needs. A positive reputation equals to increased trust and confidence by the customers. The customers believe the organization’s word on the quality of their products. Similarly, a positive reputation equals increased customer confidence in the products and services that the organization offers. An organization that builds a positive reputation can self itself through the word of mouth (Bracey, 2012). The word-of-mouth technique sees customer market the company and its products to other persons. Subsequently, Apple increases its customer base with minimal effort.
Apple also experiences several weaknesses that can interfere with its performance. First the company maintains high prices for its commodity. Customers strive for pocket-friendly prices when seeking different products (Manjoo, 2013). Apple customers can easily shift to another manufacturer if they opt for affordable products. The highly competitive IT industry means that companies such as Microsoft and Dell compete with Apple over the manufacture of products. The second weakness is that Apple risks attracting its competitors to its closed ecosystem in the face of the decreasing market share. The market share decreases with an increase of market players.

External Analysis
By 2005, it was becoming apparent that Apple was fast becoming a leading digital asset management company and a global smartphone provider. The PC market continued to grow beyond the 4th quarter of 2005, and the company realized 17% every year. The local North American market was behind in terms of the expected forecast. However, Apple enjoyed significant growth in the international market. Apple had managed to beat competitors such as Microsoft, Acer, and Dell for the top spot in the IT industry. The information technology sector was shifting to mobile computing thus resulting in significant top-line growth. Apple Inc. also has to deal with political factors that it has no control over. Factors such as political instabilities, terrorism, and health issues has seen Apple record low sales in countries affected by the political factors (Hasan, 2013). As an alternative, Apple has opted to outsource in countries such as China and Korea. Economic factors also influence world economic conditions thus affecting employability and subsequent purchasing power. Low purchasing powers affect Apple’s product sales.
The external analysis also involves the analysis of the industry’s competition. Apple continues to maintain an intense rivalry with its competitors. The company has a reliable technical team that ensures the production of quality products. Subsequently, Apple enjoys high levels of customer loyalty. Apple thus does not have to worry about making sales for its products. The emphasis on quality products and the specification of customer’s needs guarantees sustained market share. The bargaining power of suppliers can influence the price of Apple products. The continued growth of Apple means that the company will be in need of new suppliers (Hasan, 2013). The introduction of new suppliers is a strategy that Apple uses so as to regulate the bargaining power of suppliers. Apple faces a minimal threat of new entrants as it has a niche in the IT industry. Apple boasts of a strong brand image, innovation, and excellent customer service. Additionally, Apple faces no threat of substitute products. The company may experience competition from existing IT firms e.g. Dell and Hewlett-Packard but customer loyalty ascertain Apple products have loyal customers
Recommendation
The management must adopt a participatory form of leadership so as to involve employees in research and innovation activities. Steve Jobs maintained an authoritative form of leadership as he made most decisions. A participatory approach would motivate employees to be creative. Creativity is the driver of IT companies, and Apple could tap the skills that its workforce possess. The involvement of employees also gives them (employees) a sense of responsibility thus the need for quality products. Currently, it is apparent that the modern customer emphasizes on quality rather than cost. Apple’s emphasis on quality will ascertain that it attracts and retains customers who desire quality products. Apple should also embrace diversity concerning its product line. The company should expand further in mobile technology and computer hardware and software. The provision of a wide product range provides Apple with financial security in case a specific line of products fails. Additionally, a wide product range ascertains that Apple captures a wide employee pool in terms of quality and cost of the products (Manjoo, 2013).
 
References
Apple Inc. (2015). Apple reports fourth quarter results.
Bracey, L. (2012). Business reputation. Business Focus Magazine
Hasan, R. (2013). Apple: PESTLE and Porter’s five analysis. GRIN Verlag
Manjoo, F. (2013). Apple should spend its money on its future. Wall Street Journal

Carolyn Morgan is the author of this paper. A senior editor at Melda Research in custom research paper service if you need a similar paper you can place your order for a custom research paper from nursing writing services.

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