Management Report on Apple Inc

Management Report on Apple Inc.

BCom20 POM Bridging

Word Count: 2947

Michael Ma Ke

Table of Contents 1.Introduction 3 2.Macro-environment analysis 4 2.1 LAWS and politics 2.2 THE Economy 2.3 Technology 2.4 Demographics 2.5 Social Issues and The Natural Environment 3. Competitive environment analysis 5 3.1 Competitive rivalry 3.2 Threats of new entrants 3.3 Threat of Substitutes 3.4 Bargaining Power of Suppliers 3.5 Bargaining Power of Buyers 4. SWOT Analysis 7 4.1 Strength 4.2 Weaknesses 4.3 Opportunities 4.4 Threats 5.Functions of Management 8 5.1 Planning 5.2 Organizing 5.3 Leading 5.4 Controlling 6. Conclusion of the analysis and the company 9 7. Recommendations for the 5 years 10 8. Reference 11

1.Introduction

Apple Inc. is an American multinational company headquartered in Cupertino, California. Apple’s main business is on consumer electronics, including personal computer, cellular phones, MP3 player, tablet, software and many more.

When people talk about Apple, Steve Jobs always be the first one came into their minds. Steve was such an inspirational and brilliant leader that Apple could ever had, and there will be nobody else on this planet earth could possibly does what Steve Jobs had done to Apple. After the death of Steve Jobs, the world was curious on how Tim Cook is going to manage Apple and doubt and questions were raised all over the world. However, ever since Tim Cook took over the CEO of Apple, (Even before Steve passed away) Apple has doubled its profits quarter over quarter, year after year.

“Apple Inc is the most valuable companies in the world” (DeCarlo, N.D) Apple Inc originally involved in computer industry selling Mac computers and later transformed into a prominent IT company producing multiple wonderful products starting from iPod, iPhone, iMac series, iPad and iPad mini. As of now, we knew that Apple’s iPhone 5 and iPad mini are the latest gadgets that amazed the entire world. Part of the success is due to “Apple has a total number of 390 Apple retail stores worldwide” (Campbell, 2012) and set up Apple Online Store in most of the developed countries and some major developing countries. Apple has also been named as the “world’s most admired company”(CNN Money, 2012) in 2012. Apple is always focusing in innovation and beyond the possibilities.

In this report, it will mainly focus on Apple South Asia Pte Ltd, which located in Singapore and operating the entire Apple business in the JAPAC region.

2. Macro-environment Analysis

2.1 Laws and Politics

Singapore has been a politically and economically stable country for most of the MNCs. And Singapore is one of the main economic hubs around the world. Singapore government has been imposing many strategic constraints such as rules and regulation on manpower and taxation while providing opportunities to both local and foreign firms. Since Apple is operating its JAPAC business in Singapore, one of the challenges that Apple is facing, would be the manpower regulation that Singapore government is straightening. With a lesser quota of hiring foreign employees, Apple needs to figure out a way to remain competitive while inevitably losing foreign talents or Apple needs to move its base to somewhere else to continue its JAPAC business. Matter of fact, Apple has already set up its Shanghai site recently, with the expansion in China; there is a possibility that Apple might work on an alternative solution.

2.2 Economy

Singapore’s economic is as stable as always. With a relatively low inflation rate and unemployment rate, Singapore is financially stable as a country. With a strong economic growth and established infrastructure in Singapore; MNCs definitely will enjoy the outcome of it. With large cash amount in hand, Apple does not need any external capital to carry out its business and will not worry about the costs on labors, regional marketing and possibly concern free in monetary terms. The spending power in Singapore is rather strong, especially Singaporean is known for following the IT trends. Whenever a new IT product is out, Singaporean is more willing to spend on it.

2.3 Technology

Even though Singapore is the base for Apple in JAPAC region, R&D normally carried out in the US. By saying that, Apple South Asia Pte Ltd will not involved in any technology R&D in Singapore and it provides flexibility to operate other parts of the business. However, Apple does look out for its market share and competitors products regionally. It’s obvious to tell that Samsung is perhaps Apple’s one and only competitors for now. With different technologies being implemented, Apple always goes beyond to innovate what others don’t have.

2.4 Demographics

With it’s high standard education and respectful salary comparing to other region, Singaporean always being labeled as one of better citizens in the world. People in Singapore are more willing to accept new technologies, especially in consumer electronics. No wonder there are 4 major IT products exhibition per annual. As far as the government is concerning, the fertility rate in Singapore is dropping every year, take this as the outcome, the family size is getting smaller and smaller. It’s actually an advantage for consumer electronic companies, as with a smaller family and lesser children, parents are spending lesser on daily expenses and more willing to spend for their children on other things.

2.5 Social Issues and the Natural Environment

Singapore is an ally for the US and the people of Singapore are definitely having good feeling on most US companies and products. Plus Singapore is a mature market and people normally have more bargaining power when come to selecting products. Hence companies like Apple has lesser worries such as their products being boycotted. Singapore has limited land with almost no natural resource; the concern on protection of natural environment is relatively minor. As long as companies do not carry out any manufacturing activities, the effect is minimal.

3. Competitive Environment Analysis

3.1 Competitive Rivalry

Consumer electronics industry is a highly fast changing industry with many new products being innovated day in and day out. We’ve seen Nokia, Motorola, Blackberry conquered the markets and later fell. It’s an inevitably fact that company will be replaced soon or later if you don’t have more innovative products. Consumers will forsake you. As the entire world is watching, Apple has lesser competitors in number, but stronger competitor in quality and company size. Samsung has been battling with Apple for quite number of years, and the fact stated “Samsung has a market share of 29% worldwide while Apple has 21.8% worldwide”(IDC, 2013). Both companies strive to provide people with better gadgets. In Singapore, there are so many Apple authorized retailers plus Apple Online Store, and it provides Apple bigger market visibility than Samsung. However, with Nokia, Blackberry re-enter the competition, both Apple and Samsung need to be aware of the market reaction on the new products closely.

3.2 Threats of New Entrants

Singapore has a rather mature and established market, with big names gaining the reputation and popularity over the people in Singapore. However, as we’ve been mentioning in the previous chapter, consumer electronic industry always being fast changing and people want to get the best and newest technology out of it. By saying that, any new comers can join the competition. Singapore government is being friendly to all companies that willing to do business here, as more the competition is, the more benefits consumers can have. Hence, even with the high rental, labor cost and brand identification, consumer electronics companies are able to enter Singapore market by various ways, not necessarily set up a branch locally, they can simply using other distribution channels like hiring agencies to sell at first, test out the overall market response. Needless to say, with the current consumer electronics market in Singapore, people have been used to a high standard, high quality products year over year. Therefore, any newcomers will have to make sure their product quality is up to the standard that Apple and Samsung have before making a decision. As of now, I don’t think any other companies are going to come up with a product that is as revolutionary as iPad or iPhone.

3.3 Threats of Substitute

People in Singapore love new technology. Often we see products with a life span of one year before being replaced by another product. The market demands new products and companies are working as much as they could to ensure their products will not be outdated. What Apple has, is exactly what the market wants: Various range of IT products, new products being introduced on a yearly basis. All of these ensure Apple has upper hand in the competition.

3.4 The Bargaining Power of Supplier

The bargaining power of the supplier in Singapore will depends on the industry type. For consumer electronic industry, normally the raw materials or the final assemble stage are carried out in developing countries like China. Hence there isn’t any real supplier to Apple in Singapore. However, when we zoom in to the Apple supplier, such as Foxconn, it is interesting to see that Apple rely on them pretty much, as Foxconn is the only supplier that have the size and capability to assemble Apple products, in term of quantity and quality. Of course, with a company like Apple, there shouldn’t be any problem to look out for another supplier eventually, but it will take time to do so. And Apple also relies on Samsung on semi conductor market, in providing microchips that being used in iPads and iPhones.
Thus, the bargaining power of supplier is relatively strong in this industry.

3.5 The Bargaining Power of Buyers

Customers determine the fate of the company. Customers are the roots of the success for every company. It is obvious to say that the bargaining power of buyers is very strong in Singapore, matter of fact, almost in every market. There are numerous IT products in the market, for the final customers, they have many options to choose from and there are so many competitive products in the market. Companies have to listen to what the customers want and companies have to make a good judgment on the pricing decision.

On another hand, since there is no Apple retail shop in Singapore, Apple authorized resellers are being considered as intermediate consumers, as they are helping Apple to sell their products to end consumer. However, with Apple’s reputation and branding, intermediate consumers normally have less bargaining power. They have to follow what the Apple wants, in terms of their retail shop design, training and certain pricing policy. Otherwise, they won’t be able to continue sell Apple’s products.

4. SWOT Analysis

4.1 Strength

Superior reputation in the market: Apple branding is the success

Good market share: 21.8% market share

Strong supply chain management: Tim Cook is the genius of Supply chain management.

Apple experience: Apple emphasizes on the end-to-end customer experience

4.2 Weakness

Lack of key innovation in their latest products: recent iPad mini and iPhone 5 have enough said on how long Apple can continue with its success. As there isn’t any key technology being implemented into the new products, besides larger or smaller screen size.

4.3 Opportunities

Emerging market in JAPAC region: With the expanding of China and India market, Apple should see a continue growth in these regions

Limited market rivalry: With Samsung closing the gap, there isn’t many other competitors is capable of threatening Apple in the market for now. Apple should continue being innovative and enhance user experience.

iPad mini: With the introduction of iPad mini, Apple is able to enter the 7.9 inch tablet market.

4.4 Threats

Macro-economic: With the European debt crises still going and possibility of the war between North and South Korea, the possibility of instability in the region will be potentially the threats to Apple, especially when JAPAC region is slowing become the second largest market beside US.

Fails to listen to customer: Apple is so successful and brilliant, and if Apple thinks it can do no wrong, it might fail to listen to customers and then it might face the failure.

5.Functions of Management

5.1 Planning

As successful as Apple is now, Apple needs to plan for its future, both short and long term. With a strong market share and dominant products like iPad and iPhone, Apple needs to continue being innovative and giving the best Apple experience to their customers. In short term, Apple has to come out with a strategy or product that is able to compete with Samsung’s S4 or The new HTC one from HTC. In long term, Apple should continue diversified its line of business into more products, there have been rumor saying Apple is planning to introduce the Apple TV or iWatch. Be it true or not, Apple should continue to see growth in revenue. Apple also should focus on developing countries like India and Indonesia. As much as the developed countries contributed to Apple’s hefty cash count, emerging market will be the key toward Apple’s future success.

5.2 Organizing

With a company size like Apple, the decision makers need to plan for a well-organized structure within the company. In Apple, there are different organizations that operating R&D, Global Finance, Supply Chain, Retail store and Online store. Each unit has own responsibilities and duties are rather clear. Apparently, Apple has a matrix structure in terms of horizontal dimension. In Singapore, Apple consists of Online Store, Apple Care, Supply Chain and Global finance.

5.3 Leading

Currently Tim Cook is the CEO of Apple, and behind Tim Cook, there is the board of directors. They are the ones that is leading Apple to the new direction and making decisions for the company. Apple has a comprehensive structure of leading & motivating people, and Apple has been consistently investing on its employees in order for them to contribute to the organization. There are numbers of employee benefit program in Apple and employees being led at the right direction. However there is one thing that Apple doesn’t practice for now, which is profit sharing among all employees. With so much cash in hand, Apple might consider share part of the profit to its regular employees in order to make them perform even better.

5.4 Controlling

Change is what Apple about. There are so many changes within Apple on a daily basis. Nobody could ever predict what’s next for Apple. The myth is within Apple too. From strategic managers to the tactical managers to the operation manager and even to the normal employees, everyone knows the importance of change. In order to make sure the future goal being met, Apple needs to have a clear vision, and Apple is heading to the direction with different level of people working together. The upper level management has been monitoring the entire market closely and has been adjusting in accordance to the market response. As of 1st,April 2013, Tim Cook just issued an apology letter to the China customers, with regard to the warranty issue. It shows Apple is listening to the customers and is able to do whatever necessary to make the success continue.

6. Conclusion of the analysis and the company

Overall Apple is heading another magnificent year in terms of revenue, “The Company posted record quarterly revenue of $54.5 billion and record quarterly net profit of $13.1 billion, or $13.81 per diluted share. These results compare to revenue of $46.3 billion and net profit of $13.1 billion, or $13.87 per diluted share, in the 14-week year-ago quarter. Gross margin was 38.6 percent compared to 44.7 percent in the year-ago quarter. International sales accounted for 61 percent of the quarter’s revenue.”(Apple, 2013) Apple should see a continue growth in all regions, particularly in greater China and JAPAC region. With the leadership in Tim Cook, we do not see much of innovation in the new products but more towards making profit. People may love or hate Apple and their products, but there is no way you can deny that Apple has the highest market cap of any company, the products are trend setters, and now Apple are trading at rather low multiples. As long as competitors do not come out with any revolutionary products like iPad or iPhone, Apple should continue dominant the market for the foreseen future.

7. Recommendation for the 5 years

Heading into the 2nd year since Steve Jobs passed away, Apple needs to focus on innovating new revolutionary products. As what we’ve discussed previously, Apple shall not see any major threats coming and will continue enjoy the vast growth in the coming years. Apple should continue on expanding its business to remote regions such as Africa, Middle East and North Asia.

On the diversification strategies aspect, Apple should also continue doing what Apple is doing now, expand its business into multiply type. Apple is capable of innovating new line of business. However, it should not come at the price of affecting the Apple branding. Apple is a premium brand and customers expect to pay a premium price for an Apple product. There is no way Apple should compromise the branding and reputation and go into a low-end market competing with others. Apple doesn’t have to go into a price war with Samsung or others. iPad mini is a typical example. You don’t have to come out with a 7.9 inch tablets simply because you want to enter into a 7.9 inch tablets market. “7-inch tablets are tweeners: too big to compete with a smartphone and too small to compete with the iPad. ….7-Inch tablets are dead on arrival.”(Jobs, 2010.) Apple should continue focus on iPad, iPhone and even Apple TV.

What makes Apple so successful is the uniqueness that Apple products are. Hence, Apple shall never ever go into cost leadership strategies. It’s not within Apple’s DNA, not within Steve Jobs’ DNA. Whatever products Apple made, are purely amazing and astonishing. With various range of unique products Apple has, Apple is able to go into multi dimension that is going to cover most range of the IT gadgets. There is one more thing that people might ignore; Apple has its business in software too. With OS X getting bigger market share and close to Microsoft OS, Apple is able to integrate the software perfectly with the hardware, and that is nobody else could possibly do. Not even Microsoft, nor Google.

Apple is able to continue with it’s huge success as long as it listens to the customers.

Reference List

Campbell, M. (2012). Apple to open up to 35 new retail stores in 2013. Retrieved from http://appleinsider.com/articles/12/10/31/up-to-35-new-apple-stores-set-to-open-in-2013 Chen, B. X. (2010). Steve Jobs Says 7-Inch Tablets Are ‘Dead on Arrival’. Retrieved from http://www.wired.com/gadgetlab/2010/10/tablets-steve-jobs/ DeCarlo, S. (2001). The World's 25 Most Valuable Companies: Apple Is Now On Top. Retrieved from http://www.forbes.com/sites/scottdecarlo/2011/08/11/the-worlds-25-most-valuable-companies-apple-is-now-on-top/

N.M. (2013). Apple Reports Record Results. Retrieved from http://www.apple.com/pr/library/2013/01/23Apple-Reports-Record-Results.html

N.M. (2012). World’s Most Admired Companies. Retrieved from http://money.cnn.com/magazines/fortune/most-admired/2012/snapshots/670.html Restive, K., Llamas, R., & Shirer, M. (2013). Strong Demand for Smartphones and Heated Vendor Competition Characterize the Worldwide Mobile Phone Market at the End of 2012, IDC Says. Retrieved from http://www.idc.com/getdoc.jsp?containerId=prUS23916413#.UVpDlanC801