MGMT 495 Moraine Apple Inc Case Analysis and Recommendations Discussion

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C 252 CASE 32 APPLE INC.: WHERE'S THE NEXT INNOVATION?" In April 2019. Apple CEO Tim Cook held the second quarter earnings presentation at the Apple Park corporate campus in the 1,000-seat auditorium named the Steve Jobs Theater. Part of a 175 acre campus developed in 2017, the ring-shaped 2.8-million-square-foot facility with walls of curved glass surrounding an inner greenspace courtyard was possibly the last evidence of the direct vision and innovation of Apple co-founder Steve Jobs. Originally envisioned by Jobs in 2011 as a center for creativity and collaboration, the building honored his legacy memory, and enduring influence. Jobs, who died in 2011, would have turned 64 in February 2019. As Apple's current CEO Tim Cook said. Steve's vision for Apple stretched far beyond his time with us. He intended Apple Park to be the home of innovation for generations to come-1 Yet the pace of innovation at Apple had slowed considerably. Since Steve Jobs's death, the only new physical product launched had been the Apple Watch in 2014. The iconic iPhone, in FY2018 representing 63 percent of total revenues, was over 10 years old, and even though upgrades kept customers coming back, competition had eroded Apple's smartphone market share such that second quarter 2019 iPhone revenues had declined by over 17 percent year over year. Mac computer and iPad sales had declined as well. Although Apple's FY2018 revenues were up by about 16 percent overall, the bulk of that increase came from services and other products such as the Apple Watch. In this environment, there was some concern that although research and development spending was up in FY2018, research output had not produced any recent meaningful breakthroughs. This posed yet again the unavoidable question that still seemed to haunt the 42-year-old Apple: What happens to a modern company whose innovations and inspirations are so closely tied to the vision of one leader when that leader's influence is no longer present? Tim Cook was considered a highly effective leader, yet had been criticized for lack of ambition and vigor," for being perhaps too cautious about entering new product categories, pursuing acquisitions, or driving employees to achieve almost impossible stretch goals. On the other hand, investors had been mostly very pleased with the stock performance under Cook. Since he was named CEO in August 2011, Apple share price had risen from an average of over $45 to a high of $230 in August 2018, and when the company reached a market capitalization of over $1 trillion in 2018, that made it the most valuable company in the world. In addition, Cook had instituted Apple's first dividend since 1995 in 2012, and bought back more than $200 billion of shares, producing strong free cash flows and an "impressive" balance sheet. This had made investors happy Cook had done what CEOs of public companies are supposed to do-drive up value. But revenue from the flagship products-iMac, iPad and iPhone-was falling or stagnant, and only the services and other products sectors were seeing growth. In addition, operating margins were declining in products, indicating that high iPhone prices may have been the only thing keeping margins stable at around 30 percent. If iPhone sales were increasingly challenged by lower price competitors such as China's Xiaomi, and Huawei, something would have to change. Was Apple's recent shift into services and other products going to be the answer? (See Exhibits 1 to 3.) Other products" included wearables such as the iWatch and the AirPod wireless carphones, and home products such as the HomePod voice controlled smart speaker system. These were new, but perhaps not as innovative as Apple's other products. Were expectations of major breakthroughs unrealistic? As one analyst said, it is hard to find ways to make the world's most valuable company even more valuable when it's already so big that conventional growth strategies-extending product lines, moving into new territories-would barely move the needle-5 EXHIBIT 1 Apple Sales, 2015-2018 (dollars in millors and units in thousands) DOBIT 1. 2005-20 arssons in the 2018 Change 2007 Change 2016 2015 $93164 Net Sales by Reportable Segment Americas Europe Greater China $ 0.00 49,952 10% SO $112.090 62.400 51942 2033 17402 $265.595 $ 96.600 5493 4764 17730 58.715 Jan 23 16.928 15706 15.09 $229.234 $215.639 $213.715 Rest of Asia Pacific Total net sales Net Sales by Product Phone Pad Mac $ 46.699 $155.041 23.227 $ 14439 19.222 25.050 29.000 2003 $136700 20628 22.01 20:34 25.484 37290 25471 24% 19.900 17412 35% 10067 Other Products Totale Unit Sales by Product $265595 $229,234 $215.639 523375 217,722 24 231218 216.756 43753 54156 Pad Mac 18:209 19,25 20587 பாட்யாம்பாள் பக்க கதைகள் aate that al, பாண்டிக்காக பாராட்ட DHIBIT 2 Apple produs: Pertenance Percentage of our Sales Product 2011 2009 2016 Phone 10 10% Mac Services ECHIBIT 3 Adde ved Grow Megin Sex Month Endled Second Quarter Comparison 2018 to 2010 Three Month Ended March 30 March 31 2019 2018 Change March 30 2013 March 31 2018 Change $31051 16% $83.030 12.929 151% 3% Net sales by Category Phone Mac Pedro Wearables, Home and Accessories 21 Services Total news 5.513 4872 $37,559 5.776 4.000 3.944 30% 10 SSB. 22.325 5142325 S6137 $149.430 paatistian டிகன் பப்பட கள் am tamilans மன்னாடி நான் Services include them VACA di Service DOBIT 1. 2005-20 arssons in the 2018 Change 2007 Change 2016 2015 $93164 Net Sales by Reportable Segment Americas Europe Greater China $ 0.00 49,952 10% SO $112.090 62.400 51942 2033 17402 $265.595 $ 96.600 5493 4764 17730 58.715 Jan 23 16.928 15706 15.09 $229.234 $215.639 $213.715 Rest of Asia Pacific Total net sales Net Sales by Product Phone Pad Mac $ 46.699 $155.041 23.227 $ 14439 19.222 25.050 29.000 2003 $136700 20628 22.01 20:34 25.484 37290 25471 24% 19.900 17412 35% 10067 Other Products Totale Unit Sales by Product $265595 $229,234 $215.639 523375 217,722 24 231218 216.756 43753 54156 Pad Mac 18:209 19,25 20587 பாட்யாம்பாள் பக்க கதைகள் aate that al, பாண்டிக்காக பாராட்ட DHIBIT 2 Apple produs: Pertenance Percentage of our Sales Product 2011 2009 2016 Phone 10 10% Mac Services ECHIBIT 3 Adde ved Grow Megin Sex Month Endled Second Quarter Comparison 2018 to 2010 Three Month Ended March 30 March 31 2019 2018 Change March 30 2013 March 31 2018 Change $31051 16% $83.030 12.929 151% 3% Net sales by Category Phone Mac Pedro Wearables, Home and Accessories 21 Services Total news 5.513 4872 $37,559 5.776 4.000 3.944 30% 10 SSB. 22.325 5142325 S6137 $149.430 paatistian டிகன் பப்பட கள் am tamilans மன்னாடி நான் Services include them VACA di Service P காலை | ப ப | E| www | வானம் - பாகம் மழை கா வா வா | கலை காமடி | araoa காக 64, | | Taயா 2008 | 2 பாடிகா வகைகளை 4 மகாகவமயாமாகமாக |aa naa IN, Fus has capa கை கா கா கா வா | வான் கடி மாயாயை மாடிகள் போன aac || - 10 p Earn Fare a praan test மாமா மாமா Iaai Partners Acts Aaaa irupa race are 1 | கபால, வ, வடிவமான காவynam. 4 | aana | Cour 1 யாரான போல பாண யோகா ம ைமயானா | aana வாடவ ten tear a |aon மார்க சN Aanate மானாடிகா - காளாமை |aon - TV as Tvனை மகா,மோ tanga pa down கரபல பாதாள பாடி பாடி ல ப யடிகள் படிப்பு நா கா கா பாதகர் கடினமான காரி பாத்து கறாராம் Company Background Founder Steve Jobs www Under CEOs Scutey Spindles and melo Amp Steve Jobs's Return . . ter the comme ch halloween Sem dans
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Surname 1
PAPER OUTLINE
Apple Inc. Case Analysis and Recommendations
Executive Summary


Apple has maintained a leading position in various industries and markets since its start in
the late 1970s. Apple entered the Chinese market after Steve Jobs’ death and Tim Cook’s
appointment as CEO.



Apple chose China as a location because of its low labor costs and large market. Following
the launching of the iPhone 5C, Apple was obliged to reposition itself as a premium and a
high-end company focused on high-quality products.



They quickly established a considerable financial and organizational edge over their
competitors in China and around the globe.

Problem Statement


Despite Apple's battles for market share in China and the rest of the globe against many
big competitors, they are winning.



Since Apple has developed such a strong brand, they are compelled to innovate and explore
new ways to sustain their present sales and profit margins

Company Situational Analysis


Using SWOT, we can find the strength, weaknesses, threats, and opportunities of an
industry. The analysis is used to understand better an organization’s assets, liabilities, and
their respective options and threats.

Strengths


Apple is one of the most valuable and successful brands globally, with more than $1 trillion
market capitalization.

Surname 2


Consequently, Apple established the “Apple culture” in an attempt to attract new
consumers.



After becoming familiar with the IOS system, these purchasers will continue to purchase
Apple gadgets.

Weakness


The most apparent drawback in China and other countries is the high selling price. Due to
the high degree of technology, the cost cannot be reduced much.



Apple has lost many customers who choose low prices over superior technology to other
corporations that provide equivalent.



Apple’s retail network, as a consequence, is constrained, as indicated by its financial
records, since a lack of convenience will deter potential customers.

Opportunities


This is an excellent investment since the government is pursuing a good plan, and many
possible customers are there.



Apple Inc. should expand its presence in more Chinese cities while also improving the
brand’s attractiveness.



Thus, it is a fantastic opportunity to increase the number of retail outlets that can compete
with other rivals.

Threats


Aside from Apple and Samsung, many local companies provide goods similar to but far
less cost...


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