A Capstone of Apple, Inc. Essay

Running head: A CAPSTONE OF APPLE, INC. A Capstone of Apple, Inc. BUS 599 Assignment 5 June 10, 2012 A Capstone of Apple, Inc.

Analyze the company’s mission and vision statements against the performance of the organization. Then, evaluate how well the company lives out its mission and vision statement. Provide support from the organization’s performance in your evaluation.Apple Inc’s mission statement is as follows – Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through innovative hardware, software and internet offerings’ Ebben (2005) provides that a mission statement indicates a company’s business strategy and that it is developed in relation to customers’ perspective. Apple Inc’s mission statement clearly identifies what the company does, how it does, and for whom it does for.The mission statement provides that the organization is focused on quality and innovation to reach its target customers.

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Apple Inc’s vision statement is ‘Man is the creator of change in this world. As such he should be above systems and structures and not subordinate to them’. The vision statement focuses on the customer whereby the company targets to make them masters of products. Apple Inc therefore aims to focus on the customer in order to offer products that meet consumer needs and therefore promote company growth. The company’s performance is in line with its mission and vision which is reflected in its performance.Performance indicators such as sales, operating and net income show that the company has managed to maintain growth through strategies employed. In the financial year ended September 2011 the company registered 66% increase in net sales compared to previous year.

Apple had net income of $ 25,922 million in 2011 compared to $ 14,013 million in 2010 (U. S Securities and Exchange Commission, 2011). This indicates that the vision and mission statements are in line with company performance.

Apple Inc is reputed for offering products that are high in quality and are innovative which is in accordance with the company’ mission statement.In its mission statement Apple aims to provide customers with the best computing experience therefore markets products that meet customer needs in terms of functionality and quality. An example of the company’s performance in line with its mission statement is the fact that the company is ranked as the largest vendor of smart phones accounting for 20. 3% of shipments and 18.

5% of global market share (“Strategy Analytics”, 2011). This indicates that the business strategy employed is working out effectively to ensure organizational growth.Assess how the organization’s strategic goals link to the company’s mission and vision. Apple Inc’s strategic goals include attracting customers and building customer loyalty, and also to differentiate company products from competing products.

The company aims to achieve the goals through different strategies but the central strategy is differentiation where the company designs and markets products that are seen to be cool, stylish, easy to use and high in quality. This is line with the organization’s mission statement whereby the company intends to provide the best computing experience to customers through innovation.It is also in line with the company’s vision statement since the products are designed in such a way that they are easy to use thus the customer is above the product. CRM Editors (2009) provide strategies employed by Apple Inc to increase customer loyalty include consistency in product offerings, new innovations, and attractiveness. Apple delivers consistency in product attributes whereby thus building on customer loyalty, the company is innovative in developing new products or improving existing products, and also the products are aesthetically appealing.

These strategies encourage the company to develop the best product possible therefore matching with organizational mission statement which is to provide customers with the best computing experience. The company’s strategic goals include increase in revenue and this goes hand in hand with increase in market share. One of the strategies employed by the company to achieve higher market share is offering complete solutions whereby the organizations offers products that are complementary to each other (CRM Editors, 2009).The company has different types of customers thus offering complementary products ensured best products are offered to different customers.

Analyze the company’s financial performance to determine the link between the company’s strategic goals, strategy, and its financial performance. Detail your findings. Apple Inc had sales amounting to $ 65,225 in 2010 compared to $ 108,249 in 2011 which is a 66% increase (U. S Securities and Exchange Commission, 2011). This indicates the company performed exceedingly well in terms of revenue generation. MSN (2011) provides that Apple has a five year annual growth rate of 41.

6% compared to industry’s growth rate of 38. 38%. This indicates that the company has high performance compared to other players in the industry and that the company is achieving its strategic goal of increasing organizational revenue. The results indicate that strategies employed are effective in generating revenue and in improving performance. Some of the strategies employed by the company include differentiation through branding.

CRM Editors (2009) provide that Apple is one of the most recognized brands and that it has a strong identification especially with young customers.The company mainly focuses on offering products high in quality and periodically launches innovative new products which drive sales for the organization thus high growth in revenue. U.

S Securities and Exchange Commission (2011) provides that one of the business strategies employed in 2011 is expanding company distribution network so as to reach an increased number of customers and this can account for the high increase in revenue. The company registered high growth in net income whereby it increased by from $ 14,013 million in 2010 to $ 25,922 in 2011 and this represents 85% increase in income (U.S Securities and Exchange Commission, 2011). Apple has a 5 year annual growth rate of 67. 11% in net income compared to 61. 93% for the industry (MSN, 2011).

This indicates that company is effective in achieving its overall objective which is generating wealth for its shareholders. Performance is above average indicating that the company is a leading company in its industry. The strategies utilized in providing the company with competitive advantage were effective as reflected in net income generated. Financial condition of the organization can be identified using debt to equity ratio and current ratio.Apple has a debt to equity of 0.

52 which indicates that the company has sufficient equity to finance organizational debt as and when they arise. Current ratio for the organization is set at 0. 62 thus current assets are adequate to cover current liabilities therefore creditors are covered by organizational assets.

Apple’s financial condition is sound since equity and assets are sufficient to repay existing debt which means the organization can maintain performance. The overall goal for Apple and any other company is to generate wealth for its shareholders and this can be indicated by financial ratio referred to as return on equity.Return on equity indicates profit generated by a company from money invested by shareholders. According to MSN (2011), Apple has a return on equity at 41. 7% and the industry value is 42. 7%. The average 5 year average return on equity is 36. 2% and the industries average is 37.

2%. The results show that the company is generating high levels of income for its shareholders therefore it is achieving its overall objective of generating wealth for its shareholders. Apple has registered high financial performance from one year to another whereby sales and total profit generated increased.

This indicates that the strategies used in marketing its products and services were effective in achieving organizational goals and in improving financial performance. Financial performance indicates the company strategy to offer products high in quality, innovation and aesthetic appeal was successful in attracting customers and increasing company revenue. Conduct a competitive and marketing analysis of the organization to determine strengths and opportunities. Company Spotlight (2009) provides that most consumers recognize the Apple brand and that the company experiences high brand awareness for its products across all its target markets.However, Apple faces competition from other players in the industry such as Dell, Hewlett-Packard, Google, Samsung, IBM, Microsoft, and Toshiba. The personal computer sector has numerous competitors whereby intense competition is exhibited.

Companies in the industry compete in terms of pricing, product attributes, quality, design, and innovativeness. Apple operates in a highly competitive market where organizational capabilities affect competitive advantage and strategic decisions should made wisely and quickly to determine company success.Apple has managed to maintain competitive advantage in the market through product quality, innovation and pricing strategy. The major means in which Apple Inc has managed to derive its competitive advantage is through its marketing strategy. The company utilizes its brand to compete whereby the company focuses on promoting the brand rather than promoting a single product. The company carries out most of its marketing through print media and also through the television whereby the company’s strategy utilizes emotions (“Apple’s Branding Strategy,” 2011).

The company also utilizes the internet through its website where it provides information about its product offerings. Lliev et al (2004) term Apple’s website as easy to use and that the sire reinforces brand image and brand positioning. Apple utilizes this form of marketing so as to build a consumer brand relationship thus improving customer loyalty and CRM Editors (2009) provide that Apple’s marketing has been so effective in building customer loyalty such that customers sleep outside retailing points to buy a new Apple product.Apple’s brand personality concerns lifestyle, innovation, simplicity, and aspirations therefore it has managed to develop in a humanistic organization with strong connection with its consumers (“Apple’s Branding Strategy,” 2011). In its marketing campaigns the company communicates that the brand is unique and best product for customers thus has managed to differentiate the company products from competing products.

Lliev et al (2004) provides that Apple markets its brand as stylish, trendy, innovative, innovative, high in quality, and easy to use.Apple is able to different itself from other brands whereby in its marketing campaigns it compares Apple brand against other brands and provides that Apple is faster, has better design, is easier to use, and has higher quality thus is better than competing products. In addition to differentiating its products through marketing, Apple also differentiates its products using pricing strategy.

Lliev et al (2004) provide that Apple products have a premium price compared to other products. Apple justifies its high pricing in that the brand offers better quality, design and functionality compared to other products in the market.Apple’s pricing strategy is in line with the company’s target market whereby the company targets middle and upper class customers who are willing to pay premium prices for a product. Apple has expensive retailing locations therefore aligning brand pricing with the targeted market. Another strategy used in marketing is customer satisfaction whereby Apple provides a customer with an experience unmatched by competing products.

Products offered by the company ensure customer satisfaction since they are attractive in their design.The company also has well trained employees in its retailing stores to ensure customer needs are met thus building on customer satisfaction and loyalty (“Apple’s Branding Strategy,” 2011). In marketing its products, Apple utilizes vertical integration whereby it products complement or complete each other (“Apple’s Branding Strategy,” 2011). An example is the company developing computers and also creating operating system and software for the computers, another example is iPod and iTunes. This ensures sustained revenue for the organization since consumers buy multiple products.Effective marketing has led to the creating of a strong brand personality and image and this reinforces Apple products distinctive capabilities and established strong brand loyalty. This has assisted the company in gaining competitive advantage in the market which has contributed to increased organizational performance.

Building on customer loyalty means that the company has a ready market for its products in turn sustaining company revenue generation. Apply the appropriate strategy (low cost, differentiation or niche) that will maximize the organization’s return to shareholders.Provide a detailed rationale for the reason you chose this strategy and state the expected outcome(s). Apple has managed to establish itself as a brand that offers high quality innovative products for its target market thus the best strategy for the company is differentiation. Apple operates in an intensely competitive market where products are rapidly evolving and products in the market have direct substitutes. Differentiation will result in less sensitive product and service prices and the company can therefore focus on value which results in higher prices and an increased margin.

Through differentiation the company will be able to gain competitive advantage which translates into increased revenue through sales and this would be beneficial in recovering cost incurred in marketing the products. Differentiation requires an organization to be innovative and for the organization to continuously improve. Apple has strong research and development capabilities which lead to innovative and products thereby enhancing the company’s brand image (Company Spotlight, 2009).This means that Apple is capable of employing differentiation strategy in its operations and this is because it can develop new products that are different from competing products. Apple products have unique traits in appearance and functionality therefore can be effectively differentiated from other products. Utilizing such a strategy results in the ability of the company to safeguard against competing products and this is achieved through the creation of brand loyalty. Differentiation is an effective strategy in ensuring sustained revenue generation as the product and service offerings are unique thus attracting customers.Another benefit derived from differentiation strategy is higher profit margin since the products are not product sensitive.

The company can afford to charge premium prices compared to competing products and competition does not reduce profit margin. Create a detailed scenario in which a merger or acquisition would be a viable strategy to implement. Consider who the merger or acquisition would involve, the market conditions making it a good choice, and the type of strategy that would make it a success.A merger or acquisition can be viable solution if Apple Inc intends to reduce cost, if it wants to increase market share or wants to enter into a new market, and when an organization wants to diversify operations. An acquisition can be an effective strategy for an organization to grow and increase synergy.

In a scenario where Apple intends to diversify its product offerings it can acquire a company like Sony and this can provide the companies with major competitive advantage. Sony is a firm dealing with electrical appliances and an acquisition would allow Apple to diversify operations into video and music products.The acquisition would provide Apple with an opportunity to offset decline in sales of other products. Company Spotlight (2009) provides that Apple relies on third party suppliers to provide them with various components used in product development. Apple also utilizes customized components that are used by the company only. A scenario that can lead to an acquisition is failure of a supplier to provide essential components.

An example is the war that is currently going on between Samsung and Apple whereby Samsung provides Apple with key components that are used in Apple products (Fox News, 2011).Is Samsung stops supplying Apple with the components it means Apple has to acquire another firm which can provide the missing components. Apple can acquire Sony so as to get the required components. If you were a leader in this organization, determine the appropriate rewards that would best motivate employees toward achieving the desired strategy. Review the financial performance of the company to ensure the rewards are appropriate. Justify your selection.

Employees in Apple can be motivated through different strategies whereby the main reward system includes performance based incentives, ownership options and employee recognition.Kim (2006) provides top employee motivators that include recognition for work done, good wages, job security and promotion and growth within an organization. Apple is involved in designing and developing different kinds of products and one reward system that can motivate employees is employee recognition. When an employee or a group develops a product they can be recognized in internal and external communications thus building on employee morale.

Financial rewards can be combined with employee recognition so as to utilize extrinsic and intrinsic rewards.Another strategy to motivate employees is performance incentives whereby employees who are exceptional in performing their duties are rewarded. This requires employees to have goals and once employees achieve their goals effectively and efficiently they are rewarded in monetary or non monetary terms. Since Apple participates in a highly dynamic market, the company can undertake training and development programs ensure employees are adequately equipped with desired skills and knowledge. It also leads to increased employee satisfaction which translates into improved employee motivation.The rewards suggested are in line with the company’s financial performance since it has registered strong performance and can manage to meet the obligations provided in the reward system.

Evaluate how the company’s current strategy supports or discourages ethical business behaviors (or perhaps both). Discuss how you arrived at your assessment. The current strategy employed by Apple Inc discourages ethical business behavior. Apple uses vertical integration in its products which means the products complement or complete each other and one cannot operate without the other.Apple has limited its products to be used in other products that are licensed or marketed only by the company.

This means as a customer I can only use products marketed by the company since other products are not compatible with Apple products. Another strategy that can lead to unethical behavior is its pricing strategy. The company is not price sensitive since its products are differentiated which means the company can price its products as high as it desires limiting availability to a certain class.References Apple’s Branding Strategy. (2011, October 16). Marketing Minds. Retrieved from http://www.

marketingminds. com. au/branding/apple_branding_strategy. html Company Spotlight: Apple Inc. (2009).

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Developing Effective Mission and Vision Statements. Inc. Retrieved from http://www. Inc.

Com/Resources/Startup/Articles/20050201/Missionstatement. html Fox News. (2011, September 23). Samsung vs.

Apple War Set to Explode. Fox News . Retrieved June 10, 2012, from http://www.

foxnews. com/scitech/2011/09/23/samsung-vs-apple-war-hits-high-gear Kim, D. (2006). Employee Motivation: “Just Ask Your Employees”. Seoul Journal of Business, 12(1). Retrieved from http://s-space. snu. ac.

kr/bitstream/10371/1819/1/sjbv12n1_019. pdf Lliev, V. , Lindinger, A. , ;amp; Poettler, G. (2004).

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Key Ratios. Retrieved from http://Moneycentral. Msn. Com/Investor/Invsub/Results/Compare. Asp? Page=Investmentreturns;amp;Symbol=US%3aaapl Strategy Analytics: Apple Becomes World’s Number One Smartphone Vendor in Q2 2011. (2011, July 29).

Business Wire. Retrieved from http://www. businesswire. com/news/home/20110728007223/en/Strategy-Analytics-Apple-Worlds-Number-Smartphone-Vendor U.

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