The Apple Company Business Analysis

Subject: Business & Economics

5515 words

20 pages

April 6th, 2022

Executive Summary

The purpose of this report is to analyse the financial accounting of Apple, organisational structure, key resources, accounting and managerial information system of this company, competitive position, social and ethical responsibilities, budgeting, investments and so on. In addition, chapter 3 of this paper focuses on a financial statement as of 19 September 2012 (with a comparison of 2011), interim results as of 23 January 2013, and general aspects of the financial statement, pricing strategy and other strategic analysis of Apple.

However, chapter 5 includes financial management analysis (including ratio analysis, such as current ratio, gross profit margin, net profit margin, debt-equity ratio, and return on assets) and chapter 6 provides more details about internal strengths, weaknesses, opportunities, and external threats. However, chapter 7 will present the conclusion and recommendations to discuss the following issues –

The influence of the strategy of Apple Inc. on the aggregate performance;
Provide an overview of the business in the post-recessionary economy;
This report will suggest some solutions to increase sales revenue from the international market
The effectiveness of pricing strategy in the global market for the future development

Accounting function

This chapter will provide a background of Apple, its corporate structure, and give insights about the company’s business.

About Apple Inc.

One of the largest and most loyal customer bases computer software and hardware manufacturers “Apple Inc.” was introduced in 1976 by two friends Steve Jobs and Steve Wonzniak (Huimin & Hernandez 2011; Jubak 2012; Mashru 2012; Meyer 2012 and Apple 2012). As the market is highly competitive, Apple focused on product innovation and development of new generation of existing products; however, its main products include –

iPhone: Apple introduced this product in 2007 to capture global market by competing with smartphone manufacturer; however, it was convergence of an Internet-enabled smartphone and iPod (Huimin & Hernandez 2011; and Apple 2012). However, the marketers developed this item and reduced price as the original price was too high (US$ 499 for 4 GB and US$ 599 for 8 GB) for the customers;
Macintosh: user all-in-one desktop computer iMac, ultra-portable notebook MacBook Air, Professional notebook MacBook Pro, and consumer sub-desktop computer Mac Mini (Apple 2012);
iPod: in 2001, this company offered iPod (iPod Shuffle, iPod Nano, iPod Touch and iPod Classic) as a digital music player;
Apple TV: Apple marketed this product from 2007.

However, the corporate structure of Apple is very large and complicated, as it has to perform in the global market with different business segments, such as iPhone, iPad, iMusic, and iPod, online store, outsourcing, consumer, and pro application and so on. This chart was simple in the 1980s, but it expanded operation in the national and international market for which it is not possible for the management team to control the company with small structure; however, Chief Executive Officer Timothy Cook, Senior Vice President and Chief Financial Officer ‘Peter Oppenheimer’, and board of directors are responsible for the management decision-making.

At the same time, marketing department makes up the essential division and the objective of this division of this company to address the customers’ demand in order to innovate or design product line to satisfy them. On the other hand, iPhone and iPad are the significant products for Apple for which it is essential to have a unique department to manage the software segment; however, this segment coordinates the function with other departments like software engineering, device engineering to solve the problems associated with product design and function.

*Figure 1: Organisational Structure of Apple.*

Key facts	2012 (Million)	2011 (Million)
Total Assets	$176064	$116371
Short-term marketable securities	$18383	$16137
Total current assets	$57653	$44988
Long-term marketable securities	$92122	$55618
Operating income	$55241	$33790
Income before provision for income taxes	$55763	$34205
Provision for income taxes	$14030	$8283
Net income	$41733	$25922
Total operating expenses	$13421	$10028
Total current liabilities	$38542	$27970
Total liabilities	$57,854	$39,756
Total shareholders’ equity	$118210	$76615
Earnings per share: Basic	$44.64	$28.05
Number of Employees	72800 full-time equivalent staff and 3300 full-time equivalent temporary employees	60400 full-time staff

Table 1: – Overview of the key facts about Apple Inc.

Key resources

According to the annual report 2012 of Apple, total acquired intangible assets was $5266 million in 2012, and estimated goodwill for the year 2011 and 2010 were about $896 thousands and $1,135 thousands accordingly. On the other hand, property (Land and buildings), plant and equipment were $15,452 million and $7,777 million accordingly for the fiscal year 2012 and 2011 (Apple 2012, p.60); however, this data demonstrate that the management team focused more on the tangible property. Moreover, product features and service facilities, such as, hardware (iPhone, iPad, and iPod), online services (iCloud), software (iTunes) are also important resources; it has about efficient management team including CEO Timothy Cook, Senior Vice President Peter Oppenheimer, board of directors and other skilled staff.

Role of Accounting

According to the generally accepted accounting principles of the USA, the management of this company is responsible to estimate and to prepare financial statement for the fiscal year (52 or 53-week period) to disclose the actual financial position with segment information and geographic data (Apple 2012, p.48). GAAP monitors the companies to avoid risk and protect accounting fraud for which Apple is bound to provide information about source of revenue, for instance, it earns mainly from the sale of hardware, software, and other products; however, accounting plays a very crucial role of the business for which it uses specific software accounting guidance (Apple 2012, p.48).

Organization of Accounting

Accounting system is a difficult issue while the accountants have to concentrate on the revenue generation process of the national and international market, for example, the Company does not determine the selling price for third-party applications; however, it maintained unique accounting system recognized as the “Double Irish with a Dutch Sandwich,” –

*Figure 2: – Management systems 2011 audit data.*

At the same time, it applies fair value accounting to disclose at fair value (designated as hedge or non-hedge instruments and AOCI associated with such derivative instruments).

Financial Accounting Analysis

The purpose of this chapter is to analyze the financial statement as of 19 September 2012 and explain the performance of Apple Inc in more detail.

Financial statement as of 19 September 2012 (with comparison of 2011)

According to the annual report 2012 of Apple Inc, this company has very strong financial position whereas the competitors like Hewlett-Packard faced serious financial problems due to global recession. However, this company has experienced severe difficulties in the US market to reduce operating costs, but it became possible to recover from such crisis due to increase of sales revenue from some segments; so, both assets and liabilities have increased in the post recessionary period. All financial information provided in the balance sheet and income statement tables are in (US$ millions, except number of shares, which are reflected in thousands)

Consolidated Balance Sheet

*Figure 3: Details about Apple’s assets.*

In 2012, Over 52.34% of the total assets of Apple was Long-term marketable securities, more than 10.45% assets were sort-term Long-term marketable securities, and about 6% of the total assets were cash and cash equivalents in 2012. On the other hand, from 2011 to 2012, total assets of this company increased by 34% and current assets amplified by 22%; in addition, tangible assets (property, plant and equipment) boosted by about 8.8%.

*Figure 4: Details about Apple’s liabilities.*

In 2012, total current liabilities of Apple were $38542 million whereas it was $27970 million in 2011; however, total liabilities with shareholders’ equity were $176,064 million and $116,371 million in 2012 and 2011 accordingly. However, total liabilities were $57,854 million in 2012 and $39,756 million in 2011; thus, from 2011 to 2012, total liabilities of this company increased by more than 31% and total current liabilities amplified by about 27.4%; in addition, total liabilities with shareholders’ equity increased by more than 33%.

Income Statement of Apple

Total sales of iPhone and connected products and services were US$ 80.50bn in the last year, which indicates that sales revenue of this segment increased by $33.40 bn or 71% from 2011; however, Apple generated about 51% and 43% of the Company’s total sales revenue from this segment in 2012 and 2011. According to the annual report 2012 of Apple Inc, this company earned more than 21% and 19% of the Company’s total sales income from iPad and related products and services in 2012 and 2011; however, total sales amount of this sector was US$ 32.4bn in the last year, which was increased by 59% from 2011.

Consolidated Income Statement of Apple demonstrates that cost of sales were $87,846 million and $64,431 million in 2012 and 2011 accordingly and gross margin were $68,662 million in 2012 and $43,818 million in 2011; thus, from 2011 to 2012, gross margin of this company increased by more than 36% and cost of sales amplified by about 26.5%. On the other hand, the Income Statement shows that total operating expenses were $13,421 million and $10,028 million in 2012 and 2011 accordingly and net income were $41,733 million in 2012 and $25,922 million in 2011; thus, from 2011 to 2012, total operating expenses of this company increased by more than 25% and net income enlarged by near 38%.

Interim results as of 23 January 2013

Dowling, Paxton & Hoover (2013) reported that Apple generated more than US$ 54.50 billion sales revenue within first quarter of the fiscal year 2012/13; this result shows that sales revenue increased about $8.2 billion from the last quarter of the fiscal year 2011/12. However, Dowling et al. (2013) further added that net profit of this term was US$13.1 billion, average weekly revenue was $4.2 billion and gross margin was 38.6%; in addition, international sales accounted for 61% of the quarter’s revenue.

According to the press release, this company sold a record 47.80 million iPhones at this period whereas it was 37 million in the last; the last quarter of the fiscal year 2011/12; however, it also sold a record 22.90 million iPads, which was increased by 7.5 million from the previous period. On the other hand, Dowling et al. (2013) reported that Apple sold 4.10 million Macs and 12.7 million iPods; Macs and iPods sold decreased by 1.1 million and 2.7 million from the last quarter of the fiscal year 2011/12; in addition, it declared a cash dividend of $2.65 per share.

General Aspects of the Financial Statement

According to the annual report 2012 of this Company, senior administrative body are responsible for assessing critical accounting policies and disclosures with the Audit and Finance Committee; the Internal Revenue Service completes field audit regarding federal income tax (as a matter of state, local, and foreign tax authorities) though the result of tax audits cannot be estimated with certainty. However, cash and cash equivalents (beginning of the year) were $9815 millions and $11261 millions, which decreased by more than 14%; at the same time, cash generated by operating activities were $50856 million and $37529 million in 2012 and 2011 respectively thus, from 2011 to 2012, cash generation from operating activities increased by 26%.

Pricing

Sliwinska, Kardava & Ranasinghe (2008) stated that Apple used a combination of skimming and versioning method to fixing price of the products for the local market and European countries; however, Skimming indicates high selling price of the products to target loyal customers (they are relatively less price sensitive) to gain high profits and to reimburse their cost of investment. However, the management teams of Apple adopt two-stage process, for instance, they offer lower price for new version of old products for which the customers of this company can purchase every next generation model at comparatively lower price (iPod classic introduced in 2004 and the price of was $249 whereas Apple sold iPod nano in 2005 at $199).

At the same time, Sliwinska et al. (2008) argued that Apple charges different prices for the same products in some cases considering customers willingness to pay; for instance, it declined the price of iPhone about US$200 from the original price; however, the company received several complaints for which the management changed pricing structure.

Strategy of Apple

Etherington (2013) stated that Apple is a unique and successful company as a retail chain, hardware, and software service provider; however, the management team and board of directors of this company intend to carry on this success in the future. At the same time, Meyer (2012) stated that business strategy of a firm reflects its leaders, for example, Steve Jobs used simple strategy, but new CEO has already changed Apple’s business strategy to expand business in both hardware and software sectors.

On the other hand, Cook observed and followed different strategies of the previous CEO to address the issues related with brand expansion and change supply chain management system. According to the annual report 2012 of this Company, it is committed to bringing the best user experience; however, its business strategy leverages its exceptional capacity to design and develop products and services with new features and facilities to draw attention of new users and existing loyal customers.

Etherington (2013) reported that Apple had invested more for the physical presence (about $1 million for each location) because this strategy helped the company to increase number of visitors; therefore, it became possible for the company to experience rapid growth in the local market; however, the following figure shows the Relationship between store visitors and stores open –

*Figure 6: – Relationship between store visitors and stores open.*

Moreover, Etherington (2013) further addressed that Apple also closed existing store in order to open larger outlets considering customer values and higher visitor-to-store ratio in the future. In addition, Etherington (2013) stated that it invested comparatively low for fixed property, but expended more for machinery, equipment, and internal use software as part of their innovation strategy; however, the next figure shows the investment on different sectors –

*Figure 7: – Comparison of investment on property, plant and equipment ($ millions).*

According to the annual report 2012 of this Company, it will continue to invest on the R&D, marketing and advertising, business expansion of distribution network (like iTunes Store, Mac App Store) to effectively reach more customers with the best quality sales and post-sales support and to deliver third-party digital content and applications.

Competition

Yahoo Finance (2013) reported that IBM is the market leader of the Computer Hardware sector in the US market; Moreover, Hewlett-Packard Company, Dell, Cisco Systems, Xerox Corporation, and Seagate Technology Public Limited have strong position in the local market; thus, IBM is the strongest competitor of this company for this particular business segment. However, the next table shows direct competitor comparison for the year 2012 –

Key variables	Apple Inc	Google	Hewlett-Packard	Research In Motion Limited
Market Cap:	397.410 billion	258.140 billion	42.710 billion	7.570 billion
Employees	72800	53861	331800	12700
Revenue	164.690 billion	50.180 billion	118.680 billion	11.070 billion
Gross Margin	0.420	0.590	0.240	0.320
Operating profit Margin	0.33	0.27	0.08	-0.06
Net Income	41.75 billion	10.79 billion	-12.89 billion	-628.00 million
Earning Per Share	44.10	32.21	-6.55	-1.23

Table 2: – Direct Competitor Comparison for the year 2012.

According to the above table, the position of Apple is more attractive than the position of the competitors because net income of this company was $41.75 billion and net income of Google was $10.79 billion whereas Hewlett-Packard faced severe loses in the fiscal year 2012.

Social and Ethical Responsibilities of Apple

Some activities of the suppliers and the marketers of this company have created controversy in the society, for instance, the unadulterated sexiness of all its products and the suppliers’ irresponsibility to provide safe working conditions; however, the following figure shows ethics audit data 2011 –

However, Moyano (2011) stated that the management of this company has already revealed these issues and taken effective measures to stop unethical practices as part of its corporate social responsibility; therefore, the suppliers are bound to ensure equal opportunity, workplace safety issues, and so on.

Management Accounting Analysis

Scribd (2013) stated that Apple is a technology-based company, which has strong presence in the hardware and software sectors in national and international market; therefore, this report will focus on the management information system to develop information communication and to remove operational and management hurdles by developing trans-national networks.

MIS of Apple

Nikhil & Urmila (2006) conducted a landmark study on the ERP solution at Apple Inc and identified that Apple has already integrated SAP for its MIS solution, the integration of SAP has provided an extended opportunity for Apple to develop enterprise application and complete solution for its management, managers, employees and all other stakeholders from a single web portal.

Budgeting

Sherman (2013) stated that this company increased budget for advertising and Sales, general and administrative (SG&A) expenses, for instance, it spent US$ 338 million on ads in 2006, but this figure was $1 billion in the last year; at the same time, SG&A expense amplified $1.40 billion or 33% to $5.50 billion in 2010 compared to 2009. However, the budget process of this company is also complicated like organisational structure because it has different business segment for which different departments need different budget allocation; in addition, finance department, audit department and the board of directors scrutinise these issues related with budgeting (Apple 2012).

A cash-flow budget

Hughes (2013) and Etherington (2013) stated that this company had $137 billion in cash reserves in the first quarter of the fiscal year 2012/13; therefore, there is no sort of a cash-flow budget to implement new projects or invest for innovation, research and development, business expansion, advertising, marketing and so on.

Project budgets of Apple

Etherington (2013) stated that Apple has project to build new spaceship-style headquarters in Cupertino and it should require about $5 billion, which was $2 billion grater than the projected costs; however, the management of this company informed the press that it has massive cash reserves to maintain the standard level of quality for structural elements like concrete supports, and finishes.

Capital budget of Apple

Jubak (2012) stated that capital budget of this company came to US$ 4.40 billion in fiscal 2011, and it spent more than US$ 612 million to start new outlets and rest US$ 3.80 billion went into international investment particularly for the suppliers.

Investments

Garside (2012) stated that the management and audit department of this company review and assess the project plan before taking any investment decision; however, it has the world’s biggest hedge funds (US$ 121 billion under management) and its main investment group is corporate securities (US$ 44.5 billion in company shares).

Pricing – an Example

Sliwinska et al. (2008) stated that the pricing strategy for high-tech inventions of Apple considering the product features and the strategies of the competitors, such as, all products of Nokia, Motorola and many other competitors are not considerable issue for the management of Apple. On the other hand, Sliwinska et al. (2008) argued that Apple used Price skimming strategy and Huimin & Hernandez (2011) addressed the advantage and disadvantage to use this policy.

Financial Management Analysis

This chapter will illustrate different ratios in order to identify the position of the company in the global market because this is highly competitive market, and the management of Apple needs to take strategic decision after assessing the market and comparing the condition with competitors.

Working Capital

Apple Inc	2011 (US$)	2010 (US$)	2009 (US$)	2008 (US$)
working capital	46,997 – 24,327.0 = 22,670.00	41,678 – 20,722 = 20,956	31,555.00 – 11,506 = 20,049	30,006 – 11,361 = 18,645
Competitors	2009 (US$)	2010 (US$)	2011 (US$)	2012 (US$)
IBM	12,933	7,554	8,805	5,808
GOOG	26,419	31,566	43,845	46,117
HPQ	9,536	4,781	579	3,971
DELL	5,292	5,285	9,538	7,447

Table 3: – Working capital of Apple and other competitors.

Current ratio

This ratio gives the idea to the financial department to show ability to pay debt, for instance, in 2012, its current ratio was 1.5 indicates that it can pay 1.50 times its current liabilities, which indicates strong position; however, compared to the direct and indirect competitors, it can say that Google and Dell both have strong current ratios.

Apple Inc	2011 (US$)	2010 (US$)	2009 (US$)	2008 (US$)
Current ratio = current assets / current liabilities	46,997 / 24,327.0 = 1.93 %	41,678 / 20,722 = 2.01%	31,555.00 / 11,506 2.74 %	30,006 / 11,361 = 2.64 %
Competitors	2011 (US$)	2010 (US$)	2009 (US$)	2008 (US$)
IBM	1.21 %	1.19 %	1.36 %	1.15 %
GOOG	65.92 %	24.1 %	10.6 %	8.77 %
HPQ	1.01 %	1.10 %	1.22 %	0.98 %
DELL	81.49 %	61.2 %	71.3 %	1.0 %

Table 4: – Current ratio of Apple and other competitors.

Gross profit margin

After assessing this ratio for the last 4 years, it can be said that it has maintained gross margins at or above 40% and it reduced in 2010; however, introduction of new products like iPad mini, iPhone 5, and new Mac have influenced the selling price and unit cost; however, the following table shows gross profit margin of –

Apple Inc	2009 (US$)	2010 (US$)	2011 (US$)	2012 (US$)
Gross profit margin = gross profit / sales	40.14 %	39.38 %	40.48 %	43.87 %
Competitors	2009 (US$)	2010 (US$)	2011 (US$)	2012 (US$)
IBM	45.72 %	46.07 %	46.89 %	48.13 %
GOOG	62.61 %	64.47 %	65.21 %	58.88 %
HPQ	23.59 %	23.76 %	23.35 %	23.24 %
DELL	17.93 %	17.51 %	18.53 %	22.25 %

Table 5: – Gross profit margin of Apple and other competitors.

The position of Google and IBM are stronger competitors as the corporation had good pricing strategy, for instance, gross profit margin of Google was 58.88% in the last year.

Net profit margin

Apple’s Net Profit Margin is also strong and quite stable from the last four years though it was 23.86% in 2008; however, high net margin indicates that this company is generating enough sales revenue and keeping the operating-costs under control; on the other hand, the following table shows that the position of HPQ and Dell is not stable enough –

Apple Inc	2011 (US$)	2010 (US$)	2009 (US$)	2008 (US$)
Net profit margin = (EBIT / Sale Revenue) x 100 = Net income / revenue	15,863 / 51,408 = 30.86 %	18,540 / 65,225 = 28.42 %	12,066 / 42,905 = 28.12 %	8,947 / 37,491 = 23.86 %
Competitors	2009 (US$)	2010 (US$)	2011 (US$)	2012 (US$)
IBM	19.19 %	21.48 %	23.95 %	26.67 %
GOOG	27.57 %	29.01 %	25.69 %	21.40 %
HPQ	6.69 %	6.95 %	5.56 %	– 10.51 %
DELL	4.06 %	2.71 %	4.29 %	5.63 %

Table 6: – Net profit margin of Apple and other competitors.

Debt Equity Ratio

In comparison with the last 4 years, the Debt Equity Ratio of Apple is in stable condition, which attracts the investors; here, the position of Google is outstanding. However, the following table shows Debt Equity Ratio for the competitors –

Apple Inc	2011 (US$)	2010 (US$)	2009 (US$)	2008 (US$)
Debt equity ratio = total liabilities / total shareholders’ equity	33,427/ 61,477.00 = 0.5437 %	27,392/ 47,791 = 0.573 %	15,861 / 31,640 = 0.501 %	13,874 / 22,297 = 0.622 %
Competitors	2009 (US$)	2010 (US$)	2011 (US$)	2012 (US$)
IBM	1.69 %	0.97 %	0.95 %	1.14 %
GOOG	–	–	–	0.05 %
HPQ	0.35 %	0.38 %	0.58 %	0.97 %
DELL	0.44 %	0.61 %	0.66 %	0.72 %

Table 7: – Debt equity ratio of Apple and other competitors.

Return on Assets (ROA)

According to the Morningstar (2013), ROA of Apple is increasing gradually, which indicates that it is one the most proficient company to use resources and the leaders of this company proficiently handling its assets to increase revenues. Additionally, ROA of HPQ is decreasing day-by-day; however, the following table gives more data in this regard –

Apple Inc	2009 (US$)	2010 (US$)	2011 (US$)	2012 (US$)
Return on total assets (ROA) = net income / total assets	18.92 %	22.84 %	27.07 %	28.54 %
Competitors	2009 (US$)	2010 (US$)	2011 (US$)	2012 (US$)
IBM	12.29 %	13.33 %	13.79 v	14.09 %
GOOG	18.05 %	17.30 %	14.93 %	12.91 %
HPQ	6.72 %	7.32 %	5.57 %	– 10.62 %
DELL	9.17 %	4.76 %	7.29 %	8.40 %

Table 8: – Return on assets ratio of Apple and other competitors.

Return on Equity (ROE)

Apple Inc	2009 (US$)	2010 (US$)	2011 (US$)	2012 (US$)
Return on Equity (ROE) = Return on Equity = Net Income/Shareholder’s Equity	31.27 %	35.28 %	41.67 %	42.84 %
Competitors	2009 (US$)	2010 (US$)	2011 (US$)	2012 (US$)
IBM	74.37 %	64.94 %	73.43 %	85.15 %
GOOG	20.30 %	20.68 %	18.66 %	16.54 %
HPQ	19.28 %	21.64 %	17.89 %	– 41.43 %
DELL	61.90	28.91	39.31	41.86

Table 9: – Return on Equity (ROE) of Apple and other competitors.

Return on Invested Capital

Apple Inc	2009 (US$)	2010 (US$)	2011 (US$)	2012 (US$)
Return on Invested Capital	31.27 %	35.28 %	41.67 %	42.84 %
Competitors	2009 (US$)	2010 (US$)	2011 (US$)	2012 (US$)
IBM	27.31 %	28.99 %	30.15 %	31.39 %
GOOG	45.43 %	16.49 %	21.11 %	20.43 %
HPQ	13.54 %	14.04 %	9.89 %	– 22.43 %
DELL	45.43 %	16.49 %	21.11 %	20.43 %

Table 10: – Return on Invested Capital of Apple and other competitors.

SWOT analysis

Strengths

According to the annual report 2012 of this company, strong brand awareness, customer loyalty and market stability of the existing and new products;
Apple is the most innovative company in the globe, which is able to introduce products with exceptional features (Mashru 2012, p.8);
The strong financial position (lack of debt) of the company is strengthening its performance in the global market (Mashru 2012, p.8).
At the same time, Apple operates all over the world with high reputation (the brand was valued at $76.5 billion in 2012) and holds a leading position in some segments;
It has skilled and experienced leaders, managers and a dynamic labour force;
This company has excellent marketing and advertising teams
Expansion of local market size, international standard audit procedure, quality of the products, supply chain management and strong liquidity position enhances the business of Apple Inc.

Weaknesses

The middle-class people are unable to purchase the products of Apple due to asking high prices;
However, Apple needs more production costs, which becomes difficult for the company to compete in the global market;
Market players, such as Hewlett Packard, Dell, IBM, and Samsung have already created market demand in the third world countries;
Infringement of a patent is a very common scenario for which the company faces a financial problem;
However, other weakness of the company includes incompatibility with different OS, declining market share, new leadership, defects of the products, lack of corporate social responsibility from the suppliers’ point, the combination between offerings and expectations, product recall, and so on (Mashru 2012, p.8);

*Figure 9: – SWOT Analysis of Apple Inc.*

Opportunities

The demand for iPad mini and iPhone 5 is rising considerably outside the US market despite their high price;
In addition, Mashru (2012, p.8) stated that the iTV launch will strengthen its competitive advantage in the future;
According to the report of Nelson (2010, p.69), this company should open more and more stores in the global market as part of its brand expansion strategy
In addition, the expansion of tablets along with smartphone markets will open a new dimension to increase market share;
At the same time, this company has an opportunity to experience growth in the mobile advertising segment, iCloud services and software segment;
It has the opportunity to expand business by using joint ventures and mergers;

Threats

According to the annual report 2012 of Apple, taxation policy 2013 in the USA will adversely influence this company;
Fast technological change is one of the most threats as the customer like to purchase products with special features for which Apple has faced challenges to release new products (Mashru 2012, p.8);
Risk of legal litigation, the performance of distributors and third parties, market environment, infringement of intellectual property rights, increase operating costs, activities of the competitors are the challenging factors;

Conclusion

From the above discussion, it can be found that the financial position of Apple is excellent, and it has an available fund for invest more in different projects while total assets increased by 34% and current assets amplified by 22%, gross margin increased by more than 36% and cost of sales enlarged by about 26.5% from 2011 to 2012. At the same time, the management had not imposed any liability on the subordinates to decrease operating costs through total liabilities of this company increased by near 31% and total current liabilities augmented by 27.4%, total operating expenses increased by more than 25% and net income enlarged by near 38% in the last year.

In addition, financial statements and ratio analysis demonstrate that Apple holds a comparatively better position than the competitors while ROA is increasing gradually, the debt-equity ratio is in stable condition and the net profit margin is a strong and quite stable situation to invest for the future development.

Recommendations

According to the above discussion, the pricing of Apple is not suitable and reasonable to strengthen the brand image in the developing countries while the price of the products is not affordable for the middle-class people; in this context, the marketers should research on the purchasing power of the buyers in the post-recessionary economy in the global market. In addition, the price of the products should base on the social and economic structure of the marketplace to create a unique experience for the customers of developing nations, for instance, the Japanese people can afford Apple products, but mass people of India can’t afford though India is one of the most potential markets for the multinational companies.

Jobs’s leadership style was complex but effective for this company to create a strong brand image to change the financial market position particularly in the US market; however, Tim Cook should consider the leadership approach of his predecessor while he had a great contribution to this company to break the crystalline structure around them to meet the business objectives. However, it is significant to focus more on the leadership approach to compete with competitors, manage the employees and internal management system, consider the long-term growth, face a major crisis with patience, and accomplish the goals, and so on. According to the report of Nelson (2010, p.69), this company should have efficient succession planning.

The production of Apple products is too high because of increases in fuel and other energy costs, labour and healthcare costs, increases advertising costs and high remuneration for the skilled labour, and many other issues whereas competitors of the international market can offer products with no profits or little profits; therefore, Apple should concentrate on the cost reduction policy. At the same time, the CEO and board of directors should concentrate more on the effective strategy to expand business in the new market while most of Apple’s products are not available in the developing countries; in this context, Apple should consider the most effective entry strategy (like joint venture or acquisition) to enter the business zone.

Apple experienced huge success due to innovation and product development; as a result, the marketers should invest more in the research segment to introduce new products and improvement of existing product line to increase market demand or to attract a large number of customers in the national and international market, for instance, development of product features of iPad mini and iPhone 5. Moreover, the decision-making body of Apple should consider other external and internal factors, such as equal opportunities for the staff, research and development, environmental safety issues, ethical consideration, future research on customer behaviour, diversity management and other related factors.