Strategic Management

Apple Company is a reputable business with good outlined policies. Over the three years, it has performed above the industry average. It has performed accordingly to the set goals, and objectives set dated back as long as its incorporation in 1977. The market keeps changing, and with time, the costs of goods have been on the rise. The cost of sales is a critical aspect of achieving the goals and objectives. Controlling these costs will result in increased profitability. A good option would be having hedged agreement with the different suppliers.

Apple company manufacture, designs as well as markets communication devices. The communication devices include; software, applications, accessories, digital content, and personal computers, established in 1977 in Cupertino, California. It sells various products worldwide through different available markets. It's one of the biggest companies in the communication industry, offering different products. The fiscal year of the company ends on the last Saturday of September. The following are some of the products the company sells

IPhone is a smartphone product operating on its IOS system. The iPhones include; Touch ID, Siri, which is an intelligent based assistant, Apple Pay, among other standard smartphones. In the year 2018, it introduced new types of iPhones; these are; I phone Xs, Xs Max, and Super Retina. All the three mentioned smartphones have stainless designed glass, high-resolution power, and high processing speed. In addition to the three new smartphones, the company has other quality smartphones, such as; iPhone7and 8. In addition to the high-resolution power and high processing speed, they come with additional features. Some of the extra features include Book Store, digital apps, and iTunes.

IPad is one of the many lines of the company’s products that operates on the IOS operating system. Some of the standard iPads include iPad mini, iPad Siri, iPad Pro, Touch ID, and Apple Pay. During the year 2018, several new products introduced in the market. A 9.7 inch iPad launched in March 2018. The 9.7 inch iPad was pencil compatible, meaning one could type using the keyboard or use the pen. In other words, it was multi-functional. Again, in October, a new version was introduced, which was an improved version of the 9.7-inch pro having a smart keyboard. Besides, an 11 and 12.7 inch added during the same year. The two uses the Liquid Retina feature, which has additional smartphone features such as music and high processing speed and resolution power.

Mac is the personal computers and desktop which operates using the Mac Operating system. Some of the desktop versions include; iMac Pro, Mac Mini, Mac Pro, 27 inch Mac Pro, 21.5 inches, and iMac 21.5 inch with Retina. Portable computers include; Mac Book Air, Mac Book, Mac Book Pro with Touch, and Mac Book Pro. During the last quarter of 2018, a new version introduced. The Mac Book Pro with Air launched, it has a touchpad and high-performance speed.

The IOS is the company’s internal operating system for iOS devices. IOS-based devices are compatible with window-based computers, Apple iCloud, and Mac Book. A new version introduced in September 2018. The IOS 12 is an improved version with high performance, third party applications, communication features, and improved reality programs.

MacOS

macOS is the desktop operating system providing integrated and intuitive computer support. The operating system built on UNIX, which is an open based foundation. ICloud support built on this operating system where the user’s access quickly required information from; IOS devices, Mac, as well as other supported devices. Besides, it has access to macOS Mojave and iTunes. In September 2018, a new version released with high-quality apps. Such include; stock, news, and voice recognition services. Besides, it adds home-based enhancement such as Finder enhancement.

The watch operating system is specifically for Apply watches, which are intended to keep connected as well as keeping them healthy. It has to attract features such as; running features, face recognition, podcasts, Walkie Talkie, workout detection, as well as third party based applications.

Specifically, the TV operating system is for Apple Televisions. It helps developers develop new applications such as games and consequently deliver them to the relevant customers through this Tv Apple Store. The operating system supports high-quality services through HDR content.

The company has both digital content and services which allow the consumer to access various digital programs, such include entertainment, where consumers download different music and tv programs through purchase. Besides, to purchase, the customers have options for buying or renting these services. The Apple music allows the consumer has access to different music, radio station, and games as they can easily download through the Apple Store. Besides, it offers on-demand listening to radio stations through subscription, which is done online depending on the nature of services the customers need. Streaming on-demand products enhance the subscription. Some of these digital services are; iTunes, Store, The App Store, The Mac App Store, The Book App Store, and The Tv App Store.

The iCloud offers storage services for photos, music, contacts, music, documents, and emails. The primary purpose is keeping the above mentioned updated through the different IOS, windows and Mac computers and Apple Tv. Some of the notable cloud services include; family sharing, Find My iPhone, Notes, Find My Friends, iCloud Photos, iCloud Backup, iPad, iCloud Key Chain, and Mac. The above offers back up for the various content through IOS gadgets.

Apple care offers support to its customers through different services. Standard assistance includes; technical assistance, software products, online and electronic manuals as well as protection plans. It has two primary free services; the APP and AC+, which provide support to phones and hardware. Specifically, the AC+ offers support in cases of damages in different countries for different products. Also, it helps in the recovery of individual products, which may be due to, say, theft of iPhones in the US.

Apple pay is a cashless method of payment to its different customers. It allows its customers to make cashless purchases through the different acceptable stores offering cashless services. Also, it accepts both credit and debit card networks across the globe. Generally, it provides online debit and credit online services as well as offering reward-based programs. A significant version introduced in December 2017; it was updated IOS 11 and Watch operating system 4, allowing peer payment in the United States of America.

The company focuses on both domestic and foreign markets. The primary market includes household consumers, government entities, education, small and medium based enterprises. Also, it sells and resells third-party products directly to its consumers and as well as small and medium enterprises. Its many stores facilitate Apple's market presence globally, as well as its direct labor force all over the world. In addition to the direct sales and outlets, it also incorporates other selling mechanisms through indirect sales distribution channels as well as third party selling. The critical components of the selling department include wholesalers, retailers, resellers, and network sellers. Net sales for the year ended 2018 were 29% and 71% for direct and indirect transactions, respectively. It is important to note that the vast geographical markets divided into a different segment, which is independent. They help in distributing as well as selling the products to the customers in conjunction with other personnel.

Various methods are used to accomplish the set goals and objectives set: such include, product differentiation and innovation. Numerous salespeople employed by the company have rick skills required in selling and promoting the different available products to the customers. Conveyance of both software and hardware is made possible through the diverse labor force all over the world. They have the requisite knowledge about the people as having direct contact people with the customers. It is for this reason; the company believes direct selling is of paramount importance as it creates immediate awareness and feedback to the consumers in the different market segments all over the world.

Both domestic and foreign market has a good number of sales forces who are in direct contact with the consumers, and also, they offer the after-sales services. Extra sales support retains the customers as well as attracting new customers. For effective products, the company emphasizes a high customer base through continuing education and service delivery through the various distribution channels such as third party networks, sales representatives, wholesalers, and retailers. Also, retail stores are regularly expanded, thereby creating more outlets and easing distribution mechanisms.

For effective selling, the outlets are strategically located in prime locations worldwide. These locations have high traffic, thereby a top market for the products. Such areas include malls and high-end shopping. The different stores attract more customers as there is high traffic, thus creating more demand through marketing and presentation. The many outlets employ high skilled taskforce who advise the customers on various aspects. Such advice includes software, hardware, and accessories requirements.

The company has invested heavily in different programs in a different location, thereby increasing revenue from the different education stakeholders such as the students. It employs various integrated programs to the stakeholders through multiple products. The distribution mechanism helps in distributing the comprehensive ranged products globally. Additionally, the company sells its products to various governments worldwide. Besides, it deploys multiple products to the numerous markets due to their productivity, easiness, integration as well as performance. There exist quite several compatible with the different applications for various users dispersed throughout the world. Some regions have a separate customized app that requires specialized programs, thereby requiring Apple's products.

The company targets different customers. Consumers, small, medium businesses, and government are some of the targets. Each category has different attributes, such include the young generation between the ages of 18-35 years. The youth are highly conversant with the current technological trend, thereby having a posh lifestyle. Also, a good percentage of the child, both males, and females, have a moderate level of income as majoring is in the working environment. The majority of this group is in the spending mode rather than investments. Besides, both small and medium businesses are a big part of the target market. Also, the government is an important target market for the company's products. The government has different departments with different needs. The government plays an important target market for the various products produced and provided by the company. One of the most significant characteristics of the government is high spending due to support from the national resources such as taxes from various sources. The charges provide adequate resources to spend on multiple products. It is essential noting that these products aimed at facilitating service delivery to the citizens. It is, therefore, paramount in spending in actualizing its goals as well as responsibility towards her citizens.

1. High research and development

2. High-end intellectual capacity

3. Great distribution channels

The industry is very competitive; for this reason, the company has invested heavily to remain relevant and competitive in the industry. There is growing technology that plays a significant role in product development, thereby must remain consistent for effective productivity. The tremendous technological development boosts several factors that accelerate the product according to the market requirement. In short, the company, through high research and development, produces high-end products, unlike its competitors, in line with the current market requirement. In line with technological advancement, the company is a notch higher as a result of top research and development programs and teams. Change is inevitable; therefore, Apple Company understands this very well and thus steps higher than her competitors. Due to updated products in the market, the company maintains the current market share as well as attracting new customers, unlike some of its major competitors.

The Apple Company understands the advantages of having quality property rights. Across the world, the company has a vast collection for its; software, services, hardware, and accessories. Some of the essential reasons include; copyrights, patents, service marks, trade dress, and other related rights across the world. Although the company believes in property rights, it also focuses on innovations, market capabilities as well as competent technical expertise. The market capabilities are reflected by the personnel involved, for example, the marketing department, which has high marketing skills, thereby maintaining the current market share as well as attracting new customers.

Apple files regular patents with the relevant regulatory bodies to protect her innovation for its various products, which are a result of design, development, and research. Additionally, it holds multiple copyrights for specific product lines; thereby, competitors find it difficult venturing into specific products innovated by the company, thus maintaining as well as increasing the market share.

Apple Company understands the role the distributors play in achieving the set goals and objectives. It consists of various distribution channels such as direct sales representatives, wholesalers, retailers as well as third party networks. Each part plays a significant role in increasing sales and cumulatively considerable revenue. High-end distribution channels are essential as they avail the products to customers in different places. Availing the product at the right time increases sales worldwide. Also, the promoters help in expanding the market share. Unlike other companies, Apple has the upper hand when it comes to marketing, distribution, promotion, and sales, thereby remain competitive in the industry and thus increasing the market share. All these efforts improve the corporate image of the firm. Increased market share enhances the revenue and thus increasing the net profits of the company.

Apple Company distributes its products through various distribution networks. Examples include retailers, wholesalers, resellers, and network carriers. Each player plays a different role but cumulatively transacts in line with the company's goals and objectives. It’s important to note that the various players are over the world as the company is a multinational enterprise.

Apple Company produces and provides goods and services in the communication industry. The primary sources of income are the sale of various products. Notable products include; iPhones, iPads, Tv operating systems, watch operating services, iCloud, and Apple pay. The iPhones constitute the most significant portion of income through the different iPhone products. Globally, these products sold by various distribution channels. Such include retailers, wholesalers, resellers, network carriers without forgetting direct sales by the sales representatives. The revenue realized from different quarters. Examples of income include consumers who are the direct market for different products. Individual customers constitute the most significant revenue stream as they independently purchase the products. iPhones being smartphones are personal gadgets which once bought, are owned by these individuals. Collectively, different consumers provide the most significant percentage of net revenues. It is vital noting that, during the last three fiscal years, no single customer accounted for more than 10% of the total revenue. It's for this reason, and the company has been improving its marketing and promotional services to increase the revenue from different quarters.

All over the world, especially the youths, are attracted to iPhones as they have great features, thereby easing communication utility. The smartphones come with exceptional features such as great music, digital radio, games, and customized application, thereby improving connectivity such as networking. The growing trend of iPhones makes the company produce more iPhones as their demand is very high. The iPhone has been on the market, thereby increasing sales. According to the law of demand, higher demand increases the revenue, thus making the company achieve its primary goals and objectives.

Different government entities provide an excellent market for different products. The main aim of the government is service delivery to citizens. To achieve these noble goals, they require updated products that are offered by the company. Also, the government requires different software and hardware to accomplish their working as all functions of the government require updated means of service. Examples of government requirements include data entry and storage. Different aspects include financial, geographic, as well as services. The changing technology makes the government invest in the current products which are provided by the Apple Company. It's important noting that the company has numerous contracts with different governments. Settlements depend on the nature of the products in line with varying aspects of the government's requirements. Additional agreements with various stakeholders increase the revenue base of the business. Existing agreements make sure the products availed to these departments as well as support services to the provided products.

The company does not operate in a vacuum. There are different outlets globally with skilled personnel. The personnel offers various services; such include direct selling, marketing, and promotions. It's important noting that these outlets are in traffic places such as the mall and high-end urban centers. The high distribution of these outlets makes sure the products are readily available to the customers. The availability of these products makes sure the market has all the demanded quantity. Globally, customers access their preference products at ease without much hustle. Also, the company delivers services to its customers. Some of the services include; Apple Pay, iCloud as well as digital services as and contents. The services provided through many support systems all over the world.

The iPhones constitute the most significant percentage of the total earning due to the factor that individuals purchase their smartphones available. At least a substantial portion of the active population has iPhone smartphones. The increased demand for these products increases revenue. From 2016 to 2018, the iPhone contributed 63%, 62%, and 63%, respectively, in total sales. It's for this reason, and the company takes this line of business seriously.

A lot of investment is made to maintain this product line without outdoing other revenue generation lines. The resultant production costs are well maintained as they constitute a small percentage. Low cost of production increases the earning of the product while holding other factors constant. Despite iPhones being the primary revenue-generating product line, the company offers other products such as IPad, Mac, operating systems as well as services such as Apple Pay.

1. High Financial Base

2. High trained personnel

3. Technological Infrastructure

4. Intellectual property

The company has employed a highly trained human labor force. The high skilled labor force is very crucial for the operation of the business. There exist different department which has specific people.

To start with, the company enjoys good developers who develop both software and hardware for the company. Each department has productive skills required. Any given time, the developers come up with new products. Examples include the iPhone line of production. Here, there are different versions developed all year through. In 2018, they produced iPhone XS with Liquid Retina LCD Display, iPhone 8, 7plus as well as eight plus. In other words, they provide different versions according to the needs of the markets. Besides, the varied models are attractive to the customers. Developers are a vital resource as they contribute significantly to the company.

Apple Company has a product innovation team that comes up with new aspects in the different lines of production. One innovated, they combine efforts with the developers to come up with actual products. Innovation is vital as the market keeps changing and need to adjust. A market adjustment is made possible by introducing in-demand products. The innovation team provides adjustment to a different product to remain relevant in the market.

Besides, the company has high trained marketers and promoters. The two groups are significant as they are the people responsible for advertising, promotion, marketing as well as selling the product. They provide information about the different products in the vast geographical locations. Continuous marketing throughout makes it possible to maintain and attract new customers all over the world. Besides, they play a significant role in disseminating information to all prospective and existing customers. Finally, they research the market gaps in different places and thereby utilizing the current market gaps and consequently improving corporate image and profits.

Apple Company has been in existence since 1977. Throughout this period, it has seen a growth of its earning from year to year. High earnings imply that there is the value of an investment in line with profit and wealth maximization. Profit maximization reflected by the high net profits made.

On the other hand, wealth maximization is reflected by the improved share growth over the years. The financial base makes sure there are enough funds to finance various operations, such as current expenditure. Also, the company is in a position in sourcing as well as outsourcing highly trained expertise and meet their financial obligation though right remuneration packages.

Finances play a significant role in running the company in different aspects. Such include recurrent expenditure, which must be paid regardless of the performance or otherwise the company liquidated. Besides, the company has enough finances to invest in capital expenditure, such as innovation hubs, thereby coming up with new products in line with market demand. Again, the dividend issued reflects the financial muscle of the company. Profits are dependent on business performance. The high financial performance contributes to the high dividend, and a significant portion is invested back in the company for future operations.

The company has a competitive advantage in several ways. It has different copyrights, patents, and patents, providing an extended grace period for selling various products. Every product of the company has different rights, thereby preventing competitors from selling various products for a specified period. Apple Company regularly files patents for its various innovation-related products. Currently, it is pursuing different patent rights all over the world. Consecutively, there are accumulated patents globally, thereby having a notch in its operations. Intellectual properties such as patents, licenses, and trademarks help the company have a competitive advantage for quite an extended period, thereby increasing its sales. Some copyrights are very long such that the competitors have no right to sell patented products for a quite long time, thus blocking them from the market.

Apple Company has invested heavily in technical support to drive efficiency and innovation and productivity. The market has been on change. Apple understands this well; it has invested in high-end technology and always ahead of the market. The efficiency is a crucial aspect of the business and, therefore, at all-time, maintained as its impacts are far-reaching. One of the notable infrastructures is the network, which is accessed globally. The advancement helps the reduction of the expenses due to efficiency. Also, it helps in building competitive distribution channels and, consequently, high earnings.

1. Effective research and development

2. Good supply networks

3. Effective training

4. Good distribution channel

The company operates globally; for this reason, it has built productive distribution channels. Various players help in distributing multiple products. Some of the notable channels are wholesalers, retailers, and sales representatives. Besides, it has store outlets in different regions globally operating differently. Apart from the direct distribution channels, the company enjoys services of third party resellers offering competitive products. Distributors play a significant role as they are the intermediaries between the producer and the final products. The first distribution channels make the company have a competitive advantage. Also, the present distribution channels improve the corporate image, thereby creating an excellent customer-company relationship.

Supply plays a significant role in the production of goods. Without amount, production cannot take place. The company has various suppliers who supply different aspects regularly. In case one supplier fails, the company has alternatives and, thereby, continuous production of the various products. It has entered into separate agreements with multiple suppliers, thereby facilitating continuity of the business. Substantially, all hardware manufactured by the outsourced business partners located in Asia. The company specifies in software and services, leaving the hardware aspect to specific partners such as the Mac suppliers located in Asia. The excellent supply networks are facilitated by amicable agreement, which is a win situation for both parties. Apple doesn't have to invest in hardware producing machinery since contracted parties supply these products. On the other hand, suppliers increase their revenue by having a regular customer base.

The company has an innovation hub that trains the technical expertise on the requirement as well as innovation skills. The employees are regularly trained, thereby improving their productivity. There exist various training programs all year round. The training impact positively as the employees are conversant with the current market requirements. Practical training helps equip the staff with existing skills and knowledge to enhance maximum productivity. The company has supporting programs where employees are supposed to undertake specific programs. Such include innovation, marketing, and management as well as the production department. Knowledge is power. Well trained employees maximize their productivity and consequently helps in achieving Apple goals and objectives.

Apple Company invests heavily in research and development. The research team conducts regular market research to increase the value of different products. The various mechanism is used to derive value from market research. It helps in evaluating both internal and external environments to maximize value and reduce associated risks. Market data collected from different quarters, such as the age group, consumers, regions, competitors, and third-party feedback. Useful research conducted regularly has helped the company develop new technologies in line with market demand. Notable development includes iPhone 7 Plus, iPhone 8, 8 plus, and iPhone 7 Plus model. As evidenced by the current iPhone models reflects the ongoing growth in the smartphone line of production. Change is inevitable, and technology keeps changing, as evidenced by the different product lines in the market. It has remained relevant by offering products that are a culmination of the development of existing and new products.

Creation Value:

Apple company has produced a high level of good and services that its customer wants. They produced unique and differentiating goods and services compared to its competitors. The revenue of Apple company has been growing from $ 251.64 Billion in 2016 to $ 260.17 Billion in 2019. When we compare Apple company to its competitors, the results show that the revenue of Apple company increase in 2019 by 9.36%. the company achieved higher profitability than its competitors. Despite Apple online store, the numbers of apple stores have increased yearly around the world. After using creation value, it shows that the company has better creation value and has superior value creation compared to their competitors.

Capturing Value:

Gross margin has been on a slight decline from 2016 to 2018 financial years. The gross margin being 39.1%, 38.47, and 38.34%, respectively. The decrease in gross margin is due to the increased cost of sales. Over the period under consideration, the suppliers have increased the value of the supplies. The increased cost of supplies for both internally made products as well as hardware, exclusively outsourced from business partners based in Asia, has resulted in increased loss of sales. The cost of sales affects the gross margin. The higher the cost of goods sold, the lower the gross margin. Apple Company has no control over the loss of sales as the supply cost has been on the rise across the industry. Despite the declining trend, the company is above industry average depicting there is production wide increasing cost of sales

Operating margin is an important performance metric. According to the financial statements for the past three years have seen a decline in the operating margin. The following were the operating margin for the three years in a row, 27.84%, 26.76%, and 26.76% from 2016 to 2018, respectively. There is a declining trend in the operating margin. Higher selling and administration costs, as well as research and development, are attributed to the declining operating margin. Over the period under study, the company has invested heavily in research, construction as well as higher selling and administration to remain relevant in the competitive environment. It is important to note that, despite the slight declining operating margin trend, the industry average is far below the company's performance; thereby, there is industry declining trend due to the increased selling, administration, research, and development costs.

The company has been investing in the current machinery with a view of creating value. The return on assets has been on the rise, considering the period under study, 2017 had a ROA of 12.89%, while 2018 had 16.28% showing an increase in the investment of assets. The value of an investment in line to income realized as they contribute significantly to income generation. A higher return on assets implies the assets add considerably to the earning, which is quite encouraging. It’s also important it’s not just a small investment but current investment in line with technological advancement. In line with the industry average, the company is performing better than the competitors in deriving value from the venture.

In conclusion, taking into consideration the three performance indicators, the operating margin has seen a slight decline due to the increased cost of sales. Again, the operating margin has also seen a slight decrease due to increased selling, marketing, research, development, and administration costs. Finally, the return on assets has a positive trend. When comparing the metrics, with the industry average, the overall performance is excellent.

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