Apple

BUDGETING AND FORECASTING WITH EXCEL

Team Project - FP&A for a Public Company

1) Description of the business:

Apple is a global leader in the It sector that designs, manufactures, and markets smartphones, personal computers, tablets, wearables and accessories, and sells various related services.

The Company's fiscal year is the 52- or 53-week period that ends on the last Saturday of September. The Company is a California corporation established in 1977 and as of September 26, 2020, the Company had approximately 147,000 full-time equivalent employees.

We listed the industries in which the Company is active as per SIC (Standard Industrial Classification) classification:

Primary SIC: 3663- Radio & TV communications equipment

Secondary SIC: 3571- Electornic computers

7372- Prepackaged software

3572- Computer storage devices

3577- Computer perièheral equipment, nec

5045- Computers, peripherals & software

Geographic analysys

As we previously sayd, Apple Inc. is a global leader; below the data of revenues and operating income of the last three years:

Tab.1, source: Mergent Online

By analysing the tab, we can notice how Apple Inc. is improving its revenues and operating income through the years, thanks to essential investments in Research and Development and diversification of the offers by inserting and implementing new business units.

Particularly, the Company has invested in complementary services to the products, offering a unique 360-degree customer experience.

2) Corporate Portfolio, SBUs and description  

In detail, we list the SBUs offering by the Company Apple Inc. with the related description:

Products

· iPhone: iPhone® is the Company's line of smartphones based on its iOS operating system. During 2020, the Company released a new iPhone SE. In October 2020, the Company announced four new iPhone models with 5G technology: iPhone 12 and iPhone 12 Pro were available starting in October 2020, and iPhone 12 Pro Max and iPhone 12 mini are both expected to be available in November 2020.

· Mac: Mac® is the Company's line of personal computers based on its macOS® operating system. During 2020, the Company released a new 16-inch MacBook Pro®, a fully redesigned Mac Pro®, and updated versions of its MacBook Air®, 13-inch MacBook Pro and 27-inch iMac®.

· iPad: iPad® is the Company's line of multi-purpose tablets based on its iPadOS® operating system. During 2020, the Company released an updated iPad Pro®. In September 2020, the Company released an eighth-generation iPad and introduced an all-new iPad Air®, which was available starting in October 2020.

· Wearables, Home and Accessories: Wearables, Home and Accessories includes AirPods®, Apple TV®, Apple Watch®, Beats® products, HomePod®, iPod touch® and other Apple-branded and third-party accessories. AirPods are the Company's wireless headphones that interact with Siri®. During 2020, the Company released AirPods Pro®. Apple Watch is the Company's line of smart watches based on its watchOS® operating system. In September 2020, the Company released Apple Watch Series 6 and a new Apple Watch SE. In October 2020, the Company announced HomePod mini™, which is expected to be available in November 2020.

Services

· Advertising: The Company's advertising services include various third-party licensing arrangements and the Company's own advertising platforms.

· AppleCare: The Company offers a portfolio of fee-based service and support products under the AppleCare® brand. The offerings provide priority access to Apple technical support, access to the global Apple authorized service network for repair and replacement services, and in many cases additional coverage for instances of accidental damage and/or theft and loss, depending on the country and type of product.

· Cloud Services: The Company's cloud services store and keep customers' content up-to-date and available across multiple Apple devices and Windows personal computers.

· Digital Content: The Company operates various platforms, including the App Store®, that allow customers to discover and download applications and digital content, such as books, music, video, games and podcasts. The Company also offers digital content through subscription-based services, including Apple ArcadeSM, a game subscription service; Apple Music®, which offers users a curated listening experience with on-demand radio stations; Apple News+SM, a piece of subscription news, and magazine service; and Apple TV+SM, which offers exclusive original content. In September 2020, the Company announced Apple Fitness+SM, a personalized fitness service built for the Apple Watch, which is expected to be available before the end of calendar 2020.

· Payment Services: The Company offers payment services, including Apple Card™, a co-branded credit card, and Apple Pay®, a cashless payment service.

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2.1) Strategies for the SBUs

The Company presents a high number of business units, closely related to each other. Indeed, the connection between each SBU is the main strategy of the Company. That's why we need to analyse its global strategy to understand later how it is applied to each SBU.

Apple Inc. is constantly increasing the quality and technology of its offerts, which is already among the top of every market the Company is competing in. But what is mainly differentiating Apple from the competitors is the 360 degrees of customer experience that they're offering. In the latest decade, the Company has invested a lot in developing complementary services to the physical products: from the Apple cloud service to the several digital contents and the payment services reserved for Apple users only.

The main strategy the Company is pursuing with excellent results is to create a community of customers thanks to the exclusive services dedicated only to Apple users: from the free messaging service (so-called Imessage) or media content sharing (Airdrop) until sharing music playlists on Apple Music platform.

The Company is also based on an exclusive operating system (Ios) that facilitates the connectivity of devices of different types between them, limiting the interface between Apple tools and the competitors with different operating systems instead.

This "all-inclusive strategy" has allowed the Company to remain competitive even during the global COVID-19 Pandemic, offering users, among other things, a digital TV service (apple tv).

The same strategy of linking complementary products and services to them can be found in the products' packaging.

Indeed, opposite to the competitors (Samsung, Huawei, LG, Microsoft..), the current strategy is to minimize the accessories offering with the packaging in order to make the customers buy them separately. You won't find chargers, adapters and earphones when purchasing a new Apple device.