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B U S 1 0 0 I N V E S TO R S BUS 100 | SECTOR 32C | CHANDIGARH, 160031

C O N TA C T 1166, PHASE-5 MOHALI, 160059 [email protected] 0172-2580898

22 November 2106

Dear BUS 100 INVESTORS, We at SKYWALK JAAVA would like to guide you in whether to invest in APPLE.INC. We have done our analysis based on few topics which will help you to decide whether to take the decision in favor of investing or not. Basically, this report’s purpose is to brief you with the information of APPLE.INC so that you take your decision wisely. This report covers the Company Overview, SWOT Analysis, Critical Issues and Implications along with the Vision Statement, Mission statements, Long-term Objectives and Key Strategies. We have included various news reports and facts to support our findings and we assure you that this will definitely help you take the right decision. Furthermore, the report will also include Organizational structure, Marketing Strategy, Financial Performance, Company outlook, out recommendations and references for our research. Further details will be provided to you in the next half of the report. Sincerely, SKYWALK JAAVA CONSULTANCY

2016 ANALYSIS OF APPLE.INC

SKYWALK JAAVA CONSULTANCY 1

‘WE BE THE ELEVATOR, TO YOUR SUCCESS’ EXECUTIVE SUMMARY consolidated by Steve Jobs and Steve Wozniak in 1977, Apple Computer, Inc. was incorporated with total assets of US$250,000. It has since developed long ways to the Apple Inc. of today, utilizing near 50,000 representatives around the world, with total assets of US$209,379 million in 2010, putting it 56th among the Fortune 500 organizations. From theiPod unrest in 2000 to the iPhone in 2007 and most as of late, the iPad in 2010, Apple has introduced, in the midst of many exhibitions, earth shattering items that upset the markets since the begin of the 21st century.This report serves to give some understanding of a firm that has been named Fortune magazine‟ s most respected organization on the planet for three back to back years from 2008 to 2010. A strategic investigation of the firm will look at the open doors and dangers in the general environment and the firm‟ s qualities and shortcomings. Macintosh works in numerous parts of buyer gadgets, for example, PCs (PCs),mobile specialized gadgets, computerized music and video gadgets. The business presents the firm with adequate development openings, for example, the rising economies, the move towards the mobile period and expanding customer advanced way of life. Be that as it may, worldwide markets for consumer electronics are very focused as Apple‟ s contenders rush to react to its major product dispatches. As Apple works crosswise over numerous geological areas, the firm is also exposed to global operation dangers and danger of item 2

impersonation. Apple‟ s qualities put the firm in a prime position to take the preferred standpoint of the open doors and minimize the effect of innate dangers. With its dedication to innovative work, Apple‟ s Digital Hub technique, combined with solid brand showcasing and retail endeavors, has brought about the achievement of numerous Apple products. An indispensable environment is likewise one of Apple’s upper hands. Be that as it may, numerous industry eyewitnesses trust that Apple might be excessively dependent on Jobs and think about whether the firm can proceed with its force afer Job ‟s possible takeoff. The mass interest in Apple‟ s items has made incredible buildup and expectations that are turning out to be progressively difficult to meet. The firm has likewise gotten the board feedback for its contractors‟ work and business practices.The report will finish up by giving Apple three suggestions. Firstly, Apple should endeavor to enhance with each new item dispatch by keeping on utilizing on its strong development and being open to criticism. Also, Apple ought to have its succeeding pioneer to front the firm in the way Jobs has. This expanded permeability of its pioneer would increment stakeholders‟ trust in Apple‟ s business congruity without Jobs. At last, the developing markets speak to a tremendous open door which Apple can tap on by propelling once more product offering only for these business sectors to seek afer development and develop itsCorporate Social Responsibility program to further improve its picture.

TABLE OF CONTENTS 1. Introduction …………………………………………………………………………………………………………… 2. Company Overview ……………………………………………………………………………………………..... 3. Company Situation .……………………………………………………………………………………………….. I. Strength ……………………………………………………………………………………………………… II. Weaknesses ……………………………………………………………………………………………….. III. Opportunities …………………………………………………………………………………………….. IV. Threats ……………………………………………………………………………………………………….. V. Critical Issues ………………………………………………………………………………………………. VI. Implications ………………………………………………………………………………………………… 4. Strategic Directions ……………………………………………………………………………………………….. I. Vision Statements ………………………………………………………………………………………. II. Mission Statements ……………………………………………………………………………………. III. Long term objectives ………………………………………………………………………………….. IV. Key strategies …………………………………………………………………………………….......... 3

5. Organizational Structure……………………………………………………………………………………...... I. Organization ……………………………………………………………………………………….......... II. Board of directors ………………………………………………………………………………………. III. CEO Profiles ………………………………………………………………………………………………... 6. Marketing Strategy ………………………………………………………………………………………………… I. Product lines and mix ………………………………………………………………………………….. II. Marketing mix analysis ……………………………………………………………………………….. 7. Financial performance ……………………………………………………………………………………………. I. Three Year Trend Analysis ……………………………………………………………………………. i. Revenues ……………………………………………………………………………………….... ii. Net Profit ………………………………………………………………………………………….. iii. Stock Price ……………………………………………………………………………………….. iv. Earnings Per Share ……………………………………………………………………………. v. Key ratios …………………………………………………………………………………………. II. Sources of Capital ………………………………………………………………………………………… III. Comparative financial analysis with key competitors …………………………………… 8. Company Outlook …………………………………………………………………………………………………… I. Our forecast ………………………………………………………………………………………………… II. Analysts forecast …………………………………………………………………………………………. 9. Recommendations ……………………………………………………………………………………………….... 10. Appendix …………………………………………………………………………………………………………………

LIST OF FIGURES AND TABLES

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1. INTRODUCTION

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Apple inc. was established by Steve Jobs, Steve Wozniac, and Ronald Wayne. They created apple computers on April 1, 1976, and dropped the word “computer” from the company’s name. as the time passed by they kept on developing their products by innovations in technology. First, they launched the iPhone before 2007 and then began their evolution from iPod touch to iPad in 2009. In June, they launched the Cloud services and sooner Steve Jobs retired from the job in August and died on 5th October 2011. Later on, Steve Jobs was replaced by Tim Cook who is currently the CEO of APPLE.INC After this, the company kept on innovating new products and attracting new customers.

2. COMPANY OVERVIEW Apple.Inc is an American Multinational technological company headquartered in Cupertino, California that designs, develops and sells consumer electronics, computer sofware, and online services. Its hardware products include the iPhone, Smartphone; the iPad, tablet computer; the Mac, personal computer, the iPod portable media player, the Apple Watch smartwatch, and the Apple TV digital media player. Apple's purchase programming incorporates the MacOS and iOS working frameworks, the iTunes media player, the Safari web program, and the iLife and iWork innovativeness and profitability suites. Its online administrations incorporate the iTunes Store, the iOS App Store and Mac App Store, Apple Music, and iCloud. Mac was established by Steve Jobs, Steve Wozniak, and Ronald Wayne in April 1976 to create and offer individual computers. It was consolidated as Apple Computer, Inc. in January 1977, and was renamed as Apple Inc. in January 2007 to mirror its moved center toward purchase gadgets. Apple is the world's biggest data innovation organization by income, the world's biggest innovation organization by aggregate assets and the world's second-biggest cell phone manufacturer. In November 6

2014, notwithstanding being the biggest traded on an open market partnership on the planet by market capitalization, Apple turned into the primary U.S. organization to be esteemed at over US$700 billion. There are more than one billion effectively utilized Apple items worldwide as of March 2016. Apple's overall yearly income totaled $233 billion for the monetary year finishing in September 2015.

3. COMPANY SITUATION I.

STRENGTHS :i.

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II.

WEAKNESSES :i.

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Innovation: One of the key qualities of Apple over years has been its inventive product offering. Exhibiting hit products afer products has been the significant quality of Apple. It has secured almost everything that a person wishes to have in life starting from Mac book to iPods, iPhone, iPad, and iWatch. Market value: Being in authority position requires that image value should be high enough. We know that Apple is considered as the world’s best brand and thus for that, it has to keep its market value high. Technology and Designing: The best part of Apple and the reason for its popularity is its elegant design and technology used in it. Apart from the elegant design it possesses, it also has a machine under it that makes it work in an amazing way. Distribution: Apple has 470 stores in almost 17 countries. Moreover, it also distributes its products through trade partners, online channels and also through small outlets in various other areas. Recently it has also started an Apple bar at most of its stores so as to provide the best customer service to the people as soon as possible. Margins: One of the major strength of Apple is its command over the margins it receives from the sale of its products. As it is the leader in the technology department, therefore, it has the power to keep huge margins from its sale of products in the market so that it can invest in R&D and Brand building. Moreover, Apple products do not break in price, which means that all the products have the same price in all the stores/branches of Apple. Customer Focus: Apple always designs its products keeping in mind its customers. It tries to provide the customers with those things which the people have also not thought of. According to Steve Jobs, “if you ask the people what they want and by the time you provide them with that thing, they would want something else.” Working on this ideology makes Apple succeed in the market .(Bhasin, 2016)

Living up to the level of Customer Expectations: Apple has been the leading the company for a number of years and every year people expect something different from the company. Thus to be always living up to the expectations of the people is quite tough in today’s market. Incompatibility factor: Apple products are incompatible with the third party products which mean that when you buy an Apple product you have to use only the Apple

iii.

iv.

III.

OPPORTUNITIES:i.

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accessories designed for that particular product as using any other tool/accessory would lead in corrupting your device. This becomes a great matter of concern for the customers while buying the product. High prices of products: Another weakness of Apple Company is that its products have way too high prices. This makes it tough for the company to target all the markets as such high-cost products can be afforded only by a few sections of the society. Narrow product range: Apple has a narrow range of products to offer to its customers and moreover there has not been much change in the latest version of products manufactured. (Bhasin, 2016)

Technological Advancements: The best thing in the technology industry is the use of the technological advancements in the best way. The only company that we know that can adapt to the advancements soon is Apple. Therefore one can expect more advancement in technology of iPads, iPhones, and Mac books and in other products even. The growing market: Apple is focusing on the growing GDP of the developing nations because the increase in the GDP of a nation would result in more people being able to buy the product. Every company which is growing needs a strong customer base and Apple is also doing the same to develop more. I watch and Apple TV: Two products which will enhance the presence of Apple products even further are the watch and Apple TV, both of which are aiming at the future as to when will its digital presence increase. Apple iwatch already has a 50% market share of Smart watches in the US. (Bhasin,2016)

THREATS:i.

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Penetration of androids in the market: One major threat for Apple is the increasing penetration of the androids in the world market. All the smartphones like Samsung, HTC, OPO, etc. are using the android database and are even available at costs lower than that of Apple. Moreover, they are highly compatible. Thus it proves to be a great threat to Apple. Laptop segments: No doubt that in laptops Mac book is the best option but even other brands viz. DELL, Sony, HP, etc. are not less. Thus Apple faces a great threat in this field as well. (Bhasin, 2016)

PEST ANALYSIS POLITICAL FACTOR There are many difficulties which cannot be measured by the firm such as; geopolitical worries, the war against terrorism, authority to work and the health issues which can affect the sale of apple product worldwide. As to reduce operating cost Apple has outsourced in different countries like Ireland, china, Korea, Czech Republic and cork. If these countries face any political instability or any problem which 8

causes to delay in manufacturing operations, will led to spoil the Apple likeness in the eye of consumers and its dealers (CNetnews, 2012).

ECONOMICS FACTOR Obtaining power relies on upon the world's monetary conditions. As indicated by recent years, the unemployment rate is high in numerous nations which cause to diminish the offer of Apple items. Another reason was an expansion in oil costs which causes swelling in universes economy. As a consequence of these monetary elements, buying the force of individuals diminished which adversely influenced the offer of the Apple items because of its higher cost. Be that as it may, now world's monetary conditions are showing signs of improvement and the organization has bought itself outside coinage, so Apple income has expanded in the worldwide market (Apple Inc, 2012).

SOCIAL FACTORS Two elements consistently have been the lead of Apple creation everywhere throughout the past, the venture, and the esteem. The obtaining of lavishness items have gone up on the grounds that the acquiring power of clients has ascended in the diverse market over the world and individuals want to purchase iPod, iPhone, and most recent innovation iPad. As music, industry development has expanded which is the greatest social impact on the Apple in light of the fact that the fundamental basic music store is iTunes. Subsequently, Apple has picked up such a great amount from social elements due to its characterizing an individual's cutting edge ways of life.

TECHNOLOGICAL FACTORS Apple always takes benefit as of it's advanced and great skills merchandises. The enormous volume has put in investigation and expansion pitch by Apple, that’s the aim Apple approaches on high of the new advanced products.

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CRITICAL ISSUES

Critical issues are those issues which the company needs to focus on as they are the reasons why the company fails. Every firm has various critical issues and so does Apple. i.

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Model of retail: The Company earlier had worked as a homely place and this had driven back the ethics of the business environment. Due to this, there was quite a large amount of failure as there was no spirit of excitement among the employees. Thus, this is the most important critical issue that Apple needs to focus on right now to develop its sales. High prices: Another important issue that the company faces is the high prices that the products perceive. As a result, this leads to loss of customers due to the non-affordability factor of the products. Non-compatibility: The products are not compatible with other products. This implies that when you buy an apple product you need to buy all the accessories of apple related to the product. Brand loyalty: most of the customers today are not so connected to the brand they take up once. So another critical issue that Apple needs to focus on is increasing its brand loyalty. (Jackson, 2013)

VI.

IMPLICATIONS :i. ii. iii.

The company should lower the prices of the product and if it does not want to lower the price then at least it should spread its market of action too as far as possible so that more and more customers get attracted. To increase its brand loyalty they should keep on innovating their products so that people do not tend to change from one brand to another. This can be done only if they try to satisfy people with what they wish for, which is being done by the Apple Company. The another way they can work on their issues is that by making their products more compatible so that people get easy going with the apple products.

4. STRATEGIC DIRECTIONS Every company changes its mission statements afer several years and same goes for Apple.Inc which changed it recently.

I. VISSION STATEMENTS Apple’s vision statement was recently changed by the new CEO, Tim Cook. He stated that our company always thought of modernization and value simple and not complex. We participate in markets where we can contribute something and not there where one is having everything. They focus on one main project only so that they could achieve it efficiently and fully. Due to this statement, company is able to avail growth and success. Apple’s vision statement focuses on modernization and its products are very easy to use and are user-friendly. (Blodget, 2013)

II. MISSION STATEMENTS Tim Cook stated “Apple designs Macs, the best personal computer in the world, along with OS X, life, iWork and professional sofware. Apple leads the digital music revolution with its iPods and iTunes online stores. It has reinvented the mobile phones with its revolutionary iPhone and app store, and is defining the future of mobile media and computing devices with iPad.” Through the above statement, it is revealed that what Apple functions and what it will do in future. Apple’s future is of producing mobiles like iPhones and computing devices like Mac book Air. For this, it needs to focus on exploring and evolving on mobile devices and related media. It completely shows the company’s goals and situation. (Blodget, 2013)

III. LONG-TERM OBJECTIVES 10

i.

Apple should keep on producing fascinating and amazing products that would attract more and more customers towards its products. Thus the main objective is to keep the world excited about the Apple products by innovating the products manufactured by it.

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Apple should continue the surge of innovating new products. As we know that the technology keeps on changing and it becomes very difficult for any firm to cope up with the changing technology. The only way Apple can cope up is by innovating products that attract customers. Expansion of the market. Apple stores are accountable for most of the company’s profits. Therefore they have to expand by opening more number of stores all over the world to increase their sales. Accessibility. Apple should try to make its products accessible ...