Apple Business Plan

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Apple Company Business Plan: Executive Summary

Apple Inc is one of the leading electronic firms in the global market. This American firm has enjoyed massive success over the recent past due to a series of unique strategies employed by its top managers. According to Friedlander (2006), Apple Inc has voted the most valuable brand in the world, with an estimated value of $118.9 billion. In the United States, the firm’s share price has remained relatively stable despite the recent economic challenges that were experienced in the United States. Its marketing strategies, especially the emphasis on social media marketing, have enabled the firm to gain massive loyalty in the international market. Despite this impressive performance, the future of this firm remains uncertain. The electronic market is becoming increasingly competitive. This competition has been worsened by a number of Chinese firms that mimic the products of the top brands and sell them in the international market. Consumers have also become very demanding. They have a variety of choices whenever they want to purchase any product (Metcalf & Manktelow, 2000). Apple must come up with a strategic business plan that will enable it to overcome these challenges. It must remain innovative in its product development and delivery methods.

Business Plan of Apple: Rationale

The firm was chosen because of its strategic importance to the investors in the United States. According to Yoffie (2012), Apple Inc is one of the trusted firms among the United States’ investors. Firms such as Lehman Brothers and Enron brought disappointments to many investors. They lost their investments because of irresponsible business management plans. Currently, the management of Apple Inc is seen to be effective and very transparent when dealing with its investors (Rajkumar, 2009). It is for these reasons that the top management needs to come up with effective plans that will enable it to remain at the top in this industry.

Description of Apple Inc.’s Business Plan

Apple Inc was founded in April 1976 by Steve Jobs and Steve Wozniak as developer and marketer of personal computers. The two computer experts later invited Ronald Wayne into their business to guide them in marketing their products. Its initial market operations were a huge success because they came up with a product that was unique. It was during this time that personal computers were first introduced into the American market. Before then, IBM only manufactured mainframe computers for large organizations such as the American military. In January 1977, the company was incorporated. The official name at that time was Apple Computer, Inc. Since then, this firm has expanded to become one of the world’s leading consumer electronics firms in the global market. The firm currently has its headquarters in Cupertino in California. The firm has expanded its products line beyond personal computers and Smartphone. Currently, the firm is also producing smartwatches, security management gadgets used in areas such as airports, iCloud services, and a series of computer and Smartphone software. The expansion of the product line was meant to increase revenue at the firm.

The business of manufacturing and selling computer products in the modern market comes with a number of challenges. The main challenge is stiff competition from the market rivals. There is also another problem of piracy that harms the massive investment the firm makes in research. Despite these challenges, this firm must come up with a business plan that can enable it to achieve success in the market.

According to Bach (2007), Apple Inc has been relying on speciality stores to sell its products. Opening up such speciality shops in developing countries, especially in Africa, has been a major challenge. That is why market rivals such as Samsung have outsmarted it in the developing markets. In this business plan, a new strategy will need to be employed by this firm to enable it to expand its operations to the developing markets. It is proposed that this firm should embrace a new marketing strategy that allows it to partner with major supermarkets in the emerging markets to carry its products. The firm can retain a few speciality shops where its clients can visit in case they have specific issues with the products they bought or are planning to buy. However, the bulk of their products should be made available at the supermarkets. The firm can have one or two of its employees working in the sections where the products are carried within these stores. These employees must be experts who can address any technical questions that consumers may have when they are planning to purchase the products (Gillam, 2012). This strategy will not only increase its market coverage but also reduce its operational expenses. The number of employees at this firm will reduce because the product will be sold by a third party. The cost of renting speciality shops will also reduce. The ultimate outcome of this new strategy will be increased revenue at this firm.

Product and Services

Apple Inc operates in the consumer electronics market. The firm is one of the leading manufacturers of mobile phones and personal computers. It is known for its iconic products such as Mac book, iPhone, iPad, tablets, and iPod. It has expanded its line of products, and it is currently offering cloud solution products such as iCloud, iTunes Store, Mac App Store, and iOS store (Lashinsky, 2012). The firm also offers an array of different software that can be used in personal computers and Smartphones such as OS X, iWork, and iLife. The main market for this firm is in the United States of America and parts of North America. However, the firm has made successful entries into some of the emerging markets such as China, India, and Brazil (Sutherland, 2012). The brand is also trusted in the European markets for its value. As mentioned in the section above, the firm has expanded its product offering in the market. It currently offers security management tools used at airports, supermarkets, hospitals, and many other organizations that face the threat of terrorism.

Market Analysis

The current market where Apple Inc operates is very competitive. SWOT analysis may be necessary for market analysis. The strength of Apple Inc has been expressed in a number of ways. The ability of this firm to diversify its electronic products to go beyond computers has helped it increase its revenues in the market. To maintain the quality of its different electronic products, this firm has come up with a quality assurance unit in all its subsidiaries in order to ensure that it delivers quality products to the customers. The ability to deliver quality products to the customer has made it develop a special niche in the market, making its brand popular across the world. The iPhone and iCloud are some of its recent products that demonstrate its capacity to deliver special satisfaction to its customers by bringing products that are a little beyond the expectations of the market. Despite the above strengths, this firm has some weaknesses that have impeded its growth to a given degree. One of the main concerns that this firm has not addressed properly is the issue of environmental management (Reilly, 2004). The components of the products of this firm are known to be very dangerous to the environment. Old phones, laptops, among other products, pose a serious challenge to the environment.

There are various opportunities that exist for Apple Inc in its operations in the global market. One of the opportunities that this firm has had is an expansive and unexploited market in third world countries. The stable economic growth in the major economies means that there is increased opportunity for this firm to expand its sales in such countries as the American and European markets. This growth of the economy means that the consumers will always have enough to spend on luxury goods such as iPhones and iPads. The Samsung Galaxy Note 10.1 and Apple iPad 3 have been competing in the market for supremacy. There are threats that exist in this industry that are worth noting (Phillips, 2012). Technology is probably the main threat that this firm faces in this industry. It is a nightmare trying to figure out what some of the competitors can do with this same technology. Another threat that this firm face is the stiff competition posed by the rival firms.

Apple’s Revenue and Sales

According to O’Grady (2009), Apple Inc has experienced impressive sales within the last five years due to effective production and marketing strategies that the top managers have maintained. By the end of the third quarter of 2015, the firm announced a revenue of USD 233.715 billion, which was almost 12% higher than that of the previous year. Its operating income rose to USD 71.23 billion while its net income for the same period was USD 53.394 billion. The major increase in revenue at this firm is directly attributed to its impressive sales not only in the United States and European markets but also in the emerging markets in Asia and parts of Africa.

Financials

A critical analysis of the financials of Apple Inc can help in determining its performance in the market. In this section, the analysis will focus on the firm’s income statement and balance sheet for the last three years.

Income Statement

View: Annual Data |

All numbers in thousands

Period Ending		Sep 27, 2014	Sep 28, 2013	Sep 29, 2012
Total Revenue		182,795,000	170,910,000	156,508,000
Cost of Revenue		112,258,000	106,606,000	87,846,000

Gross Profit		70,537,000	64,304,000	68,662,000

	Operating Expenses
	Research Development	6,041,000	4,475,000	3,381,000
	Selling General and Administrative	11,993,000	10,830,000	10,040,000
	Non-Recurring	–	–	–
	Others	–	–	–

	Total Operating Expenses	–	–	–


Operating Income or Loss		52,503,000	48,999,000	55,241,000

	Income from Continuing Operations
	Total Other Income/Expenses Net	980,000	1,156,000	522,000
	Earnings Before Interest And Taxes	53,483,000	50,155,000	55,763,000
	Interest Expense	–	–	–
	Income Before Tax	53,483,000	50,155,000	55,763,000
	Income Tax Expense	13,973,000	13,118,000	14,030,000
	Minority Interest	–	–	–

	Net Income From Continuing Ops	39,510,000	37,037,000	41,733,000

	Non-recurring Events
	Discontinued Operations	–	–	–
	Extraordinary Items	–	–	–
	Effect Of Accounting Changes	–	–	–
	Other Items	–	–	–


Net Income		39,510,000	37,037,000	41,733,000
Preferred Stock And Other Adjustments		–	–	–

Net Income Applicable To Common Shares		39,510,000	37,037,000	41,733,000

Source (Evans, 2015)

Balance Sheet

View: Annual Data |

All numbers in thousands

Period Ending		Sep 27, 2014	Sep 28, 2013	Sep 29, 2012

Assets
Current Assets
	Cash And Cash Equivalents	13,844,000	14,259,000	10,746,000
	Short Term Investments	11,233,000	26,287,000	18,383,000
	Net Receivables	31,537,000	24,094,000	21,275,000
	Inventory	2,111,000	1,764,000	791,000
	Other Current Assets	9,806,000	6,882,000	6,458,000

Total Current Assets		68,531,000	73,286,000	57,653,000
Long Term Investments		130,162,000	106,215,000	92,122,000
Property Plant and Equipment		20,624,000	16,597,000	15,452,000
Goodwill		4,616,000	1,577,000	1,135,000
Intangible Assets		4,142,000	4,179,000	4,224,000
Accumulated Amortization		–	–	–
Other Assets		3,764,000	5,146,000	5,478,000
Deferred Long Term Asset Charges		–	–	–

Total Assets		231,839,000	207,000,000	176,064,000

Liabilities
Current Liabilities
	Accounts Payable	48,649,000	36,223,000	32,589,000
	Short/Current Long Term Debt	6,308,000	–	–
	Other Current Liabilities	8,491,000	7,435,000	5,953,000

Total Current Liabilities		63,448,000	43,658,000	38,542,000
Long Term Debt		28,987,000	16,960,000	–
Other Liabilities		24,826,000	20,208,000	16,664,000
Deferred Long Term Liability Charges		3,031,000	2,625,000	2,648,000
Minority Interest		–	–	–
Negative Goodwill		–	–	–

Total Liabilities		120,292,000	83,451,000	57,854,000

Stockholders’ Equity
Misc Stocks Options Warrants		–	–	–
Redeemable Preferred Stock		–	–	–
Preferred Stock		–	–	–
Common Stock		23,313,000	19,764,000	16,422,000
Retained Earnings		87,152,000	104,256,000	101,289,000
Treasury Stock		–	–	–
Capital Surplus		–	–	–
Other Stockholder Equity		1,082,000	(471,000)	499,000

Total Stockholder Equity		111,547,000	123,549,000	118,210,000

Net Tangible Assets		102,789,000	117,793,000	112,851,000

Source (Lüsted, 2015)

As shown in the two financial documents, this firm has experienced impressive success over the past five years. Its income and net assets have been on the rise, a sign that it is growing in strength. Further financial statements can be found at the appendix.

Apple’s Organizational Structure

A critical review shows that Apple Inc is generally successful (Gogerly, 2012). This strategy is meant to improve its sales. By forming a strategic alliance with major supermarkets around the world, the firm will be able to concentrate more on production, leaving the supermarkets to focus on the sales of the product. This business plan will have a simple organizational structure. A new channel of distribution will be introduced. The products will come from the producers to retailers before they reach the consumers. The organization will retain the same structure for the first 5 years of operations. This is a slight change from the current structure of producer to speciality stores before reaching the consumers.

Exit Plan

The exit plan for this new strategy is necessary in case the top management feels that it is not delivering the expected value. The firm will simply inform the strategic partners that the alliance has failed to achieve the expected outcome; hence it shall come to an end.

Appendices

Appendix 1: Apple Inc Income Statement

12 months ended	Sep 26, 2015	Sep 27, 2014	Sep 28, 2013	Sep 29, 2012	Sep 24, 2011	Sep 25, 2010
Net sales	233,715	182,795	170,910	156,508	108,249	65,225
Cost of sales	(140,089)	(112,258)	(106,606)	(87,846)	(64,431)	(39,541)
Gross margin	93,626	70,537	64,304	68,662	43,818	25,684
Research and development	(8,067)	(6,041)	(4,475)	(3,381)	(2,429)	(1,782)
Selling, general and administrative	(14,329)	(11,993)	(10,830)	(10,040)	(7,599)	(5,517)
Operating expenses	(22,396)	(18,034)	(15,305)	(13,421)	(10,028)	(7,299)
Operating income	71,230	52,503	48,999	55,241	33,790	18,385
Interest and dividend income	2,921	1,795	1,616	1,088	519	311
Interest expense	(733)	(384)	(136)	–	–	–
Other expense, net	(903)	(431)	(324)	(566)	(104)	(156)
Other income (expense), net	1,285	980	1,156	522	415	155
Income before provision for income taxes	72,515	53,483	50,155	55,763	34,205	18,540
Provision for income taxes	(19,121)	(13,973)	(13,118)	(14,030)	(8,283)	(4,527)
Net income	53,394	39,510	37,037	41,733	25,922	14,013

Source (Evans 2015)

Appendix 2: Apple Inc Balance Sheet

Assets

Fiscal year is October-September. All values USD millions.	2011	2012	2013	2014	2015	5-year trend
Cash & Short Term Investments	25.95B	29.13B	40.55B	25.08B	41.6B
Cash Only	2.9B	3.11B	8.71B	10.23B	19.06B
Short-Term Investments	23.05B	26.02B	31.84B	14.85B	22.55B
Total Accounts Receivable	11.72B	18.69B	20.64B	27.22B	30.34B
Accounts Receivables, Net	5.37B	10.93B	13.1B	17.46B	16.85B
Accounts Receivables, Gross	5.42B	11.03B	13.2B	17.55B	16.93B
Bad Debt/Doubtful Accounts	(53M)	(98M)	(99M)	(86M)	(82M)
Other Receivables	6.35B	7.76B	7.54B	9.76B	13.49B
Inventories	776M	791M	1.76B	2.11B	2.35B
Finished Goods	776M	791M	1.08B	1.64B	2.35B
Work in Progress	0	0	0	0	0
Raw Materials	0	0	683M	471M	0
Progress Payments & Other	–	–	–	–	–
Other Current Assets	6.54B	9.04B	10.34B	14.12B	15.09B
Miscellaneous Current Assets	5.82B	7.84B	10.34B	14.12B	15.09B
Total Current Assets	44.99B	57.65B	73.29B	68.53B	89.38B

	2011	2012	2013	2014	2015	5-year trend
Net Property, Plant & Equipment	7.78B	15.45B	16.6B	20.62B	22.47B
Property, Plant & Equipment – Gross	11.77B	21.89B	28.52B	39.02B	49.26B
Buildings	2.06B	2.44B	3.31B	4.86B	6.96B
Land & Improvements	–	–	–	–	–
Computer Software and Equipment	–	–	–	–	–
Other Property, Plant & Equipment	2.78B	3.71B	3.97B	4.51B	5.26B
Accumulated Depreciation	3.99B	6.44B	11.92B	18.39B	26.79B
Total Investments and Advances	55.62B	92.12B	106.22B	130.16B	164.07B
Other Long-Term Investments	55.62B	92.12B	106.22B	130.16B	164.07B
Long-Term Note Receivable	0	0	0	0	0
Intangible Assets	4.43B	5.36B	5.76B	8.76B	9.01B
Net Goodwill	896M	1.14B	1.58B	4.62B	5.12B
Net Other Intangibles	3.54B	4.22B	4.18B	4.14B	3.89B
Other Assets	3.56B	5.48B	5.15B	3.76B	5.56B
Tangible Other Assets	1.96B	2.48B	5.15B	3.76B	5.56B
Total Assets	116.37B	176.06B	207B	231.84B	290.48B

Liabilities & Shareholders’ Equity

	2011	2012	2013	2014	2015	5-year trend
ST Debt & Current Portion LT Debt	0	0	0	6.31B	11B
Short Term Debt	0	0	0	6.31B	8.5B
Current Portion of Long Term Debt	0	0	0	0	2.5B
Accounts Payable	14.63B	21.18B	22.37B	30.2B	35.49B
Income Tax Payable	–	–	–	–	–
Other Current Liabilities	13.34B	17.37B	21.29B	26.94B	34.12B
Dividends Payable	–	–	–	–	–
Accrued Payroll	590M	735M	959M	1.21B	–
Miscellaneous Current Liabilities	12.75B	16.63B	20.33B	25.74B	34.12B
Total Current Liabilities	27.97B	38.54B	43.66B	63.45B	80.61B
Long-Term Debt	0	0	16.96B	28.99B	53.46B
Long-Term Debt excl. Capitalized Leases	0	0	16.96B	28.99B	53.46B
Non-Convertible Debt	0	0	16.96B	28.99B	53.46B
Convertible Debt	0	0	0	0	0
Capitalized Lease Obligations	0	0	0	0	0
Provision for Risks & Charges	0	0	0	0	6.9M
Deferred Taxes	8.16B	13.85B	16.49B	20.26B	24.06B
Deferred Taxes – Credit	8.16B	13.85B	16.49B	20.26B	24.06B
Deferred Taxes – Debit	0	0	0	0	0
Other Liabilities	3.63B	5.47B	6.34B	7.6B	12.98B
Other Liabilities (excl. Deferred Income)	1.94B	2.82B	3.72B	4.57B	9.36B
Deferred Income	1.69B	2.65B	2.63B	3.03B	3.62B
Total Liabilities	39.76B	57.85B	83.45B	120.29B	171.12B
Non-Equity Reserves	0	0	0	0	0
Preferred Stock (Carrying Value)	0	0	0	0	0
Redeemable Preferred Stock	0	0	0	0	0
Non-Redeemable Preferred Stock	0	0	0	0	0
Common Equity (Total)	76.62B	118.21B	123.55B	111.55B	119.36B
Common Stock	13.33B	16.42B	19.76B	23.31B	27.42B
Retained Earnings	62.84B	101.29B	104.26B	87.15B	92.28B
ESOP Debt Guarantee	0	0	0	0	0
Cumulative Translation Adjustment/Unrealized For. Exch. Gain	313M	(232M)	(280M)	1.12B	(653M)
Unrealized Gain/Loss Marketable Securities	130M	731M	(191M)	(40M)	(464M)
Revaluation Reserves	0	0	0	0	0
Treasury Stock	0	0	0	0	0
Total Shareholders’ Equity	76.62B	118.21B	123.55B	111.55B	119.36B
Accumulated Minority Interest	0	0	0	0	0
Total Equity	76.62B	118.21B	123.55B	111.55B	119.36B
Liabilities & Shareholders’ Equity	116.37B	176.06B	207B	231.84B	290.48B

Source (Lüsted 2015)

List of References

Bach, B 2007, Implications of enabling technologies for Apple Inc: Cybermarketing & enabling technologies, GRIN Verlag GmbH, München.

Evans, V 2015, The Financial times essential guide to writing a business plan: How to win backing to start up or grow your business, Prentice Hall, Harlow.

Friedlander, J 2006, Apple numerics manual, Addison-Wesley Publishing Company, London.

Gillam, S 2012, Steve Jobs: Apple icon, ABDO Publishers Company Minneapolic.

Gogerly, L 2012, Cool brands, Lerner Publications, Minneapolis.

Lashinsky, A 2012, Inside Apple: How America’s most admired-and secretive-company really works, Business Plus, New York.

Lüsted, M 2015, Apple: The company and its visionary founder, Steve Jobs, ABDO Pub, Minneapolis.

Metcalf, D & Manktelow, P 2000, Portraits in Black, Good Apple, Inc, Carthage.

O’Grady, J 2009, Apple Inc, Greenwood Press, Westport.

Rajkumar, T 2009, Die Erfolgsfaktoren von Apple Inc, GRIN Verl, München.

Reilly, E 2004, Concise encyclopedia of computer science, Wiley, Chichester.

Sutherland, A 2012, The story of Apple, Rosen Central, New York.

Phillips, J 2012, Project Management for Small Business: A Streamlined Approach from Planning to Completion, American Management Association, New York.

Yoffie, D 2012, Apple inc. in 2012, John Wiley & Sons Publishers, Hoboken.

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