A report on Apple

1. Apple:
Executive Summary:
The main idea of this report is to understand the challenges company face when they enter the
new market. This will cover the analysis of the industry and the target segment. This will also
cover the size of the industry, value factors in business environment, competitor’s analysis,
Buyers & seller relationship and to identify the major buyers of the target segment of the
industry.
1. Introduction:
Apple Inc. is an American multinational Technology Company headquartered in Cupertino,
California, which designs & develops, and sells consumer electronics, computer software, and
online services. It’s hardware products include iPhone smartphone, the iPad tablet computer,
the Mac personal computer, the iPod portable media player, and the Apple Watch smartwatch.
Apple is the world's largest information technology company by revenue, the world's largest
technology company by total assets and the world's second-largest mobile phone
manufacturer.
Sources:http://lasseolsen.blogg.no/1265470886_hvordan_apple_er_s_he.html
http://www.apple.com/pr/bios/jobs.html RevisedOct.1st 2010. Read Nov.2nd 2010

2. Apple Inc. has been successful in making its brand popular and known worldwide as a valued
company that offers exceptional & status products and has been successful in providing a
value and customer satisfaction.
The strategy that Apple Inc. utilizes frequently for global market development includes:
Foreign outsourcing, importing as well as exporting.
Foreign operations are conducted in the Americas, Europe, Japan, and Asia Pacific
Apple has developed 417 retail stores in 13 countries and an online store available in 38
countries with sales of $16billion dollars..
2. About Industry
Electronic Equipment, Instruments & Component: The Electronic Equipment, Instruments and
Components Industry in the Information Technology Sector includes producers of electronic
equipment, instruments, electronic components and electronic equipment mainly for the OEM
(Original Equipment Manufacturers) markets (including analytical, electronic test and
measurement instruments, electronic components, connection devices, equipment not
classified elsewhere, and distributors of technology hardware and equipment).
https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/industries.jhtml?tab=learn&
industry=452030
Industry Fundamentals AS OF 06/10/2016
P/E (Last Year GAAP Actual) 21.97
P/E (This Year's Estimate) 30.30
Enterprise Value $13.44B
EPS (TTM) $2.18
EPS Growth (TTM vs. Prior TTM) -3.53%
Revenue Growth (TTM vs. Prior TTM) 16.82%
Return on Equity (TTM) 9.20%
Return on Investment (TTM) 6.28%
Total Debt/Equity (TTM) 57.43
Dividend Yield 1.74%
2.1 Characteristics of ElectronicIndustry:
 It is one of the fast growing industries of the world.
 It includes wide range of products.

3.  It has become the main foreign exchange earner for the economy.
 The global electronics industry is forecast to reach US $932 billion by 2017, with a CAGR
of 5.37% over the next five years.
 The consumer electronic industry is a highly diverse and growing industry
.
3. Industry Analysis:
The electronicindustryplaysapivotal role inoureconomy,drivingwide scale industrialactivity,
boostinginvestment,innovationandbolsteringeconomicgrowth.
3.1 Size of the Industry:
The industryisexpectedtogrowbyaround six percentin2013.
The marketfor electrical andelectronicproductswassizedatabout 4.6 billionUSdollars(oraround3.4
billioneuros).
The overall revenue of the consumerelectronics marketinthe UnitedStates increased from2009 to
2016. In2014, the U.S. consumerelectronicsindustryhada marketsize of 218.8 billionU.S.dollars.
In 2012, the Europeanelectronicsindustrywassizedataround660 billioneuros(orabout915 billion
U.S. dollars).

4. http://www.statista.com/statistics/268398/market-size-of-the-global-electronics-industry-by-
country/

5. http://www.statista.com/statistics/268398/market-size-of-the-global-electronics-industry-by-
country/
3.1.1 PESTEL
Political factors:
Political factorsincludeareassuchas tax policy, labourlaw,environmental law,trade restrictions,
tariffs,andpolitical stability.Governmentshave greatinfluence onthe health,education,and
infrastructure of a nation.
Environmental factors:
These include weather,climate,andclimate change,which mayespeciallyaffectindustriessuchas
tourism,farming,andinsurance.
Social factors:
These include the cultural aspectsandinclude healthconsciousness,populationgrowthrate,age
distribution,careerattitudesandemphasisonsafety.
Technological factors:
These include ecological andenvironmentalaspects,suchasR&D activity,automation,technology
incentivesandthe rate of technological change.

6. Economicfactors:
Change inthe economy can affectthe supplyordemandfor a company'sproductsand services.
Sometimes ithasa positive impact,like the country’sgrossdomesticproduct(GDP) increasesmore than
expected.Othertimes,economicforcescanhurta business,like consumerconfidence drops, and
potential customer’s startsspendinglessandsave more.
Legal Factors:
These include discriminationlaw,consumerlaw,antitrustlaw,employmentlaw,andhealthandsafety
law.These factorscan affecthowa companyoperates,itscosts,andthe demandforits products.
http://www.fcai.com.au/library/publication/fcai6049_full_version_final_(2).pdf
3.1.2 Potor's five forces
The Porter's Five Forcestool isa simple butpowerfultool forunderstandingwhere powerliesina
businesssituation.Thisisuseful,becauseithelpsyouunderstandboththe strengthof yourcurrent
competitiveposition,andthe strengthof apositionyou're consideringmovinginto.
https://www.diva-portal.org/smash/get/diva2:627146/FULLTEXT01.pdf
Five Forces Analysisassumesthatthere are five importantforcesthatdetermine competitivepowerin
a businesssituation.These are:
SupplierPower: Thisisdrivenbythe numberof suppliersof eachkeyinput,the uniquenessof their
productor service,theirstrengthandcontrol overthe comapny,the costof switchingfromone to
another,andso on.
BuyerPower:Thisdependsupon the numberof buyers,the importance of eachindividual buyertothe
business,the costtothemof switchingfromthe company’s productsandservicestothose of someone
else,andsoon.
Competitive Rivalry:Thisdependsuponthe numberandcapabilityof yourcompetitors. If the
competitorsofferthe productatthe same price,thenthe rivalryincreases.
Threat of Substitution:Thisisthe abilityof yourB2Bcustomerto finda differentproductasa substitute
If substitutioniseasy andeasilyavailable,thenthiswill weakenyourpower.
Threat of NewEntry: There isalwaysa reasonof worryfor all the companiesthatnew firmsshouldnot
entertheirindustry;thiscanimpactthe businessplansof alreadyexistingcompanies.

7. 3.2 Competitionanalysis:
These are the topfive consumerelectronicscompanies:
- Apple
- Dell
- HewlettPackard
- Samsung
- Sony
http://www.researchandmarkets.com/reports/2532367/top_five_global_consumer_electronic_comp
anies
By lookingatthe figure one can pointoutthat the competitionisverytoughinelectronicindustry.Profit
of apple thoughisincreasinginthe subsequent quartersbuttheyare still laggingbehindSamsung.
Innovationisthe onlyfactorwhichcan keepmovingthe companyforward.Appleisknownforitsbrand
value.The reasonwhytheyare not able to become numberone inthe marketisthe marketprice at
whichtheysell the productinthe market.It’squite highandonlyupperclassof the societycan affordto
purchase.Thisisa concernarea forApple inthe future tolookinto.

8. 4. Market SegmentationApproaches:
Market segmentationformobilrsintoday’stimes,the electronicsectoris expandingwithgrowthand
more and more playersare enteringthe electronicindustry.
4.1 Macro Segmentation:
Macro-segmentationfocusonthe characteristicsof the buyingorganizationthusdividingthe marketby:
Company size: Thisisone of the mostpractical andeasilyidentifiable criteriawhichcangive a good
roughindicatorof the potential businessforacompany.
Geographiclocation:Ittellsacompanya lotaboutculture and communicationrequirements.
Purchasingsituation:Asaresultof increasedcompetitionandglobalization companies findingafocusin
a small numberof markets,getto knowthe marketwell andestablishlong-termrelationshipwith
business.
SupplyChainPosition:A businessmodel affectswhere andhow theybuy.If he pursuesacost leadership
strategy,thenthe companyismore likelytobe committedtohigh-volume manufacturing,thus
requiringhigh-volume purchasing.
4.2 Micro Segmentation
Micro-segmentationfocusesonfactorsthatmatterin the dailybusiness.
 Buyingdecisioncriteria: The Companymustdivide the marketbasedonsupplierprofilesthat
appearto be preferredbydecision-makers,e.g.highquality,less-promptdelivery,low price etc.
 Purchasingstrategy:There are companieswhocontactfamiliarsuppliersandplace the orderwith
the firstsupplierthat fulfills the buyingcriteria. Someorganizations consideralargernumberof
familiarandunfamiliarsuppliers, fix the bids,examine all proposalsandplace the orderwiththe
bestoffer.
 Structure of the decision-makingunitcanbe one of the mosteffectivecriteria. If the decision-
makingprocess isknown,itcan make a difference betweenwinningandlosingacontract.
 Perceivedimportance of the producttothe business
 Attitudestowardsthe supplier:Personal characteristicsof buyers(age,education,jobtitle and
decisionstyle) playamajorrole informingthe customerspurchasingattitude aswhole.
http://www.unescap.org/sites/default/files/AWP%20No.%2037.pdf

9. 4.3 Identificationoftarget markets
There are three stepstofollow while identifyingthe targetmarket:
 Identifywhyabusinesswouldwanttobuy the product/service
 Segmentthe overall market
 Researchthe market
There are fourbasictypesof marketopportunities:MarketPenetration,MarketDevelopment,Product
Development,andDiversification.
Market Penetration strategiesinclude:more aggressive marketing,increasingservice toimprove
renewal rates,orattractingcompetitorcustomersdirectly.
Market Developmentisanefforttoincrease salesbysellingcurrentproductsintonew markets.The
companiescanadvertise toreachnewtargetcustomerswithinageographicregion,orlookfor
international marketsforexpansion.
ProductDevelopmentreferstoofferingnew orimprovedproductstopresentmarkets.
Diversificationmeansopeningcompletelynew linesof businesswithnew productsinnew markets.
Many organizationsdiversifytheirproductmix tomitigate risksrelatedtoeconomicvariables.
http://edwardlowe.org/

10. 4.4 Strategiesadopted to enternew market:
There are a varietyof waysinwhichorganizationscanenter new markets:
 Exporting:
 Licensing
 Jointventures
 Ownership
The Apple Companyshouldfollowprice penetrationpolicytoenterthe autoindustry.
Price penetrationpolicy: A marketingstrategyusedbyfirmsto attract the customersto a new product
or service.Penetrationpricingisthe wayof offeringalow price for a new productor service duringits
initial stage inordertoattract customersawayfromcompetitor.
The company can alsofollowprice skimmingpolicyaswell.It’suptothe companyto follow eitherof the
pricingpoliciesasbothof themhave theirownbenefits.
Price Skimming Policy:Price skimmingisaproduct pricingstrategywhere afirmchargesthe highest
initial price thatcustomerswill pay.Asthe demandof the firstcustomersissatisfied,the firmwill lower
the price to attract anotherwhichismore price-sensitivesegment.
The company (Apple)hastocome witha product differentiationstrategy tomake its productdifferent
fromthe marketsothat the B2B clientgivesall the manufacturingorderstothem.
In the initial stage,theyhave togothroughthe marketingandadvertisingaswell astocreate a name in
the industry.Thiswill incurcostto the companybut inthe longrun thiswill be greatlyhelpful in
positioningtheirproduct.
http://www.inc.com/karl-and-bill/5-step-primer-to-entering-new-markets.html
4.5 ImplementationPlan:
The diversificationplanshouldcoveradue diligenceaboutthe electronicindustry. Apple should
checktheircompetitorreportshow theyare doingthe businessandhow muchprofitable itis.
Once it isfoundgoodto enter,the prospective researchfirmsshouldbe contactedtogetthe
requiredinformationaboutthe new market.
http://ectacenter.org/~pdfs/implementprocess/implementprocess-stagesandsteps.pdf
Anyimplementationplanincludesthesethree steps:
 Exploration: The Companyhasto explore the opportunitiestoenterthe new industryas
well asthe source of funds.

11.  Installation:If the companyisdiversifyingitsbusiness,thenthe new manufacturing
facilityhasto be setup.
 Implementation:Thisisthe laststage where the companygoesaheadwiththe decision.
5. Recommendations:
The company possessesmajorstrengthsthatcan be usedto effectivelyaddressorganizational
weaknesses.The companycanalsouse these strengthstoexploitthe opportunitytoexpandits
distributionnetwork. Also, Apple canuse itsstrongbrand image andrapidinnovationprocessesto
successfullydevelopandlaunchnewproductlines.However,the firmfacesthe significantthreatsof
aggressive competitionandimitation,whichare majorchallengesaffectingplayersinthe industry.A
suitable course of actionisto addressthese threatsthroughastrongerpatentportfolio,alongwith
continuousinnovationtoensure the competitive advantage of Apple productsevenwhen competitors
try to catch up.
Profitof apple thoughisincreasinginthe subsequent quartersbuttheyare still laggingbehindSamsung.
Innovationisthe onlyfactorwhichcan keepmovingthe companyforward.Appleisknownforitsbrand
value.The reasonwhytheyare not able to become numberone inthe marketisthe marketprice at
whichtheysell the productinthe market.It’squite highandonlyupperclassof the societycan affordto
purchase.Thisisa concernarea forApple inthe future tolookinto.
Apple Inc.Form10-K, 2014.
6. Conclusions:
Apple continuestoleadthe industrywiththeiroutstandingandaward-winningproductsandservices.
The company hasenteredthe mobile phoneindustrywithanaltogetherdifferentbusinessstrategy
knownas value innovationwiththe iPhone.
Withgrowingdemandforhigh-quality,powerful,user-friendly,andcosteffective products,Apple is
undoubtedlythe leaderintermsof bringingthese ideastolife. .Thisisan excellentstrategywhenthe
goal is to keepconsumerseagerforthe latestproductsandasking,“Whatcouldtheypossiblyimprove
next?”
Apple shouldavoidthe mistakeswhatNokiamade bybeingopentocollaborationandbypartnering
withotherhightechcompanies.
Our overall conclusionisthatthere are economicincentives(bothfromreductionof costsas well as
creationof newrevenue sources) forelectronicmarkets. Itisnot justa fad that will goaway. Electronic
marketsare a newinstitutionof capitalismandtheyare useful becausetheyeconomizeontransaction

12. costs inmanyinstanceswhencomparedwithotheravailable transactiongovernance mechanisms(such
as traditional markets).
David,FredR. (2011). Strategicmanagement:conceptsandcases(13thed).UpperSaddle River,NJ:
PearsonPrentice-Hall.