Apple Computer Inc. Case Analysis
Company Overview Apple Computer Inc. is designer and manufacture of personal computers, software, peripherals, networking solutions, and music players Products include: MacBook, MacBook Pro, Power Mac G5, iMac, Mac mini, iPod, Xserve G5 OS X 10.4 Tiger, iTunes, iLife, Final Cut Pro Over 130 Apple Retail Stores in 31 states
Mission Statement Leads the industry in innovation with its award-winning desktop and notebook computers, OS X operating system, and iLife and professional applications. Apple is also spearheading the digital music revolution with its iPod portable music players and iTunes online music store.
Apple SWOT Analysis Strengths
54% of Apple Profits are in foreign markets Knowledge of customer base High Quality Products Brand Name Innovation Product Diversification Easy use product Attractive, Small, light Easy to carry Apple is the oldest hardware manufacturer Control over the product by manufacturing both computer and their OS
Apple SWOT Analysis Weaknesses Quality Product control High Price
iPod Nano may have a faulty screen Faulty ipod batteries High Price Poor leadership Internal engineering focus rather than a market focus The Scare of LBO “Leveraged Buyout” No Dividends
Apple SWOT Analysis Threats Opportunity
Enlarge target market with new product “Nike” Integration with other products “ Cars” The use of Intel chips The Intel chip allows the new machines to run the Windows Operation System Developing iTunes and music player technology into a mobile phone format. Threats High level of competition in the technology market High product substitution effects
Financial Ratio Analysis
Profit margin 9.97% (2006) ROA 11.40% ROE 22.90% Gross Profit 4.04 B Current Ratio 2.533 Dept/Equity 0 EPS 1.98 Dividend payout 0 P/E 32.45
Apple can expect a prosperous future Steady increase in sales net earnings over the past 5 years Almost 200% sales increase from -Over 80% market share in iPods Must continue to develop and acquire new strengths I.e. Innovation, high quality products, good marketing plan Threat of substitution/competition is decreased
Must minimize number of faulty components of its products Increase R&D efforts Maintain customer loyalty Decrease prices iPod ranges from $300 to $400 Mac desktop starts at $1300 Result in gaining new customers Pay dividends Stopped paying in 1995 due to 2 for 1 Stock Splits Competitors haven’t been paying Improve stockholder loyalty
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