Case Study: Apple Flashcards
Operations: Cost leadership
Economies of scale used by Apple’s outsourcers
Operations: Good/service dif.
iOS, quality
Operations: Tech.
Highly competitive market, ongoing issues w/ iPhone X face recon.
Operations: Legal Regs.
- Ongoing battles w/ Samsung, both companies claiming IP infringement
- overworking FOXCONN workers
Operations: Govt. policies
- Trump’s tariffs on China import
- ^2019, caused global eco. ‘shockwave’
Operations: Flexibility
- 2014, iPhone6/6+ release w/ larger screens ~ response to competitors phones + Asian market demands
CostOperations:
Vertical integration
- (2019 AAPL purchased Intel’s 5G department of $1B-USD). + Using cheaper suppliers (Swapping Samsung for TSMC for the phone memory, worth $10B-USD/yr)
Operations: Design/Dev a New prod/service
2021, $21.91B-USD spent on R&D
Operations: Logistics
- inputs (var. parts of iPhones) are sources from a global web of suppliers, delivering to Apple’s outsourcing partners (FOXCONN etc)
Operations: Global srcing.
- Apple is known to buy a large amount of one component, to buy out competitions stock
Operations: Leading edge tech.
- FOXCONN reduced employees from 110,000 to 50,000 through induction of robots in factories
Operations: Global issue ~ Global sourcing
- Covid; 24th April 2022: Apple expects to take a hit of up to $ 8 b from supply chain shortages and factory shutdowns in China…Supply constraints caused by Covid-related lockdowns and industry-wide silicon shortages were identified as the key disruptors, along with declining customer demand in China.
- Silicon shortages, declining customer demand in China, COVID factory shutdowns in China
Marketing: Selling approach
iPhone is seen as a high quality product
Marketing: Psychological
Cheaper iPhone version, iPhone 5c, plastic back etc, is an example of this
Marketing: Economic
In COVID, iPhone SE was updated to meet concern consumers re; cost of living
Marketing: Gov.
Launch of iPhone 6/6+ delayed in China due to gov concerns re privacy
Marketing: Decep. misl. adver.
2015, law suit against AAPL ~ intentionally slowing iPhone 4 users via software updates
Marketing: Estb. market obj.
AAPL; increase market share in India by 2% in next yr. by offering discounts on older iPhones and payment in installments
Marketing: Segmentation; Demographic
Low-cost iPhone (SE) is aimed at dev. countries.
Marketing: Segmentation; Geographic
highest demand for smartphones in recent yrs have been in ASIA.
Marketing: Segmentation; Psychographic
iPhones viewed as a status symbol
Marketing: Branding
Quality, design, appearance, OS, apps etc
Marketing: Global Branding
AAPL most val. brand in world, 2022
Marketing: Global pricing
2016, depreciation of Euro-VS-USD led to 30%inc in iPhone price in France
Marketing: e-Marketing
65% of a person’s individual media consumption is spent on a mobile device
Finance: Retained profits
The value of Apple’s retained profits has significantly declined in recent years, from 66% of shareholder’s equity in 2018 to 9% in 2021.
Finance: Equity sources
Apples Debt:Equity ratio has increased sign. in recent yrs. (Liabilities increased, 31% decrease in owners’ equity)
Finance: Equity sources
Apple’s level of debt compared to owner’s equity (gearing) has increased significantly in recent years (from 107% in 2014 to 456% in 2021)
Finance: Infl. of Gov.
AAPL’s tax haven in Ireland (<1% tax rate) –> had to pay back $13B-Euro.
Finance: DebtVsEquity Financing
Historically, Apple had low gearing, however the company has become highly geared in response to record low interest rates in recent years. Liab incr. nearly 400% in past decade.
Finance: Cash flow
Overall, Apple’s holding of cash has declined significantly over the 3-year period of 2019 to 2021.
Finance: Inventories
Apple uses FIFO + JIT
Finance: Payables
Apple’s accounts payable has increased steadily between 2019 and 2021.
Finance: Reducing fix/var costs
Low-cost models, cheaper suppliers, change outsourcing partners, reloct. prod, vert. integration.
Finance: Rev controls ~ marketing obj
AAPL marketing iPhone in India, using competition-based pricing strats.
