Ashley Campion
Stephanie Lanter
Wes Kincaid
Michael Riggen
John Hutchens
Nathan Frost
Claudia Martinez
A Bit of History
 Founded in 1976 by Steve Jobs and Steve Wozniak
 Wozniak, a self-taught engineer, began building boxes
that allowed him to make long-distance phone calls
free of charge
 1976 they began to build the Apple I, without a
keyboard or power supply for a hobbyist club
 To startup their company, the pair sold everything they
owned raising about $1300
A Bit of History
 With large ambitions in mind, Jobs and Wozniak sold
1/3 of the company to Mike Markkula
 Regis McKenna was hired for advertising and created
the Apple logo
 By June of 1977, after the release of Apple II, annual
sales totaled around $1 million
 By the end of 1978, Apple was considered one of the
quickest growing companies in the U.S.
A Bit of History
 1980 Apple became public and offered 4.6 million
shares at $22 each and sold out in minutes
 In May of 1981 a second share of 2.6 million was offered
 December of 1982 Apple became the first personal
computer company to reach $1billion in annual sales
 In 1984 the Macintosh was finally released
A Bit of History
 October 2001, the legendary iPod was released
 iPod Photo, Nano, Mini, Shuffle, and Touch
 iPhone release in 2007
 Campaign created the most buzz in the industry
 “Whether the iPhone succeeds wildly or fails badly, it won’t really matter.
This campaign has been an education in itself. Never before in history has a
product been so widely anticipated.”
 iPhone named “Invention of the Year” by Time
Magazine in 2007
Company Overview
 Mission Statement:
 “Apple is committed to bringing the best personal
computing experience to students, educators, creative
professionals and consumers around the world through
its innovative hardware, software and Internet
offerings.”
 Vision Statement:
 “Man is creator of change in this world. As such he
should be above systems and structures, and not to
subordinate to them.”
Company Overview
 Follow up of mission statement: iPhone is changing
the world and how we communicate.
 Applications have simplified everyday things
 Apple relies on innovativeness that comes from
intense research and development and competitive
drive, which Jobs embodies
 Used to ask Bill Hewlett for spare parts when working on
his first computers
AT&T and Apple
 Exclusivity contract with AT&T allowed Apple to
benefit from contracts made
 Win-Win for AT&T and Apple
 Set the tone for exclusivity contracts around the world
 O2 in Britain, Orange in France and T-Mobile in
Germany
 Italy one of the few countries that sells iPhone from 2
different providers
 AT&T and Apple in WSJ- 4/15
iPhone Key Issues
 Technology Mishaps
 Faulty applications
 Service Problems
 Screen Problems
 Competition
 Missed out on computers, not making same mistake
with iPhone
 Continue innovativeness to stay ahead
iPhone Key Issues
 Target Market
 Currently target people under age 30
 Need to expand into corporate climate

Start with small businesses
RIM Blackberry
already has a huge
advantage in the
global market, but
Apple has surpassed
Palm
iPhone’s Global Stance
Sold all over US and Canada,
although some problems with service
in different parts of US
The iPhone surprisingly sold most
areas in South America.
Quickly expanding in Europe and
Asia.
The Apple Strategy
 The Apple brand competes across many highly
competitive markets
 According to Marketing Minds Apple’s strategy is very
unique and dissimilar from competitors. Their product
strategy is to create innovative products and services
aligned with a “digital hub” strategy
Branding Personality
 Apple dominates the market through their branding
personality
 Focus on emotions, lifestyles, imagination, innovation,
passion, hopes and dreams, and the power-to-thepeople through technology
 Personality is also about simplicity and the subtraction
of complexity in people’s lives
 “Apple Community”

Feeling of inclusiveness
12 Effective Strategies Apple Uses
to Create Loyal Customers
1.
A store created just for Apple

A friendly place where users are encouraged to play
and interact with Apple technology
2. Complete Solutions
 Apple products complement and interact with each
other, giving Apple the control over the entire user
process
3. “Are you a Mac”
 Apple prides itself on being a hip, young brand
 “I’m a Mac” campaign
12 Effective Strategies Apple Uses
to Create Loyal Customers
4. Varied Products

Selling low entry cost products gives the opportunity
for users to be introduced to the brand
5. Proprietary Formats
 Apple downloaded music only works with Apple
products. User is more likely to stay with the Apple
brand than lose all of their music
6. Media Fodder
 Media Channels LOVE Apple (bloggers, media
channels)
 Apple gift wraps news stories creating hype
12 Effective Strategies Apple Uses
to Create Loyal Customers
7. Education Sales

Selling products to schools and universities creating
early exposure
Products that Deliver
8.

Apple carefully analyzes what consumers are looking
for, products are developed as a result of both research
and innovative design
9. Outsourcing Unpleasantness

With the iPhone, Apple was clever to stick with
building a high-quality product and allowing AT&T
handle the service
12 Effective Strategies Apple Uses
to Create Loyal Customers
Consistency
10.

Apple products contain the same basic architecture;
current customers know what they are getting
New Innovations
11.

Diversifying its portfolio, offering a variety of ways to
enjoy products at home or in the office
Attractiveness
12.

Packaging to aesthetic design to user-interface knowhow. Apple makes its products accessible and
attractive
Company Analysis
 NAICS Code
 334111- Electronic Computer Manufacturing
 In Jan. Apple was feeling the hit of the economic crisis,
iPod sales slowed from previous years
 Sales still continue to grow year-to-year and a boom in
iPhone sales keep the company’s revenues rising
Company Analysis
 First quarter of 2009
 Driven in over $10 billion in revenue, a leap from last
quarter’s $7.9 billion
 Earnings per share were barely up at $1.78, but ascended
significantly from the previous quarter at $1.26
 Quarter-to-quarter increase in earnings per share were
higher than the climb in revenue, meaning that Apple
held up its margins regardless of consumer cutbacks
Company Analysis
first and fourth quarter of 2008, and the first quarter of 2009.
STRENGHTS
 Most established and healthy IT brands in the world
 Excellent CRM (customer relationship management)
by focusing, identifying, and maintaining customer
loyalty
 Shifting in orientation
Product Centric
Customer Centric
 Innovative & high product-to-product integration
WEAKNESSES
 iPhone [drawbacks & defects]
- Doesn’t contain Flash or Java
- 2 megapixel camera
- Battery life
- Non-removable battery
- Easy to break
 iPhone does not work in technologically
advanced countries , such as, Japan and
Korea
OPPORTUNITIES
 Targeting the market at a corporate level,meaning,
iPhone is already a phenomenally successful and can
be leveraged too much higher levels with the attention
to corporate market and by developing multiple price
points.
 The Apple iPhone is a viable stepping stone for Apple
to attract new users who previously had not owned an
Apple product before.
 Many car models from all major automakers have
equipped their new models with Apple products
connectivity
THREATS
 High level of competition in the technology markets
[Apple invests a lot in research & development, as well
as, in marketing in order to retain its competitive
position]
 Also, economic crisis is already seeing Apple’s market
share dip incredibly fast now that people don’t want to
spend the excess amounts of cash for an iPhone, or an
Apple product, when they can get similar products
that offer the same service, at a lower price far less than
those of Apple’s.
FIVE BRAND KEY SUCCESS FACTORS
 A great brand experience
 Clear and consistent positioning
 Sense of dynamism
 Sense of authenticity
 A strong corporate culture
Apple Openness & Trust
 Want to be the company that embraces open platforms
and to trust decision to the wisdom of crowds.
 Not open like to keep thing hidden. (closed system)
 Created a cult of Apple followers.
 Apple has proven to get customers what they want
before they know they want it.
Employee Benefits
 Flexible benefits
 Flex dollars
 Stock Purchases
 15% discount every six months
 Health + Fitness
 fitness plans, health education, and preventive care
401(k) Savings and Investment Plan
 Pre-tax deferral
 No Waiting
 Investment options
 Online Investment Advice
Collaboration
 Apple & BMW
 Apple & Adobe
 Flash Drive
Innovation
 Apple is world leader in innovation
 Always a step ahead of the competiton
 According to BusinessWeek survey, they are the leader
for past 5 years
 Survey asks company executives who they feel is the
most innovate companies in the world
 Followed by Google, Toyota, respectively
Innovation
 System for innovation is “there is no system” – Steve
Jobs
 “Saying no a thousand times” to find the right type of
product
Innovation and R&D
 Striving for innovation, it can be assumed they have a
high budget for research and development
 However, when compared to other technological
companies, Apple spends the least in terms of
percentage of revenue
Innovation
 Innovation at Apple becomes non-replicable
 Without an active system for innovation, there is
nothing to imitate
 As long as Apple can continue to innovate, they will
always be the leader
Advertising
 Apple takes aggressive approach on advertising with
iPhone
 Not a core competency, but still something they do
extremely well
 With iPhone, Apple showcases product by
highlighting its usability
Advertising
 http://www.youtub
e.com/watch?v=tH
0-GKBmOE8
 Apple showcases
user friendliness
and usability
 Advertisements
take different
approaches, but
never lose focus of
showcasing phone’s
usability
Financials
 Information off of Apple’s 2008 financial statements.
 Return on Investment (in millions)
 Asset turnover = sales / total assets

= 10,167 / 42,787 = .23
07
08

.15
.23
 Asset Turnover you are really looking at how efficiently a
company uses its assets to generate sales or revenue. People
think that having a lot of assets is a good thing. Wrong
 A company’s value is in its income stream. The ideal company
would produce income without assets! Apple here is doing a fine
job by it increasing, meaning they are keeping up with sales.
Financials cont.
 Return on Assets ( in millions)
 Return on assets = net income * 100 / total assets
= 1605 * 100 / 42,787 = 3.75%
07
3.56
08
3.75
 ROA shows how profitable a company is before moving on to see how
well it is leveraged. It shows investors how much profit a certain
company generates from each $1 in assets. It measures how much the
company earns in relation to all of the assets it owns. It is also part of
the test to see the return to shareholders.
 As shown above, Apple’s ROA increased by .19%. This tells investors
that over the course of the year the company’s Returns have increased
so there is a chance that their own return will have increased.
Financials cont.
 Return on Equity
 ROE = net income * 100 / owner’s equity

= 1605 * 100 / 22,909 = 7.00%
07
08

6.22
7.0
 Look at financial leverage refers to how a company uses its debt to
increase returns on equity. A company takes the proceeds that it
receives from borrowing or debt and reinvests it into the company.
 When comparing ROA and ROE the fact that both numbers increased
over the course of a year shows that the company is using its financial
leverage wisely. Since the ROE has increased it shows that the
company also has a high growth rate.

Cash flow ratio shows how much debt is covered by cash flow.
In the chart you can see Apple’s operating cash flow has only been getting
stronger, indicating that the cash it’s bringing in every year is enough to cover all
of its short-term liabilities such as payroll, inventory purchases, and so on. This is
why apple has little to no debt.
Financials
 “Apple just reported one of the best quarters in its history, with a
spectacular performance by the iPhone we sold more phones than
RIM,” said Steve Jobs, Apple’s CEO. “We don’t yet know how this
economic downturn will affect Apple. But we’re armed with the
strongest product line in our history, the most talented employees and
the best customers in our industry. And $25 billion of cash safely in the
bank with zero debt.” – Steve Jobs
 With no debt to pay back there are a few things Apple could do for the
future:
 Redistribute the wealth to shareholders in the form of dividends
 Increase production capacity
 Acquire other companies and/or technologies
Apple’s PE ratio
 Market price per share
$116.32
PE ratio
21.6
 Used to determine how much people are willing to pay for a
dollar of current earnings
 The higher the PE ratio, the more time the stock is
multiplied
 One share of Apple stock will sell for 21.6 times earnings
Stock Prices
 Average Close
Apr. 09
Mar. 09
Feb. 09
Jan. 09
Dec. 08
Nov. 08
Oct. 08
 Average Close
120.22
105.12
89.31
90.13
85.35
92.67
107.59
Sep. 08
Aug. 08
July 08
June 08
May 08
Apr. 08
113.66
169.53
158.95
167.44
188.75
173.95
Dividend payout
 Never gave a dividend payout
 It wasn’t that Apple couldn’t
 Keeping the retained earnings for financing their
future growth
Working Capital
 Current Assets
Current Liabilities
Working Capital
35,163
19,878
15,285
 Has strong cash and cash equivalents
 Liabilities have increased but overall assets balance the
working capital out
 Apple shows investors that it has more potential for growth
Financial Conclusion
 Strong financial stability
 Invests in research and development to gain
sustainable growth in the future
 Rich in cash and short term investments
 Apple should stay strong in the next financial periods