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Business Deconstructed - Apple Inc

Vordiplomarbeit 2010 54 Seiten

BWL - Unternehmensforschung, Operations Research

Leseprobe

Table of Contents

Apple’s Company Profile

List of Figures

1. Legal Form
The Role of Investors
1.1. Forms of Business organization
1.1.1. Company with Limited liability
1.2. Company types
1.3. Strengths and Weaknesses of a PLC compared to a Ltd
1.4. Corporation
1.5. Company Law with focus on PLC by executing Company Act
1.6. Corporate governance
1.7. Board of Directors
1.8. The responsibilities of Apples committee

2. Benchmarking – Horizontal Analysis

3. Recommended Strategy
3.1. Strategy formulation
3.1.1. BCG Matrix
3.1.2. Ansoff’s Growth Strategies
3.2. Strategy Implementation
3.2.1. Balance Scorecard
3.2.2. The Value Chain

Conclusion

Bibliography

Appendix.

Apple’s Company Profile

Apple is a Californian based, American Multinational Corporation, providing personal computers, portable music players and communication devices. It also develops, manufactures and sells related peripherals, applications and related services. The company was founded by two young men Steve Jobs and Steven Wozniak in 1976 (Kahney, 2008, p. 5).

Their products can be grouped in 5 product lines: desktops, portables, IPod and other music related products and services, peripherals hardware, software service and other sales.

Apple sells its products worldwide through multi-channel-distribution in own retail stores, online stores, direct sales force and third-party wholesalers and resellers. Apple has 247 retail stores including 205 stores in the USA and 42 stores internationally. The corporation is operating on three continents, in America, Asia, and Europe employing 28.000 people (Datamonitor, 2009, [online]).

Apple is a well known brand, focused on high-end innovative products with high margins. Their products are famous for their reliability.

Apple has the reputation of being one of the most innovative companies in the world. The Fortune Magazine ranked Apple in 2008 as “The Most Admired Company” (Fortune, unknown, 2009 [online]).

The corporation has been growing dynamically and increased their profits despite the recession over the last couple of years. They increased their sales from 32 billion in 2008 to 36 billion in 2009. One of the major factors is the increasing brand loyalty of their customers.

Glossary

Asset turnover measures the efficiency of the use of net assets in generating Sales (Elliot & Elliot, 2008, p.672).

Corporate Governance “describes whom the organization is there to serve and how the purpose and priorities of the organization should be decided

Current ratio “The ratio shows the extent to which the firm’s short-term obligations are covered by its cash and trading assets” (Sutton, 2004, p. 698)

Dividend yield “measures the actual rate of return obtained by investing in an ordinary share at the current market price” (Black, 2004, p. 293)

EPS Earning per Share is “the profit for the financial period after tax, minority interests, and preference dividends divided by the weighted average number of ordinary shares outstanding during the period” (Black, 2004, p.119)

Gearing “The relationship between a company’s ordinary shareholders’ funds and the debt capital” (Jones, 2006, p. 589).

Liability “Amount the business owes. They can be long-term or short-term” (Jones, 2006, p. 591).

Liquidity ratios “derived from the Balance sheet that measures how easily a firm can pay its debts” (Jones, 2006, p.592)

Operating costs “expenses related to (a) marketing and distributing the product or service, and (b) administering the business”(Keown, et al., 2005, p.32).

Operating Profit “Net profit before (see profit) taxation adjusted for interest paid and interest received” (Jones, 2006p. 594)

Quick or “Acid test” ratio this test is similar to Current ratio. However it “is a more severe test of liquidity” because it considers inventories (Sutton, 2004, p.704).

Profit “Sales less purchases and expenses” (Jones, 2006, p. 597)

Profitability ratios “a business's ability to generate earnings as compared to its expenses and other relevant costs” (Elliot & Elliot 2008, p. 676).

Profit margin “expresses the operating profit as a percentage of sales revenue. It can be thought of as the amount of profit for every £100 of sales” (Proctor, 2006, p.30)

ROCE Return on Capital Employed; “expressed as a percentage and tells you the rate at which the business is earning profit relative to the amount of money invested” (Proctor, 2006, p.29).

Shareholder are the most important stakeholder in of public company which have legitimate privacy of the company’s wealth (Johnson & Scholes, 2006, p.139)

Stakeholder “are those individuals or groups who depend on the organization to fulfill their own goals and on whom, in turn, the organization depends” (Johnson & Scholes, 2003, p. 206).

Stock turnover “It measures the speed with which firm converts inputs into output (Sutton, 2004, p. 701) .

Turnover “money derived from selling the company’s product or service” Jones, 2006, p. 599)

Working Capital “ A measurement of how effective a company is using its working capital to generate sales” (Elliot & Elliot, 2008, p. 16).

List of Figures

Figure 1 Independency of shareholders and the organization

Figure 2 Higlights of the company act 2006

Figure 3 Stakeholder Matrix

Figure 4 Apple’s Board of Directors

Figure 5 Apple’s Board of Directors

Figure 6 Operating profit Comparison

Figure 7 Apple’s Business Strategy

Figure 8 Apple's Growth development

Figure 9 Adopted BCG Matrix on the Example of Apple’s Operating Markets

Figure 10 Apple’s Sales development per Operating Segment

Figure 11 Apple’s Sales development per Operating Segment

Figure 12 Implementing Apple in Ansoff Growth Strategy

Figure 13 Apple’s two by two Grid

Figure 14 Figure 14: Apple’s Balance Scorecard

Figure 15 Figure 15: Apple’s Value Chain Highlights

Figure 16 Apple's Turnover Forecast

1. Legal Form

All forms of companies are subjected to general company laws that influence their way of acting. Additionally, for every company type, there are specific rules which the company form has to consider. General- and specific company laws unified, secure that every firm has standardized rights and obligations concerning to stakeholders, shareholders and the government. Furthermore, company law deals with treating creditors and debtors adjusted for every situation.

For example, there is the obligation that the company has to prepare their accounts at the end of the year because the government needs them for calculating the firm’s amount of taxes.

With regard to the shareholders, the company law regulates the interdependency among shareholders and the organization:

illustration not visible in this excerpt

The Role of Investors

According to the principle of PLC and Corporation, shareholders have a special importance for the business. Not only the stakeholders depend on the organisation but also the organisation depends on them (Johnson et al., 2008, p.138). Especially the investors are of ultimate importance for PLC’s as they provide the fundamental capital of the company (Crane & Matten 2007, p.240).

illustration not visible in this excerpt

illustration not visible in this excerpt

Shareholders belong to the most important group of stakeholders. The organization has to keep them satisfied by showing increasing profits and paying dividends. The protection of investors is based on the Company’s Act, and the corporate governance.

1.1. Forms of Business organization

Depending on the purpose and the scale of capital, the director of a company can choose between three general types of business organizations: Partnership, sole traders and companies with limited liability (public and private company) which is the most common form and will be described in the following section (Lowry & Dignam, 2006, p. 4). The description of the other two forms is attached in the Appendix 9.

1.1.1. Company with Limited liability

This form is a commercial venture limited by shares which means, that the liability of the shareholders debts is limited by the shares.

The most obvious advantage is the access to limited liability” (Bourne, 2008, p.1). Basically, it means that the participants do not have to risk their own wealth.

According to Salomon’s approach, limited liability is regulated through corporate personality which is also known as Lifting the Veil:

illustration not visible in this excerpt

On the one hand, limited liability is a huge advantage because you cannot lose all your assets, but on the other hand, it districts the participant to have access to a loan from bank. The bank won’t assign a credit if there is not enough liability from their participators.

1.2. Company types

The company Act 1985 indicates a distinction between different types of companies. It is the private company where the business is normally funded by bank loans or personal savings. Regarding the public companies, the intention is to raise a large amount of money by offering shares to the public (Lowry & Digman, 2006, p.8).

The vast majority has chosen the form of a private limited company. In March 2002, there were 99.2% limited companies and 0.8% public companies (Hannigan, 2003, p18).

PLC’S gain more interest of the public because they offer their shares on the stock exchange. This fact provides the opportunity for every person to become an allottee by buying shares. “A private company cannot invite the public to buy shares, however they have no required minimum capital” (Lowry & Dignam, 2006, p. 8).

1.3. Strengths and Weaknesses of a PLC compared to a Ltd

As already mentioned, a PLC offers their shares to the public. It is at the same time the most obvious difference to a Ltd. that can only offer its shares to self chosen shareholders. Offering shares to the public is an enormous advantage in relation to raising investment capital. Furthermore, a public company offers the possibility of separating control. According to the fact, that participators and executives can modify the company, they have the privilege of perpetual succession. The company “never dies” (Bourne, 2008, p. 2).

The PLC can use the shareholder’s capital for any operation concerning the company, as long as they keep the “shareholders happy”. However, this form of limited company cannot control who buy its shares. It is also possible that competitors buy shares to gain influence on the organization’s vote in order to reduce the competition.

In contrast, the Ltd. can elect the investors who want to become a member of the business. The disadvantage of an Ltd is that it is not able to raise their investment capital in a comparable scale like the PLC.

Moreover, a PLC is faced with the fact that it has to spend a lot of money for the high level of formalities which are necessary to serve the public with reports of the company’s performance. The company has to make sure that the reports are accessible on the company’s website. According to this legal act, it is evident that competitors will access the reports to get basic information for analyzing the business strategy and to compare accounts.

There is also the weakness that executives can make decisions which are not complying with the willingness of the company. When the company loses the trust of its shareholders, because of non-efficient decisions, they might lose shares, and consequently, capital to invest.

illustration not visible in this excerpt

However, there is no doubt that the PLC is the appropriate company type for a Global Player. Nevertheless, a private company can also rise to a public limited company which is regulated by the Act of re-register (see Appendix 5).

illustration not visible in this excerpt

1.4. Corporation

The American company type corporation (like Apple) is comparable to a PLC. However, it nearly merges all advantages of an ltd and PLC in one company type. Therefore, disadvantages of limited liability and separate legal identity are similar to a PLC

illustration not visible in this excerpt

These facts underline the possibility of a corporation to act with fewer regulations. For global acting companies like Apple, international accounting standards (IAS) have been introduced. Apple states their annual report by using the IAS standard.

1.5. Company Law with focus on PLC by executing Company Act 2006

Company law deals with making available the corporate form, facilitating and regulating the process of raising capital and imposing controls whose power is derived from external investment (Ferran, 1999, p.3).

Companies are regulated and registered under the Companies Act 1985 and former. However, company Act 2006 is the latest and at the same time the most complex Act in history of company law. It was introduced with the aim to enhance shareholder engagement, ensure better regulation, make it easier to set up a business and to run a company, and providing flexibility (lecture notes). The ever changing company acts indicate the need to adjust the law on the arising challenges of business. According to Apple, a US Company has to consider the Sarbanes-Oxley Act 2003 (Appendix) instead of the company Act 2006.

The author presents the five major laws according to a PLC. Detailed legislation for PLC’s concerning Company Act 2006 can be found in the Appendix.

Figure 2: Higlights of the company Act 2006

illustration not visible in this excerpt Source: own analysis

1.6. Corporate governance

Corporate Governance describes whom the organization is there to serve and how the purposes and priorities of the organization should be decided (Johnson & Scholes, 2002, p. 195).

It is the question of who should own and control the company. It purely concerns the relationship between the shareholders and directors (Lowry & Digman, 2006).

Apple’s statement about their Corporate Governance says: “Apple's Board of Directors oversees the Chief Executive Officer and other senior management in the competent and ethical operation of Apple on a day-to-day basis and assures that the long-term interests of shareholders are being served” (Apple, 2010,[online]) .

Due to the fact that shareholders are not necessarily involved in the day-to-day operations, they are in the centre of the corporate governance debate and therefore, the priority group of corporate governance (Bourne, 2008).

1.7. Board of Directors

“To satisfy the Board's duties, directors are expected to take a proactive, focused approach to their positions, and set standards to ensure that Apple is committed to business success through the maintenance of high standards of responsibility and ethics” (Apple, 2009, [online]).

[...]

Details

Seiten
54
Jahr
2010
ISBN (eBook)
9783640690596
Dateigröße
4.6 MB
Sprache
Deutsch
Katalognummer
v156320
Institution / Hochschule
New College Durham
Note
Schlagworte
Business Deconstructed Apple Business Strategy Financial Accounting Apple's Future Apple's Financial Accounts Apple's company law Lifting the Veil Strategy Apple Business Portfolio Company types ic PLC INC Corporation Corporate Governance Ansoff Growth Strategy apple Balance Scorecard Apple Value Chain

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Titel: Business Deconstructed - Apple Inc