RUNNING HEAD: APPLE ANALYSIS

APPLE INC. ANALYSIS

NAME

INSTITUTION
 APPLE ANALYSIS

Organizational measurement and control system

During the year 1970s when Apple Inc. was formed, it changed its corporate structure

from the traditional that had been widely practiced at the time and adopted a unique way of

managing its organization. Adhocracy structure was adopted by the company to solve complex

issues that can suit its complicated and sophisticated innovative culture. The company

performed its duties based on the concept of informal corporate structure among its technology

industry and preferred a flat organizational ad hoc structure than the tall structure. Apple uses a

unique corporate structure which is considered out of date when measured against traditional

classical organizational culture. However, when measured against the post-classic modern

generation of information as supported by Hewlett et al. 2009, it can be said that Apple is in line

with today’s requirement of success. In contrast to the tall hierarchical structure, the flat

organizational structure is made up of just a few layers of management hence reducing the chain

of command from top to bottom.

This type of organizational structure had several merits such as effectiveness concerning

empowerment and innovation. Policies are quicker and easier to implement, and level of

coordination is increased. This might be the reason why Apple Inc. is widely known for

distinctive competence in product innovation and design. The major disadvantage of this culture

is that change in culture or leadership may cause severe repercussion because other strategic

structures may struggle to fit. A good illustration was when Steve Jobs was fired, and other

successors struggled to manage the organization until he was reinstated. Apple adopted the

functional structure as the company was organized along the functional line. People were

grouped based on their level of expertise, resources, and experience. Employees performed a

specialized set of tasks within every functional division of the organization. This increased
 APPLE ANALYSIS

operational efficiency in the group. However, the drawback could be lack of communication

among groups in the organization.

Current financial position. Is it healthy?

An analysis of Apple balance sheet certainly suggests that it is a well-managed company.

The data is presented in a reader-friendly manner and lacks significant exposure to off-balance

sheet items that might obfuscate their true situation. However, we should be aware that balance

sheet of the company could deteriorate as its industry position and earnings situation change.

For investors at Apple, they have had a fruitful investment. Other investors who are

considering investing in the giant product of Cupertino-based consumer should use a balance

sheet to start gauging the company. The balance sheet will provide a good guide to gauge the

performance of the company. Based on the Apple balance sheet, a strong cash position is its

major source of strength. The company has its –cash and cash equivalents totaling to $13.8b plus

other marketable securities of up to $11.23 billion that can easily be converted to cash. The

company borrows a lot of its cash to participate in share buy bask program to reduce tax expense

on money held overseas. Revenues for Apple Inc. increased by 13% to $88.29B for the 13 weeks

ended 30 December 2017. Net income increased to $22.6B representing a 27% before

extraordinary items.

Apple has reported goodwill of $4.6billion representing intangible assets associated with

the positive consumer association with its brand name. During the year 2014, the company used

a $2.2 billion from goodwill to acquire Beats Music for $2.6billion. The acquisition process was

financed by readily available cash of apple of $2.66billion. Other major assets for Apple include

$130.16billion long-term marketable securities. This is made up of $22 billion in US treasury

and $79billion in corporate securities. The company has a reported $22 billion in property, plant

and equipment category after accounting for wear and tear. The accounts receivable amounts to

$17.4 billion representing the amount owed by the companies that it conducts business with such

as government, wholesalers, retailers, carriers and other cellular networks. Apple has taken

substantial effort to limit its credit exposure by taking insurance.

Compare with competitors and standard market- financial analysis tools and ratios

Another means used to comprehend the Apple's financial position is the use of ratios that

provides ideas on the management of the economy affairs. One major ratio is the liquidity ratio

that provides a way in which the company can pay off its creditors when it has to. This is

calculated by taking Apple's current assets versus current liabilities. For the case of Apple, this is

healthy 1.08 showing that the company has excess current assets on hand to pay for current

liabilities when they fall due. We can also look at how Apple is leveraged, the relation between

debt and equity position. It provides a snapshot of how debt is managed. Too much debt

compared to equity implied that the company is over-leveraged. This will raise the red flag since

it will have less chance when it gets into a financial mess. The debt to equity ratio of apple is

0.32 that is somehow conservative and has a lot of breathing room.

Organization key performance indicators

In pursuit of quality management of the organization, the organization has been prompted

to use key performance indicators. The key performance indicators entail measurement and

metrics that assist the organization in achieving its goals and objectives. The measurement is

based on the historical information with the aim of improving the future performance. The key
 APPLE ANALYSIS

performance indicators should be very effective in exposing wasteful activities, quantifying and

visualizing. These measures are useful in creating the motivation aspects of employees. The

three major performance indicators adopted by Apple Inc. include revenue, employee

satisfaction, and supply chain management.

More than 76000 employees work with Apple Inc. on a full-time basis. Employees

undertake various nature of operations and hence are a critical asset to the organization. Some

technical jobs executed by employees require a certain level of experience and specialty, and

hence it would be a huge setback if the organization loses these employees. Quality management

should be maintained on the side of the employees to retain them in the organization as long as

possible. This can be achieved through improving consumer satisfaction. Consumer satisfaction

can be attained through providing favorable working conditions for employees and favorable

remuneration. Unfavorable working conditions had been reported in production plant called

Foxconn that led to increased employee suicide.

Another key performance indicator for Apple Inc. is the revenue amount generated.

Apple is regarded as the largest IT Company regarding revenue. It is second after Samsung.

When compared to other mobile manufacturing, it’s the third largest based on the prospect of

revenue. Since 2004, the revenue of the company has been continuously increasing, with growth

trajectory flattening in the same period. This means that the growth is diminishing to some

extent. For example, in 2012 the company recorded total revenue of $156 billion while this year,

the company has announced its first-quarter revenue of $43.6 billion. Concerning the above

statistics, it is expected that the organization can attain and surpassing the previous year revenue

threshold. Production of high-quality products will ensure high profitability for the organization.
 APPLE ANALYSIS

Increased consumer satisfaction will cause more to purchase the product of the company. Thus

revenue is an important performance indicator used manage quality of products produced.

Supply chain management is an important tool used in the assessment of the performance

indicator of Apple Inc. and allows management of products quality. The supply chain of Apple

include producers, suppliers of raw materials, wholesalers and retailers and end consumers.

During production, Apple Inc. has tried to outsource their activity China-based company that had

a reputation for receiving such huge contracts. Employee working conditions will be assessed to

address cases with the working environment. To manage quality, the organization should adopt

an effective supply chain to guarantee key performance indicators. Suppliers will determine the

quality of products produced. The company should contract with companies that have built a

name for themselves. This allows the company to build trust with other stakeholders in the

supply chain. Apple Inc. should sign quality assurance contracts with its major supplies and

hence these suppliers that dishonor contracts will not be favorable to operate.

Reference

Cusumano, M. A. (2010). Staying power: Six enduring principles for managing strategy

and innovation in an uncertain world (lessons from Microsoft, Apple, Intel, Google, Toyota and

more). Oxford University Press.

Arthur, C. (2014). Digital wars: Apple, Google, Microsoft and the battle for the Internet.

Kogan Page Publishers.

Jinjin, T. A. N. (2013). Strategic Analysis of Apple Computer Inc. & Recommendations

for the Future Direction. Management Science and Engineering, 7(2), 94.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012). Strategic management cases:

competitiveness and globalization. Cengage Learning.

David, F. R. (2011). Strategic management: Concepts and cases. Peaeson/Prentice Hall.

Snow, C. C., Fjeldstad, Ø. D., Lettl, C., & Miles, R. E. (2011). Organizing continuous

product development and commercialization: the collaborative community of firms

model. Journal of Product Innovation Management, 28(1), 3-16.

Teece, D. J. (2012). Dynamic capabilities: Routines versus entrepreneurial

action. Journal of management studies, 49(8), 1395-1401.

Horowitz, R. C., Christothoulou, P., Caldwell, E., Keister, J., Korman, W., & Busby, J.

(2010). U.S. Patent No. 7,668,950. Washington, DC: U.S. Patent and Trademark Office.