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Apple Programmatic Recommendation
- 1. Apple Inc. AndrewBrewer - International Business John Funke - Marketing/Management Ellis Kim - Management A.J McKay - Marketing/Management
- 2. History FOUNDING AND INCORPORATION 1971- The Beginning 1976 - Apple Computer begins 1977 - Apple II introduced - Michael Scott becomes 1st CEO 1980 - Apple goes public
- 3. History EARLY SUCCESS 1981 -Mike Markkula becomes CEO 1983 - John Sculley III becomes CEO - Project Lisa introduced 1984 - Original MAC introduced 1985 - Jobs resigns at Apple DECLINE 1993 - Michael Spindler becomes CEO 1996 - Gilbert "Gil" Amelio becomes CEO 1997 - Jobs returns as "Interim CEO" - Introduces 1st online Apple store 1998 - Jony Ive promoted to design team
- 4. History RETURN TO PROFITABILITY 2000- Steve Jobs becomes CEO 2001 - 1st iPOD, 1st Apple store opens 2003 - iTunes store opens 2004 - Jobs announces medical leave 2007 - Apple introduces iPhone 2009 - Steve Jobs takes 2nd leave of absence 2010 - Apple introduces iPad
- 5. History POST JOBS ERA& EXPANSION 2011 - Jobs resigns as CEO - Steve Jobs Passes Away - COO Tim Cook becomes CEO 2012 - Apple releases iPhone 5 - First dividend payment in 17 years 2014 - 7-for-1 stock split - Angela Ahrendts becomes VP of retail & online stores - Acquires BEATS 2015 - Apple sees record sales in App Store - Firm reaches world record valuation of $700B - Iphone 6 released - Apple Watch released
- 7. Opportunity Statement Apple Inc.currently operates in a highly competitive technology industry. They rely on their superior brand image, high-quality products, and quality intellectual capital for competitive advantage. There exists opportunities to further leverage underutilized assets that would increase customer share and identify other sources of sustainable competitive advantage.
- 8. Significance to Leadership Wehave identified new forms of sustainable competitive advantage, and have developed a strategic program designed to implement these sources. By focusing on and leveraging these resources, Apple will be able to build and sustain new forms of sustainable competitive advantage.
- 9. Sustainable Competitive Advantage Along-term advantage that uniquely differentiates a firm from its competitors, achieved by augmenting physical products with value-added benefits to create high customer perceived value and meet customer needs for time, convenience, fear and/or risk reduction.
- 10. Expected Outcomes Valuable customerknowledge capture Personalized customer relationships Increased customer satisfaction Anticipating future trends Future innovation focus Insulates brand image Increased & sustained profitability
- 11.
- 12. Research Methodology Secondary Research ● Objective, Third-Party Sources ● Relevant and Credible ● Environmental Scanning & Monitoring ● Drawbacks & Limitations Examples: ● Apple Website ● SEC Filing ● Business and Peer Reviewed Articles
- 13. Internal Analysis Leadership CorporateCulture Organizational Structure Human Resources Operations Finance Marketing
- 14. Leadership Steve Jobs “Without passion,any rational person would give up. So if you’re not having fun doing, if you don’t absolutely love it, you’re going to give up. And that’s what happens to most people, actually.” “While some see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world are the ones who do.” Transformational Charismatic Visionary Perfectionist
- 15. Leadership Tim Cook CEO Methodological Transactional Supportive Empowers Employees “We believe in the simple not the complex. We believe that we need to own and control the primary technologies behind the products that we make, and participate only in markets where we can make a significant contribution.” “Together, we are committed to diversity within our company and the advancement of equality and human rights everywhere.” -Tim Cook
- 16. Leadership Executives Luca Maestri CFO Denise Young Smith Worldwide Human Resources Dan Riccio Hardware Engineering Philip W. Schiller Worldwide Marketing Bruce Sewell General Counsel Jeff Williams Operations Paul Deneve Special Projects Steve Dowling Communications Lisa Jackson Environmental Initiatives Joel Podolny Dean, Apple University Johny Srouji Hardware Technologies
- 17. Leadership Noteworthy Executives JonathanIve Senior VP Design Eddy Cue Senior VP Internet Software and Services Craig Federighi Senior VP Software Engineering Angela Ahrendts Senior VP Retail and Online Stores
- 18. Corporate Culture “ Wewant people to be themselves. And contribute throughout their own, individual experiences. Because this environment inspires creativity and innovation. And empowers us all to do the best work of our lives. Together.” “And doing things great -- not accepting good or very good but only the very best. Apple has a culture of excellence that is, I think, so unique and so special.” -Steve Jobs Innovation Perfectionism Collaboration Secrecy
- 19. "...You also wantpeople to buy into the philosophy, not just buy in, but to deeply believe in it." “Together, we are committed to diversity within our company and the advancement of equality and human rights everywhere.” -Tim Cook ● Diversity Social responsibility Corporate Culture Recent Changes
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- 21. Human Resources Recruiting ● Apple Website ● LinkedIN ● Career Fairs ● Scholarship Programs "You're trying to pick people that fit into the culture of a company...You want a very diverse group with very diverse life experiences looking at every problem. But you also want people to buy into the philosophy, not just buy in, but to deeply believe in it." -Tim Cook
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- 23. Human Resources Training ● Employee Orientation “Whether you work at one of our global offices, offsite, or even at home, a job at Apple will be demanding. But it also rewards bright, original thinking and hard work. And none of us here would have it any other way.” -Apple Website
- 24. Human Resources Retaining Healthand life insurance 401K plan with company match Employee stock purchase plan Tuition assistance Wellness program "Our people are the essence and we can’t really do anything without making sure we have a culture and environment that is constantly thinking about our people." -Denise Young Smith, VP Human Resources
- 25. Organizational Structure Non-traditional Flat Team/department divisions Matrixinfluence “Today, I am announcing changes that will encourage even more collaboration between our world-class hardware, software and services teams at all levels of our company." -Tim Cook, CEO “Great things in business are never done by one person, they are done by a team of people.” -Steve Jobs
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- 27. Operations Locations Corporate HQin Cupertino, California International HQ in Cork, Ireland
- 28. "We want tobe as innovative with supply responsibility as we are with our products. That’s a high bar. The more transparent we are, the more it’s in the public space.." - CEO Tim Cook Operations Supply Management
- 29. Operations Supply Management “Aroundthe globe, Apple employees are united on bringing equality, human rights, and respect for the environment to the deepest layers of our supply chain.” -Jeff Williams Senior VP of Operations
- 30. Operations Distribution Distribution Elk Grove,California Memphis, Tennessee Direct Channels 265 Apple retail stores Apple online store Third-party retailers
- 31. Operations Worldwide Worldwide 453 retailstores in 16 countries Online store available in 40 countries Third-party retailers worldwide iTunes and App Store in 147 countries China
- 32. Operations Workforce 92,600 Employeesworldwide 66,000 employees in the U.S. 30,000 retail store employees 4,400 additional temporary jobs and contractors
- 33. Finance Income Statement Balance Sheet Short-TermSolvency Long-Term Solvency Asset Utilization/Efficiency Profitability Market Value
- 34. Consistent revenue growth Steadyoverall growth Cost of Sales spike Finance Income Statement
- 35.
- 36. Decrease of 10%in shareholder equity from 2013 to 2014 Significant increase in: A/P Commercial paper Long-Term Debt Total liabilities increase 45.6%. Finance Balance Sheet
- 37. Finance Balance Sheet ➔ Decrease of 10% in shareholder equity ➔ Total liabilities increase 45.6%. ➔ Significant increase in: ◆ A/P ◆ Commercial paper ◆ Long-Term Debt 2014 2013
- 38.
- 39. Finance Short-Term Solvency Cash& Equiv Current Liabilities Measures cash on hand to pay off short-term debts and/or emergencies. Only represents money that can be accessed immediately. Current Assets Current Liabilities Measures the firm’s ability to pay back short-term obligations. Accounts for illiquid assets such as inventory. Current RatioCash Ratio
- 40. Measures financial leverage,and a firm’s ability to take on more debt to finance long-term growth. Total Liabilities Total Shareholder Equity Debt/Equity Ratio Finance Long-term Solvency
- 41. Finance Efficiency Ratios Measureshow quickly a firm uses up it’s supply of goods over a given period of time. COGS Avg. Inv. Receivables TurnoverInventory Turnover Measures how efficient a firm is at collecting debts. Net Credit Sales Avg. A/R
- 42. Finance Profitability Ratios ProfitMargin Return On Equity Measures how much revenue translates into actual profit. Calculates how much money a firm generates with the equity they have. Net Income Total Revenue Net Income Shareholder Equity
- 43. Finance Profitability Ratios Tellsus how much an investor is willing to pay for stock relative to the firm’s earnings. Market Value EPS P/E Ratio
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- 46. Marketing Product We're verysimple people at Apple. We focus on making the world's best products and enriching people's lives. - Tim Cook
- 47. Marketing Price ● Value-BasedStrategy ● Premium Products ● High Customer Perceived Value
- 48.
- 49. Create Awareness Advertising Public Relations InduceTrial Sales Promotion Build and Insulate Relationships Personal Selling Direct Marketing Marketing Promotion
- 50. Marketing Advertising ● Internet ● Billboards ● Commercial ● Print ● Video
- 51. Marketing Public Relations HumanitarianAgenda Press Releases Global Media Following Praise From Major Outlets
- 52. Marketing Sales Promotion ● Price Free shipping Promotional offers Rebates Non-Price Money-back Guarantees
- 53. Marketing Personal Selling Frontlineemployees iPad Coordinated Hands-on experience “The thing is, I don't want to be sold to when I walk into a store. I want to be welcomed.” Angela Ahrendts, VP Retail and Online stores
- 54. Marketing Direct Marketing ● Email Campaigns 1. Educate customers on products & launches 2. Encourage site visits & product purchases ● Push notifications ● Not measurable
- 55. 500,000,000 Apple ID’s registeredas of 2013.
- 56. External Analysis Industry Competition MacroeconomicFactors Industry Technology Industry Customer
- 57. Industry Competition Direct MobilePhone Software Media & Applications Tablet Industry Mobile Payment Google
- 58. Industry Competition Direct PersonalComputers Operating Systems Tablet Industry Media & Applications Microsoft
- 59.
- 60. Industry Competition Indirect ● Video Games ● Software developers
- 61. Macro-Economic Negative Data Security Global andregional economics Labor issues Political events Positive ● Green initiatives
- 62. Industry Technology ● Wearables ● Internet of Things ● Mobile payments ● Wireless Charging
- 63.
- 64. Industry Customer ● Consumers ● Small-Medium Sized Businesses ● Education ● Enterprise ● Government Market Segments Consumer Traits ● Price Insensitive ● Astute ● Indirect Channels
- 65.
- 66. Strengths ● Brand Image ● Customer Database ● Intellectual Capital ● Financial Stability ● Supply Chain Standards ● Leadership ● Developer community
- 67. Weaknesses Customer Relationships Customer Database Immeasurabilityof Advertisements Labor Issues Decreasing Profit Margins Direct Marketing
- 68. Opportunities Expansion Customer Database Further leverageintellectual capital Personalized customer relationships Improvement of App store
- 69. Threats Security and privacy Directcompetitors Suppliers performance Labor issues Volatile global and local economies Indirect competitors New technology/innovation
- 70. Sustainable Competitive Advantage Along-term advantage that uniquely differentiates a firm from its competitors, achieved by creating high customer perceived value through the augmentation of physical products to meet customer needs for time, convenience, fear and/or risk reduction.
- 71. New Forms ofS.C.A Further leverage customer data base Build & insulate personalized relationships Anticipating the current and future needs of customers
- 72.
- 73. Viable Alternatives Talent Recruitment Potential opportunityto obtain new talent for the company through research and internship partnerships with universities. Acquisition Strategy Potential opportunity to expand into a new industry through acquisition.
- 74. iProfile “Seamless integration betweenlife and technology”
- 75. Through a newapplication that lies at the center of the Apple experience, this initiative will begin to foster learning relationships between Apple and its customers.
- 76. Goals & Objectives: Integratewith the App Store to provide a customized recommendations stream Allow Apple to capture valuable customer knowledge Allow users to create a profile through their pre-existing Apple ID
- 77. Create Awareness Advertising AppleID’s Connect with customers Featured Ad on App Store
- 78. Induce Trial SalesPromotion ● Opt-In Program ● Promotional Code ● Redeem Code in App Store
- 80. Build Relationships PersonalSelling ● Prequalified Relationships ● Knowledge Capture ● Highly Personalized
- 81. Build Relationships DirectMarketing ● Continuous Engagement ● Insulate Relationships ● Focus on Customer Share
- 82. Ryan Smith Name: RyanSmith Apple ID: Ryansmith@icloud.com City: Los Angeles State: CA Age: 22 Primary Device: iPad Profession & Productivity: -Marketing Coordinator (3 years) -Drives an hour to work daily -Grocery shops every Monday -Stock market Fun & Recreation -Favorite sport: baseball -Surfing -Music: Piano,Guitar -Photography Lifestyle & Culture -Wine enthusiast -Vegan -News -Christian
- 84. Feasibility ● High cashon hand ● Massive Customer Database ● Intellectual Capital
- 85. Expected Outcomes Valuable customerknowledge capture Insulated and personalized customer relationship Increased customer satisfaction Understanding and anticipating current and future trends Future innovation focus Insulates brand image App store profitability
- 86. Key Metrics ● InitialResponse Rate ● Longevity of Use ● Customer Feedback ● Sales promotion engagement ○ Code registration ○ In-App Purchases
- 87. Areas Of FutureStudy ● Development of products based on consumer information ● App Developers ● Reconsideration of Pricing Model
- 88. Spiritual Implications Would we workfor Apple? Yes Would we invest in Apple? Yes
- 89.
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- 91.
- 92. Data Security andPrivacy ● Strict policies ● Transfer and Storage ● Extremely transparent “What Apple doesn’t do is hand over the keys to all that data and let advertisers plug into it directly with their own data-mining and targeting software.” Apple will not perform iOS data extractions in response to government search warrants because the files to be extracted are protected by an encryption key that is tied to the user's passcode, which Apple does not possess.” -Apple Website Macro-Economic
- 93. This should havemore info about security and privacy Electronic Frontier Foundation gave them 6/6 stars for security commitment government agencies frustrated they dont have a back door to apple and that apple cant get them things Macro-Economic - Back Up “Our commitment to protecting your privacy comes from a deep respect for our customers. We know that your trust doesn’t come easy. That’s why we have and always will work as hard as we can to earn and keep it.” - Tim Cook
- 94. Operations Supplier Standards Appleproducts are manufactured primarily in China until the software is downloaded onto them. From there the final product is shipped to distribution centers in Elk Grove, California and Memphis, Tennessee and then to retail stores, third-party retailers, and to customers who placed online orders. Since Angela Ahrendts took her position, she has been instructing retail store employees to encourage customers to make more of their purchases online, especially around times that new products are introduced. This is not in an attempt to move away from retail stores but an attempt to minimize long lines in stores, prevent long inventory backorders, and dissatisfied customers that go to a store that does not have the product they want in stock.
- 95. Finance Back up(6 reasons for COS) 1. New versions of existing products (like new macbooks) cost more to make but are selling for the same or reduced prices. 2. An overall shift in sales mix to products with lower margins 3. The introduction of the iPad mini with a significantly lower profit margin. 4. Price reductions on the iPad 2 and iPhone 4 5. Higher warranty expenses 6. Unfavorable foreign exchange fluctuations Products Affected By Shift In Pricing Model/Reasons For COS Spike
- 96. Finance Sales ByProduct 2014 2013 2012 iPhone $101,991.00 55.80% $91,279.00 53.41% $78,692.00 50.28% iPad $30,283.00 16.57% $31,980.00 18.71% $30,945.00 19.77% Mac $24,079.00 13.17% $21,483.00 12.57% $23,221.00 14.84% iTunes & Software $18,063.00 1.25% $16,051.00 2.58% $12,890.00 3.59% iPod $2,286.00 9.88% $4,411.00 9.39% $5,615.00 8.24% Other $6,093.00 $5,706.00 $5,145.00 Total Sales $182,795.00 96.67% $170,910.00 96.66% $156,508.00 96.71%
- 97. Finance Sales ByCountry 2014 2013 Americas 3.97% $65,232.00 9.09% $62,739.00 $57,512.00 Europe 8.04% $40,929.00 4.29% $37,883.00 $36,323.00 Greater China 17.43% $29,846.00 12.80% $25,417.00 $22,533.00 Japan 11.29% $14,982.00 27.35% $13,462.00 $10,571.00 Asia-Pacific 7.49% $10,344.00 4.10% $11,181.00 $10,741.00 Retail 6.10% $21,462.00 7.44% $20,228.00 $18,828.00 Total $182,795.00 $170,910.00 $156,508.00