Apple Business Strategy

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STRATEGIC AUDIT WORKSHEET

FOR

APPLE INC.

Prepared by:

MGMT 4480
FALL 2009

I.CURRENT SITUATION
A.Current Performance: Apple announced financial results for its fiscal 2009 fourth quarter ended September 26, 2009. The Company posted revenue of $9.87 billion and a net quarterly profit of $1.67 billion. These results compare to revenue of $7.9 billion and net quarterly profit of $1.14 billion, in the year-ago quarter. Gross margin was 36.6 percent, up from 34.7 percent in the year-ago quarter. International sales accounted for 46 percent of the quarter’s revenue. Adjusting GAAP sales and product costs to eliminate the impact of subscription accounting, the corresponding non-GAAP measures* for the quarter are $12.25 billion of “Adjusted Sales” and $2.85 billion of “Adjusted Net Income.” Apple sold 3.05 million Macintosh® computers during the quarter, representing a 17 percent unit increase over the year-ago quarter. The Company sold 10.2 million iPods during the quarter, representing an eight percent unit decline from the year-ago quarter. Apple sold 7.4 million iPhones in the quarter, representing seven percent unit growth over the year-ago quarter. B.Strategic Posture Focus on making the best product, and rewards will follow. In fact, Apple's new partners are signing up in spite of, rather than because of, Jobs' rules of engagement. Apple makes little pretense of building a level playing field, but routinely picks favorites—such as Google for building mapping and video applications for the iPhone. And rather than aim for the most partners, Apple focuses on attracting the best ones. As a result, the Mac and iPod feel more like a gated, elitist community, with Apple keeping close watch over who gets in. "The notion of a platform is a very PC-oriented way of looking at the world," says Silicon Valley financier Roger McNamee. "Consumers just want a great experience. They don't buy platforms." II.CORPORATE GOVERNANCE

A.Board of Directors
Bill Campbell
Chairman and former CEO
Intuit Corp.

Millard Drexler
Chairman and CEO
J. Crew

Albert Gore Jr.
Former Vice President of the United States

Steve Jobs
CEO, Apple

Andrea Jung
Chairman and CEO, Avon Products

Arthur D. Levinson, Ph. D.
Chairman
Genentech

Jerry York
Chairman, President and CEO
Harwinton Capital

B.Top Management
Steve Jobs
CEO, Apple

Timothy D. Cook
Chief Operating Officer

Scott Forstall
Senior Vice President
iPhone Software

Jonathan Ive
Senior Vice President
Industrial Design

Ron Johnson
Senior Vice President
Retail

Bob Mansfield
Senior Vice President
Mac Hardware Engineering

Peter Oppenheimer
Senior Vice President and
Chief Financial Officer

Mark Papermaster
Senior Vice President
Devices Hardware Engineering

Philip W. Schiller
Senior Vice President
Worldwide Product Marketing

Bertrand Serlet
Senior Vice President
Software Engineering

Bruce Sewell
Senior Vice President and
General Counsel

III.EXTERNAL ENVIRONMENT: OPPORTUNITIES AND THREATS
A.Societal Environment:

SOCIETAL ENFIRONMENT
FACTOR

PROJECTED CHANGE

OPPORTUNITY/THREAT
PROBABILITY OF
OCCURRENCE
IMPACT OF CHANGE ON THE INDUSTRY
ECONOMIC-Opportunity
ThreatIndustry booms
Industry declines as consumers want less luxury products
The overall global economy outlook is not as good for this and the following. The raise of oil and food prices has lead inflation to the world economy while the consumers' income has not been much reduced. Since consumers are also facing a greater risk of being unemployed, it will push them to spend less in consuming luxuries goods, like update their current computer or to buy a new iPhone. This will have a quite big influence on Apple's retail business. Considering the US economy will continue going down this year, the exchange rate might be falling further down. However, Apple has used foreign exchange forward...
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