Case Study: Apple

Question 1

Operations: Cost leadership

Answer 1

Economies of scale used by Apple’s outsourcers

Question 2

Operations: Good/service dif.

Answer 2

iOS, quality

Question 3

Operations: Tech.

Answer 3

Highly competitive market, ongoing issues w/ iPhone X face recon.

Question 4

Operations: Legal Regs.

Answer 4

• Ongoing battles w/ Samsung, both companies claiming IP infringement
• overworking FOXCONN workers

Question 5

Operations: Govt. policies

Answer 5

• Trump’s tariffs on China import
• ^2019, caused global eco. ‘shockwave’

Question 6

Operations: Flexibility

Answer 6

• 2014, iPhone6/6+ release w/ larger screens ~ response to competitors phones + Asian market demands

Question 7

CostOperations:

Answer 7

Vertical integration
- (2019 AAPL purchased Intel’s 5G department of $1B-USD). + Using cheaper suppliers (Swapping Samsung for TSMC for the phone memory, worth $10B-USD/yr)

Question 8

Operations: Design/Dev a New prod/service

Answer 8

2021, $21.91B-USD spent on R&D

Question 9

Operations: Logistics

Answer 9

• inputs (var. parts of iPhones) are sources from a global web of suppliers, delivering to Apple’s outsourcing partners (FOXCONN etc)

Question 10

Operations: Global srcing.

Answer 10

• Apple is known to buy a large amount of one component, to buy out competitions stock

Question 11

Operations: Leading edge tech.

Answer 11

• FOXCONN reduced employees from 110,000 to 50,000 through induction of robots in factories

Question 12

Operations: Global issue ~ Global sourcing

Answer 12

• Covid; 24th April 2022: Apple expects to take a hit of up to $ 8 b from supply chain shortages and factory shutdowns in China…Supply constraints caused by Covid-related lockdowns and industry-wide silicon shortages were identified as the key disruptors, along with declining customer demand in China.
• Silicon shortages, declining customer demand in China, COVID factory shutdowns in China

Question 13

Marketing: Selling approach

Answer 13

iPhone is seen as a high quality product

Question 14

Marketing: Psychological

Answer 14

Cheaper iPhone version, iPhone 5c, plastic back etc, is an example of this

Question 15

Marketing: Economic

Answer 15

In COVID, iPhone SE was updated to meet concern consumers re; cost of living

Question 16

Marketing: Gov.

Answer 16

Launch of iPhone 6/6+ delayed in China due to gov concerns re privacy

Question 17

Marketing: Decep. misl. adver.

Answer 17

2015, law suit against AAPL ~ intentionally slowing iPhone 4 users via software updates

Question 18

Marketing: Estb. market obj.

Answer 18

AAPL; increase market share in India by 2% in next yr. by offering discounts on older iPhones and payment in installments

Question 19

Marketing: Segmentation; Demographic

Answer 19

Low-cost iPhone (SE) is aimed at dev. countries.

Question 20

Marketing: Segmentation; Geographic

Answer 20

highest demand for smartphones in recent yrs have been in ASIA.

Question 21

Marketing: Segmentation; Psychographic

Answer 21

iPhones viewed as a status symbol

Question 22

Marketing: Branding

Answer 22

Quality, design, appearance, OS, apps etc

Question 23

Marketing: Global Branding

Answer 23

AAPL most val. brand in world, 2022

Question 24

Marketing: Global pricing

Answer 24

2016, depreciation of Euro-VS-USD led to 30%inc in iPhone price in France

Question 25

Marketing: e-Marketing

Answer 25

65% of a person’s individual media consumption is spent on a mobile device

Question 26

Finance: Retained profits

Answer 26

The value of Apple's retained profits has significantly declined in recent years, from 66% of shareholder's equity in 2018 to 9% in 2021.

Question 27

Finance: Equity sources

Answer 27

Apples Debt:Equity ratio has increased sign. in recent yrs. (Liabilities increased, 31% decrease in owners’ equity)

Question 28

Finance: Equity sources

Answer 28

Apple's level of debt compared to owner's equity (gearing) has increased significantly in recent years (from 107% in 2014 to 456% in 2021)

Question 29

Finance: Infl. of Gov.

Answer 29

AAPL’s tax haven in Ireland (<1% tax rate) --> had to pay back $13B-Euro.

Question 30

Finance: DebtVsEquity Financing

Answer 30

Historically, Apple had low gearing, however the company has become highly geared in response to record low interest rates in recent years. Liab incr. **nearly 400% in past decade**.

Question 31

Finance: Cash flow

Answer 31

Overall, Apple's holding of cash has declined significantly over the 3-year period of 2019 to 2021.

Question 32

Finance: Inventories

Answer 32

Apple uses FIFO + JIT

Question 33

Finance: Payables

Answer 33

Apple's accounts payable has increased steadily between 2019 and 2021.

Question 34

Finance: Reducing fix/var costs

Answer 34

Low-cost models, cheaper suppliers, change outsourcing partners, reloct. prod, vert. integration.

Question 35

Finance: Rev controls ~ marketing obj

Answer 35

AAPL marketing iPhone in India, using competition-based pricing strats.