Apple, Inc.

More Than Just a Company

Apple, Inc. More Than Just a Company

Apple, Inc. More Than Just a Company

Prepared for
Jenell Barnard-Keller
COM 338 Instructor

Prepared by
Debra Cormier, Chandler Fish, David Furtado
Lisa McKay, and Estephanie Ward
University of Michigan Flint

November 23, 201

MEMORANDUM
TO:
FROM:

Professor Barnard-Keller, COM 338

Group 10; Debra Cormier, Chandler Fish, David Furtado, Lisa McKay,
Estephanie Ward

DATE:
SUBJECT:

November 23, 2014

Apple: A Fortune 500 Company

Attached is the research-based analysis of Apple, as you requested.

While composing our report on Apple we placed an emphasis on researching how the
competition within the market affects Apple's business. The competition that Apple faces causes
Apple to be strategic in every decision that is made. Strategic decision making has allowed Apple
to remain a powerhouse company that has and continues to hold a great deal of influence on
consumers and in the market.
Apple is a very successful company with an optimistic future. Apple faces competition in many
different areas, including: new products that are released, company morale, employee treatment,
and environmental factors. By examining the different areas that Apple competes in, we can
better predict what the future may hold in terms of competition for Apple.
Our group worked very well together. We each did individual research as well as collaborated
together to successfully complete our report. With the hard work, cooperation and talent that this
group possesses, this group project went better than we could imagine.
We appreciate this opportunity, as it has allowed us to develop our group skills. Practicing how
to work efficiently and successfully in a group has better prepared us for the future. If you have
any questions about the report please reach out to us through email or over Blackboard.

TABLE OF CONTENTS
INTRODUCTION............................................................................................................. 1
APPLES COMPETITION.............................................................................................. 1
APPLES FIRST COMPETITOR ............................................................................................ 2
APPLES SECOND COMPETITOR ........................................................................................ 2
APPLES THIRD COMPETITOR ........................................................................................... 3
ENVIRONMENTAL CHALLENGES FACED............................................................. 4
ENVIRONMENTAL POLLUTION ........................................................................................... 4
ACTIONS TAKEN TO RAISE AWARENESS ............................................................................ 4
HOW CAN THEY REMAIN COMPETITIVE ............................................................................. 5
FAIR WORKPLACE TREATMENT? .......................................................................... 5
OVERALL WORKING CONDITIONS...................................................................................... 6
OVERALL MORALE OF EMPLOYEES ................................................................................... 6
MORALE OF COMPETITORS EMPLOYEES ........................................................................... 6
CONCLUSION ................................................................................................................. 7
REFERENCES .................................................................................................................. 8

LIST OF ILLUSTRATIONS
1. APPLE VS. SAMSUNG .................................................................................................. 2
2. GOOGLE DETHRONES APPLE ..................................................................................... 3

iii

Apple, Inc. More Than Just a Company

INTRODUCTION
Apple today is one of the planets largest technology producers. They serve several countries
using a variety of methods that adapt to the country they are hosted by. For over ten years in a
row, Apples revenue has been in the hundreds of billions of dollars. They have entered and
nearly conquered the tablet market, including globally owning fifty percent of the market share.
However, thirty-eight years ago, Apple started as a small startup company to produce personal
computers by Steve Job and Steve Wozniak (The Apple Revolution, 2009). Competition from
Microsoft, and other companies, has kept Apple on the leading edge of technology in order to
stay relevant. Recently, global competition from Samsung has led to increasingly versatile
mobile devices (Arnald, 2013). Apples long history has witnessed controversy, new
competitors, and changes in social responsibility. These challenges have been overcome by
Apple while conforming to social norms.
The dream of Apple was to produce a computer that was relevant for the ordinary person, to be
used at home or work, while being affordable on a large scale. Apple I was created. In the first
year, Apple I appeared with minimal circuitry. Apple I was sold as a kit and only required a
keyboard and screen to display the text. This was a huge achievement at the time. However,
competition did not find this technology as useful. Apple I sold for fewer than seven hundred
dollars, thus making it affordable to the ordinary person. Since then, Apple has flourished and
strived to stay on the leading edge of technology (The Apple Revolution, 2009).
Apples biggest achievement was its emergence in the stock market. On January 12, 1980 Apple
opened an IPO on the New York Stock Exchange with an initial asking price of $22 per share.
What was significant about this event was that it was the largest capital gain for a company since
1956 with the IPO of the Ford Motor Company. Another advantage was the capital gain of
investors, this event created the most instant millionaires up to this time in history (The Apple
Revolution, 2009).
APPLES COMPETITION
It is no question that nowadays, nearly everyone is glued to an electronic device, whether it be
their smart phones, iPads, iPods, Kindles, tablets, laptops, Apple TV, Google glasses... you name
it, consumers have got it. There is a growing obsession to have the newest, fastest, one-of-a-kind
devices and manufacturers constantly have to think ten steps ahead of its competitors to be the
first to release these new products.
Apple has remained the leader in the industry, but with so much competition, how have they
remained amongst the top, and how have they separated themselves from the other big players in
the market? Apple set the stage and expectations for all competitors when they were the first in
the market to provide convenient software (iTunes) to go with the hardware. Furthermore,
anything that is purchased through iTunes is compatible with all of Apple's products. If a
1

consumer has an iPod, all their music and purchases can be transferred to their iPhone. With
Apple's expansive range of digital media content, it has been reported that Apple has the credit
card information for well over 100 million consumers, making them also a top retailer.
Apples First Competitor
The top three competitors that Apple is currently up against are Samsung, Google and Microsoft.
Samsung, who has been known for being amongst the first in the industry to release products that
feature large screens and advanced technology, has recently experienced a 73.9 percent drop in
sales during the third quarter of 2014. (Dilger, 2014). According to Dilger, Samsung is now
earning about one third of Apple's profits while shipping over twice as many phones. Sure, one
could question if the decrease in revenue for Samsung is due to the new release of the Apple
iPhone 6, or perhaps with the many features and capabilities of these new products, there are not
many opportunities available to create products that can add more value to what is already on the
market. Although Samsung has been a large competitor with Apple, especially in the market of
smartphones, is the recent decline in Samsung's sales partly due to Apple's new launches? Or
could it possibly be a glance at the future of the industry all together?

Apple vs. Samsung

Apples Second Competitor
Another top competitor for Apple is Google. Some may wonder how these two companies can
compete with one another, but there is a high-level of competition between these two
powerhouse companies. While Apple products contain the exclusive iOS software, Google
licenses its operating system to other manufacturers, and these products end up competing head
to head with Apple. Along with Android making up 85% of smartphones that were shipped

globally during the second quarter of 2014, Google is releasing three new products this
November that will compete directly with Apple. These new Google products will be available
for purchase in 27 countries (Smith, 2014). With Google offering products of many
manufacturers it is no question as to why Google imposes a threat to Apple. However, despite
Google's global success, Apple still remains the top preferred brand in the United States.

Google Dethrones Apple

Apples Third Competitor
Alongside with Apple and Google are the powerhouses Microsoft and Amazon. Many wonder
what the future may hold for companies such as Microsoft who have been ranked amongst the
best in the PC industry. There is no question that with the availability of various tablets in the
market that the sales for PCs have dropped in the past few years. On an additional note, there is
also Amazon. Amazon is a powerhouse online retailer who has come out with products that
compete directly with Apple. Typically, Microsoft products do come with a higher price tag than
Apple's. However, Apple makes up for the lower cost through iTunes when consumers purchase
music, videos, and applications for the devices. Amazon products come with an even lower price
tag, than both Apple and Microsoft, but often fails to meet the variety and accessibility of Apple.
In order to remain competitive, all of these powerhouse companies have overlapped boundaries
and are in some way directly competing with one another despite their primary focuses. When
one company releases the new it product, another company releases something very similar.
What will be the deciding factor that the consumers makes on which brand to choose? Will it be
cost? To which extent will these brands be able to lower the cost of their products and maintain a
profitable margin? Apple continues to reap the benefits of having been amongst the first to ever

release a software, such as iTunes, which continues to generate huge profits. Many consumers
are loyal to Apple because of all the purchases they've made through iTunes and the convenience
of having the option to easily transfer them to another Apple product. Also, although Apple
products do come with a price, they are still selling their products at a competitive price because
they make up for any loss in profit through the applications and downloads that are purchased.
This has been, and continues to be, amongst the leading factors as to what separates Apple from
its competition.
ENVIRONMENTAL CHALLENGES FACED
Apple, along with most large manufacturing companies, has been accused of using materials that
are damaging the environment. Apple and Samsung were accused by Friends of Earth of
damaging tropical forests and coral reefs in Indonesia by using tin in their products. One of
Apples suppliers in China dumped so many pollutants in a river that it turned it milk-white. A
report by Greenpeace estimated that Apples data centers have a 54.5% dependence on coal to
power its servers and they estimated that its already high electricity usage would steadily
increase. Greenpeace also thought Apple did not have a very good policy for recycling the old
products (Price, 2014). These are just some of the environmental challenges that Apple has been
faced with.
Environmental Pollution
Apple is doing what is needed to help prevent environmental pollution. They were one of the
first companies to stop using arsenic, hazardous PVC plastics and brominated flame retardants
(Dowdall, 2014). Knowing that it takes a lot of energy and supplies to manufacture their
products, they have developed ways to use less energy and materials to cut back on pollution and
using less of the planets resources. Their data centers use 100 percent renewable energy to help
prevent climate change. They use less of the planets limited resources by using more recycled
and recyclable products and some that are ecological, plant-based materials. They use fewer
materials by making their products thinner but stronger and longer-lasting. They have also
established a Clean Water Program that cuts water use and it encourages water recycling (AppleEnvironmental Responsibility). All of this is helping Apple to lessen their environmental
pollution. With the companys continuous growth, if they did not start using less energy and
materials, they would have increased environmental pollution significantly. By using recycled
products they are decreasing the amount of waste in the landfills.
Actions Taken to Raise Awareness
In order to promote environmental awareness, both within the company and amongst the
consumers who use their products, Apple offers programs to encourage environmental
responsibility. Even though they use materials that last longer and make their products more
efficient, the items can only last for so long. All Apple retail stores will take back Apple products
for free and recycle them. They also offer special events where they accept competitors products
to recycle. Apple expect their suppliers to maintain their environmental standards. In order to
make sure that the suppliers are doing this, they conduct onsite compliance audits. The suppliers
know how strict the rules are and that if they dont comply they will be charged with high

penalties (Apple-Environmental Responsibility). They have also come up with a clever Earth
Day advertisement that promotes environmental efforts and indirectly ridicules Samsung. At the
top of the newspaper advertisement, the headline reads: There are some ideas we want every
company to copy. Samsung and other companies have been accused of copying Apples
products, and they wouldnt mind if they copied their environmental plans (Summers, 2014).
How Can They Remain Competitive
Apple can remain competitive in environment awareness of their products by keeping up with
their programs that they offer and by reducing their carbon footprint. To keep their suppliers up
to date on what can be done to help the environment they offer the Apple Supplier EHS
Academy. EHS stands for environment, health and safety and the program offers 25 courses in
these areas. It is an 18 month program and the participants need to finish 19 courses. They are
required use their acquired knowledge to implement plans at their facilities (Apple Supplier Responsibility Environment). Apple continues to reduce their carbon footprint by designing
greener products using materials that do not contaminate the environment. They believe that no
product should be hazardous to the health of the consumer, the employees that help produce
them, or the environment (Apple-Environmental Responsibility).
FAIR WORKPLACE TREATMENT?
Apple has been a force to be reckoned with in the technological marketplace, so one also
wonders if their wage compensation reflects that attitude. According to Reuters, they offer fairly
competitive benefits for their employees, Apple has 929 million shares outstanding [they
have] issued 439 million shares, leaving almost 500 million shares left over, so its fair to
assume that the lions share of the newly-issued shareshave gone to employees (Salmon,
2012). It seems that Apple has been generous in terms of handing out equity to its employees,
and theres no reason to believe it wont be just as generous going forwards (Salmon, 2012).
One of our team members had an opportunity to discuss Apples workplace treatment with a
friend who is currently employed by Apple and they had stated that Apple treats their employees
in the U.S. very well. They get massive discounts and scheduling flexibility. From former
employee reviews at GlassDoor (an American site where employees and former employees
anonymously review companies and their management), Ive gathered information concerning
work place treatment. Many of the reviews on GlassDoor cite the same advantages of working
for Apple such as amazing benefits, great pay, diverse workforce, intense focus on products and
customers, etc. Many of the cons cited are hectic work-life balance (burning out is common),
long hours, impersonal relationships between employees and managers (just another number),
stove-piped planning structure, etc. However, most reviews from employees and former
employees state that although it is an intense work environment, it is still a rewarding workplace
with fair treatment of their employees. However, back in January, Apple was downgraded from
hold to sell by Standpoint Research based on how much Apple pays their suppliers. An analyst
from Standpoint Research argued that for Apple to pay their workers [overseas] $2 an hour
while they have $150 billion in the bank is nothing short of obscene (Jones, 2014). Their
argument is that Apples empire is built upon the backs of workers that are given minimal
compensation and defend their actions by saying that the wage is higher than [average] there
and in-line with what their competitors are paying (Jones, 2014). This argument is tricky

because on one hand Apple strives to set itself apart from their competition by trying to be
conscious of their employee treatment, but Apple also strives to remain competitive with their
rivals. From a business standpoint it is an economical decision to price wages competitively with
your rivals in todays marketplace, but if their ideology is to be an innovator, especially in
employee treatment, then Apple may have to step-up to the plate to lead the charge. Overall,
Apples employee treatment seems to be fair and priced competitively with their rivals.
Overall Working Conditions
In the past, Apple facilities have been cited for inhumane working conditions and workplace
violations. An article from the New York Times in 2012 illustrates that employees [worked]
excessive overtime, in some cases seven days a week, and live in crowded dorms. Some say they
stand so long that their legs swell until they can hardly walk. Under-age workers have helped
build Apples products, and the companys suppliers have improperly disposed of hazardous
waste and falsified records (Duhigg, 2012). Managing facilities overseas is a big undertaking
when foreign labor laws are not the same as U.S. labor laws. Unless facilities are constantly
monitored, workplace violations will be commonplace and it will be the corporations
responsibility to handle such violations. Corporations will seek going overseas because of
cheaper overhead costs, labor, materials, etc. However, all of this comes at a cost when trying to
stay competitive in todays market. Often, the negative repercussions of being known as a
company that allows for inhumane work conditions will have a lasting effect. The senior vice
president of operations, Jeff Williams, says that trying to manage work violations such as
underage workers and limiting work hours [are] two of the most challenging issues it [faces] in
its supplier audits (Smith, 2013). Apple has proved that they have no qualms with ending
business relations with suppliers when they have crossed the line. In January of last year, Apple
[had] decided to end business relations with component maker Guangdong Real Faith Pingzhou
Electronics over underage labor issues (Smith, 2013). Overall, Apple is conscientious of their
facilities, they regulate and crack the whip when need be.
Overall Morale of Employees
After the passing of Steve Jobs it was speculated whether the direction of Apple would stagnate
because he had been the man behind the wheel for so long. Brain drain was also a possibility that
had been considered because employees were simply seeking different directions for their own
objectives. It appears that lower and lower Apple stock price is moving from low employee
morale into employee defections. It was even said that some Apple employees are going to work
at other tech players like Google and Hewlett-Packard Co. and also over to social media players
like Facebook or LinkedInslower growth appears to have created slower ambition (Ogg,
2013). It seems that company morale has fallen slightly and now employees may be looking
elsewhere for employment.
Morale of Competitors Employees
A former employee of Samsung sites that While working at Samsung, [they were] continuously
put down, over worked, and never respected. Management [had] little respect for its employees
and often [ignored] their advice. Samsung is one of Apples top competitors and seems that

reviews gathered from GlassDoor reflect that Samsungs employee morale appears to be quite
low. On the other hand, Microsoft has been implementing large layoffs over the past few months,
but indicated that morale among employees there hasnt been diminished due to the staffing
rollbacks (Wilhelm, 2014). The biggest complaint that they are experiencing is that change is
happening too quickly, but others agree that it is time for a change. The employee morale of their
top competitors seems to be varied between Samsung with low employee morale and Microsoft
with moderate employee morale.
Apple has grown into one of the most powerful technology giants in the world. What started out
as a small, unknown startup company turned into something that no one could predict. Apple
continues to attract consumers all over the world with their vast array of products. It seems like
Apple has been on top of the world for many years now. It makes people wonder what is next for
the tech giant. After all, it is usually only a matter of time before a company goes under. No one
can stay on top forever, right? While this may be true, Apples future shows no sign of slowing
down.
CONCLUSION
In September of this year, Apple unveiled a series of new products to be released: two new
iPhones (iPhone 6 and iPhone 6 Plus), a smart payments system, and a wearable device called
the Apple Watch. The Apple Watch has yet to be released, but there is already a lot of pressure
on it to do well. It has been over four years since Apple has released a new, groundbreaking
product, the iPad. Many people are wondering if Apple still has what it takes to create a new
successful product since Steve Jobs is no longer with us (The Future of Apple Watched, 2014).
According to Forbes, in order for Apple to continue making successful products and appealing to
consumers they must reinvent their self. Forbes suggests there are two ways Apple can do this.
First, Apple needs a clear vision of an opportunity in the marketplace. In other words, Apple
needs to have the right vision at the right time, just like they did when they moved from a PC
company to a consumer device company. Secondly, Apple needs a whole new way of operating.
Apple needs to find a way to speed past their competition and then continue reinventing to stay
ahead of the competition (Ottinger, 2013). The technology market is more successful than ever
right now. Apple faces competition from multiple companies and at times the competition is
fierce. Only time will tell the success of the Apple company but it is safe to assume that they are
not going anywhere, anytime soon.

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