Business Report To Ceo On Company To Develop Understanding For Planning and Control
Business Report To Ceo On Company To Develop Understanding For Planning and Control
TO CEO
A new CEO has recently joined the company and he has no such knowledge and
understanding of the organization in order to plan and control the organization
effectively, CEO needs the complete understanding of the organization. The basic
purpose of this report is to develop the understanding of the organization.
So this report deeply analyses the company named Apple Inc. by understanding the
introduction, history, and background of the organization. In order to develop the basis
of what the organization is all about, its mission and vision statements i.e. to identify the
mission of the organization its vision and the values that the company posses for
stakeholders.
After this, the report moves to the understanding of the ownership structure of the
organization by considering the number of owners, the type of owner and the
classification of owners of Apple Inc.
This report also analyses the organizational structure of the company, what type of
organizational structure the company has, current strategy whether Company is using
differentiation strategy or cost-effective leadership strategy.
This report also discusses the financial position and financial performance of the
company, when to produce and what to produce. Is it possible to produce in a small
quantity or large quantity and whether is it possible to consider International markets
while producing goods and services?
This report particularly analyses the strengths, weaknesses, threats, and opportunities
for the company in order to develop an understanding what to do and what to avoid,
which areas to focus and where the hard work is required.
We all know that there is the highest competition in the cellular sector each and every
company is trying to take a competitive advantage over its rivals. They use various
techniques to avoid competition and take comparative advantage. Porter's five forces
model was analyzed in order to develop a deep understanding about competition, the
competitors of the company whether to take competitive advantage or not and at what
position in the competition in the market the company lies and what should be the goals
and objectives of the organization.
This report also analyses the financial performance, financial position, social
performance and environmental performance of the organization in order to develop the
understanding of the financial position of the entity.
At last recommendations are made to the CEO in order to identify which areas to focus
and where the hard work is required
1. INTRODUCTION
As requirement specifies that a new CEO has recently joined the company who requires
in-depth knowledge of the business for effective planning and control of the company. In
order to provide in-depth knowledge of the business the information is necessary to
provide such as; background information, organizational and ownership structure, facts,
and figures, implications, conclusions, and recommendations. We as a team assumed
that The company is Apple Inc. Apple Inc. is a USA based company which is working on
the production of cellular products as well as other technology related gadgets and
software. Apple Inc. offers a wide variety of electronic products which are selling around
the globe. It only sources revenue from production and sales of electronic gadgets like
laptops, mobile phones, smart watches etc. and some software as per need. As far as
planning and control are concerned following is the detailed information that is enough
to deeply understand and analyze the company in order to plan and control effectively.
1.1 BACKGROUND
The history and background of Apple Inc. is the strong evidence that the company is
operating very well since its entry to the market. In 1976 Apple Inc. was founded by
Steve Jobs and on 1st of April 1976 Apple introduced there the first system and named it
as Apple I which was sold on the local electronic shop of just $666.66. The main goal of
Apple was to create inexpensive and simple to use computers which can easily be
operated by anyone. From there apple started its journey and started giving upgraded
and high-performance systems in the market every year. Apple II computers became
the de-facto computing standard for elementary schools throughout the 80s and 90s
and at the end of 90s, Apple II gave almost $6 to $8 billion sales to Apple Inc [ CITATION
Ful15 \l 1033 ]. This journey didn’t stop here and in year span of 2007-2017 Apple by
providing its multiple products like Mac Books, iPhone, watch etc. collected total
revenue $52.6 billion with quarterly growth of up to 24%. Currently, Apple is among one
of the topmost technology products providing company in the world which is being
known for its quality and reliability.
Mission:
We want to be the world class manufacturer and service provider of technology.
Vision:
The company is committed to providing the best computing experience to our
customers.
Values:
Our core values are to provide quality computing products to people and only provide
services in that field in which The company is sure about our extraordinary and
significant contribution[ CITATION Cho18 \l 1033 ].
After the death of Founder Steve Jobs, the company currently has 12 institutional
shareholders. The company has different regional offices on the basis of continents and
countries and different managers are working in these offices and sub-offices [ CITATION
Nak00 \l 1033 ].
According to Mintzberg, the organizational structure is basically the sum of the total in
which the labor of an organization is divided into different tasks and then it coordinates
with each other among their tasks. There is no such specific thing regarding
organizational structure in The company. Our sole purpose and focus are to achieve
goals and so we have no specific organizational structure in a company there are
basically two types of organizational structures which are “mechanic structure” and
“organic structure”. We basically use the mix of them in order to achieve higher results.
The mechanic structure is basically the one which is characterized by authority and
control. In mechanic structure decision making is done at higher levels and it is a highly
centralized organizational structure[ CITATION Lee15 \l 1033 ].
Organic structure is highly decentralized where decisions are made by the individuals
who have required knowledge and expertise regarding that specific decision. Organic
structures are very flexible with the authority and responsibility.
The major activities of The company are the manufacturing and distribution of cellular
products and related product. There are lots of brands associated with The company
and we produce a lot of products and inject them into the market.
The brands and products of The company “Apple Inc.” are iPhone, Apple watches,
Apple iPad family, Macintosh, macOS, iPod, iOS, keynotes, final cut pro, logic pro, Mac
OS Sierra, pages, iOS10, numbers, and iLife[ CITATION Zhu16 \l 1033 ].
Cellular products show a lot of revenue earned by the Company.
As far as the location is considered where Apple incorporation sells its products,
basically the demand for products of Apple is increasing day by day in today's world.
Apple Company has opened retail stores all around the World to fulfill this demand it is
not possible for the international buyers to buy the products of Apple incorporation in
any location may be the nearest one, because Apple incorporation has opened retail
stores in a lot of locations of the world[ CITATION Nag17 \l 1033 ].
The details where Apple company sell its products we will come to know that Apple
company sell its products in Australia, Belgium, Brazil, Canada, China, France,
Germany, UK, Italy, Japan, Netherlands, Spain, Sweden, Switzerland, Turkey, UAE,
United Kingdom, and the United States
In addition to these locations the buyers of Apple products can also buy their desired
product through official Apple retail shopping websites in some specific countries which
include Austria, Denmark, Finland, Hungary, Indonesia, Ireland, Mexico, New Zealand,
Malaysia, Norway, Poland, Russia, Singapore, Taiwan, Thailand and Vietnam.
The locations from where Apple incorporation generates a lot of revenue The company
is faced with some facts. Apple stores are basically considered as the valuable anchor
stores in retail shopping markets. The location where apples and its most of the revenue
is Shanghai China revenue from retail stores in Shanghai is much higher as compared
to other locations because the customer range in Shanghai is 25000 to 30000
customers per day.
Mission:
We want to be the world class manufacturer and service provider of technology.
Vision:
The company is committed to providing the best computing experience to our
customers.
Particula Objectives Measures Targets Initiatives
rs
Custome Customer Overall 80+ Manage
r: satisfactio customer overall staff
How n rating rating leadership
should Customer’ Percentage Above initiative
Apple s comparison 50% Develop
Inc. perception of Meet 8 community
appear to of the customers out of to enhance
its quality Employee 10 customer
customer index engagemen consul satisfaction
s t tation
Consultatio measu
n measures res
Internal Processes which Reporting 95% Independen
business: basically focus on measures 98% t reviews
At which employee safety Safety 95% Enhance
internal and should be measures reporting
business customer Safety and process
Apple centered. satisfaction
Inc. measures
excels to
better
serve our
customer
Learning Enhance and Vacancy 3% Hire a new
and maintain a rate 80% HR head
Growth: healthy work Leader 100%
How environment learning
should along with developmen
Apple sustainable ts
Inc. growth Performanc
develop e plans
systems
to serve
customer
s
Financial: ROCE ROCE 15% Asset
Which Asset Cash flow 11% depreciatio
areas to Liquidation Volume 45% n program
focus in Profitability growth 20% Cost-
order to Cost Net margin effectivenes
sustain leader s
mission Profitable
financiall growth
y
2. STRATEGY
2.1 CURRENT STRATEGY
The current strategy of The Company is basically the means by which we achieve over
desired results such as business objectives can be described as a long-term business
planning normally current business strategy will cover a period of about 2-4 years but
sometimes it takes longer[ CITATION Gra16 \l 1033 ]
Almost 90% of the top rated companies in the cellular sector use differentiation strategy
because there are lots of brands and lot of varieties of products are available in the
market each and every time. If you really need high traffic for your products
differentiation strategy is the best. There are several ways to differentiate your product.
Basically, differentiation strategy focuses on creating and producing the unique product
which will be attracted by the market in no time in order to have a competitive
advantage on rivals[ CITATION Sun17 \l 1033 ].
The company uses a differentiation strategy. In today's world, there are lots of top rated
companies operating very well in an industry. The most important of all things is the
products produced by The company and other companies in the same sector are of a
different nature. Buyers rely on quality rather than quantity. They prefer the best quality
and if it is there, they don't even pay damn care to price as price is not much important
for them but quality and uniqueness matters. So it is really inappropriate to use cost-
effective leadership strategy because it is of no use. Differentiation strategy is the best
and The
The company “Apple Inc.” maintained the dominant position and is the leading company
in the industry. SWOT analysis is basically a strategic planning tool that can help our
managers to evaluate strengths, weaknesses, opportunities, and threats that the
organization is facing in the business environment [ CITATION Kha15 \l 1033 ].
The SWOT analysis gives the managers of a company to develop different strategies
like strength-opportunities strategies, weaknesses-opportunity strategies, strengths-
threats Strategies, and weaknesses-threats strategies.
Strengths
Weaknesses
Weak positioning and selling proposition of products may create adverse
situations
Low research and development investment may put a full stop on advancements
Various gaps in products sold may lead to adverse situations
Organizational structure is not very compatible so undesirable behaviors might
be Possible which weekend internal structure of organizations
Weekend tackling challenges due to new entrants and so lost small share in the
market
Difficult to get integrating forms with different cultures as the status quo has been
seen in a lot of departments of The company
Opportunities
New customers from the online channel may increase the demand for products
New taxation policy can bring a big change as tax deductions are possible which
may lead to an increase in income of the organization
Government green drive opened a lot of opportunities as government regulations
are not strict in this matter and Organization can easily make its way forward
New environmental policies can open a lot of opportunities as environmentally
friendly products are possible and new additions can be appropriate in
manufacturing sector offer organization
Advancements in technology can lead the organization to cost-effective policies
as advancement in technology can make the work easy and complete it in no
time rather than manual work
Decreasing the cost of transportation and stable cash flows
Threats
It is also a strategic management tool in order to understand and analyze the underlying
levers of profitability in an industry of a specific company Apple Inc. in our case. Our
managers use Porter's five forces to understand the competition in the market and how
to take competitive advantage over rivals.
Threats of new entrants
New entrants in an industry may bring material innovation and often new entrants bring
the new ways of getting things done and so they can put The company under pressure
by lowering costs and by providing value propositions to customers.
The threat of new entrants can be eliminated by cellular strong economies of scale in
order to lower cost.
The company Apple Inc. can tackle the threat of new entrants by spending more money
on research and development and Research and Development will bring in new ways
that can have an impact on achieving competitive advantage over new entrants.
Bargaining power of suppliers
The customer is not only the key to success but the supplier is up to some extent. Often
in the material industry almost all the companies buy materials from numerous keys
suppliers. The supplier is the dominant party and can have an influence on the
organization as suppliers can reduce the profit margin of The company weekly result in
high cost and low profit.
Apple Inc. has developed proper plans to build efficient supply chain various suppliers
and found substitutes of various products that are supplied to Apple Inc. just for that
time that they can shift to substitute products when supplier raise their price.
In order to control the bargaining power of suppliers, The company can develop
dedicated supplier relationships and find only those suppliers whose business depend
upon the organization so that they can never act in that way.
As we all know that a new product or service is introduced in the market affects the
profitability of any organization adversely because customers are left with more options
and they always choose the one that is cost effective for them.
The company Apple Inc. increased the switching cost for customers which make it
difficult for customers to switch between different products.
3. PERFORMANCE
3.1 COST MANAGEMENT
The major cost that The Company Apple Inc. is facing is the cost of goods sold and it
has upward Trend if you look at data of recent 3 years cost of goods sold is increasing
year by year[ CITATION Pel16 \l 1033 ].
The company has some strategic Cost Management policies and techniques that are
used to reduce costs this can be applied in service and manufacturing areas. As the
main objective of Cost Management is to reduce costs expected by an organization The
Company has three policies and techniques to reduce costs which are:
Established the system in order to streamline the transactions between the
organization and the operating units and customers
To design the particular transfer pricing system in order to coordinate the buyer
and supplier interactions
To use that cost centers in order to create effective profit-maximizing behavior in
an organization
To strengthen the company's competitive position in the market
Income Tax expenses also measure the cost of Apple Incorporation as Apple is selling
its products all around the World and they have to use customers the revenue of every
year. Apple incorporation is very high as compared to other companies in the same
industry and so net profit before tax is often high in recent years ultimately it increases
Income Tax expenses which are the major cost to the company.
The major cost of a company include cost of goods produced by the Apple incorporation
as inflation impacts in the USA are high and transportation and other costs are
increasing day by day due to advancement in technology is it reduce that time period in
which the product is produced but it increases cost on the other hand and so the cost of
goods produced by Apple incorporation is increasing here by here especially in recent
years.
4. RECOMMENDATIONS
Pay level in an industry is rising adversely which raise a question on cost-
effectiveness and effects profitability so pay level needs to be controlled.
Technology is improving day by day and the better way to achieve competitive
advantage over rivals is to innovate products and make Technology
advancements in the company.
The company has no effective policy regarding research and development and
no expenditure is allocated to research and development for a lot of years we
would recommend to allocate some of the expenses to research and
development in order to bring cost effectiveness.
Each and every organization in the industry is facing a shortage of skilled labor
along with The company we would recommend to make policies and allocate
expenditure to enhance skills of labor to cover the shortage of skilled labor.
5. CONCLUSION
After proper analysis and understanding of the entity, we come to know that The
Company Apple Inc. is operating very well. Its policies and procedures are operating
effectively. As a result of SWOT analysis, we come to know that strengths of The
company Apple Inc. are much greater than that of weaknesses and opportunities are
even more than that of threats but threats need to be minimized and weaknesses need
to be controlled and strengthen. After proper analysis of Porter's five forces model, we
concluded that The Company Apple Inc. has an awesome competitive advantage over
its rivals. The only need is to strengthen the weaknesses and to minimize the threats in
order to succeed and operate in a much better way than before.
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seven days a week, family claim.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Khan, U. A. (2015). A critical analysis of the internal and external environment of Apple Inc. International
Journal of Economics, Commerce, and Management, 955-961.
Lee, J. Y. (2015). Structural marketing: Using organizational structure to achieve marketing objectives.
Journal of the Academy of Marketing Science, 73-99.
Nagle, T. T. (2017). The strategy and tactics of pricing. A guide to growing more profitably.
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Peltier, T. R. (2016). Information Security Policies, Procedures, and Standards: guidelines for effective
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Sun, J. T. (2017). PRODUCT DIFFERENTIATION STRATEGY AND COMPETITIVE SUCCESS. American Journal
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APPENDIX 1
Apple Inc.
(In millions, except the number of shares which are reflected in thousands and per share amounts)
Years ended
September 30, September 24, September 26,
2017 2016 2015
Net sales $ 229,234 $ 215,639 $ 233,715
Cost of sales 141,048 131,376 140,089
Gross margin 88,186 84,263 93,626
Operating expenses:
Research and development 11,581 10,045 8,067
Selling, general and administrative 15,261 14,194 14,329
Total operating expenses 26,842 24,239 22,396
Apple Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
Years ended
September 30, September 24, September 26,
2017 2016 2015
Net income $ 48,351 $ 45,687 $ 53,394
Other comprehensive income/(loss):
Change in foreign currency translation, net of tax effects of $(77), $8
and $201, respectively 224 75 (411)
Apple Inc.
(in millions)
30.9.2017 24.9.2016
Current assets:
Cash and cash equivalents $ 20,289 $ 20,484
Short-term marketable securities 53,892 46,671
Accounts receivable, less allowances of $58 and $53, respectively 17,874 15,754
Inventories 4,855 2,132
Vendor non-trade receivables 17,799 13,545
Other current assets 13,936 8,283
Total current assets 128,645 106,869