Business_Analysis

Investing in Apple: A Business Analysis While strengths and opportunities are two important parts to a SWOT analysis, it is the weaknesses and threats that will determine whether to invest in a company. Chris Mallon, editor and publisher of the Undervalued Weekly states in www.work911.com that you should “Focus on the weaknesses and the threats, because that's what will turn around and bite you after you make your investment. I'm not saying you should look only for the negatives, and ignore the company's potential. But you should analyze the risks with as much, or more, scrutiny than the opportunities. Opportunities don't always show up, but somehow risks always do.” The decision to invest in Apple, Inc. took into consideration all aspects of the SWOT analysis, with specific concentration on the weaknesses and threats. An investor must feel confident that Apple, Inc. can continue its success, and assure shareholders it will resolve all current and potential issues. This business analysis will provide a clear understanding of the deciding factors to invest in Apple, Inc. as well as point out the effects of current events that may disrupt a shareholder’s relationship with the company. SWOT Analysis Apple is a successful company and may be one of the best to invest in. According to the NasdaqGS historical data, since September 7, 1984, its stock has gone from $26.50 a share to $373.72 at the close of August 25, 2011. It continues to provide superior products and works hard at developing its management team. Its brand is incomparable, having one of the most loyal and satisfied customer bases in the world. ”The obvious side to Apple's customer satisfaction lies in their attention to detail in every facet of product development. All their products are designed, at every stage, with the customer clearly in mind and each product is tailored to make it as easy to use as possible for the customer, regardless of how technically savvy or not they may be” (Howe, 2007, The Secret Behind Apple’s Loyal Customer Base). With strengths, come weaknesses. And this is a focal point for the investor. Many of the products Apple provides its customers do have drawbacks that raise concerns. Such mobile devices that still require plugging into a computer have become a thing of the past. While the company is aware of social networking, it has not been able to compete with Facebook, Google’s Android or Microsoft products. The Apple TV is making improvements, but still lacks the strengths that TV companies like Comcast or DirectTV have. To put a positive spin on these weaknesses, Apple does not have a very strong competitor and is in control of its own destiny. The opportunities may be endless for Apple. What makes the company attractive is the improvements it makes on its existing products rather than developing new ones. That supports the reasoning for a lack of competition. “Apple's limited choice creates more satisfaction. Less time is spent trying to find the right player, less time (if any at all) is spent wondering if the chosen player was actually the right one, and as a result, more time is spent simply enjoying the purchase” (Howe, 2007, The Secret Behind Apple’s Loyal Customer Base). With opportunities, come threats. This is another focal point when it comes to investing. The issue here is security because that is a top priority when it comes to any web business or hand devices. There have been hacks on Twitter, Baidu and Comcast by many digital rogues in the past three years. Those companies have become more secure today, but the same cannot be said about Apple. Apple must be aware of hackers and focus on security, especially when moving its iProducts, or its competition will benefit. “Apple's success is its problem. The more Macs and iProducts there are in the wild, the more hackers will concentrate on them. After all, Apple's machines will be the ones with the data the hackers want” (Beyers, 2010, The Biggest Threat to Apple). Based on the SWOT analysis, there are many positives that can assure investors Apple will remain a leader in the technology world. There are also negatives that will need to be addressed and the company must keep a watchful eye. It is the decision of this mutual funds company to invest in Apple, Inc. because of its ability to increase customer satisfaction and meet the needs of its stakeholders. The Stakeholders Apple has stakeholders both internal and external that include shareholders preferred and common, employees, software developers, manufacturers, customers, suppliers and the music industry. Steve Jobs was the chief executive, but stepped down on August 24, 2011, leaving the Apple team unsettled in achieving continued success. “The real challenge for Apple will be what happens beyond that road map. Apple is going to need a new leader with a new way of recreating and managing the business in the future” (David B. Yoffie, 2011, Without Its Master of Design, Apple Will Face Many Challenges). The successor to Jobs is Tim Cook, Apple’s chief operating officer. Cook has been involved in contractual agreements, keeping profit margins high and preventing competition from producing products at lower prices. But stakeholders are concerned over this change to the organization of whether the company will continue to work effectively and collaboratively without Jobs to rely on for the final decision. Cook immediately responded and comforted stakeholders in a company email affirming “Apple is not going to change” (Tim Cook, 2011, E-mail to Apple employees). Also, Jobs will continue his interest in the company as Chairman. That in mind, Apple has appeared to take the necessary steps in accomplishing the transition. According to Apple spokeswoman, Katie Cotton, “Apple has had a succession plan for years but kept it under wraps to deflect competitors.” Other news has surfaced that has stakeholders unsettled about Apple’s future. Jobs was forced out of the company in 1985 because investors did not share his insight. He returned in 1996 when Apple bought NeXt, a corporation founded by Jobs, and now to step down in 2011. Stakeholders are worried that Apple could be lost again without his “dominant personality and killer instinct” (Kane and Wingfield, 2011, Management Team Faces Task of Keeping Momentum). However, with Cook, Jonny Ive, Phil Schiller and other executives, Apple is deep and talented which provides focus for the future. The company has a successful product line that continues to provide the best user and consumer experience. The upcoming iPhone, the release of the iPad, and updates to the Mac and iPod will generate strong revenue for some time. Apple has $60 billion in cash that should allow investors to sleep safely and know nothing foolish will occur. Shareholders will most likely benefit from this massive cash hoard through the company’s strategic opportunities. And with Jobs still in the picture, Apple will be just fine if not better. References Beyers, Tim. (2010). The Biggest Threat to Apple. Retrieved from http://www.fool.com/investing/general/2010/06/17/the-biggest-threat-to-apple.aspx Cook, Tim. (2011). E-mail to Apple employees. Retrieved from http://arstechnica.com/apple/news/2011/08/tim-cook-e-mail-to-apple-employees-apple-is-not-going-to-change.ars Cotton, Katie. (2011). Apple Shareholders Criticize Post-Jobs Succession Plan. Retrieved from http://www.mobiledia.com/news/104644.html Howe, Carl. (2007). The Secret Behind Apple’s Loyal Customer Base. Retrieved from http://seekingalpha.com/article/32022-the-secret-behind-apple-s-loyal-customer-base Kane, Yukari. Wingfield, Nick. (2011). Management Team Faces Task of Keeping Momentum. Retrieved from http://online.wsj.com/article/SB10001424053111904787404576528982689519562.html Mallon, Chris. (2005). SWOT Analysis. Retrieved from http://work911.com/planningmaster/planningarticles/swotanalysis.htm. NasdaqGS. (2011). Retrieved from http://finance.yahoo.com/q's=AAPL Yoffie, David B. (2011). Without Its Master of Design, Apple Will Face Many Challenges. Retrieved from http://www.nytimes.com/2011/08/25/technology/without-its-master-of-design-apple-will-face-challenges.html'ref=technology