Sales Report
Apple Inc. is a multinational technology company located in California that is known for developing and selling electronics, computer software and providing other online services to its consumer market. Some of the merchandise sold by the company include iPhones, iPads, Macs Apple and Apple watches. It is currently considered the largest information technology company globally based on the vast amount of sales it makes annually.
The sale of software and services like iTunes, App Store, Apple Pay and iCloud has increased since more users are interested in using these products. This has thus increased the amount of revenue earned by the company and the gross profit. Back in 2012, the sale of 8.75 million iPhones generated over 40% of revenue earned after only six months. The increased number of sales was due to its availability through more networks that are currently in use such as Vodafone and Orange which are not situated in the U.S. During this period, the company recorded the highest number of sales within the first quarterly sales that the company has ever made since it started manufacturing smartphones. A total of 2.2 million iPhones were sold in the two quarters in the same year. 2.943 million units of Macs were sold and these generated $3.76 billion. In the final quarter of 2016, the sale of all Apple products were rated as being good, with the exception of the iPad which recorded lower sales and thus, lowered the amount of revenue and profits earned by the company. The unit number of sales of iPhones increased by a few million units and thus increased revenue by 4.7%. The iPhone 7 Plus model sold more units in comparison to the iPhone 6 Plus and the iPhone 6S Plus. There has however been a decrease in the sale of iPads from $16.12 million tablets to $13.08 million tablets and the company thus intends to introduce new tablets. The unit sales of the Mac have been gradually increasing due to introduction of MacBook Pro which has newer features. Since no record is kept for the sale of products such as Apple TV, Apple Watch, USB-C dongles and Beats headphones, it is difficult to establish the reason for their declining sales since revenue is below 7.5 percent. However, according to Cook, the sale of Apple Watch was consistent and thus the declining revenue and sales can be blamed on other products and accessories (Cunningham, 2017).
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Internal factors that can be said to have affected these sales include the introduction of new products such as the MacBook Pro which resulted in a decrease in the number of sales for Macs. A change in budget also resulted in a decline of sales for products such as the iPad since the company decided to focus on a different model since the iPad was too expensive to be purchased by most users. An external factor that can be attributed to the decline in sales of some of their products includes the preference of consumers to other products that are cheaper and offer similar services as the newer products which are only slightly advanced. Stiff competition from other companies such as Google also contributes to the decline in sales. Google released its own smartphone model, the Pixel, which was cheaper than the iPhone in key markets such as the market in China. Most people thus opted to purchase the Pixel rather than spend money purchasing the iPhone.
Industry
The company mostly deals with electronic software and hardware, and with the continuous advancement in technology, the company is now regarded as the most valuable global electronics and electronic services company (Alami, N.d.). Apple faces competition from other tech companies depending on the products involved. Personal computers expose it to competition with Toshiba, HP, Dell and Acer. It is also in competition with Google regarding the manufacture of smartphones, applications such as App store and iTunes whereby Google offers Google play store for downloading media. The company is known for its innovative products such as the iPad and the iPod (Alami. N.d.).
Organization Structure
A look at the organization structure of the company shows that it has a hierarchical structure, whereby policies and decisions of the company are made by the CEO, to whom the other employees are subordinate (Meyer, 2017). This organizational structure was initially established by Steve Jobs, one of the co-founders of the company, who intended for it to be a culture of excellence, creativity, innovation, secrecy and moderate combativeness (Meyer, 2017). During his time, all decisions made had to pass through his office before they were implemented. This structure stood to support innovations which would promote business growth. However, with the new management, there have been few modifications made to the management structure by the current leader, Tim Cook. He has decentralized the organizational structure and has adopted an organizational structure with the following characteristics. The spoke-and-wheel organization ensures that the chief executive officer is not the major decision maker of the company. In this form of hierarchy, there is increased collaboration between the vice presidents of the company. The CEO is at the center of the management while the vice presidents have more autonomy. This structure allows the organization of the company to be more flexible since decisions can easily be made.
Function-based grouping in the organizational structure of the company ensures that the senior vice presidents report to Tim Cook in the event that they handle any businesses with regards to the company. The company has a senior vice president for marketing, a separate one for software engineering, and different SVPs for hardware engineering, internet software and services, finance and general counsel. All the vice presidents are thus required to give an account to the head in order to ensure that the top leaders get to address business needs in these function areas and be updated on how each functional department is running. The product based grouping of the company forms the lower tier of the organizational structure at Apple Inc. Each product within the portfolio of Apple such as the iPhone, iPad, Apple TV is placed in its own group. In this structure, there are several different vice presidents below the senior vice presidents who are in charge of management of the various products and outputs produced by the company. The major role of these vice presidents is to ensure that they keep track of the products and address any issues concerning these products such as the declining sales of iPhones and Mac products and how to increase the efficiency of their products. This alteration of the initial rigid hierarchical structure has resulted in increased innovations in different levels within the company and has also resulted in collaboration of product-based groups.
Purpose
If the company’s mission statement is anything to go by, then the company’s purpose is to design more evolved personal computers that easily meet the needs of their users. This goes hand in hand with providing professional and other software such as iLife and iWork which can be used in the personal computers from the company. Its contribution can also be observed in the music industry where it is involved in promoting online music through invention of its iPods and their popular online music store, iTunes, where users can purchase and organize their music and also listen to radio broadcasts and other media. In addition to this, the company has also reinvented mobile phones by coming up with revolutionized models that have the brand name iPhone. The company also provides an online distribution platform called App store, where software developers can distribute any content that they have developed to users of Apple’s devices, specifically the iPhone, iPod touch and iPad. The content being distributed is in form of apps which can either be downloaded for free or at a starting cost. In general, the company is set on changing the course of mobile data and computing devices with its numerous technology reinventions (Johnson, Li, Phan, Singer &Trinh, 2012).
Number of Employees
According to a study done back in 2012 by Analysis Group, there are 47,000 people who work directly for Apple in the U.S. From this number, 7,700 employees work as customer support operators while 27,350 work in the retail stores that sell Apple products. About 12,000 are product designers, engineers and marketers and other employees involved in white-collar technical work in the company (Fernholz, 2012). Other employees that are related to but do not work directly under the company are 210,000 designers and developers of applications used on devices owned by Apple, and an additional 257,000 people who supply computer chips to owners of Macs, with the inclusion of those who are involved in supplying and delivering iPads. The number of employees in other countries is at least 33,000. With the consistent growth observed at the company, the total number of people has increased by hundreds of thousands, especially since the company manufactures its products in Asia where it has employed 9,000 trained engineers. Current statistics show that the company has a total number of 115,000 employees.
Revenues
According to the financial results of 2016, Apple’s net worth is said to be US$ 215.6 billion. Looking at the financial reports provided by the company, in the first quarter of 2017, the sales made by the company generated a revenue of $78.4 billion and made profit worth $17.9 billion. This was in comparison to a profit of $18.4 billion and a revenue of $75.87 billion, earned in the first quarter of 2016. The increase in revenue was due to the increased sales in Europe and the Asia-Pacific region. There has been a general decrease in the revenue earned from the sale of iPads from $7.08 billion to $5.53 billion and this is attributed to the fact that most people prefer to purchase iPads that have aged which are considered cheaper since their value is usually lower than the value of purchase at the time of their introduction into the market such as preference of iPad Air 2 to iPad Pros. This also explains why the amount of revenue is not directly proportional to the number of sales (Cunningham, 2017).
Revenue from other services provided by Apple such as iCloud, iTunes, App Store and Apple Music have recorded high revenues and the increase from 2016 to 2017 was by a few billion dollars, equivalent to 18.3 percent. The total revenue in the first quarter of 2017 was also boosted by the amount of money that was paid to the company from a lawsuit where they earned $548 million (Cunningham, 2017).
Accounting information systems
Initially, the company spread out the earnings over the supposed life of the phones. However, it changed the structure of its accounting and has thus popularized the use of book sales and profits of popular products such as iPhones. Since the company deals with technology and its improvement, the accounting information systems are all automated to ensure that they can keep track of all its products, revenues, profit, purchases and employees.
The accounting cycle at the company involves identifying the type of business transactions that would have taken place, so that they can be analyzed and recorded. The analysis of this data involves checking out for estimates and assumptions that may have been included in the financial data. The net sales recorded consists of revenue from the sale of Apple products in the form of software, peripherals and hardware. Also included are the warranties provided for the products and any support contracts. The accounting level has its own Senior Vice President who is also the Chief Financial Officer. Under him is the vice president and other employees who are in charge of recording stocks and sales made, revenue from the sales and any profits gained or losses incurred.
Process Flow Chart
This structure shows the management of a product from the manufacturer, to the suppliers, to the customers and includes any processes that take place such as estimation of prices for goods. Once the product has been manufactured and delivered to the company, the financial department calculates the possible revenue that is to be expected, after which the price of the products is set. Once the prices have been fixed, the goods are delivered to suppliers and retailers to sell to customers while others are sent directly to customers who have made online purchases. Products that have to be shipped to get to suctomers have their revenue deferred until the consumers receive and pay for their goods. This is because there is always a risk for loss of the items before they get to the users. Afterwards, the company records any reductions to the revenue that result form customer incentives programs and any other sales programs during the sale of their products. Reductions are also included for future product returns based on the company’s past experience. When all the sales have been made, the Company finally calculates and records its inventory of products and any other components that may have been sold . These data is then used to predict future sales and to analyse whether the company has made losses or profits by comparing the present revenues to revenues of past years.
Process Flow Chart
Risk Assessment
When analysing the risk assessment strategy employed by the company, the analysis is divided into execution, and operational and financial risk assessment. With regards to execution, the company focuses on the future plans it has regarding its products. This is done by analysing past events during predictions of future events so as to ensure that they make realistic decisions which can be achieved within a given timeframe. An example is during the low sales recorded for their tablet, Apple made plans to release a different model which they hoped would raise the sales of their tablets. When it comes to operational risk assessment, the company tries to make the organizational structure at the company more flexible so as to ensure that all departments can function well without necessarily having to rely on the CEO. Financial risks at Apple are managed by including reductions in their calculations of the possible returns they may get from the sale of their products.
Control matrix of key controls
Key controls are used at Apple to manage the company’s financial data, mainly for purposes of ensuring the easy evaluation of the Company’s financial statements in addition to their reliability. These key controls are used to maintain detailed and accurate recordsof the Company’s assets, expenditures and any materials that can be directly linked to the company. The external factor evaluation matrix is used by the Company’s financial department to stabilize the financial position of the Company based on its long-term and short-term investments, to gauge whether the Company will benefit from opening a retail store at a particular region and the assurance and the profitability of the place. This control matrix also helps the company to rate its problems globally and identify the particular times when the company can establish more retail stores and release new products.
Summary Assessment
The company achievements can be stated as being its ability to maintain a large market share globally due to the constant upgrading of its products such as the iPhone 8 that is about to be launched. This ensures that the users remain updated on the new form of technology that keep evolving daily. Its organizational structure also contributes to its excellence and gives the company a competitive advantage over other tech companies (Meyer, 2017). The company should however, reduce the cost of most of its products so as to have a competitive advantage over other technology companies that produce similar products at cheaper prices. This can be improved by reducing the cost of production so as to ensure that the selling price is lowered.
References
Alami, D.(N.d.). Innovation: A Gift or a Curse. Financial Analyst. Retrieved from http://www.financialanalystwarrior.com/apple/
Cunningham, A. (2017). Apple Sets Revenue and iPhone Sales Records in Q1 of 2017. Ars Technica. Retrieved from https://arstechnica.com/apple/2017/01/apple-sets-revenue-and-iphone-sales-records-in-q1-of-2017
Fernholz, T. (2012). Why does Apple Want You to Know How Many Employees It Has? Good. Retrieved from http://www.good.is/articles/why-does-apple-want-you-to-know-how-many-employees-it-has
Johnson, K., Li, Y., Phan, H., Singer, J., Trinh, H. (2012). The Innovative Success that is Apple, Inc. Marshall University. Theses, dissertations and Capstones. Paper 418.
Meyer, P. (2017). Apple Inc. Organizational Culture: Features & Implications. Panmore Institute. Retrieved from http://panmore.com/apple-inc-organizational-culture-features-implications
Meyer, P. (2017). Apple Inc. Organizational Structure: Features, Pros and Cons. Panmore Institute. Retrieved from http://panmore.com/apple-inc-organizational-structure-features-pros-cons
