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Apple Incorporation

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PROJECT FINANCING 2

Introduction

According to Haslam, Tsitsianis, Andersson, & Yin (2013), the world’s most valuable

technology company in terms of stocks and market valuation is Apple Incorporation. Authors

assert that the enterprise continues to combine new customer devices and internet platforms as a

way of implementing its marketing strategies. The organization’s resurgence has been

extraordinary, demonstrating just how crucial it is for a firm to have the capacity to innovate as a

way of gaining comparative advantage over the rest of the competitors in the market. The paper

looks at the identity of products and services that Apple Incorporation has rolled as a bandwagon

demonstrating its potential in the market. By extension, the identification of those products and

services is to cover an analysis of the quality of the existing products, the returns coming in as

well as the financing of the new products.

Apple’s new product

Apple Incorporation intends to roll out a new watch series for its target market dabbed

Apple Watch Series 3, in the coming months (Hennessy & Najjar, 2017). Some of the features

that will make the watch unique will include a two-day battery life, capacity for water resistance

as well as availability of GPS. More significant is the fact that the watch will be subjected to

updates so that new features can be added on the series to come in future. The drive behind

coming up with the product is to ensure continued improvement and perfection on the products

and services that the company offers.

With the advent of the company’s iPhone as the pillar of its prowess, steps have been

taken to identify strategic plans that could be used to diversify profit generation. The

organization realizes that the smartphone boom may no longer be profitable moving into the

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future, hence requiring the manufacture of other standalone devices from the company can sell

profitably. The primary advantage of the device to be introduced would be in its ability to

connect to cellular internet while allowing for the placing of calls. The firm seeks to assure the

customers that an operating system can be made functional through software that link

fundamental interface.

Quality of existing products

The world recognizes Apple Incorporation’s superiority when it comes to products able

to command price premiums as well as loyalty. The secret of the organization is in two primary

areas. The first is in the investments made in research and development (R&D) so that the

products are thoughtful and portray a sense of choice in the materials used. The second area

pertains to the performance of the organization when it comes to ratio analysis in the previous

years. For example, the company’s return on equity increased from 33.3% at the end of

December 2016 to 37.7% today (Hennessy et al., 2017). The figures give a justification of the

fact that the amount of income the organization has been investing into different products and

services have been bearing fruit concerning the amount of returns shareholders are able to get

back.

If the shareholders are getting back the money they invested into a business within the

shortest time, it means other stakeholders are also likely to have an interest in the organization’s

operations in future. Comparing returns on capital earned between 2015 and 2016, one realizes

that the company made strides in ensuring that the figure increased from 237.9% to 256.4%

respectively. The figures are a measure of the amount of profit the institution generated for every

dollar they put into the manufacturing of products and the offering of services. As such, the

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statistics on cash returns of the company look promising even though in the years beginning

2010, the percentages were much higher.

Financing of the new initiative

With a strong financial position on total assets owned, Apple Incorporation has proven

that it is the best within the ranks of the worldwide market. By 2012, the company had a cash in

hand of up to $116 billion dollars, demonstrating that it has the capacity of financing any

initiative that it strategically identifies to take it to the next level. Moreover, the organization

does not borrow to finance its initiatives (Priyadarshan, Mohammed, Cuccinelli, Chittari, Miller,

Vadrevu, & Rothman- Shore, 2014). The economies of scale and scope available ensure that

investments go into research and development as a way of maintaining lead positions in profit

margins. The initiative involving the introduction of watches would be financed based on the

retained earnings that the company has been accumulating from the profits generated annually.

Three concerns explain the financing of the new initiative. The first is that the company’s

value has remained stable even with micro-economic changes within the United States. The

global financial crisis of 2008 that had negative influence on inflation, currency movements as

well as interest rates saw Apple only emerge stronger and become a success. The second concern

is on the sensitivity of the institution’s operating income, which has been challenged from time

to time. The influence of the macro-economic variables cannot be wished away considering the

declines witnessed on the return on capital. However, the institution has always strived to ensure

its operating income does not decline through various forms of innovation. Thus, while the value

is stable to the variables, the operating income is subject to changes.

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References

Haslam, C., Tsitsianis, N., Andersson, T., & Yin, Y. P. (2013, December). Apple's financial

success: The precariousness of power exercised in global value chains. In Accounting

Forum (Vol. 37, No. 4, pp. 268-279). Elsevier.

Hennessy, J., & Najjar, A. (2017). Apple Computer, Inc.: Think Different, Think Online

Music. Kellogg School of Management Cases, 1-24.

Priyadarshan, E., Mohammed, I., Cuccinelli, J., Chittari, R., Miller, A., Vadrevu, J., & Rothman-

Shore, J. W. (2014). U.S. Patent No. 8,762,556. Washington, DC: U.S. Patent and

Trademark Office.

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