Five Force Industry Analysis Essay

The partnership distributes its point of intersections principally with triad-party computing machine resellers. The fellowship is also go on its expansion into impertinent distribution channels, such(prenominal) as mass merchandise stores, consumer electronics outlets and computer superstores, in response to changing industry practices and fashioner preferences. The go withs ingatherings argon interchange principally to care and government systemers by means of self-employed person resellers, value-added resellers and systems integrators to home customers through self-supporting resellers and consumer channels and to education customers through educate sales and independent resellers. In order to provide products and military service to its independent resellers on a well meterd(p) basis, the club distributes its products through a occur of orchard apple tree distribution and support centers. Business customers account for the largest mickle of the play al ongs revenues. Business customers are attracted to the Macintosh in fussy for a variety of reasons, including the availability of a wide variety of performance software, the reduced amount of training resulting from the Macintoshs intuitive help of use, and the ability of the Macintosh to concludingwork and communicate with early(a) computer systems and environments.Apple personal computers were first introduced to education customers in the late 1970s. In the coupled States, the ships company is one of the major suppliers of personal computers for both elementary and supplemental school customers, as well as for college and university customers. The association is also a substantial supplier to institutions of higher education outside of the united States. In the United States, the accompanys formal consignment to serve the federal official government began in 1986 with the formation of the Apple Federal Systems Group. Although the play along has contracts with a num ber of U.S. government agencies, these contracts are non currently poppycock to the orders overall fiscal condition or results of trading operations. Presently, the United States represents the companions largest geographic marketplace. The Apple USA organization, found in Campbell, California, focuses on the beau mondes sales, marketing, and support efforts in the United States. Products change in the United States are primarily manufactured in the familiaritys facilities in California, Colorado, and Singapore, and distributed from facilities in California and Illinois. Approximately 45% to 46% of the Companys revenues in recent years has come from its world(prenominal)operations.The Company has two international sales and marketing offices, consisting of the division and the Apple peaceable division. The Apple atomic number 63 division, based in Paris, France, focuses on opportunities in Europe as well as in parts of Africa and in the pith East. Products sold by the E urope division are manufactured primarily in the Companys rapidity in Cork, Ireland. The Apple peaceful division, based in Cupertino, California, focuses on opportunities in Japan, Australia, Canada, the Far East, and Latin America. Products sold by the peaceful division are manufactured primarily in the Companys manufacturing and assembly facilities in California, Colorado and Singapore. A compend of the Companys Industry Segment and Geographic Information whitethorn be found in Part II, point 8 of this sour 10-K under the foreland Industry Segment and Geographic Information, which reading is hereby incorporated by reference. Raw materialsAlthough raw materials, processes, and components all important(p) to the Companys business are cosmopolitanly available from two-foldx sources, definite key components are currently restrained from single sources. For example, definite microprocessors used in many of the Companys products are currently available that if from Mo torola, Inc. whatever availability limitations, interruption in supplies, or price increases congenator to these and other components could inauspiciously affect the Companys business and monetary results. Key components and processes currently obtained from single sources include veritable of the Companys displays, microprocessors, mouse devices, keyboards, disk drives, CD-ROM drives, printers and printer components, ASICs and other custom chips, and trusted processes relating to construction of the plastic housing for the Companys computers. In addition, new products introduced by the Company often initially utilize custom components obtained from only one source, until the Company has evaluated whether in that location is a need for an surplus supplier. In situations where a component or product utilizes new technologies and processes, there may be initial ability constraints until such time as the suppliers yields assume matured.Materials and components are normally ac quired through purchase orders, asis rough-cut in the industry, typically covering the Companys requirements for periods from 90 to clxxx days. However, the Company continues to evaluate the need for a supply contract in to each one situation. If the supply of a key single-sourced material, process, or component to the Company were to be delayed or curtailed, its ability to ship the related product utilizing such material, process, or component in desired quantities and in a timely manner could be adversely affected. The Companys business and fiscal performance could also be adversely affected, depending on the time call for to obtain comfortable quantities from the original source, or to identify and obtain sufficient quantities from an alternate source. The Company believes that the suppliers whose loss to the Company could concur a material adverse effect upon the Companys business and financial mystify include, at this time, Canon, Inc., General Electric Co., Hitachi, Ltd ., IBM, Motorola, Inc., Sharp Corporation, Sony Corporation, Texas Instruments, Inc., Tokyo Electric Co., Ltd., and/or their United States affiliates, and VLSI Technology, Inc. However, the Company helps mitigate these potential risks by working well-nigh with these and other key suppliers on product introduction plans, strategic inventories, and set up product introductions.The Company believes that most of its single-source suppliers, including most of the foregoing companies, are received transnational corporations. Most of these suppliers manufacture the relevant materials, processes, or components in multiple plants. The Company further believes that its long-standing business relationships with these and other key suppliers are backbreaking and in return beneficial in nature. The Company has a supply stipulation with Motorola, Inc. (see Exhibit 10.B.12 hereto). The agreement with Motorola continues for five years from January 31, 1992 unless differently mutually agree i n writing by the parties. The Company single-sources microprocessors from Motorola. The supply agreement does not obligate the Company to make nominal purchase commitments however, the agreement does commit the vendor to supply the Companys requirements of the particular items for the duration of the agreement. The Company has also from time to time experienced significant price increases and extra availability of certain components that are available from multiple sources, such as dynamic random-access memory devices. Any similar occurrences in the future could shake up an adverse effect on the Companys operating results. Item 2. PropertiesThe Companys headquarters are located in Cupertino, California. The Company has manufacturing facilities in Fountain, Colorado, Sacramento, California, Cork, Ireland, and Singapore. As of September 30, 1994, the Company leased crudely 5.2 jillion square feet of space, primarily in the United States, and to a lesser extent, in Europe and the Pacific. Leases are generally for terms of five to ten years, and normally provide renewal options for terms of up to five additional years. sealed of these leased facilities are subject to the Companys restructuring actions initiated in the third quarter of both 1993 and 1991. The amount of space leased by the Company may decline in the future as the leases for facilities subject to restructuring actions are terminated pursuant to agreements with landlords or expire as scheduled. The Company owns its manufacturing facilities in Fountain, Colorado, Cork, Ireland, and Singapore, which total approximately 920,000 square feet. The Company also owns a 450,000 square-foot facility in Sacramento, California, which is used as a manufacturing, service and support center.The Company also owns the research and development facility located in Cupertino, California, and a centralized domestic data center in Napa, California which approximate 856,000 and 158,000 square feet, respectively. Outsi de of the United States, the Company owns a facility in Apeldoorn, Netherlands, which is used primarily for distribution, totaling approximately 265,000 square feet, in addition to certain other international facilities, totaling approximately 553,000 square feet. The Company believes that its existing facilities and equipment are well maintained and in good operating condition. The Company has invested in additional internal capacity and external partnerships, and therefore believes it has adequate manufacturing capacity for the foreseeable future.The Company continues to make investments in capital equipment as demand to meet anticipated demand for its products. Information regarding critical business operations that are located near major earthquake faults is set forth in Part II, Item 7 of this Form 10-K under the heading Factors That May Affect Future Results, which knowledge is hereby incorporated by reference. Information regarding the Companys purchase of its remaining pa rtnership arouse in Cupertino Gateway Partners, formed for the purpose of constructing the campus-type office facility that is flat wholly owned bythe Company, may be found in Part II, Item 8 of this Form 10-K under the heading Commitments and Contingencies, which information is hereby incorporated by reference.Other countries consists of Canada and Australia. Prior year amounts have been restated to conform to the current year presentation. Net sales to unaffiliated customers is based on the location of the customers. Transfers between geographic areas are recorded at amounts generally above cost and in accordance with the rules and regulations of the respective governing body tax authorities. Operating income (loss) by geographic area consists of total net sales less operating expenses, and does not include an allocation of general corporate expenses. The restructuring charge and adjustment recorded in 1993 and 1994, respectively, are include in the calculation of operating inc ome (loss) for each geographic area. Identifiable assets of geographic areas are those assets used in the Companys operations in each area. Corporate assets include cash and cash equivalents, joint think investments, and short-term investments. 1995Approximately 45% to 48% of the Companys revenues in recent years has come from its international operations. The Company has two international sales and marketing divisions, consisting of the Apple Europe division and the Apple Pacific division. The Apple Europe division focuses on opportunities in Europe as well as in parts of Africa and in the Middle East. Products sold by the Europe division are manufactured primarily in the Companys facility in Cork, Ireland. The Apple Pacific division focuses on opportunities in Japan and Asia Australia and New Zealand and the Caribbean region. Products sold by the Pacific division are manufactured primarily in the Companys facilities in California, Colorado and Singapore.The Company distributes it s products through third-party computer resellers, and is also continuing its expansion into various consumer channels, such as mass merchandise stores, consumer electronics outlets and computer superstores, in response to changing industry practices and customer preferences. The Companys products are sold primarily to business and government customers through independent resellers, value- added resellers and systems integrators to home customers through independent resellers and consumer channels and to education customers through direct sales and independent resellers. In order to provide products and service to its independent resellers on a timely basis, the Company distributes its products through a number of Apple distribution and support centers. Raw materialsAlthough certain raw materials, processes, and components essential to the Companys business are generally available from multiple sources, key components and processes currently obtained from single sources include cer tain of the Companys displays, microprocessors, mouse devices, keyboards, disk drives, printers and printer components, application- specific integrated circuits (ASICs) and other custom chips, and certain processes relating to construction of the plastic housing for the Companys computers. Any availability limitations, interruption in supplies, or price increases relative to these and other components could adversely affect the Companys business and financial results. In addition, new products introduced by the Company often initially utilize custom components obtained from only one source, until the Company has evaluated whether there is a need for an additional supplier.In situations where a component or product utilizes new technologies and processes, there may be initial capacity constraints until such time as the suppliers yields have matured. Materials and components are normally acquired through purchase orders, as is common in the industry, typically covering the Companys r equirements for periods from 90 to 180 days. However, the Company continues to evaluate the need for a supply contract in each situation. If the supply of a key single-sourced material, process, or component to the Company were to be delayed or curtailed, its ability to ship the related product utilizing such material, process, or component in desired quantities and in a timely manner could beadversely affected. The Companys business and financial performance could also be adversely affected, depending on the time required to obtain sufficient quantities from the original source, or to identify and obtain sufficient quantities from an alternate source. The Company believes that the suppliers whose loss to the Company could have a material adverse effect upon the Companys business and financial position include, at this time, Canon, Inc., General Electric Co., Hitachi, Ltd., IBM, Motorola, Inc., Sharp Corporation, Sony Corporation, Texas Instruments, Inc., and/or their United States affiliates, and VLSI Technology, Inc. However, the Company helps mitigate these potential risks by working closely with these and other key suppliers on product introduction plans, strategic inventories, and coordinated product introductions.The Company believes that most of its single-source suppliers, including most of the foregoing companies, are reliable multinational corporations. Most of these suppliers manufacture the relevant materials, processes, or components in multiple plants. The Company further believes that its long-standing business relationships with these and other key suppliers are strong and mutually beneficial in nature. The Company has also from time to time experienced significant price increases and limited availability of certain components that are available from multiple sources. Any similar occurrences in the future could have an adverse affect on the Companys operating results. The Company has a supply agreement with Motorola, Inc. (see Exhibit 10.B.12 h ereto). The agreement with Motorola continues for five years from January 31, 1992 unless otherwise mutually agreed in writing by the parties. The Company single-sources certain microprocessors from Motorola. The supply agreement does not obligate the Company to make minimum purchase commitments however, the agreement does commit the vendor to supply the Companys requirements of the particular items for the duration of the agreement.