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Apple Inc. is a rank 367(Fortune Global 500 2007) and a high-technological

company for innovating in the world which established by Steve Jobs and

Steve Wozniac in 1976. (DEVONthink Professional). It was the first company

to release a graphical user interface (GUI) for their operating system. Apple

has been bringing surprises to people all the time. From the first GUI to the

latest Iphone, the symbol of apple has always been a signal of launching a

refreshing change to the whole industry.

Uniqueness of business model

1. Reseach and Development

Apple has a very salient feature: every new-launched product is not only a

hardware product but also being attached with highly-developed software of a

powerful operation platform providing for unique and compatible service. This

should be attributed to the capability of Apples research and development

which provides continuing and timely flow of innovative and competitive

products and technologies to the marketplace. This is crucial for Apples

success for not being confronted with low profit margin competition. As it is

the core value of Apple products, it would be highly maintained to draw

attractive gross margins. Those unique products are the main sources of

revenues which includes a great variety of categories: hardware, music and

service, peripherals, software and computer technology wireless connectivity

and internet.

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2. Volatile organizational structure

Apples most renowned reputation is clearly distinguished with updated

uniqueness which has drawn sustainable attractiveness to loyal customers.

However, the business model reflected in its business organizations is in a

kind of volatile and robust structure: it is primarily on a geographic basis,

composing of the Americas, Europe, Japan and Retail. It is interesting to find

that the Retail segment operated world-wide retail stores including Asia-

pacific area. And Europe segment also run business in Middle-east and Africa.

This structure at one hand is integrated and at the other hand is responsive to

different needs.

3. Distribution channels and 3rdparty logistics.

Apple distributes its products through wholesalers, resellers, national and

regional retailers and catalogues, so direct and indirect sales are both in play.

The company also sells many of its products and resells certain third-party

products in its most of its major markets directly to consumers, education

customers and businesses through its own sales force and retail and online

stores. Ten percent of the companys net sales in 2006 were through its U.S.

education channel, including sales to elementary, secondary schools, higher

education institutions, and individual customers. Most of Apples products are

manufactured in whole or in part by 3rd party manufacturers. It outsourced

much of its transportation and logistics management to 3rdparties. As it may

lower the cost of operations, and reduce direct control cost outside U.S.

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Apples Business Model:

Risks control process

1. Industry competition:

Apple is confronted by aggressive competition in all areas of its business. It

would be much proper to say its entry into a lot of market already full of

intense competition. Apart from rapid technological advances, price

competition poses the most impending threat, as those competitors like a lot

TaiWang OEMs eg acer has positioned itself as the 3rd largest pc

manufacturer of the world.

Instead of taking aggressive move of cutting prices and lowering product

margin, Apple chose the way of converting its customers attention to internet-

based service features which are unique for Apples products. By offering

integrated components into an individual product, customers would be willing

to pay more for its added-value.

2. Raw Materials:

Apples source of materials can be seen as multiple and limited. As for

multiple sources, it poses less threat as the companys component suppliers

and manufacturing vendors are mostly located outside America. Especially in

Asia, those suppliers maintain highly competitive price which contributes a

reduction of cost of the company. By keeping a number of suppliers and

vendors is good way to keep this advantage. As for limited source, some key

components including microprocessors and ASICs, it is under availability

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constraints and pricing pressure, as some for Apples needs are uncommon to

the rest of the personal computer especially when new products introduced. It

is urgent in this sense to contract with some long-term supplier with highly-

attractive incentives of being Apples strategic partners. Strategic alliance is

essential to play in this sense.

3.Patents, Trademarks, Copyrights and Licenses

Apple currently holds rights to patents and copyrights relating to certain

aspects of its computer systems, iPods, peripherals, software, and services.

Those registered trademarks are important intellectual property, and renew

liceses in future in very necessary for further products and business methods,

as the change of technology may unkowningly infringe existing patents of

others. Apple actually keeps to be highly alert to this. Not long before, Apple

has claimed to the word Pod, arguing that other companies that use the

word as part of their product names risk infringing the trademark of its popular

iPod music player.[1]

4.Legal proceedings

There are two areas may give rise to legal proceedings. One is that there had

been some allegation of poor working and living conditions at a manufacturing

facility in China where iPods are assembled. Internally, the audit group was

formed and Supplier Code of Conduct has been in force. Apple also

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engaged the services of Verite, an internationally recognized leader in

workplace standards. Another is about Environmental issue. Greenpeace has

attacked Apple for not setting a timeline to remove PVC and BFRs, which still

exist in recent products such as the iPod nano and MacBook; and for not

promoting a global end-of-life take back for Apple hardware. On 2007, Apple

updated their product line and this is environmentally notable. The last risk is

the financial statements have exposed the company to litigation, regulatory

proceedings and government enformcement actions. And a number of class

actions also brings uncertain risks may affects the companys normal

operations. Correspondingly, Apple has a Special Committee Review and

hired independent registered public accounting firm to ensure the law-abiding

procedures.