Sunday, March 18, 2012

Why is Apple The Most Success Public Company In The World

Corporations, which were created during and following the American Industrial Revolution have changed the world of big business.  Corporations are now one of the most powerful and influential economic operating systems that exist in the business world today.  Over time though, corporations in a capitalist society can and will use that power and financial superiority to help further their capital assets in any way possible.  Corporate Governance is a mechanism put in place to make sure that to the best of the government and societies ability, that are kept in check to make sure they do what is in the best interest of the stakeholders and of society as a whole.  Societal views and satisfaction on corporations and big business from the consumer standpoint has slowly dwindled after the crash of the Stock Market in 2008.  The players involved in this abrupt destruction of the U.S. and world economy did not do their job to see the long-term picture, only focusing on the short term goals.  The banks, the government, the investors, and the people of the United States were blinded by the money that was rolling in, but never thought about what might happen.  In this paper I am going to take the biggest corporation in the world right now, which is Apple, and discuss the role of each stakeholder, and how good ethical behavior throughout the company would only increase profitability because consumer trust is almost as important as the product you are selling.  Having a steady balance of short-term and long-term goals as a company can only improve the company’s performance today, tomorrow, a year, and ten years down the road.  In my personal perception of the world after the information technology boom as well as the housing boom and crash, has left me with a thinking and ideology of the do not’s in the economic world.  People in America and all over the world are blinded by the idea of quick money.  Quick money is a great way to get rich, but not having a steady and future forecasting approach to making it and keeping it, the corporation or commodity you invested in may not always be as healthy as you may think.  In the end, Apple, in my opinion, is the epitome of what a good corporation is, but at the same time everyone and everything has its flaws for we humans have created this system and we are by no means perfect.

            Management is the most important part of the company because they are the individuals at the top of the company that handle the everyday business activities of the company.  When looking at Apple over the past decade or so, I’ve come to the realization that Steve Jobs was one of the most brilliant business minds to every come on this Earth.  He took the idea of Macintosh and created a corporate empire that has surpassed the $500 billion plateau.  Management has done a great job in developing and promoting a product that is arguable the best computer technology that we have available.  At the same time, being able to make a few great products like the MacBook, the Iphone, the Ipod, Itunes, and the Ipad has proven to be much better approach than to come out with an abundance of products that are new and innovative, but sometimes coming out with new things without perfecting them can be very costly in terms of consumer backing and support.  At the same time though, it was proven on the news that Steve Jobs made more money that he claimed he did as CEO.  Instead of accepting his base salary, he asked for a mere $1 a year but hedged his way to astronomical amounts of money which has been proven.  Apple’s management though, has done a great deal to go out of its way to increase stakeholder and customer satisfaction throughout the years by giving society a product that is long lasting and efficient and continues to innovate on new concepts and ideas into the future such as the Ipad 3, and the up and coming Apple TV. 

            Apple has a strong, but small group on their Board of Directors that are highly educated in their area of expertise in progressing the company to where it is now.  In all, Apple has eight members on its Board of Directors.  Each one has a background in their respective role in the company which in my opinion helps create a positive trickle-down effect throughout the company by playing a role as a positive role model to those in and out of the company.  In many cases, each one of them worked at many different companies before joining the Apple team.  For example, Tim Cook is now the current CEO of the company, used to hold the position of Chief Operating Officer.  His ability to handle that job as COO, allowed for a better and smoother transition to that of CEO of Apple.  Another good example of a knowledgeable Board member is that of Scott Forstall.  Mr Forstall is the Senior VP of the company, and is charge of the IOS software that you find in Apple computer products and systems.  He received a Bachelor’s Degree of Science and Symbolic Systems and a Master’s Degree in Computer Science from Stanford University.  In the end, having a great management team who’s small, but highly educated has proven to be a key success for Apple as time has progressed.  The ability to have a management team that works together to promote and maintain a great product has made Apple the biggest and most profitable corporation of Earth. 

            Regulators are people and government agencies that promote and maintain a good legal standing in the company.  Apple, even though sometimes they may seem to be greedy individuals, have taken to the needs of their customers.  Apple has led the way in decreasing the amount of harmful chemicals in their products after consumer concern arose in the mid-2000’s.   “It is generally not Apple’s policy to trumpet our plans for the future; we tend to talk about the things we have just accomplished. Unfortunately this policy has left our customers, shareholders, employees and the industry in the dark about Apple’s desires and plans to become greener. Our stakeholders deserve and expect more from us, and they’re right to do so. They want us to be a leader in this area, just as we are in the other areas of our business. So today we’re changing our policy.”(Jobs, Steve)  Problems have also emerged because of working conditions in China with their manufacturers who make the phones.  Apple’s products are manufactured in factories all over China, and workers exceed almost half a million people.  Because of concerns in working conditions, Apple was forced to have their manufacturing companies look into unhealthy working conditions such as excessive hours, child labor, and use of products that are detrimental to the health and well-being of the employees.  I find it hard to believe though that Apple did not know about the problem before hand, but played a blind eye to the well-being of their Chinese employees because business for some is more about making money than taking care of those who help one increase your stance as a profitable corporation.  The news and shareholders can even play a role as regulators of the firm for they spoke out about Apple’s excess cash reserves.  As a result, Apple was going to pay out dividends to its stock holder’s who’s loyalty and vested capital interest in seeing the company progress should be rewarded since Apple as a company has soared to new economic heights as of recently.  In the end regulators internally and externally have proven to be very important to the growth and regulation of Apple Inc. 

            Analysts for Apple Incorporated according to Yahoo finance says according to statistics according to 46 brokers, that almost all them say that Apple is a strong “buy” or “hold” as of the last month.  Apple’s growth has now peaked at over $500 billion in the last few weeks.  This capital climb has led many to think about Apple’s Future financial forecast.  In my opinion, Apple is a stock that I would not necessarily buy, but hold onto.  There have been rumors going around the financial world of the possibility of Apple exceeding $1,000 a share in the coming future.  If this is true, and only time will tell, than analyst predictions of the increased profitable of the company would leave to believe that holding onto or buying company stock is a smart plan.  In the end though, since Apple stock is already quite expensive, that I only find it worth purchasing if you are willing to invest large sums of capital if one wishes to make a substantial return in the future.  In the end though, analyst projections will only take them as far as Apple innovation will let them.  The past has proven to analysts that Apple’s consumer base and profitable innovation leaves them with the idea that the sky is the limit. 

            Creditors are people or firms that give Apple usable capital to help increase the profitability.  The more money that is borrowed by Apple, the more they must profit off of the sales of their items to pay back their creditors.  As of 2009, Apple’s Debt to Equity ratio was around 50%.  On the other hand, Apple’s profit margin in that year was almost 20% meaning that the risk of insolvency was not an issue whatsoever.  Apple seems to not have any problem with paying its creditors in the short-term for they are the largest corporation in the entire world.

            Ernest and Young and KGMP are two of the biggest and most prestigious accounting firms in the country, and they happen to represent Apple Inc.  According to their accounting records, Apple’s Shareholder equity as of 2009 was $31.6 billion.  As a result of this auditing, consulting, and accounting, this leads one to believe that Apple’s behavior is leaning towards improving the capital revenue of their shareholders.  Over the past few years, Apple’s stock has risen immensely from the final 10k statement to present times.  As a result, a shareholder of Apple who has remained faithful to the company in the long hall has made a huge capital gain.  Apple had the biggest IPO in 1980 since Ford Motor Company went public.  As a result of this shareholder optimism, investment banks play a key role in promoting the purchasing of Apple Stock on the buy side over the past few decades as a result of their increase in stock price and capital position. 

            Apple has seen great financial and worldwide growth over the past three decades since going public.  Apple has more than 500,000 employees worldwide and has become the most profitable corporations in the world.  As a result of their continued innovation of a few brilliant products, they have been able to continue to promote growth in retail stores as well as manufacturing overseas even though some may say they are wrong for taking their jobs overseas, but they only do so to increase profitability for their shareholders, creditors, and for future investors.  Steve Jobs has turned a great company into a corporate empire over the past few decades, and leads me to believe that Apple is unlimited potential looking into the future as long as they adhere to the issues presented to them from an internal and external prospective.  The future of Apple has set their sights on reaching $1,000 a share, and I think they will not stop at anything to reach that goal unless consumer trust is lost, but I personally do not see that happening. 
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