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Visionary Consultant Group

Analyzing Apple, Inc


Team Members:
Francisco Abad
Mellisa Banh
Logan Gelzer
Jacqueline Martinez
Carina Rosa
Zheya Wu

Table of Contents:

Vision Statement
1
Mission Statement
1
Background
1
Issue 1:Software and Product Launch affect on Consumers
Recommendation for Software and Product launch
Issue 2:Trust and Credibility
Recommendation for improving Trust and Credibility with Consumers
Issue 3:Government/Tax problems in Ireland
Recommendation for resolving back taxes with Ireland
References

Vision Statement
We strive to be the top consultant group that companies depend on to effectively analyze any
problem or situation and offer our expertise in finding the most beneficial solution for that
company. Our vision is to be dependable, confidential, and effective whenever our services are
rendered.
Mission Statement
At Visionary Consultant Group we believe in confidential analysis, effective breakdown of
predicaments and proactive solutions. We are direct, concise and operative. Our clients rely on
our punctuality, discretion and resolutions. We are here to aid the success of any company.
Background

Issue 1:Software and Product Launch affect on Consumers


Apple released the newest line of iPhone, the iPhone 7 and iPhone 7 plus, along
with the latest update to the iPhone software, iOS 10. While the hardware and software have
been improvements over previous versions, they are not without issues that have affected
consumers. Here we will examine the issues surrounding these products.

(source:statista.com)

Iphone 7 and iPhone 7 plus

Issue 1: Removal of the 3.5mm headphone jack, causing consumers to use the lightning
headphones, an adapter, or bluetooth headphones. When using the corded headphones provided
by Apple, inc you cannot charge the phone at the same time without an adapter that is sold
separately.

(source:betanews.com)

Issue 2: Despite enhanced retina display, the picture quality is the lowest of the major
phones on the market at 750p.
Issue 3: Lightning adapter is limited. Slowest charging capabilities on the market, and no
ability for external hard drive to add storage, which is available with some competitors phones.
The culmination of these issues have left Apple with one of the more forgettable product
releases in recent memory. The real issue with the product for consumers is a lack of competitive
features to other products in the market and an increase in cost for the consumer to utilize the
new features associated with the new phone, mainly related to the headphone problem. Now we
will examine the issues that have arised from the release of the new version of the operating
system for the iPhones, iOS 10.
iOS Issues
Issue 1: Activation issues. iPhone 7 users have been experiencing a long set up issue,
about a 30-1 hour wait to start up with the new iOS download.
Issue 2: 10.02 Weakened backup security. This makes it easy for hackers to crack logins
for backups stored on a Mac or PC. Potentially guess backup passwords 40 times faster using
CPU acceleration when compared to the speedier GPU-powered cracking in iOS 9.

Issue 3: New update 10.03 only available to Verizon carriers. Unfortunately, increasing
reports argue that it does not deliver. This update is only available to iphone 7 and 7 plus. Aside
from only being available to the iPhone 7 and iPhone 7 Plus, it only makes improvements for
Verizon customers. This excludes other carriers such as T-mobile, Sprint and AT&T.

Recommendations for Issue 1 (Product Launch)


After examining the issues surrounding the iPhone 7 and iPhone 7 plus, we recommend
the following solutions for improvement to be implemented immediately. Due to the large
inconvenience with the removal of the headphone jack, we recommend that Apple provides the
consumer with an adapter or wireless headphones free of charge. At this time it is not possible to
change the screen resolution on the current model, therefore we recommend employing a special
task for in the research and development department to source or create technology with the
highest picture quality available to be used on the next model. Finally, for the external memory
issue, we recommend that Apple seek the technology for an external hard drive which exists on
the market currently, and offer this accessory directly through Apple. In order to accomplish
these recommendation we advise Apple to follows these action steps to remedy these issues for
their consumers.
Action Steps:
Headphone issue
A. Provide the adapter to connect the charger and headphones to the
phone at the same time free of charge with the purchase of the device.
B. Provide the wireless headphones with the device, in replacement of
the wired headphones currently offered
Option A would offer the best solution for Apple from a cost standpoint whereas option B
would offer the greatest solution for the consumer from a convenience standpoint.
Picture Quality
Create a special task force within the research and development department to
source and create a screen with the highest picture quality possible for the next
device that is launched
External Storage Issue:
A. License an existing patent on a current mobile external hard drive,
then manufacture and sell directly through Apple as an additional accessory for
purchase
B. Employ the research and development department to create and
patent the technology, then manufacture and sell directly through Apple.
Examples of existing products:

(source: alicdn.com)

(source:mophie.com)

Option A would solve the issue quicker but incur a cost for licensing. Option B may take
more time to employ but would offer less costs in the long run.

Recommendation for iOs Issue 1:


We understand everyone has a need for their phones. The iOs 10 has many improvement but can
always use more. Due to a large number of users experiencing activation issues, we implement
all new iPhones to be activated with the latest version of iOS installation. Previously we have the
option for users to activate themselves, this way consumers get to use their new phones quicker
and is more convenient. Next, we have a security issue that is weakening our backup systems.
We recommend a new security app on all phones. Apple is working with a security team that
monitors all phones 24/7. This new free security app will track passwords and credit cards
safely. To give you another option, you can get the paid app which will alert you if any hackers
are nearby. As of now the new iOS 10.03 is only available to one carrier, however, we are
working with all carriers to ensure the latest software update. In the meantime, Apple is giving
all carriers that do not have the luxury of purchasing an iPhone 7/ 7 plus with Verizon, for a free
(1) app purchase.
Action Steps:
Activation Issues
Option A: Get your phone activated automatically with the new update.
Security Issue
Option A: Brand new security app that monitors your phones security
Option B: Pay for 24 hour app security and hacker alerts.
New Update Issue:

Option A: Go to your local carrier store for (1) free app if you are not with Verizon.
Option B: Wait for the latest 10.03 update to reach all carriers.
Issue 2:Trust and Credibility
Apple has always surprised their customers with new gadgets and engaging features
which is blinded the customers from the many errors this company has made. It is believed that
concerns in product quality and certain events have caused consumers to lose trust with Apple.
The company has dealt with malfunctions with Apple Maps, lack of security with Apple Pay, and
issues with privacy. Another factor that has threatened the trustworthiness of this company was
the incident with the FBI versus Apple.
Malfunctions with Apple MapsSecu
Issue 1: After the release of iOS 6 in September 19, 2012, many customers were
disappointed with the Apple Maps feature. It gave inaccurate directions and brought various bug
attacks. Many people rely on Apple Maps to reach their desired destination because they pay a
large amount of money and expect the phone to work up to the price. From harsh criticism and
experience with this inefficient feature, the stock market decreased immensely after September
2012, as you can see from the chart below:

Issue 1: There is always an issue with Apple Maps after a new operating system is
released. iOs 10 is the most recent update where Apple Maps included a feature that informs you
where your car is parked. However this feature did not work for everyone. When issues, such as
promising an improved innovative feature that fails, sparks we are seeing setbacks for Apples
dependability rate and customers lost of trustworthiness towards this company.
Lack of security with Apple Pay & Privacy
Issue 2: This feature promises confidentiality with your credit card information and a new
convenient way to pay. There is a security flaw within the system that allows an easy access for
credit card fraud. The CVV code has 1,000 different combinations where a hacker can scan
through them and re-enter the combinations numerous times without being discontinued.

Lack of security with


Apple Pay & Privacy
(cont).
Issue 2: In 2015
a group security
researchers found that Apple is easily susceptible to malware attacks. They tested this accusation
by creating a malware that was uploaded to the App Store in the form of a regular downloaded
app. The team had unauthorized access to sensitive data such as: saved passwords on Google
Chrome, iCloud, and any other critical information on your Apple devices. Privacy is important
to customers because there are saved files of confidential information and now customers must
worry about credit card theft since systems are easily hacked by professionals.
FBI versus Apple
Issue 3: There was a dispute between the FBI and Apple; the FBI needed assistance from
Apple to unlock mass murderers iPhones for further investigation. Apple concluded that the
master key for this event would leak sensitive information, giving easy access for hackers.
Civilians did not agree with the consequence as seen below:

Although this may put many people at risk for releasing information, Apple should be
clever enough to quickly resolve this risk factor to help with further investigation. Even
individuals with iPhones would take the risk of hack to help their fellow Americans.
Recommendations for Issue 2
After analyzing each issue causing the lost of trust and credibility from customers, we
have concluded the following recommendations that will help regain the companys
trustworthiness.
1) Since Apple Maps continues to have setbacks with this feature we
recommend a series of tests to be done before the release to million of iPhones.
2) Credit Card Fraud protection should be put into action by asking
various questions to verify the identity of the user.
3) Apple should build a strong foundation (malware protected wall)
to prevent hackers to have easy access to sensitive data.
4) The FBI incident is hard to come back from, however, Apple can
explain the positive outcomes for not using the master key.
Action Steps:

Malfunction of Apple Maps


A. Test the feature numerous times until the problem is resolved before releasing the
iOs.
B. Offer a free service to the disappointed customers to keep them satisfied during
the testing process.
Lack of security with Apple Pay & privacy
A. Ask a series of questions concerning personal aspects of life to increase difficulty
of hacking.
B. Build a malware protected system and integrate it into the iPhones.
FBI versus Apple
A. Explain to consumers the high risk of exposing their personal information
allowing the use of the master key.
B. Assure the consumers Apple will work to the best of their ability to provide a way
to use the master key for future use without exposure of critical information.

Issue 3:Government/Tax problems in Ireland


There are many multinational corporations that in order to maximize their profit with
reduced taxes. Consequently, the European Union regulates their integrated market since there
are different tax rates among their member countries. In 1991, Apple launched a product
manufacturing plant and made a deal in Ireland. Ireland happens to have one of the lowest tax
rates, therefore many foreign companies will set up in Ireland. The deal made between Apple and
the government of Ireland was on the basis that Apple was credible in its promise of jobs and
revenue. Apple received a lower tax rate and Ireland kept Apple in their country. When the
European Union ruled that Apple had disobeyed the EUs tax policy, Apple and the Ireland
government refused the decision and appealed to not pay $14.5 billion dollars in taxes to Ireland.
Unfortunately, now the EU has ruled that the deal made in 1991 has caused Apple to attain such
monetary profit that it is considered as taking away from state aid.
In order to make recommendations to Apple, first clarification of why Ireland refused to
accept that amount of money is needed. Of course Ireland would like to accept the money, but
Ireland would prefer to make their economy move forward with the help of Apple. The tax rate
in Ireland is currently 12.5%, which makes business in this country attractive to foreign
corporations. If Apple is forced to pay, it will be unlikely foreign companies will want to make
deals with Ireland in fear that the European Union will step in again.
This deal and its lack of clear cut boundaries brought forth the current issue. This issue
would cause a monetary lost for Apple as well as heightened sensitivity to future deals with EU
countries. This is also a problem for Ireland since they are being criticized for their tax policies
and if held accountable will cause the countrys finances to suffer. This leads to manufacturing
issues for Apple. Since manufacturing in Ireland was produced at a lower tax rate, the overturn of
this rate will cause future production to be at a higher cost to Apple.

The issue at hand is the amount of back taxes Apple will be forced to pay post-appeal as
well as what is the future for Apple in any foreign deals with the EU. Future deals will be
scrutinized for loopholes due to this breach in Apple credibility in the eyes of the EU.

Recommendations for Issue 3


Both Apple and Ireland will appeal the ruling by the EU. In a best case scenario, Apple
will not have to pay the full $14.5 billion to Ireland. Unfortunately, that decision is pending and
Apple is advised to plan accordingly for whatever the verdict may be.
After revision of the possible outcomes we offer these action steps and recommendations
for either possible verdict as well as to avoid reoccurrence.
Verdict 1: Appeal denied Apple must pay full amount of back taxes.
Verdict 2: Apple required to pay half or lower amount of back taxes.
A. Apple must sit down with its attorneys and attempt another appeal. Mediation can
be used to try to obtain a settlement at a lower amount than full amount.
B. As one of the biggest corporations in the world, Apple should have their PR
representatives clarify to society that they did nothing illegal.
C. Apple should negotiate with European Union to fight for a lower tax rate for the
future especially if the European Union wants to increase the tax rate of all EU members.
D. Internally, Apple must come up with a plan for foreign tax payment and how to
legally obtain a low and fixed tax rate with the European Union.
E. If possible, arrange for a monthly payback plan to avoid a large sum loss all at
once. If there is a way to pay back Ireland with products, instead of money, that route
should also be explored.

F. Apple must rearrange its finances. This includes looking into the schedule and
projects where assets can afford to be moved so that the company does not suffer in
production.
G. Attorneys should review where the loopholes in the deal were most visible to the
European Union and strategically plan how to avoid repercussions from such loopholes
by adding addendums and exceptions to future deals.
H. The launch and advertisement of the iPhone 8, which is Apples 10th anniversary
product, should be at a high peak to bring in more revenue to make up for the loss of
money. Promotions and deals to encourage consumers to buy more Apple products is
crucial at this point to recover revenue.
I. Create new deal and explore options of how to maintain low cost production in
Ireland or elsewhere.

References

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Cook, J. (2016, August 30). A deal made in 1991 paved the way for Apples current tax issue.
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Leswing, K. (2016, August 30). Europe to hit Apple with its largest tax penalty ever. Retrieved
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