Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid
On 30 August 2016, Margrethe Vestager, the European Commissioner for Competition, ordered Ireland to recover a‚¬13 billion in illegal state aid that the state had granted Apple over a decade from 2003. In allowing Apple to pay close to zero in taxes, she ruled, Ireland had given the foreign company a selective advantage over other businesses paying the regular corporate tax rate of 12.5%. Tim Cook, CEO of Apple, and Enda Kenny, the Irish Prime Minister, appealed the ruling, a process that is still ongoing. The case explores this event from five analytical pillars: 1) the role of Ireland's low corporate tax rate in attracting FDI; 2) Apple's decision to allocate its earnings to a paper company in Ireland with no physical presence in the country; 3) the repatriation of foreign earnings to the United States; 4) the transfer payments that Apple makes to the US to pay for R&D; 5) the Commissioner's decision to impose a retroactive tax penalty on a foreign company that acted in accordance with the tax arrangements granted by its host country.
Authors :: Morten Bennedsen, Brian Henry, Mark Stabile
Swot Analysis of "Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid" written by Morten Bennedsen, Brian Henry, Mark Stabile includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Apple Tax facing as an external strategic factors. Some of the topics covered in Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid case study are - Strategic Management Strategies, International business, Policy, Technology and Global Business.
Some of the macro environment factors that can be used to understand the Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid casestudy better are - – geopolitical disruptions, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, technology disruption,
cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Apple Tax, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Apple Tax operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid can be done for the following purposes –
1. Strategic planning using facts provided in Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid case study
2. Improving business portfolio management of Apple Tax
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Apple Tax
Strengths Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Apple Tax in Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid Harvard Business Review case study are -
Successful track record of launching new products
– Apple Tax has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Apple Tax has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
High switching costs
– The high switching costs that Apple Tax has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Analytics focus
– Apple Tax is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Morten Bennedsen, Brian Henry, Mark Stabile can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Innovation driven organization
– Apple Tax is one of the most innovative firm in sector. Manager in Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to lead change in Global Business field
– Apple Tax is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Apple Tax in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Apple Tax is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Apple Tax is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Apple Tax is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Apple Tax is one of the leading recruiters in the industry. Managers in the Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Apple Tax has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Low bargaining power of suppliers
– Suppliers of Apple Tax in the sector have low bargaining power. Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Apple Tax to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Apple Tax has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Weaknesses Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid are -
Skills based hiring
– The stress on hiring functional specialists at Apple Tax has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Apple Tax is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid, is just above the industry average. Apple Tax needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Increasing silos among functional specialists
– The organizational structure of Apple Tax is dominated by functional specialists. It is not different from other players in the Global Business segment. Apple Tax needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Apple Tax to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Apple Tax has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Apple Tax even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High bargaining power of channel partners
– Because of the regulatory requirements, Morten Bennedsen, Brian Henry, Mark Stabile suggests that, Apple Tax is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High operating costs
– Compare to the competitors, firm in the HBR case study Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Apple Tax 's lucrative customers.
Aligning sales with marketing
– It come across in the case study Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid can leverage the sales team experience to cultivate customer relationships as Apple Tax is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid, in the dynamic environment Apple Tax has struggled to respond to the nimble upstart competition. Apple Tax has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Apple Tax, firm in the HBR case study Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the segment, Apple Tax needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Opportunities Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid are -
Buying journey improvements
– Apple Tax can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Developing new processes and practices
– Apple Tax can develop new processes and procedures in Global Business industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Apple Tax can use these opportunities to build new business models that can help the communities that Apple Tax operates in. Secondly it can use opportunities from government spending in Global Business sector.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Apple Tax to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Apple Tax can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Apple Tax in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Apple Tax in the consumer business. Now Apple Tax can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Apple Tax has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Apple Tax to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Apple Tax can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Apple Tax to increase its market reach. Apple Tax will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Leveraging digital technologies
– Apple Tax can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Apple Tax to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Apple Tax to hire the very best people irrespective of their geographical location.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Apple Tax can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Apple Tax can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Threats Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid are -
Consumer confidence and its impact on Apple Tax demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Apple Tax in the Global Business industry. The Global Business industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Stagnating economy with rate increase
– Apple Tax can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid, Apple Tax may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Apple Tax in the Global Business sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Apple Tax can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid .
Shortening product life cycle
– it is one of the major threat that Apple Tax is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Apple Tax needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Apple Tax can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Apple Tax will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Apple Tax can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Apple Tax needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Apple Tax needs to make to build a sustainable competitive advantage.
