Introduction
Apple Corporation sells its products to various markets across the world. Through various accessible stores and merchandising outlets, the corporation trades its goods and intermediary stocks to the purchasers and corporate markets. In fact, Apple has invested in programs that promote reseller sales such as the ASCP, which focuses on certain reseller locations and APRP that provides expertise in products and customer service.
Apple’s stores similarly trade its computer produces in the state, and creative markets found within its topographical divisions. The markets are particularly crucial to third party developers of computer applications and hardware that are compatible with Apple’s computers.
The superior expansion and computing performance of Apple’s products are the major attractions of the consumers within this market. Despite its reputation across the globe where it offers its computer products to customers, Apple Corporation has been facing various risks in its global operations.
The risks include global-specific risks, country-specific risks, and firm-specific risks. The research report has offered various risk mitigation strategies that Apple Corporation can use while going global to remain competitive. The report analyses Apple Corporation international market entry using frameworks such as Porters five forces, PESTEL, and SWOT.
Company overview
Apple Corporation is a publicly listed American multinational company specialising in the production of high-technological electronic products, computer hardware, and software (Apple Corporation 2010). However, in the electronic hardware category, the corporation goods include private PCs, broadcasting tools, portable communication gadgets, and handy but digitalised devises.
In addition to the high-tech hardware devices, the firm produces a variety of software gadgets including intermediary digital appliances and set-up drives. Within the mobile communications category, the company has launched into the market a variety of smartphones including iPhone and other android smartphones that have hit the world market.
The company is currently the market leader in the android smartphones and computer technology market. However, the company’s operations are based on geographical locations. In fact, the operations of the firm are segmented founded on the type and place of the clients. The research report analyses the external and internal environment where Apple Corporation operates using various frameworks particularly when the company enters a new market.
Main Findings
Political factors
Apple Corporation is a multinational company operating in many countries especially in North America, Europe and Asia. As such, its products are sold in a wide spectrum of political environments. Moreover, its smartphones consumers are spread across the political divide found in all parts of the world.
Therefore, political consideration is a very important factor especially when introducing a particular product in a foreign country market. For instance, most of the company’s smartphones are manufactured in China, but the products are sold within the Chinese market. Thus, the company’s marketing strategies are always in line with the policy of the state where its products are sold (Herzog, 2010).
Economic factors
The current economic situation around the world has some profound effects not only on the company’s products but also on the general production capacity. The recent economic downturn experienced in America, and Europe has a considerable consequence on the smartphones’ domestic market.
The sales of smartphones reduced as the majority of consumers switched to other essential products as their income reduced. The reduction in sales was also experienced in many parts of Europe as well as in many countries around the world. However, the reduction presented an opportunity for the company to introduce cheaper smartphones in the international market.
In such an economic environment, the company always increases its capital flow in order to avoid negative effects of economic shocks (Dziri, 2011).
Social and cultural factors
The company’s smartphones are sold in an open cultural environment. Moreover, its target market for the younger generation is to pursue vogue and like cultures. The lifestyles of the groups are similar in almost all parts of the world. The company smartphone’s process designs are simplified to meet the needs of all cultures across the globe.
The smartphone’s designs combine simplicity and beauty, the logic that is praised highly in all parts of the world. All the smartphones that the company has launched into the market have been popular among the younger generation, which has revolutionised the generation cultures. With the current globalisation where there are no cultural boundaries, the company’s smartphones have been seen as the engine behind the current globalisation (Blomstermo, Sharma & Sallis, 2006).
However, the company’s smartphones design focus on the needs and wants of the target market. The younger generation needs gadgets that are simple, but with wide applicability. Indeed, the Apple android smartphones have achieved that objective while the company enters into an international market.
The apple android smartphone that has been currently released into any new international market has sophisticated and attractive style, which is available and have gone beyond the fashion (Dziri, 2011).
Technological factors
The company is operating in a technological and changing environment. The technology has found wide application in many global industries as it appears to be quickly improving. In fact, the technology has formed the core of electronic and fiber information industry (Dziri, 2011).
Apple Corporation is one of the leading global companies in the electronic and information technology industry. The highly volatile and ever changing technology has made it difficult for the company to hold a leading position in the IT industry. However, with the advent of the android technology in smartphones, the company makes a great stride in capturing the larger global market share (Herzog, 2010).
In addition, the speed at which technology is being pirated has made it difficult for the company to hold on the patented technology. Nevertheless, as Apple Corporation goes global, the company improvements on the current technology and innovative culture have enabled it to maintain its market share in the smartphones market (Gormley, 2010).
Legal environment
The company is operating in many countries around the world with various legal regulations. Moreover, these countries have their domestic companies that produce similar products. Given that, Apple Corporation is going global, the commercial regulations become varied ranging from preferential regulations to patent and rights laws (Henry, 2008).
For instance, as Apple enters into the new global markets, the company is facing many challenges and legal tussles with competing companies relating to patent and copyright laws or regulations. The situation has increased the risks for the company in both the emerging and existing international markets. Besides, most of the products take a long time before being introduced in the market based on the legalities relating to patent and copyright.
The situation has significantly contributed negatively to the growth of the company’s smartphones market-share in the international markets (Shen & Lin, 2011).
Rivalry between competitors
The industry is characterised by few but large manufacturers and very expensive products that hunts for a niche audience. However, the evolution of personal computers has caused an explosion in the industry, which currently includes dozens of companies pursuing millions of consumers across the globe. Due to the use of electronic equipment in day-to-day lives, the tools are becoming more of commodities (Ashcroft, 2011).
To most consumers, economy is more important than the performance specifications. Such circumstances have forced many manufacturers to pursue the best-cost and low-cost provider strategies in the international markets. For instance, as Apple opens its operations in the new global markets, the companies in the middle range compete for the consumers by offering various options at varying prices.
However, in order to hasten the situation, the industry leaders like Apple, Sony, Microsoft and Nintendo have always kept to this pace (Biswas, Fraser & Mahajan, 2007).
Supplier power
In its international market operations, the suppliers in the industry have significant influence over the manufacturers of electronic equipments. While many standards in the industry are open and made by collaborative or independent bodies like IEE, the manufacturers also depend on the standards owned privately. Such a technology must enter into the market so that it can be licensed to pay a defined membership fee.
Additionally, the virtual concentration of the suppliers in the global markets puts some pressure on competitors. In the case of personal computers, Sony unlike Apple outsources the central processing units from Intel (Barrios, Görg & Strobl, 2005).
Thus, the incompatibility in design does not allow the company to switch to other suppliers. However, microchip manufacturers are not present in the computer manufacturing business hence rely on the computer manufacturers for their business.
Buyer power
According to reports, customers have the last say and apply considerable leverage over manufacturers. Various buyers with differing desires affect the manufacturers of electronics directly given that they must react and adapt by offering extensive product-lines.
The notable characteristic between the powerful user and the average user presents an obstacle to the manufacturers focusing on trapping many customers possible. In the international markets, manufacturers like Apple Corporation benefit from the wide use and acceptance of electronic products thus causing high demand for the products. In fact, Apple’s brand loyalty and proprietary systems are used to maintain customers in the global markets.
Threat of potential entrants
Many avenues through which new entrants can enter the electronic market exist. However, several hindrances may prevent the entrance of a company such as Apple Corporation in the international markets. The current market is characterised by well-entrenched players who have significant brand loyalty and recognition including Sony, Microsoft, Samsung and LG (Crespo & Fontoura, 2007).
Thus, developing a successful brand in the presence of such players is difficult for Apple in its global markets operations. For instance, such large corporations operating in the global markets tend to keep the costs down and dominate the markets with economies of scale. The strategy cannot be achieved easily by a new entrant unless substantial capital is invested.
Despite these obstacles, new entrants into the global markets like Apple Corporation may still come from the newly instituted lean organisations, which depend on third party OEM for production. The trend is increasing in popularity thus bringing companies such as Acer Corporation into competition with the industrial giants (Ruckman, 2004).
Threat of substitutes
The technology sector has substantially grown with the introduction of alternatives such as televisions, game consoles, Smartphone, virtual music stores and personal computers. There are now feature-rich smart phones and PDAs in an average living room. Such developments have resulted into the consumers focusing their “technology money” away from computers, televisions, radios and game consoles.
However, despite the focus it is not likely that smartphones will diminish the importance of other products significantly. The only thing that the substitutes have influenced is the elimination of monopoly in the electronic market. Thus, Apple faces threats of substitute as the company enters into new and existing global markets.
SWOT analysis
Strengths
The company is producing high quality and attractive smartphones. The nature of these products allows the company to penetrate and claim the largest market share in both android and other smartphones market. Besides, the company’s leadership in high technology and electronic industry has boosted the marketability of its smartphones in the international markets.
The company strengths in technology and powerful but innovative capacity have boosted the confidence that the target market have on its smartphones (Dziri, 2011). The company’s smartphones operating system has exceeded any other competing smartphones, and this has become one of its greatest marketability strength in the global markets.
The company’s smartphones design is fashionable and stylish, which enables the user interface. The feature has enabled the company’s smartphones to be used in diversified cultures. In addition to technological, quality and design strengths, the company’s smartphones are diversified with different prices that meet all classes of people (Linzmayer, 2006).
Besides, the company’s good relationship with the customers tends to boost the smartphones sales in the international markets.
Weaknesses
The biggest drawback that the company’s smartphones has in the global markets is their limited compatibility with other gadgets. Apple’s android smartphones are not compatible with other applications. The situation has limited its use in most international markets. Consequently, its market has significantly reduced particularly where the spare parts are not within reach.
Besides, the company’s smartphones have limited market and distribution channels as compared with most of its competitors (Dziri, 2011). Another problem is the supplier’s environmental concerns with pollution issues surrounding the production of the smartphones and other company products (Bernard & Jensen, 2007).
Opportunities
The growing smartphones market is an opportunity for the company particularly in countries like China, which are experiencing an economic boom. Moreover, the huge population and increasing application of smartphones by the younger generation offers a potential market.
The innovative capabilities of the company are another opportunity to introduce new products into the international markets (Arregle, Hebert & Beamish, 2006). Besides, the growing use of the smartphones in the developing market such as Africa presents another opportunity to be exploited (Apple Inc, 2012).
Threats
The biggest threat the company and its smartphone products are facing in the international markets is stiff competition from other firms and similar products. Besides the external competitive threat the company is facing on particular products, the technology used is also hard to maintain.
For instance, it is difficult to sustain technological leadership in the industry while Apple goes global. New technologies are highly pirated by other companies to produce competing products (Linzmayer, 2006).
Micro-environmental analysis
Apple Corporation is a leader in the electronic industry but markets its products in the same markets. The firm is probably influenced by the same micro-environmental factors. Apple and its competitors are expected to respond to the dynamics of both the individualistic cultures from the west and collective cultures of the east.
The company has probably achieved that target by creating organisational cultures that support both teamwork and individual efforts in the respective global areas of operations. As the firms become increasingly global, Du Plessis and Beaver (2008) insist on the need to develop an effective International Human Resource Management (IHRM). The strategy helps the company to respond to the labor sourcing and expatriation issues.
Consumers are also becoming more sensitive to prices and quality hence compelling Apple and its market competitors to be more responsive through effective quality control systems. The involvement in Corporate Social Responsibility (CSR) is also a strategy that Apple and other market participants are using to improve their relationship with consumers in the international markets.
Recommendations
Since the company operates in a highly competitive market, the innovative products, managerial competencies, and enhanced marketing are critical for Apple Corporation’s future success in global operations (Blonigen, 2001). The smartphones are categorised under various products that have promoted the company and have remained to be the source of the company’s strength. Smartphone technology is the core company competency.
Therefore, developing the smartphones that satisfy the needs of the targeted market will increase Apple Corporation’s internationalisation strategy. Moreover, the company must invest in the development of its smartphones brand and establish them to be the leading fashion brand.
The brand development strategy will ensure that the company offers quality brands that add value to the customers (Antràs & Helpman, 2004). In order to attain the strategy, Apple Corporation should become conscientious with the general management strategies besides constantly spreading out of the retail areas to ensure effectiveness in attaining the profit margin (Henry, 2008).
From reports, it is apparent that fully owned subsidiary is the best entry mode for Apple Corporation in the international markets. As indicated, the fully owned subsidiaries in the international markets make the firm have control over the enshrined competencies and initiatives that form the core of the business strategies.
The strategy increases Apple Corporation’s geographical diversity while reducing both the political and economic risks associated with this expansion (Chen & Mujtaba, 2007).
Conclusion
The changing consumer trends and market shifts require the companies to institute strategies that will respond to these dynamics and ensure that the firms achieve competitive advantages. Among the trickiest industry is the electronic industry, which is characterised by big firms that are swift in responding to the market changes. In this industry, Apple Corporation can only adopt the best-cost strategies and risk mitigation measures.
The strategies can help it increase its competitive advantage in the global markets given that consumers are increasingly becoming price sensitive while many competitors are pursuing low-cost strategies. The strategy demands the integration of developmental and marketing plans, which focus on the best value while reducing the prices of products.
Within the strategy, Apple Corporation should retool its products to attract a wider range of consumer segments while maintaining low prices for the majority of low-income earners. Conversely, from its humble backgrounds, Apple Corporation has grown to be a market leader in computer and electronic industry. With a wide market, the company has outdone the stiff competition in the industry, but must consider the governmental regulations, risks and issues that might affect its future operations.
In fact, Apple Corporation should exploit the marketing opportunities created by the emerging economies to remain competitive, but devise proper strategies to mitigate the prevailing global market risks while seeking global ventures.
References
Antràs, P, & Helpman, E, 2004, “Global sourcing,” Journal of Political Economy, vol.112 no.2, pp.552-580.
Apple Corporation 2010, The 2010 annual report, United States Securities and Exchange Commission, Washington, DC.
Arregle, J, Hebert, L & Beamish, P 2006, “Mode of international entry: the advantages of multilevel methods,” Management International Review, vol.46 no.5, pp.597-611.
Ashcroft, J 2011, Apple Corporation the case study 2000-2010, <https://www.pro-manchester.co.uk/>.
Barrios, S, Görg, H & Strobl, E 2005, “Foreign direct investment, competition and industrial development in the host country,” European Economic Review, vol.49 no.1, pp.1761-1784.
Bernard, A & Jensen, B 2007, “Firm structure, multinationals, and manufacturing plant deaths,” Review of Economic and Statistics, vol.89 no.1, pp.103-204.
Biswas, R, Fraser, D & Mahajan, A 2007, “The international market for corporate control: evidence from acquisitions of financial firms,” Global Finance Journal, vol.8 no.1, pp.33-54.
Blomstermo, A, Sharma, D & Sallis, J 2006, “Choice of foreign market entry mode in service firms,” International Marketing Review, vol.23 no.2, pp.211-213.
Blonigen, B 2001, “In search of substitution between foreign production and exports,” Journal of International Economics, vol.53 no.2, pp.81-104.
Chen, L & Mujtaba, B 2007, “The choice of entry mode strategies and decisions for international market expansion,” Journal of American Academy of Business, vol.10 no.2, pp.322-344.
Crespo, N & Fontoura, M 2007, “Determinant factors of FDI spillovers – what do we really know?” World Development, vol.35 no.2, pp.410–425.
Du Plessis, A J & Beaver, B 2008, “The changing role of human resource managers for international assignments.” International Review of Business Research Papers, vol.4 no.5, pp.ce-181.
Dziri, R 2011, Avoiding strategic drifts in a hypercompetitive market: analysis of apple’s position in the mobile phone industry and suggestions, GRIN Verlag, Munich.
Gormley, T 2010, “The impact of foreign bank entry in emerging markets: evidence from India,” Journal of Financial Intermediation, vol.19 no.1, pp.26-51.
Henry, A 2008, Understanding strategic management, Oxford University Press, Oxford, UKt.
Herzog, C 2010, Strategic tools in dynamic environments: a framework, GRIN Verlag, Munich.
Linzmayer, O 2006, Legend of Apple, Qinghua University Press, Beijing, China.
Ruckman, K 2004, “Mode of entry mode into a foreign market: the case of U.S. mutual funds in Canada,” Journal of International Economics, vol.62 no.2, pp.417-432.
Shen, C & Lin, M 2011, “The determinants of cross-border consolidation in eight Asian countries: before and after the Asian financial crisis,” Journal of Multinational Financial Management, vol.21 no.2, pp.89-105.
Apple Inc 2012, The new, faster MacBook air, <https://www.apple.com/>.