Prelude
Apple Inc. is a company that designs and manufactures personal computers, phones, software, and other consumer electronic products. The company has grown to be a particularly crucial innovative multinational corporation leading in the production of PCs and software. Its chief products include the “Macintosh computers, the iPod, the iPhone, and the iPad” (Apple Inc. 2008). On the other hand, the software product produced by Apple is the Mac OS X operating system.
Identification of the Organization
According to Wong, (2005) Apple Inc has been a leading player in the innovation of personal computers and other digital electronic services (p. 56). The company started from a humble beginning and even during the times when it was regarded as a niche player in the production of PCs, most of the unique features the company designed ended in their competitors’ hands (Hill, & Jones 2004).
Some of whom were doing much better than Apple. However, at the beginning of the 21st century, saw the company define its place in the industry to set up a solid ground for its survival in the turbulent computer and music industry (Burrows 2008, p. 40).
Sangan (2008) notes that the company became acutely innovative and designed the iPod Mp3 player who has seen it expand its business to the digital lifestyle. Currently, Apple is the leading company in online music selling. It operates a music store referred to as iTunes.
The company was started by Steve Wozniak and Steve Jobs in 1960s, Apple Computer Inc. (2003a). The company was founded on a platform guided by the theme “Think Different.” This helped the company rise to compete with IBM.
The Needs that the Business Meets
Apple Inc is a cutting-edge company which has established an unusually strong reputation of Innovativeness. Since its initial stages of establishment, the Apple II PC allowed the use of floppy disk while the rest of the competitors relied on magnetic tape for data storage, Apple Computer Inc. (2003a). These PCs allowed installation of complex programs like VisiCalc.
The firm also introduced the Macintosh, which was the first computer to use a Graphical User Interface (Breen 2005, p. 18). By the mid-1990s Apple faces real trouble as its products market shrunk (Apple Computer Inc. 2003a). Many analysts concluded that the company was on the verge of collapsing. Jobs was brought back as CEO in 1997, and his strategy was to focus on innovative, elegant products where he produced the iMac which allowed USB (Wong 2005, p.57).
Mr. Jobs was the principal reason for the success of the firm (Apple Computer Inc. 2003b). He also introduced the iBook, and these brought the firm back on its feet. With the possibility of selling music in the digital world, Jobs did not hesitate to initiate the service (Merrion 2005, p. 2). The iPod was created in 2001. To ensure that clients have a music library, the company followed it with the iTunes store where clients can purchase music online and play on their iPods (Burrows 2008, p. 40).
The iPod and the iTunes were outstanding actors and hence success. These products set up Apple as a crucial player in the sale of digital music online. The core mission of the business was quickly reshaped, (Apple Inc. 2008). It is from this diversification from the manufacture of computers to the digital lifestyle products like AppleTV, iPod, iPhone and iPad that saw the original Apple computers get renamed Apple Inc.
Study Method
To study the progress and the successes of Apple Inc, a research was conducted to study the competitive advantage that Apple had over its competitors in the digital electronics industry (Barney, & Hesterly 2008, p. 3). This, therefore, meant that the data that was collected had to be predetermined. The data included the greatest inventions or innovations the company has had so far, the organization and how the company operations are run, as well as the way the company does its marketing (Apple Computer Inc. 2003b).
To get the relevant data for these analyses, the researchers designed a search strategy where the data to research was groups based on themes. The different themes were decisive in exposing different competitive advantage factors (Barney, & Hesterly 2008, p. 3).
The data collected was straightforward and, therefore, particularly valuable in descriptive analyses of the way Apple Inc has been able to attain competitiveness in the industry to become a leading player (Apple Inc. 2008). The researcher hence looked at several articles searched from the internet and the library.
The Internet articles were searched by punching keywords into the search engines, and papers that were written on the successes and challenges of Apple Company were identified. A literature search was also done on papers that contained information on the computer manufacturing industry in general, the manufacture of computer software, manufacture and sale of digital music gadgets like the MP3 players, as well as the management issues of the company (Apple Inc. 2008).
Search Strategy
Several sources were searched including Hoover’s company profiles, PR Newswire, Market Wire, Business wire, Journal of Engineering and Technology, Journal of Computing. The initial search was mainly set to identify the titles which contain appropriate information and combination of words or phrases for Apple’s International management strategy.
Selection criteria
There were inclusion and exclusion for eligibility for articles that were identified after the reviewers analyzed the sources. The inclusion criteria included articles that had been published in peer-reviewed technology journals, and those with keywords only found in book chapters, but unavailable in any other sources. The major concentration of the articles was needed to include aspects of functioning related to the successes or challenges of Apple Computer then later Apple Inc.
The research materials included were those published during the period of the 1980s to 2000s and that the copies were available for a full assessment. Articles that addressed management issues, technology wars, and rivalry were also considered.
All the information collected on technology advancement at Apple Inc. management issues, challenges, and success stories were critical to helping in evaluating the competitive advantage that the company has had over competitors (Crossan, Fry, & Killing 2002, p. 56).
When it comes to innovation, it can be easily said that Apple Inc has made it. The company has been at the forefront of innovative technology in the digital world; therefore, when addressing its success, one cannot help but think of innovation. Its success is achieved by innovativeness more than anything else.
In the market today, the company’s greatest inventions include the iPod, the iTunes online music store, the iPad and iPhone (Merrion 2005, p. 2). During the launch of these products, its CEO described the iPod and iTunes as a landmark turn in the music industry he envisioned that the product was going to be a legal online music service that would compete against all illegal music and movie downloads.
Just in its first week after launching, iTunes sold over one million songs online (Chapman, & Hoskisson 2008, p. 189). Since then, sales have constantly been increasing. The launch of iTunes brought about a shakeup in the industry, as the free downloads from other online music stores or sites were mandated to have subscription requirements to protect music labels.
The iTunes online music store has significantly promoted the sales of the iPod since the gadget can easily store music downloaded from iTunes (Chapman, & Hoskisson 2008, p. 193). Since the inception of iTunes in 2003 (Apple Computer Inc. 2003b), Apple Inc has seen the music market grow exceptionally fast in making the company a dominant player in the digital music industry.
It was hence able to secure a market share of 70% (Apple Computer Inc. 2004). What’s more, the music market is expected to grow further and flourish more as the company launches other prominent innovations, the Apple TV. This technology allows users to watch movies and video clips downloaded from iTunes (Chapman, & Hoskisson 2008, p. 193).
Other than the iPod, the iPhone has also mesmerized the market, and it is doing well, making enormous sales just because of the unique features it offers. The phone has a touch screen; it can play audio, and video music downloaded from iTunes among other features. In 2008, Apple Inc was named as the most innovative firm of the year for the third time running by the Business Week.
Now Apple can offer a variety of digital services because of its software suite that allows application like iPhoto, iMovie, and the iPod. A flurry of products has been coming from Apple including the PowerBooks, (Pride, & Ferrell, 2000) the iMac and the iBook, computers that are affordable by the low-income customers (Chapman, & Hoskisson 2008, p. 194).
Organizational Analysis
As already stated above, Apple Inc deals in designing, manufacturing and marketing a wide range of PCs, Phones, media gadgets, and digital products. The company also develops software, provides services and peripheral networking solutions to customers (Apple Computer Inc. 2003c). The product portfolio is hence, extraordinarily wide, and that has already been mentioned.
The company is headquartered in Silicon Valley, California. The company thrived to become an international business selling its products and services across the globe. Many hardware products produced by the company can be found in there retail stores in many countries (O’Grady 2009, p. 33). There are also online stores for the software and other services through the purchase of the hardware is also done through these online stores.
Because of the aggressiveness of the company, it also runs or engages in direct sales and the use of third-party cellular networks carriers. Many of its products can be found in wholesale stores, retailed stores and value-added resellers. By last year October, Apple had opened 317 retail stores across the world. Two hundred thirty-three of these stores were based in the US, and 84 were international.
Therefore, outside the US, Apple has a unique way of penetrating the foreign market by fundamentally opting to sell directly to customers. This explains why it opened retail stores in Japan, China, and Europe (Ahrens 2003, p.46). Its strategy lies mainly in exporting.
The management of the company was immediately updated following the resignation of its CEO, Steve Jobs in August this year, 2011. Jobs was particularly insistent on the vision that he anticipated what clients wanted, and that made Apple grow and become one of the world’s most valuable and influential firms in modern technology.
Following his resignation, he was lauded by his long-time friend and co-founder of Apple, Wozniak as “the greatest technology business leader of his time” (Heracleous, & Papachromi 2008, p. 162). At the age of 56, Mr. Jobs has made it successful. Nonetheless, his constant medical problems have caught up with him. In 2004, he underwent surgery to treat pancreatic cancer, and in 2009, he received a liver transplant.
As he was set to go on another crucial medical leave, Jobs said that it had come a time when he could no longer manage to fulfill his duties as CEO, hence stepped down but recommended Tim Cook as new CEO. Cook was previously the chief operating officer. Mr. Jobs, on the other hand, was named the company’s chairman of the board of directors.
Apple’s market share in the United State’s computer sales is still at 10 percent, based on a report by Gartner in the first quarter of 2011. It is pertinent to take into consideration that there are some places that are friendlier than others. The company’s potential in the foreign market is still remarkably high. When the iPad was introduced, Jobs claimed it hit a market share of 90%, which flummoxed its competitors.
This could be an exaggeration by Jobs, but the market share was above 70%. Apple will retain the momentum that was started by Jobs and Wozniak believes that Jobs worked with equally talented people like Cook who learned a lot from him. Besides the culture of innovativeness, Apple’s marketing strategy is another success in the foreign market.
Its marketing is characterized by extremely appealing advertisements that caused the sales of its products to skyrocket (Chapman, & Hoskisson 2008, p. 200). In 2003, Apple Inc earned the award of advertising age’s marketer of the year. This was after it had designed truly original and outstanding ads of its MP3 player the iPod. Apple has also been cited by several articles in marketing and technology as the best marketer over the years.
This has in worked to the advantage of the company quite a lot as its brand name had grown to become iconic on the market. The export strategy is not influenced or affected by the political climate in foreign countries since; the company has had a strong rapport with many nations it has opened stores in; the main challenge has been the economic climate.
With the grievous 2008 economic downturn experienced in Europe, many of the customers have complained that the prices of Apple products are exceptionally costly. However, the management of the company argues that these products are also of exceptionally superior quality and sophisticated technology standing out from the competition (Bach 2008, p. 3).
One of the strengths of the company for survival has been that; it is particularly potent with advancing technology. It is said that even competitors appreciate that Apple produces excellent products and has eye-catching designs, which makes it dominant on the market (Bach 2008, p. 3).
Its CEOs, on the other hand, have had an extraordinarily strong rapport with the media just like the immediate former CEO, Steve Jobs. He used media’s attention to his success as a promotional aspect. Because of his personal touch to the management of the company, he came to be fondly referred to as the face of the company and Apple’s brand champion (Chapman, & Hoskisson 2008, p. 200).
He had excellent PR skills which paid off well in terms of marketing the company. Besides running retail stores, Apple has ventured in partnership with well established and famous companies to boost its market share and brand awareness. Apple has invested in joint ventures, with Motorola and IBM, to manufacture PowerPC chips (Breen 2005, p. 18). These chips are used in the manufacture of the new PowerMac.
This chip allows greater and efficient functionality of the computer compared to those powered by the famous Intel microprocessors (Apple, Inc. 2005). Challenges to success have been that, for so long the company was dominated by decisions and hard work of a single individual. Besides, over the recent decade, the company’s product portfolio has increased tremendously that it could be difficult to manage them and still retain the repute of innovativeness.
International Market Analysis
Challenges
Apple Inc is not just a large company for nothing. It offers efficiency and always doing something else that competition like Microsoft does not, even though; these two firms use the same Intel chips (Bartholomew 1999, p. 34). On the other hand, a wide range of products has been a challenge for the company. Its internal environment has been particularly turbulent.
The way Jobs dealt with the suppliers was tough. It is said that Jobs was not always forthcoming with the company information, but investigations into the firm’s operations indicate that, companies, which have worked with Apple, express frustration working with Jobs.
These claims hinge on the fact that the CEO was extremely strict on the quality of products to be purchased by his company and at some point, he could overstep his jurisdiction hence other businesses felt he was controlling. With a new CEO, Mr. Cook this could change.
Apple could also be faced with a marketing strategy crisis. This phenomenon hinges on the fact that, over the past decade, the company has continuously ventured in a wider product portfolio to increase its market share. Its clients, therefore, are from wider backgrounds, the technology savvy fanatics to scholars and designers to home users (Chapman, & Hoskisson 2008, p. 200).
Mr. Jobs used to say that he knew what clients wanted, but at this rate, it could become extremely difficult to satisfy all the clients because of the increased diversity. Apple would want to market its new products aggressively, as it did with the iPhone, which penetrated the market well because of the company’s reputation.
However, when customers do not believe that their expectations are met, then the prices, brand equity, and investor confidence are tarnished (Chapman, & Hoskisson 2008, p. 200). The external environment could also have a serious implication on the company, like competition. Since the launch of the iPod in 2003, there has been a multitude of competitors coming up with even cheaper MP3 products to try and get a share of the digital market (Apple Computer Inc. 2004).
Some companies even offer free music download and sharing stores online. Apple placed a lawsuit that saw Napster and many other online music providers ordered to set subscription services like Apple’s iTunes. The pricing of these new products has been a formidable challenge. Many Apple products are of superb design and superior quality; hence; highly priced than products from competitors. For instance, the iPod is more costly than Mp3 players from Toshiba and Samsung.
Also, whereas, iTunes offers $ 0.99 per song downloaded, and $9.99 for a whole album, companies like RealNetworks offer song downloads at $0.49 per song and $4.99 for an album. Napster, on the other hand, provides songs at a $12.95 subscription per month to allow users to have unlimited access to music downloads.
In the 1980s and 1990s, Apple only faced competition from PC manufacturers like Dell, IBM, Gateways among others. Microsoft was a serious competitor in the manufacture and sale of operating systems (Zachary, & Stephen 1992, p. 80). Apple’s OSX/XP almost dropped out of the market at some point because of this completion.
However, in recent years, Apple has profoundly diversified into digital products and especially online media. Itunes and the iPhone are the main products here. This, therefore, means competition has increased to Napster and other online music stores and Mp3 manufacturers like Samsung, Nokia and Blackberry (Seitz 2005, p. 2).
The emerging markets are highly crucial hunting sites for companies investing in technology. For this reason, Apple has been struggling to invest in the East. The company will, therefore, very soon launch a new outlet in Hong Kong and Shanghai. These stores will enable the company to sell directly to its customers in these regions.
Customers will be able to walk into the stores and get all manner of assistance forum the Apple’s employees. The existing stores are not enough for the company to compete against dominant players like Nokia in the region, and this scenario explains why it has to open a new shop in Shanghai to boost its Asia-Pacific returns.
International Challenges
Apple does not face a serious challenge in management even when Steve Jobs is leaving the company because, as his co-founder of the company states, Job used to work alongside equally talented persons (O’Grady 2009, p. 33). Besides, Tim Cook has been a long-serving employee at the firm, and he understands well what it takes to run a company like Apple.
Apple Inc. will, however, face challenges from operations and probably the management of the Human resource. In terms of production of PCs, the company has been able to maintain a stable market of loyal users for quite a long time (Apple Computer Inc. 2003c). Microsoft remained a significant competitor in this area as it has dominated the sector especially software manufacturing and sales.
Other providers use strategies that are truly crucial. For instance, Dell supplies cheap computers; hence; it is growing tremendously steadily on the market. Foreign operations could be a challenge. The company operates on a geographical basis, and it has three segments divided as ‘America,’ ‘Japan and Asia-Pacific’, and ‘Europe and the Middle East’ the (Ahrens 2003, p.49).
Apple has increased global operations, but the US remains the leading marketplace (Apple Computer Inc. 2003c). The assembly of its products outside the US is done in Taiwan, Korea, China, the Czech Republic, and the Netherlands. There were some restrictions in penetrating Germany, France, and the UK;, however, most were not political but economical in terms of cost and pressure from the customers.
Foreign currency exchange fluctuations, the international trade laws like a tariff, and other penalties, as well as pressure to reduce the cost of its products, have a substantial risk for the company’s survival. This is especially because of the hard economic times where people want to save more and cut costs.
The international penetrations strategy has been found to face two main obstacles. The first one is responsiveness to customers and terms of pricing. These concerns have been extremely difficult for the company to meet. However, if the company could meet these concerns whereby it can supply low-cost computers and other products, it will gain unusually high acceptance among customers.
Over the recent years, Apple has been trying to apply this strategy, but it is yet to be exploited to the fullest yet because; even if the company could attain appropriate low-cost structure of production, it would still have the pressure of convincing its customers that the new entry of their technology was superior.
International Business Strategy
When the company was trying to devise a means of operating internationally, many executives of the company were seriously concerned about which markets to enter first, and on what size of operations (Holmberg et al. 2005, p.261). Issues like meeting local preferences in foreign markets, as well as the political situation and the cost, were crucial. The company then decided to first venture in Europe.
The choice was reached because the market there was slightly different from that of the US. Catheter, the company, ventured in Japan which is slightly risky ad highly competitive (Ahrens 2003, p. 54). From there, Apple ventured in several other countries; however, the timing of the foreign investment was always tricky as the US market was in a mess in the 1990s the because of recession (Holmberg, et al. 2005, p. 263).
Apple mainly exported its products and tried as much as possible to reduce risk hence using the ‘Baby steps strategy.’ The company could only import to cut costs that could come as a result of exchange rate fluctuations of the dollar, shipping costs and competition from cheap products from competitors based in the country they were entering (Alexander, Isabelle, & Thorsten 2006, p. 239).
The company later decided to study economies of scale and ventured into fully owned subsidiaries in some countries like Ireland where it set up the Cork Plant. Recently, the company has been licensing its computer production though this has developed just recently. Apple has not been into a joint venture or franchising because the company was working exceptionally hard to protect its technology; therefore, entering into joint ventures would expose its know-how to partners.
Therefore, currently, the international strategy employed by Apple is a combination of strategies of having subsidiaries across the world and exporting its product into the foreign market from various assembling plants (Alexander, Isabelle, & Thorsten 2006, p. 243). Apple Inc has turned down mergers and acquisitions in the US, even the famous Microsoft deal; hence the company survives on its own. It has never been involved in significant alliances with other multinational firms.
Reference List
Ahrens, F., 2003. Apple Set to Open in Japan First Retail Store Outside United States, America’s Intelligence Wire, pp. 45-59.
Alexander, E. R., Isabelle, S., & Thorsten, G., 2006. The iPod Phenomenon: Identifying A Market Leader’s Secrets through Qualitative Marketing Research. Journal of Product & Brand Management, 15(4), pp. 239 – 249.
Apple Computer Inc., 2003a. Apple’s Strategy for Long-Term Growth, 2003.
Apple Computer Inc., 2003b. Corporate Governance Guidelines.
Apple Computer Inc., 2003c. Ethics the Way We Do Business Worldwide.
Apple Computer Inc., 2004. Eight-Quartet Financial History.
Apple Inc., 2008. Business Week Online. Web.
Apple, Inc., 2005. Apple to Use Intel Microprocessors Beginning in 2006. Web.
Bach, B., 2008. Implications of Enabling Technologies for Apple Inc.: Cyber Marketing & Enabling Technologies. Munich, GRIN Verlag publisher.
Barney, J., & Hesterly, W., 2008. Strategic Management and Competitive Advantage. (2nd Ed.). New Jersey, Pearson Prentice Hall.
Bartholomew, D., 1999. What’s Really Driving Apple’s Recovery? Industry Week, p. 34.
Breen, C., 2005. Video iPod Arrives. Macworld, p. 18.
Burrows, P., 2008. Apple May Be Holding Back the Music Biz. Business Week, p. 40.
Chapman, R., & Hoskisson, R., 2008. Apple Computers Inc.: Maintaining the Music Business While Introducing iPhone And Apple TV”. In: Ireland, D., Hoskisson, R & Hitt, M.A, Understanding Business Strategy: Concepts and Cases. Boston, Cengage Learning.
Crossan, M., Fry, N., & Killing, J. P., 2002. Strategic Analysis & Action. 5th ed. Toronto, Pearson Education Canada.
Heracleous, L., & Papachromi, 2008. Strategic Leadership and Innovation at Apple Inc. In De Wit, B., & Meyer, Ron, Strategy: Process, Content, Context, An International Perspective. London, Cengage Learning.
Hill, C.W., & Jones, G.R., 2004. Strategic Management – An Integrated Approach. (5th Ed.). Boston and New York, Houghton Mifflin Company.
Holmberg, T., Lindqvist, F., Logander, M., 2005. Living On the Edge: A Case Study of Important Factors for the Survival of Apple Computers, Inc. School of Economics and Management; Lund University.
Merrion, P., 2005. Inventor of Music Player Takes a Bite Out of Apple. Crain’s Chicago Business, p. 2.
O’Grady, J.D., 2009. Apple Inc. Westport, ABC-CLIO.
Pride, W. M., & Ferrell, O. C., 2000. Marketing. London: Cengage learning.
Sangan, H., 2008. Apple and MP3 Player Market. Web.
Seitz, P., 2005. Apple Sees Healthy ‘iPod Economy’. Investor’s Business Daily, p. 5.
Wong, M., 2005. Apple Sets Pace in Consumer Electronics. America’s Intelligence Wire, pp. 56-60.
Zachary, G.P. & Stephen, KY., 1992. Apple Moves Its Microsoft Battle to the Marketplace. Wall Street Journal, pp. 79-81.