Executive summary
Apple Inc. is a publicly listed American company specializing in the production of high technological electronic products, computer hardware, and software (Apple Inc, 2010). The company products include personal computers, media devices, mobile communication, and portable-digital music players. However, during its international market operations, Apple faces various challenges and opportunities.
The company is nonetheless committed towards bringing the best user experience to all clients around the world through its innovative hardware and software. The peripherals and services have driven the company to open up its operations in the major emerging markets.
Thus, this report analyses Apple Inc market entry using frameworks such as Porters five forces, PESTEL, and SWOT. It concludes recommendation on what Apple should do to remain competitive.
Apple Inc Market Entry Strategy. Company overview
Apple Inc. is a publicly listed American multinational company specializing in the production of high technological electronic products, computer hardware, and software (Apple Inc. 2010). Under the electronic hardware category, the company products include personal computers, media devices, mobile communication, and portable-digital music players.
In addition to high tech hardware devises, the company produces a variety of software applications including third-party digital content applications and networking solutions. Within the mobile communications category, the company has launched into the market a variety of Smartphones including iPhone and other android Smartphones that have significantly hit the world Smartphones market.
The company is currently the market leader in the android smart phones and computer technology market. The company operations are based on geographical locations. In fact, the operations of the company are segmented based on the nature and location of its customers. The research report analyzes the external and internal environment where Apple Inc operates using various frameworks.
Main Findings
Current Market Situation: External marketing environment. PESTEL analysis
Political factors
Apple Inc. is a multinational company operating in many countries especially in North America, Europe and Asia. Thus, 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 very important factor especially when introducing a particular product in the foreign country market. Thus the company marketing strategies must be in line with the country policy in which its products are sold (Herzog, 2010).
Economic factors
The current economic situation around the world has a profound effect not only on the company 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. Sales for the Smartphones reduced as majority of consumers switched to other essential products as their income reduced.
Reduction in sales was also experienced in many parts of Europe as well as in many countries around the world. However, this presented an opportunity for the company to introduce cheaper Smartphones in the market (Wernerfelt 172).
Social and cultural factors
The company Smartphones is sold in an open cultural environment. Moreover, its target market of younger generation pursue vogue and like cultures. Their lifestyles are similar in almost all parts of the world. Moreover, the company Smartphone’s process designs are simplified to meet the needs of all cultures.
The company 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 has been popular among the younger generation, which has revolutionized the generation cultures (Blomstermo, Sharma & Sallis, 2006).
However, the company Smartphones designs focuses on the needs and wants of the target market. That is, younger generation needs gargets that are simple and with wide applicability. Apple android Smartphones have achieved that objective. The apple android Smartphone that has been currently released into the market has sophisticated 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. Electronic technology has found wide application in many industries and quickly improving. In fact, technology has formed the core of electronic and fiber information industry (Wernerfelt 168). Apple Inc. is one of the leading companies in the electronic information technology industry.
The highly volatile and ever changing technology has made it difficult for the company to hold the leading position in the IT industry. However, with the advent of the android technology in Smartphones, the company made a great stride in capturing the larger market share (Herzog, 2010).
Nevertheless, the company improvements on the current technology and innovative culture will enable it maintain its market share on the Smartphones market (Gormley, 2010).
Legal environment
As indicated before, the company is operating in many countries around the world with various legal regulations. Moreover, these countries have their own domestic companies that produce similar products. Commercial regulations are varied ranging from preferential regulations to patent and rights laws (Henry, 2008).
The company is facing many challenges and legal tussles with many competing companies relating to patent and copyright laws and regulations. This has increased the risks for the company. Besides, most of the products take long time before being introduced in the market because of legalities relating to patent and copyright (Shen & Lin, 2011).
Internal marketing environment
Rivalry between competitors
While an industry characterized by few large manufacturers and very expensive products hunts a niche audience, 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 equipments in day-to-day lives, the tools are becoming more of commodities (Ashcroft, 2011).
For most consumers, economy is more important than performance specifications. This has forced many manufacturers to pursue best-cost and low-cost provider strategies. The companies in the middle range compete for consumers by offering various options at varying prices.
To hasten the situation, industry leaders like Apple, Sony, Microsoft and Nintendo have always kept to this pace (Biswas, Fraser & Mahajan, 2007).
Supplier power
Suppliers 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, manufacturers also depend on standards owned privately. Such technology must enter the market and licensed to pay a defined membership fee. Additionally, the virtual concentration of suppliers puts some pressure on competitors.
For personal computers, Sony unlike Apple outsources central processing units from Intel (Barrios, Görg & Strobl, 2005). Thus, incompatibility in design does not allow the company to switch to other suppliers. However, microchip manufacturers are not present in computer manufacturing business and hence rely on computer manufacturers for their business.
Buyer power
As in all businesses, customers have the last say and apply considerable benefit over manufacturers. The various buyers with many but differing needs influence manufacturers of electronics directly since they must react and adapt by offering extensive product-lines.
The notable characteristic between power user looking for the ‘greatest and latest’ and average user needing a product which is ‘just good enough’ presents an obstacle to manufacturers focusing on tapping the many customers possible.
Manufacturers benefit from the wide use and acceptance of electronic products causing high demand for the products. Brand loyalty and proprietary systems are used to maintain customers (Moshirian, 2001).
Threat of potential entrants
Many avenues through which new entrants can enter the electronic market exist. However, several hindrances may prevent the entrance. Well-entrenched players who have significant brand loyalty and recognition including Sony, Microsoft, Apple, Samsung and LG among others (Crespo & Fontoura, 2007) characterize the current market.
Thus developing a successful brand in the presence of such players is difficult. They also keep costs down and dominate with economies of scale that cannot be achieved easily by a new entrant unless a substantial capital is invested. Despite these obstacles, new entrants may still come from newly instituted lean organizations, which depend on third party OEM for production (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 in consumers focusing their “technology money” away from computers, televisions, radios and game consoles.
However, despite the focus it is not likely that smart phones will diminish the importance of other products significantly. The only thing that the substitutes have influenced is elimination of monopoly in the electronic market (Alfaro, Chanda, Kalemli-Ozcan & Sayek, 2004).
SWOT analysis
Strengths
The company is producing high quality and attractive Smartphones. This has made the products to penetrate and claim the largest market share in both android and other Smartphones market (Chen & Mujtaba, 2007). Besides, the company leadership in high technology and electronic industry has boosted the marketability of its Smartphones. The company strengths in technology and powerful innovative capacity have boosted the confidence the target market have on its Smartphones (Dziri, 2011). The company Smartphones operating system has exceeded any other competing Smartphones and this has become one of its greatest marketability strength.
The company Smartphones design is fashionable and stylish which enables the user interface. This has enable the company Smartphones be used in diversified cultures. In addition to technological, quality and design strengths, the company Smartphones is diversified with different prices that meet all classes of people (Linzmayer, 2006). Besides, the company good relationship with the customers will boost the Smartphones sales.
The biggest drawback the company Smartphones has is their limited compatibility with other gargets. Apple android Smartphones is not compatible with other applications. This has limited its use. Consequently, its market will significantly reduce particularly where the spare parts are not within reach.
Besides, the company Smartphones has limited market and distribution channels as compared to 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 global Smartphones market is an opportunity for the company particularly in countries like China, which is experiencing 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 market (Arregle, Hebert & Beamish, 2006). Besides, the growing use of the Smartphones in the developing market such as in Africa presents another opportunity to be exploited (Apple Inc, 2012).
Threats
The biggest threat the company and its Smartphone products is facing is stiff competition from other firms and similar products. Besides external competitive threat the company is facing on the particular products, the technology used is also hard to maintain.
That is, it is difficult to sustain technological leadership in the industry. New technologies are highly pirated by other companies to produce the competing products (Linzmayer, 2006).
Recommendations
The future of Apple Inc lies on the development of its key competencies to enhance the expansion strategy (Blonigen, 2001). Since the company operates in a highly competitive market, the innovative products, managerial competencies, and enhanced marketing are critical for Apple Inc future success.
Smartphones are categorized 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 Inc’s internationalization strategy.
Moreover, the company must invest in the development of its own 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 Inc 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).
Compared to other modes, fully owned subsidiary is the best entry mode for Apple Inc. The fully owned subsidiaries in the international markets make the firm to have control over the enshrined competencies and initiatives that form the core of the business strategies. The strategy increases Apple geographical diversity while reducing political and economic risks associated with this expansion.
References
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