Executive summary
Since China is enjoying a speedy economic growth, many individuals are starting their ventures in the country thus creating stiff competition. In this regard, multinational companies, like Apple Company, have found a good center for economic development in addition to affluence.
Apple Company should choose licensing, joint ventures, and wholly owned foreign enterprise licensing as its modes of entry. An evaluation of the business atmosphere in China would give a general image of the market.
Additionally, with an excellent evaluation of the market, Apple Company can capitalize on the viable opportunities and reduce the existing threats, as a precise strategic planning will give the company a stable and suitable setting for its growth.
Profile
Economic
Economic aspects have a direct impact on companies since they influence the accessibility of capital, charges, provision, and demand. In the contemporary era, the economic development of China has been fast and the industrial segments can attest to this assertion.
From around 1978, China turned out to be a market centered economy. In addition, as the central bank in China, the Bank of China employs monetary strategy to raise or reduce the rates of interest and regulate the sum of money in the financial system to attain a steady economic development.
The Bank of China as well assumes the responsibility of regulating conflict and surplus, in addition to raising taxation for import duty (Isenberg, 2008).
In a period of inflation, the financial system is short of investment and exports normally suffer from the price hikes since inflation raises the cost of exports but it supports imports.
Socio-cultural
Disproportionate income distribution and poverty act as hindrances for the development of China and thus the government should regulate the taxation system, decrease income variation, and enhance socio-cultural security to increase the safety of existence.
With the changing way of life, individuals desire to work from home, which increases the need for such things as computers. Moreover, the level of single households is on the rise and companies have a tendency of deploying such employees far away from home (Acs, 2006).
With regard to attitude of work and leisure, individuals become more considerate and flexible when they have an opportunity to take pleasure in life after work.
In this regard, it is critical for companies to set aside time for leisure activities of their personnel and encourage the capacity to communicate and socialize irrespective of their cultural origins, and thus improve their health of body and mind in addition to creating a suitable ground for their effectiveness at work.
Legal
The legal aspects deal with the manner in which regulatory and government strategy impact economic aspects and judgments by the government.
Following the economic change in 1978, the financial system of China is rising outstandingly and influences the encouragement of the growth of non-public companies, foreign trade, industrial manufacturing, in addition to the employment report.
When the security of consumers is increasing, Apple Company and other international companies will acquire gains from carrying out business in China.
The emergence of foreign trade in China is leading to a rise in foreign direct investment (FDI) and in 2008, the FDI rose to around 110 billion US dollars in China. Moreover, the excellent association involving nations is very significant for economic growth (Li & Zhou, 2010).
Competitive profiles
With China enjoying a fast economic growth, many individuals are starting their ventures in the Chinese market thus creating competition amid different companies as aforementioned.
In a bid to draw foreign direct investment and operate a thriving business in the Chinese market, it is critical to assess the macro-environment and recognize the aspects that would influence financial systems of different companies like the cost of demand and supply (Doole & Lowe, 2008).
Additionally, there exist some suggestions for local and foreign shareholders and business individuals to access the market in China and distribute information such as high-expertise, cultural, and management proficiencies with companies in China in a bid to create competition and encourage rapid growth of the economy in China.
Entry mode
The following are some of the entry modes available in China.
Licensing
In this entry mode, one company that has intangible possessions offers a foreign company the permission to utilize that possession for a particular period.
The licensed possession could contain exclusive rights, patents, and procedure in addition to trademarks (that encompasses designs and names of brand).
It is normal in the manufacturing sector for companies to be given the right to make use of some process expertise in return for royalties (for example companies like Apple that deal with computers and other electronics).
Franchising
Franchising denotes a special kind of licensing and signifies a situation where a company supplies a different company with intangible possessions as well as other support for a long period in exchange of compensation in terms of costs and royalties.
Whereas the licensing method is widely practiced in the manufacturing segment, franchising mode of entry is commonly practiced in the service sector.
Strategic alliance: In this mode of entry, at least two companies collaborate to realize strategic objectives. Strategic alliance is mostly practiced between a business and its customers, competitors, and suppliers.
Joint venture
For the case of a joint venture, the partners structure an autonomous and jointly possessed but detached company in a bid to realize particular business objectives. The types of joint ventures include frontward/rearward incorporation, buyback and multi-phase.
Wholly Owned Foreign Enterprise (WOFE): WOFEs denote facilities that are possessed and run by a single parent corporation via foreign direct investment, which could be the outcome of attaining an installation at hand or a development of a new installation from scratch.
Chosen mode of entry
Apple Company could use licensing, joint ventures, and wholly owned foreign enterprise as its modes of entry in the Chinese market.
The company would choose licensing as its mode of entry since it does not have to take up expansion charges and risks associated with venturing in a foreign market.
Apple Company would choose joint venture as a mode of entry as being a multinational company it might gain from the knowledge of a local partner in the competitive situations, culture, and business systems of China (De Wit & Meyer, 2010).
Lastly, Apple Company could employ wholly owned foreign enterprise as its mode of entry as for a company anchored in control over technical proficiency, this mode of entry decreases the risk of losing management over that proficiency.
Wholly owned foreign enterprise offers a company the type of firm control over functions in a number of nations that is essential for pursuing an international strategy.
Product
Product components around physical product
The products of Apple Company such as computers and cell phones denote a significant building block in different systems envisaged for the Internet.
Some of the components that could be built around these physical products include cameras, Near Field Communication (NFC) module, and visual markers.
Visual markers anchored on Radio Frequency expertise could assist cell phones to recognize every kind of physical object rapidly and effectively.
Most computers and cell phones could as well be fitted with powerful cameras that can even decode universal barcodes that can be accessed on virtually every consumer good.
Moreover, computers and cell phones can read Radio Frequency Identification tags with the help of inbuilt Near Field Communication module.
Apple Company could offer value addition to clients by enhancing its physical products with digital services, thus making sure that there is an unending attractiveness and constant contact with the product (Jones, 2010).
Demographic profile of customers
Some of the demographic characteristics of the customers of Apple products are as follows
- Middle and high-income customers that are ready to pay more for greater user experience.
- Customers that have fun with technology: this segment could represent customers that enjoy shooting digital videos and photos
- Lovers and fans of music between 12 and 35 years of age
- Experts in media and design
- Low income earners that can only afford cheap products with basic features
Competitors
Table 1: Competitive Analysis
I would standardize a new product as interchangeability brought about by standardization yields a greater efficiency and cheaper costs of manufacturing new products and these gains are conveyed to the customers due to increased competition.
Price
I would set the prices of the products by first ensuring that I factor in every cost involved in the production and before factoring in the profits. Moreover, I would conduct a market research to know the prices offered by competitors for similar products.
I would standardize the price for products by employing calculated amount while considering impacts of cost reduction on the continued operation, which would be adaptable for the people as it will be considerable and as per the quality of the product (Santos-Álvarez & García-Merino, 2010).
Promotion
The promotional tools available for Apple Company are Internet advertisement, direct marketing, and sales promotion.
The tools that would be best suited for Apple is Internet advertisement since most people in the modern world have gone digital and the Internet has converted the world into a global village (Santos-Álvarez & García-Merino, 2010).
Standardizing a new promotion mix for Apple Company will ensure easy availability of products with a great number of varieties being in stock.
Distribution
The following are the min distribution channels for Apple Company
Figure 1: (Prashantham & Dhanaraj, 2010).
The best channel for Apple Company in China is the second one, viz. from the company through an agent to the customer. The company will standardize the new distribution channel, as standardization will ensure that a uniform terminology is employed.
Conclusion
China is a fast developing nation, which has several prospective business opportunities. Nevertheless, it is significant for Apple Company to evaluate the investment environment in China and ensure that it is safe before making an entry.
An assessment of the business environment would give a general representation of the market. In this regard, Apple Company can take advantage of the suitable opportunities and reduce any threats.
The right strategic planning will present Apple Company with a stable and suitable environment for its growth.
Reference List
Acs, Z. (2006). How is entrepreneurship good for economic growth? Innovations: Technology, Governance, Globalization, 1(1), 97-107.
De Wit, B., & Meyer, R. (2010). Strategy: Process, content, context, an international perspective. Belmont, CA: Cengage Learning Business Press.
Doole, I., & Lowe, R. (2008). International marketing strategy: analysis, development and implementation. Boston, MA: Cengage Learning EMEA.
Isenberg, D. (2008). The global entrepreneur. Harvard Business Review, 86(12), 107-111.
Jones, G. (2010). Organizational theory, design, and change. Upper Saddle River, NJ: Prentice Hall.
Li, J., & Zhou, Z. (2010). How foreign firms achieve competitive advantage in the Chinese emerging economy: Managerial ties and market orientation. Journal of Business Research, 63(8), 856-862.
Prashantham, S., & Dhanaraj, C. (2010). The dynamic influence of social capital on the international growth of new ventures. Journal of Management Studies, 47(6), 967-994.
Santos-Álvarez, V., & García-Merino, T. (2010). The role of the entrepreneur in identifying international expansion as a strategic opportunity. International Journal of Information Management, 30(6), 512-520.