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International Strategic Plan to help Apple company expand in China Report

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Updated: Jul 21st, 2021

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

  1. Middle and high-income customers that are ready to pay more for greater user experience.
  2. Customers that have fun with technology: this segment could represent customers that enjoy shooting digital videos and photos
  3. Lovers and fans of music between 12 and 35 years of age
  4. Experts in media and design
  5. Low income earners that can only afford cheap products with basic features

Competitors

Table 1: Competitive Analysis

Factor Our Firm Strength Weakness Competitor A Competitor B Importance to Customer
Products Computers, mobile phones, music players and other electronics Has a range of products that suit all classes of customers Competitors are copying its products Supplies similar products as Apple Company Offers similar products as Apple Company A wide range of products to choose from
Price Suits all levels of customers Advanced products are available at a higher cost Very high prices when compared to prices offered by competitors Cheap products available Offers products at a cheap cost Get products at reduced prices
Quality Has provided of low to high quality Customers desiring high quality products get them High quality products are very expensive High quality products are offered at a low cost Quality does not very high prices Get excellent quality
Selection Has the greatest market share Has managed to convince most customers Is slowly losing to competitors Are waging competition for an outstanding selection Posing a tough competition Benefit from the competition through low prices and high quality
Service Has the best and most convenient services Customers are assured of good service Offer some of their services at a high cost Slowly catching up Employing fast-paced digital technology Go for excellent service
Reliability Well known for excellent products Excellent products and services make it reliable Higher prices make it gradually loose to competitors Has not been clearly known thus customers have doubt Is yet to be fully approved by most customers Rely on dependable products only
Stability Has maintained a leading position over years Has the greatest number of royal customers Is losing some customers to competitors Has developed hitches occasionally Products are not constantly available in the market Never lack what they want
Expertise Does not stop inventing Employs modern technology Advanced products go for very high prices Is applying modern technology Offers modern expertise Acquire products of high expertise
Company Reputation Brand loyalty is indubitable Customers are ever attracted to it Is losing regard to competitors Has not gained sufficient reputation Is slowly attracting customers Choose where they benefit most
Location Operates globally Has managed the greatest share in almost every market Its high prices are making it loose in some markets Is a multinational corporation Is slowly going global Can get quality products wherever they go
Appearance Appealing to all its customers Its constant invention ensures outstanding appearance always Its appearance is being blurred by low prices offered by its competitors Is gradually appealing to its customers Does not appear to offer aggressive competition Go where it appeals most
Sales Method Sales in its retail stores as well as online Can reach customers that can have access to its retail stores Acquiring products online has additional charges Sales in its retail stores as well as online Sales in its retail stores Can get the products at their convenience
Credit Policies Influenced by economic situation and degree of risk Loyal customers do not have to pay in cash Fail to have a one-suits-all credit policy Value the circumstances for a credit policy Bill some of their customers for the products they buy Acquire products at the most convenient method
Advertising Employs appealing slogans for particular products in its campaigns Its slogans are able to attract a huge number of customers Keeps changing its slogans and that may confuse some customers Basis its campaigns on cheap costs Music and media plays a key role in its ads Choose products that attract them most
Image Internationally regarded as a market leader Uses its image in satisfying the needs of clients Is losing its image as a result of criticism from some of its competitors Shaping to image to appeal to most customers Faces tough financial constrains that bar it from making sufficient progress Acquire brands with the most preferred image

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

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.

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