The Operations of Apple Inc in the United States of America and China Qualitative Research

Apple Inc. is an American multinational corporation that designs, develops and markets consumer electronics, computer software and personal computers. It has a wide range of products both software and hardware; the hardware include, iPod, iPhone and the iPad while software includes; iTune, iLife suite of multimedia and creativity software and iWork suite of productivity software.

Owing to its emphasis on the philosophy of comprehensive aesthetic design and its distinctive advertising campaigns, the company not only endeared itself to consumers globally but also confirmed its status as a major player in the consumer electronics industry. The fact that the Apple App store can be found in 96 countries globally underpins its scope (Chesbrough & Henry, 2003).

Apple’s mission statement sums what the company is all about. ‘Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and internet offerings.

Apple Inc. deploy Apple brand to compete across various competitive markets. These markets include computer industry, the electronics industry and the advertising market. Apple’s product strategy has been instrumental in helping the company to launch and maintain a formidable campaign against its rivals.

Apple’s product strategy entails developing innovative products and services that are in sync with a digital hub strategy. Apple Macintosh computer products serve as digital hub for the various Apple digital devices such as the iPod, digital video and still cameras, cellular phones, personal digital assistants and other digital devices. The most recent brand strategy by Apple lays a lot of emphasis on customer experience.

It took Apple a long time to penetrate the China market. When iPhone was released in the year 2007, it did not get a positive reception. It was deemed to be unnecessarily overpriced. Apple did not also have an official Chinese distributor. Nevertheless, the product became popular with the affluent Chinese who had more disposable income. Apple eventually got an official distributor for its merchandise. China Unicom, the second largest mobile phone operator in China, obtained the rights to distribute the iPhone in China.

A lot of factors are responsible for Apple’s success in China. Apple had an extremely strong series of products starting with the iPod in 2001 to the iPhone in 2007. The level of product differentiation by Apple was unprecedented. It was superior to the ones that existed in the market at the time. Their superb design appealed to a wider audience (Chandler & Alfred, 2001).

Apple Inc. in America added to its distribution channels to shore up sales. They opted for distribution channels with high sales volumes such as AT&T, Best Buy, and Wal- Mart. These allowed Apple to reach to a wider audience.

Apple has also opened retail stores in various major cities around the world in high-end shopping malls in an effort to shore up its sales volumes. In China, Apple teamed up with China Unicom to distribute Apple’s products and services. The formation of strategic alliances is applied in other countries as well. Apple opened its first store in Beijing in the year 2008. It has plans to open twenty five more stores around China in future.

The Apple brand is referred to as a premium brand because its competitiveness is not centered on the price of its products and services. Apple does not have to slash the prices of its products and services for it to be competitive. This is because the reduction in prices will not only lead to reduced profits but will also erode the value of the company’s shares (Carlton & Jim, 1997).

The reduction of prices is unhealthy for premium brands such as Apple because of price elasticity. Price elasticity is the change in demand for a product in response to the change in price of that product. Premium brands have low price elasticity; change in price of premium products or will not significantly alter the demand for those particular products. Therefore, reducing the prices of premium products is of little consequence if any to its demand.

Apple’s price strategy is anchored on the human psychology. Human beings are interesting in that if a product is out of their reach with regard to its price, they will attach more value to it. Affluent consumers will ‘break their banks’ so to speak just to acquire what they intensely desire. This informs Apples price strategy (Grindley & Peter, 1995).

In the States, Apple’s original iPhone recorded obscene sales despite it costing more than its closest competitor. In China, instead of manufacturing affordable products for the Chinese market, Apple opted to wait until the disposable incomes of their target market increased to a level which they could afford to purchase Apple’s core products.

A global business environment refers to factors within any business environment that should be considered as they will have a bearing on the performance of a business in that environment. They include, the economic outlook of the region in which the business will operate in, political and social developments, availability of skilled labor, consumer buying behavior, physical infrastructure and the competitive strength of potential rivals.

In our countries of choice, United States and China, the global business environments differ. The United States is a nation that subscribes to capitalism while China subscribes to social communism. The United States has for a long time now has had the largest economy globally. It is only recently that China’s economy has grown exponentially to be the second largest economy in the world.

The United States boasts of population with more disposable income which they freely to spend. The governance structures of the two countries are diametrically opposite; hence their respective formal institutions impose statutory rules, regulations and laws which differ (Philip & Tushman, 1990).

The competitive environment for Apple in the United States favors Apple’s. Nokia found the going hard when Apple’s iPhone superseded Nokia’s Smartphone in sales. Nokia consequently lay off 7000 employees to cut costs. Apple officially became the largest mobile phone company in terms of revenue leaving Nokia with the unenviable title of the largest handset maker in terms of volume.

In China the case was no different. Many tabs had flooded the market with better features than those of iPad 2. None challenged Apple’s supremacy. The sleek design together with the app support in the Apple store put the iPad in a class of its own. It is all the rage among affluent consumers in China. Other tablet makers in China are looking to launch tablets that will challenge iPad 2’s dominance.

Apple does not target markets. Therein lays the gem that turned the fortunes of this company around for the better. Apple realized that it was the individuals who worked for the companies that Apple was trying to target rather than the company itself who ultimately rejected or accepted a product. Apple targets the end user and allows them to decide where and how they are going to use Apple’s products. Apple focuses on the end user, develops superb products for them, and let’s them decide on the best way to put the technology to use.

Apple uses all forms of media to communicate to its prospective consumers. In the year 2007, Apple’s advertising budget was approximately $467 million to specifically market the iPhone. Apple used all modes of advertising to bring purchasers to its point of sale. These include television, radio, print and digital media.

Culture has impacted the operations of Apple in the United States and China. Since the United States has a free and vibrant society, it follows that the consumers will spend freely leading to increase in revenue as a result of increased sales. Apple is free to do whatever it wants to so long as its activities are legal. In America, Apple’s options are endless as it can engage in whatever activity it wishes to (Grant & Robert, 1991).

In China, liberal spending is abhorred. This leads low sales Apple’s part considering its products are expensive. Every activity that goes on within the borders of China is monitored by the State. This can be costly to Apple since it has to always confer with the authorities if it wants to engage in any activity hence curtailing its flexibility.

Lastly, the only undoing of Apple is the fact that all the power lies with one person, the CEO Steve Jobs. This is risky to the interest of the company. Other managers ought to have jobs delegated to them so that they can learn the ropes of management gradually. If they make any mistakes they are corrected immediately hence if Steve Jobs leaves, the company will be able to run without any hitches.

References

Carlton, K., & Jim, A. (1997). Apple: The Inside Story of Intrigue, Egomania, and Business Blunder. New York: Times Business.

Chandler, F., & Alfred, D. (2001). Inventing the Electronic Century. The Epic Story of the Consumer Electronics and Computer Industries. New York, NY: Free Press.

Chesbrough, P., & Henry, J. (2003). Open Innovation. Boston, MA: Harvard University Press.

Grant, L., & Robert M. (1991). The Resource-Based Theory of Competitive Advantage: Implications for Strategy Formulation. California Management Review, 33, (3), 4-22.

Grindley, A., & Peter, M. (1995). Standards, Strategy, and Policy: Cases and Stories. Oxford: Oxford University Press.

Philip, R., & Tushman, M. (1990). Technological Discontinuities and Dominant Designs: A Cyclical Model of Technological Change. Administrative Science Quarterly, 35, (4), 604-633.