International Business Environment of Apple Incorporated - Case Study Example

? International Business Introduction Apple Inc is an international organization which originated in America. It was founded by Steve Jobs in the year 1976 (Apple, 2013a). The company is presently headquartered at California, USA. The company deals with manufacturing and production of computer software and advanced technological electronics. Apple markets and develops laptops, desktop computers, mobile communication devices, portable music players and many other digital gadgets. Devices such as IPhone, Ipad, Mac OS, Ipod are some of the invigorating products of Apple. Apart from the hardware category, the company also has a strong presence in the field of engineering and software technology. The operating systems under the software segment include Mac OS and other productivity and utility applications like I-work, Quick time player, and logic studio among others (Apple, 2013b). Apple is considered as one of the best software firms in terms of creativity and innovation. The company mainly distributes its services and product through retailers, whole sellers and exclusive Apple owned stores. Hewlett Packard, Dell, Google and Blackberry are the direct competitors of the company (NASDAQ, 2012). The current business environment is extremely volatile and changing. In order to thrive and survive in this competitive environment, companies will have to monitor and analyses the external as well as internal environment conditions before taking any business decision. Company philosophy Apple runs on the philosophy of creativity and premium (Simoes, 2001). Even though other companies are trying to cut down costs in order to increase sales and volume growth, Apple continues to price products in the premium category. The company has established a loyal base of customers. Design and technology have always been the pillars of success for Apple. The other major marketing philosophy surrounding Apple is empathy, focus and Impute. Together, they provide a breakthrough competitive advantage to the company with respect to customer preference and market knowledge (Ghodeswar, 2008). Empathy concerns with understanding the exact needs to the customers (Witcher and Chau, 2010). The company has successfully embedded this philosophy with extensive research and evaluating the future trends and demands of the ever evolving customer. The second philosophy is focusing on only what is important and is necessary and removing all unimportant things from the activity plan. This increases the employee efficiency and overall productivity. The third philosophy is imputing which means that public and consumer form an opinion about the company. Thus, Apple makes sure that the image of the company is clean and balanced. External environment analysis PEST analysis will be helpful in evaluating the external environment of Apple. Political More than 50 percent of revenue of Apple comes from international markets. Thus, any change in the political scenario in the major international market will be crucial in overall growth of the organization. Economical The global economic crisis has impacted the company in an adverse way. With the high inflation rate and rising unemployment, consumers have shifted to saving mode. This has impacted the overall business of Apple, as most of its products are categorized as luxury and premium range. Fluctuating values of US dollars have also impacted the organization. Social The two major factors which have always been the forefront of Apple were designing and creativity. With the increasing disposable income, people are more attracted towards creative gadgets and technology (Beri, 2007). Apple has understood this market sentiment and continues to design innovative and user-friendly technology for the masses. Technological Apple throws in a large chunk of its revenue into product development and research phases. The sole purpose of this is to come out with new and innovative technology which provides competitive advantage to Apple. Opportunities and challenges An understanding of the current opportunities and challenges is important in order to further make crucial decisions regarding marketing and planning (Richter and Pahl, 2009). Opportunities The biggest opportunities for Apple lie in its designing and innovation. Very few competitors can challenge Apple on creativity and designing. Even though the shelf life of electronic gadget is decreasing fast, Apple can still hold competitive advantage by patenting its best products (Assael, 2001). Other opportunities lies in Apple’s cloud services. To remain competitive in the major market, the organization can expand its services further. This can be done by adding services and new applications to the Smartphone, iTunes and providing add-ons in its present models of iPhones. Challenges Recent inconsistent market performances and recurring customer complaints have become a major grey area for the organization (McCray, Gonzalez and Darling, 2011). Inability to improve competitiveness in terms of costs and increasing cost structure have also resulted in decreased overall profit and revenue generation by the country. The personal computer sector needs rebranding and repositioning, due to its shrinking demand and market share. The organization has also started observing a decrease in employee morale, mainly due to slow market growth of and cuts in bonuses and incentives. Apple- Strategy and Globalization While opting for an international expansion, companies generally choose between two common types of business strategies. These are differentiation strategy and cost-leadership strategy. In the current business environment, Apple is using mixed strategy, implementing the best strategy for different areas. For example, in emerging countries like India and China, the Company has launched specific brands, which are generally rated as premium and targeted as luxury market system. Apart from that, the company has also launched many mid-level brands, which are affordable to executive and middle-income groups. In case of developed market such as European nations, Apple follows a differentiation strategy by manufacturing products with unique design and development. This strategy helps in enhancing the position of Apple with respect to its competitors in international market. Organizational structure The larger than life image of Steve jobs has become one of the identities of Apple. The company follows a more or less flat or straight forward organizational structure. The company structure is decentralized into various smaller unites. Since the organization has presence in various regions across the globe, the management has decided that a decentralized and localized organizational structure will bring innovation and help in understanding local preferences well. Tim Cook is the present CEO of Apple. Under him, a bunch of senior vice presidents handling different departments as well as chief financial officer are working. The company is known for its collaborative approach. Even though most of the crucial decisions are taken in the head office, most of the regional offices have been given decision making power to a certain extent. This is majorly in terms of local adjustments in marketing and promotional activities. Apart from that, the important functions of the company, including the product development teams and market research team are in constant synchronization with each other. Apart from the major roles in the head office, the organization does not follow any strict hierarchy. Also, horizontal integration is given much importance for the internal growth and development of the organization. Company structure The company has been known for its innovative and cult technology and designs. In terms of design advantage, most of its competitors are far from behind. The company is headquartered in California United States. The company is listed in NASDAC and is known as the second largest company in the IT sector, worldwide. The company has 408 retail stores spread over 14 countries. Apple also distributes its products through online iTunes store and Apple stores. In terms of market capitalization, the company is considered as the largest publicly traded firm in the world. The company is worth 314 billion dollars according to the latest financial reports. The company has more than 70,000 permanent and full-time workers and is one of the top ten companies in Fortune 500 list. The company has been involved in many mergers and acquisitions with the objective of integrating these smaller companies into various projects. The first acquisition of Apple was made in the year 1988 when it acquired Network Innovations. In the year 2002 Apple made most of its acquisitions. During this year only, Apple acquired few music software companies and with their associations, was able to launch the integrated music technology systems. The company also divested into five investments, through which various parts of Apple were sold to another company. Culture and its advantages When apple was established in the year 1970, it challenged the traditional notion in which business culture was perceived. In a matter of few years, Apple established a successful organizational culture which was very different. The organization adapted a flat versus hierarchal strategy, casual versus formal attire and a more decentralized approach, which was not very much accepted during that time. Initially, this unique organizational culture differentiated apple from the rest of its counterparts. Soon, this culture was being adopted by most of the start-ups and was becoming more popular among young and newly established businesses. Steve jobs had always portrayed a larger than life picture and this was replicated in Apple’s organizational as well as business culture. Even the strategies and the objectives behind Apple’s design are to provide customers with extraordinary and powerful experiences of technology and design. The organizational culture of Apple has come a long way and still retains the original aura of excellence and individuality. The organization has created an Apple fellows Program in which individuals showing extraordinary achievement in leadership or technical field are awarded. Enforcing accountability is another major culture which the organization strictly follows. Every project in the organization is lead by a DRI or directly responsible individual. Job’s tenure in Apple was crucial and because of his charismatic leadership he was able to increase efficiency level of employees. Internal competition and innovation were few of the other mantras followed by the organizational culture. Most of the employees in Apple were specialist and this strategy was started by Jobs. He did not wanted employees to step out of their expertise area so they generate excellent results in their expert area. Corporate management of Apple deals with designing, production, launch, marketing and analysis of each of Apple’s products and services. It can be also described as the core of the organizational strategy. The overall strategy and evaluations of marketing and business plans is done by this group. In order to increase organizational performance, Apple involves in group dynamics and employee engagement programmes. Regular discussions and brain storming sessions help in increasing creativity and innovativeness in the organization. Retailer management is another important job for the organization (Mills, 2002). Passion for the products, optimistic approach and excellent communication skills are few of the pre-requisite for this department. Since this job requires direct contact with the customers, sales and performances in terms of figure and numbers are crucial, in order to find out the reliability and efficiency of the management. To increase the productivity of this department, the organization uses motivational schemes such as incentives, bonuses and foreign trips. Future Most of the ongoing projects of Apple are based on differentiation strategy. Apple is following this strategy by introducing unique and creative elements in the development and design process. The objective is to formulate and design unique products and services so that they are values and likes by the customers. According to analysts, future customers preference will be inclined towards value based services and products. Thus, manufacturing and producing services which can be easily differentiated from its customers can provide long term competitive advantage to Apple. At present Apple is one of the most profitable and valued company around the globe. The future plans of Apple will be continuing its growth performance. In terms of rivalry, Samsung and Nokia have been its closest rivals in most of the product categories, especially in mobile phones. Most of the mobile products of both companies are similar in terms of features and applications. Thus, competitive pricing will be one of the strategies for Apple in near future (Knox, 2004). In terms of strategy, the company is planning for expansion through new stores (Subramanian and Ghose, 2003). The company has announced a budget of 1 billion through which it plans to open around 30 stores in various locations around the globe. Apple also plans to re-open few of its existing stores in bigger locations. Expanded distribution and focus of emerging market will be few of the important immediate future strategies. The company has also planned to introduce low cost iPhones especially in the emerging markets. Apart from this, the company is planning to introduce new software in order to provide customers with new experiences and exciting new applications. For this, Apple has scheduled a budget of 4 million dollars in the current fiscal year (Yenko, 2013). Recommendations According to the findings above, the company is performing well, even in this economic crisis. However, competitors are giving a tough time in few of the vulnerable categories. Also, pricing has become an important criterion in consumers purchasing process. Few of the suggestions which can help Apple in improving its overall business operations are; 1. The outsourcing business of Apple is not very strong. In order to improvise the outsourcing practice, Apple can introduce stringent regulations and tighter ethical practices. The company can also hire internal auditors and team of investigators who can undergo surprise visits in order to check the overall performance of the outsourcing businesses. 2. In order to ensure that its designs and manufacturing technology is not replicated, the company can patent its design and can get copyrights on its manufacturing processes (Rufat-Latre, Muller and Jones, 2011). 3. Apart from making sure that the innovations and creative designs are intact, the company should also focus on the external environment as well as the technological and socio-cultural factors affecting trends. Through this, the company can formulate appropriate strategies and best utilize its capabilities and resources. 4. The company should also focus on improving the strength of its internal environment. Focus can be given on employee engagement programmes and activities improving the overall performance of the employees. Apart from this, other strategies such as bonuses and performance driven incentives can also help in increasing the overall productivity of the company. Conclusion The company strives hard in order to provide excellent experience in usage of its services and products. This is done by introducing new and innovative technology and software in customer’s life. Apple’s ability to design unique operating systems and design has made it one of the most valued firms across the globe. The success of the company can be attributed to the company’s continued focus of research and development and persistent effort in bringing new and innovative design and technology. However, in order to thrive and succeed in this volatile environment, the company will have to formulate its business strategy so as to build a strong platform for its services and products. The present economy around the globe is free from any boundary. Integration and globalization are the major factors driving the economy now (Bhagwati, 2004). Even though these factors have their own challenges and well as opportunities, it will be extremely difficult for any organization to remain cut-off from the changes. Thus, Apple Company will have to best utilize its capabilities and resources in order achieve competitive advantage and sustainable growth in future. Reference List Apple. 2013a. About us. [online] Available at [Accessed 16 Aug 2013]. Apple. 2013b. Mac. [online] Available at < http://store.apple.com/us/mac.> [Accessed 16 Aug 2013]. Assael, H., 2001. Consumer behaviour and marketing action. Boston, MA: Thomson Learning. Beri, 2007. Marketing Research. New Delhi: Tata McGraw-Hill Education. Bhagwati, J., 2004. In defense of globalization. Oxford, New York: Oxford University Press. Ghodeswar, B.M., 2008. 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Reciprocal spill over effects: A strategic benefit of brand extensions. Journal of Marketing, 67, pp. 4-13. Witcher, B. J. and Chau, V. S., 2010. Strategic management: Principles and practice. Connecticut: Cengage Learning. Yenko, A., 2013. Apple’s billion worth of plans in the future. [online] Available at < http://au.ibtimes.com/articles/468991/20130520/apple-samsung-ios-google.htm#.Ug3ZFX8qmho> [Accessed 16 Aug 2013]. Read More