Strategic Analysis: Apple's Chinese Market Challenges and Solutions

This case study examines the major problems Apple faces in the Chinese smartphone market, including declining sales and increased competition from domestic manufacturers. The analysis delves into the company's strategic challenges, such as pricing, innovation, and marketing strategies, and their impact on revenue and market share. The study identifies the core issues, like the US-China trade war and the rise of cheaper, feature-rich smartphones. It then proposes alternative solutions, including price adjustments, increased innovation, and improved sales and marketing efforts. The recommended course of action focuses on price reduction to boost sales, particularly in emerging markets. The implementation plan involves a phased approach, starting with middle and South Asian countries before global expansion. The case study emphasizes the importance of adapting to market dynamics and making strategic decisions to maintain a competitive edge.

Case study

Contents
Case study........................................................................................................................................1
Major Problem or Issues..................................................................................................................3
Analysis...........................................................................................................................................3
An alternative solution to the issue..................................................................................................4
Recommend a course of action........................................................................................................5
Implementation of plan....................................................................................................................6

Major Problem or Issues
The Chinese smartphone market is considered to be one of the most important markets for the
smartphone manufacturer in the world. this market has the potential of expanding the turnover of
any smartphone company in the world. Apple is one of the most reputed smartphone brands in
the world and is dependent on the revenue from the Chinese market. The company is having a
major problem in the sense of its turnover as this is seen that the company’s turnover is being
depleted every year. It is seen that the from the top position in the global market to the third
position the company has loosed its value and is having the problem with the sales figure.
Despite the fact that the companies latest offering that is iPhone XR which is the most sold
smartphone in the world for the year 2018-19. The company is lacking in the third position.
Also, as the company is an American company the trade war between China and America is
impacting their sales figure. The new competition and the cheaper smartphone giving the
flagship level specification is considered to be the major problem for the company which they
have to consider over next 5-10 years of study. as this is the problem that stands in front of the
company due to which they are not able to maximize their turnover and overall profit.
Analysis
The problem that has been identified for the company like Apple is a big problem as the
companies repute and the sales figure are downgrading due to which the company is facing
lower profit. It has been considered that the CEO of the company Tim Cook wrote the letter to
the investors where they have revised the company’s revenue for the expected quarter for $84Bn.
The CEO of the company has also specified that the decline has been due to the Chinese market
where the company is expecting the decline of over of 100% in the revenue for the latest quarter
this year. This is the result of China and the US trade problem due to which the company is
suffering. Also, the company is facing a problem from an innovative company to the non-
innovative company. the company is having multiple portfolios and the major source of revenue
for the company is the smartphone that they sell. It is considered that the company is heavily
impacted due to increase in the competition in the market. the Chinese manufacturer Huawei has
just beaten the company and has got the 2nd position in the top brands in the world falling behind
Samsung. One of the problems that the company is facing is that their products are considered to
be high priced as compared to the other smartphone in the industry which are offering better

specification at the lower price segment. The belief that the company is having is that the product
that they are making is for the elite class people and due to this the price of the product that they
are offering does not matter. While on the other hand this is seen that due to the increase in the
number of smartphone brand and the offering that they are giving to the customer at the price
which is much lower than the products of Apple are making the elite class people shift from
Apple to other smartphone brands. The company is facing a problem where the demand for the
product of the company is decreasing. Hence this is considered to be the main problem of the
company as they are not able to capture the hold on the market as they were doing it before. The
other portfolio of the company is doing well as the Mac books, Pc’s, Pad and another offering of
that the company is providing are considered to be far from the competition and they are not able
to maximize it accordingly. Also, the increase in the price of the US dollars is making it difficult
for the company to export the product as this becomes difficult for the other companies to pay
the increased price for the product. The other portfolio of the company except the smartphones
are performing at a greater rate and bring the profit for the company. hence this is important for
the company to make and the target the strategy for the smartphone that they sale as this is
impacting the turnover of the company and this issue can be considered by the company over the
next 5-10 years of performance.
An alternative solution to the issue
As the company is facing the main problem in the most required portfolio where they are not
able to take the smartphone sales to the new heights rather the sale of the smartphone of the
company are decreasing at the rapid rate. Due to which the company is having a threat in the
coming 5-10 years that their smartphone sales would decline to the lowest level. Therefore, due
to this reason the company has to make various solution which is related to the identified
problem. These include the following:
 Bringing the price of the product of the company down: It is considered to be the
major problem for the company as this is seen that due to the competition in the market
the other brands are selling their product at the cheaper rate and with better specification
due to which the products that are offered by the company are not purchased by the
maximum smartphone users. hence this would be considered to be the positive point for
the company to bring the price of the product that they sell to a lower level. it is
considered that if this is done than the sale of the smartphone of the company in the south

and middle Asia would increase significantly as this is the main market for the
smartphones from where the maximum revenue is generated. This has the certain
disadvantage that is related to its which includes that the company would not be able to
earn the profits margin as they were earning before, on the other hand the company is
having the chances to increase the turnover.
 Innovation as the key principle: the company should include in its strategy formation
that innovation should be used as the key measure for the purpose of development of the
product of the company. As in recent time technology is considered to depleted in the
around 3-4 months hence this is important for the company to innovate. This would help
the company in a manner that nowadays new technology is adapted rapidly and due to
this the companies are able to grow their sales turnover. As the competitor of the
company are able to innovate the new products and hence, they are able to take the first-
mover advantage for the same. This would help the company to get the maximum profit
as through this the sales turnover of the company would rise. But on the other hand, this
is a risky project as it would take high amount of investment.
 Sales and marketing: the company has no or very less investment in the sales and
marketing department due to which they are not able to maximize their turnover. This is
considered that most of the market of the company is not having the proper sales channel
due to which the company is not able to sell the product at the desired volume. Hence this
is important for the company to invest in the sales and marketing department. This has
the advantage as this would lead to an increase in the company’s turnover and while on
the other hand the company investment cost would increase.
Recommend a course of action
As there are various alternatives that are available to the company this is important for the
company to identify the best alternative which would be suitable for the company. hence for this
purpose, the best alternative would be a reduction in the price of the product. As this is seen that
company is already making huge margins and if the price of the product is reduced due to which
the turnover of the company increases then it would help the company to get the profit at the
increased percentage. All the other alternative that is proposed would require a certain amount of
investment and would take time to get implemented hence these are not chosen.

Implementation of plan
The plan that is proposed for the company would be implemented by the CEO of the company at
the global level. For the purpose of testing the plan of the company it would be implemented in
the middle and the south Asian countries first and then would be imposed on the rest of the
world. the result and the sales figure would be first checked for the first year of implementation
and if these are successful then they would be implemented for the rest of the year.