RMIT BUSM1227: Apple's International Business Strategy

This essay provides a comprehensive analysis of Apple as a multinational enterprise (MNE). It begins with a background on Apple, discussing its founding, products, and market position, and then explores its competitive advantages. The essay delves into Apple's core resources and capabilities, utili...Read More

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( Total word count_ 2565 )

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Part 1. Background and competitiveness
Brief profile of Apple
Apple is an American multinational corporation dedicated for designing and
manufacturing electronic products and computer software. Steve Jobs, Steve Wozniak and
Ronald Wayne became the founders of Apple and it was incorporated on January 3, 2997 in
Cupertino, California. Apple has built the first personal computer which was designed with
single-handled and it was built by Steve Wozniak. Apple is operating in more than 250 retail
stores with more than 35,000 employees across the world and there also have online store. The
company's divisions include the Americas( where it includes North and South America),
Europe(where it includes European countries India, Middle East and Africa),Greater
China( including China, Hong Kong and Taiwan), Japan and the rest of Asia Pacific. Apple is
famous for its hardware products such as iPhone, iPad, Mac, Apple Watch, Apple TV and it also
deals in providing professional software applications such as iCloud, Apple Pay, iTunes and so
on. Apple has recognized in the fortune 500 lists since 1980 and its competitive advantage is
excellent in electronical environment than others. Further, Apple launches the series of iPhone in
every October and there always have a long queue in physical stores while some customers even
made pre-order before the new product launches. Offering innovative products with high quality
and outstanding design to its customer together with trying to increase its market shares is one of
the main reasons why Apple experienced a sudden increase in demand for products and services
since last few decade. On one hand, selling variety range of product encourages Apple for
understanding indeed needs of its customers. Besides, Apple makes contribution to make the
tools for the mind that advance humankind for the world is Apple mission statement. On the
other hand, vision statement of Apple is to think different. (Nisar, et al., 2012).
(words-299)

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Q-2: Core resources and capabilities
Without the threshold capabilities, it is not possible for businesses(including Apple) for
survival in the market and know the required threshold competency for using in the company for
meeting customers’ requirements.(Johnson, Scholes and Whittington, 2005). Apple’s threshold
capabilities can be found as in appendix(3).However, only threshold capabilities are not only
involved in gaining competitive advantage because core competences helps in achieving
competitive advantage in such a way that others cannot follow. (Johnson, Scholes and
Whittington 2005).
Apple had history of success in electronic market by facing various challenges. Core
resources and capabilities of Apple are identified with the help of the VRIO (which includes
value, rarity, imitability and organization of the business).Further, Apple exploits core
competencies for achieving long-term competitive advantage (Laufs and Schwens, 2014).
According to appendix (2), automation process of business, which is considered as
valuable, but it is not unique as same process is followed in all companies and markets. Further,
employees’ packages include function which helps company in maintaining a skilled workforce
for supporting the repaid changes and innovation. However, it is not considered as core
competency in Apple as many companies which deals in technology like Microsoft, Google are
also offering the competitive packages to employees. The ability of supporting innovative human
resource which is common in technology, consumer electronic company and digital industries is
presence in Apple. Furthermore, product portfolio of Apple is considered as increased diversity
as they put the strategic efforts for reducing the market risks. The various resources and features
of Apple are essential but not considered as core competencies (Omar, et al., 2009).
In Apple, CEO(Steve Jobs) is a valuable, rare, inimitable and non-substitutable resource
and his vision for business is unique. Even though Apple operates its business mainly on
Americas, Europe, Greater China, Japan and rest of Asia pacific as physically, it can be said that
there have global presence in Apple since Apple have online channels and authorized resellers
across the world.(Notesmatic.com. 2020). Further, company’s global well-known brand is a core
competency since it requires to analyse the valuable, rare and difficulty for imitating companies
and apple is required to organize the business strategies for gaining the competitive advantages

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(Sadaghiani, et al., 2011). Besides, Apple has made the investment in research and innovation
since its foundation. Apple has set up the system for making rapid changes in innovation for
business success. The resources and capabilities helps in maintaining the innovative ideas with
the updated technology in the hardware products like iPhone. Features in Apple products help in
attracting large number of customers to buy product like assess ability and compatibility in
iPhones. Artificial intelligence capability of Apple helps in providing the competitive advantages
in case of providing effective services with the help of Siri and other features. The products and
accessories of Apple bring the amazing experience for customers (Ragnetti, 2011).
Indeed, Apple’s competitive strategy is based on products differentiation, sustainable
competitive strategy, product innovation and vertical integration. Apple products differentiation
strategy is based on the production of hardware and software. Further, Apple's sustainable
competitive strategy aims to strengthen customer loyalty by implementing the customers indeed
needs and it hard to replicate. Besides, Apple relies on the horizontal and vertical integration
strategy, horizontal integration strategy is involved in channel and devices, while vertical
integration strategy is involves in software and hardware retailing.
(words -553)

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Question(3) (Host country analysis)
Apple which is operating in many countries but most of its smartphones are
manufactured in China on these days( K., J., 2020).Company always need to understand the
policy for selling the products (Herzog, 2010) and so for Apple, it needs to understand the policy
of China. On one hand, the government situation is an important factor where it is required to be
analysed by the organization. Political factors include government stability, laws for
employment, government leadership, trading restrictions, taxation, corruption level and rules and
regulations of the government. Besides, political factors created the opportunities and challenges
for business( including Apple) and so Apple is also required to follow the rules and regulations
for running the business successfully (Brahma and Chakraborty, 2011).
In Apple, free trade policies of China are considered as an opportunity. As it is analysed
with current political situation, the US and China are facing trade disputed which is considered
as a threat for the organization. Apple is one of many American technologies company that have
accumulated a lot of cash. As of June 30, 2015, it had bank deposits of $ 34.7 billion. This
triggered a call to increase taxation in the U.S, as their income inequality is a major issue. Apple
relies heavily on low-cost production in China. China's social and political turmoil could disrupt
manufacturing or increase the country's manufacturing costs. There are also calls for limiting the
imports in the United States to promoting manufacturing in America (Kabue and Kilika, 2016).
For Apple, the finding of costs a Chinese-made alternative are considered as high. This
may cause the price of Apple products to increase. The problem which is faced by Apple is the
disposal of used electronic equipment as the environmental problem. The disposal equipment
costs (particularly equipment containing lithium batteries) are high. Apple is required to bear the
cost because of the concern of the equipment in landfills affects the environment. The facilities
of Chinese in manufacturing the equipment consider the pollution and environmental as the
major effect and it also receive major attention. At some point in the future, this will lead in
increasing regulations and increased cost of manufacturing (Cantwell, 2014).
On one side, China is a country with low labour costs, and Apple production is largely
dependent on China. However, the turbulent political situation in China has affected and
destroyed its manufacturing industry from time to time. Therefore, its manufacturing costs

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continue to increase. In addition, to promote manufacturing within the United States, Chinese
imports have imposed restrictions. In Apple ’s case study, the influence and facts of the political
relationship between the US government and the Chinese government on Apple were also
considered (Blackburne and Bucley, 2019). One of Apple ’s main concerns is that if it tries to
find alternative production methods in China, it will increase production costs, which will lead to
higher prices for Apple products. In addition, due to the intensification of Chinese nationalism,
Apple's market share in China may face significant losses. In this case, Apple could be a target to
protest China's anti-Americanism (Koch, 2011).
Changing regulations is a challenge for Apple. The procedures are required to be followed by
the organization with the change in permits, registration and licensing. Bureaucratic barriers are
increasing in China which is considered a challenge for the organization to run the business. It is
also analysed that Apple Inc. in host countries like China is facing the issue of lack of
transparency which includes the inconsistency and unfair interpretation of the regulations in
running the foreign business (Williams, et al., 2019).
( Words 597)

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Question(4) MNE strategy
Apple has a hierarchical organizational structure(where it is a traditional organization
structure with different classification characteristics(including product-based grouping like iOS
and macOS) and a weak functional matrix. Theoretically, hierarchy provides top leaders like Tim
Cook have to control everything in organisation. (Dudovskiy, J., 2020). In a weak functional
matrix, senior management determines the direction of project while project manager has limited
authority and control. Apple's corporate structure facilitates advantages is the rapid and effective
implementation of strategic management and helps in establishing consistency throughout the
organization. On one side, Apple’s corporate structure has downside of low flexibility since it
does not support rapid changes and it is because of everything need to go through Tim Cook and
senior top management(Panmore Institute, 2020). Nowadays, Apple’s organizational structure is
less rigid and it can be found out in appendix(4).
International strategy is handled in Apple as its products are targeting for domestic
customer and international strategy includes the way for replicating the home-market success.
Various benefits can be obtained from the usage of international strategies such as market size
increase, and greater returns on capital investments in new products (Kendall et al. 1990). On
one hand, Apple use differentiation strategy as its main international strategy in order for
delivering the value to customer through innovations in foreign markets and with the aid of this
strategy, Apple can solve the issues and challenges faced by its rival firms like Google,
Microsoft, Dell and so on. Moreover, low imitation can be caused by competing firms with the
adoption of differentiation strategy. Indeed, Apple has low pressure for cost reductions and local
responsiveness( appendix 5).
In global market, Apple has adopted “ONE SIZE FITS ALL” strategy in order to design
the product. Even though it does not consist customization feature, it consider the feedback of
customer. Further, Apple had adopted the strategy of advancement in technology which helps in
making the customers into followers (Williams, et al., 2019).

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In Apple, market entry strategy includes licensing, exporting, and importing strategies for
entering into the new market. Apple use licensing as an entry mode into the market because other
marketing strategies are like joint ventures, strategic alliances, etc. have no positive features. In
addition, using an entry-level licensing strategy, business complications are less comparable to
other modes. Usage of licensing strategy is also good for companies compared to other entry-
level strategies in the international market.
One of entry mode for international expansion in Apple is Joint venture(where it is an
agreement between two or more parties for managing the specific business) since Apple made a
trademark with China recently. Apple offers general technical support, consulting, and support
and training services with the help of joint venture (MacDailyNews 2010).Without pursuing a
joint venture strategy with the Chinese government, Apple will face difficulty to access the
Chinese domestic market as well as labour. On one hand, physical presence of Apple in China
will inspire a sense of ownership to the customers(Lawrence, 200) and so Chinese customers will
get the better connection and will be placed to understand the needs of end-users.
Moreover, Apple has adopted different distribution channels for reaching customers in
China. Apple considered direct and indirect distribution channels where direct distribution
channels helped company by opening the stores of Apple in China market at various locations
which the help of displaying the products (Gubik and Karajz, 2014).
Government regulations affect the time as well as cost for entering into the new market.
Companies are required to study the implications of such regulations before entering the market.
It is also analysed that the Apple has followed the government regulation for entering and
manufacturing the products in the market of China. The products are firstly approved by the
government before launching it into the China (Dunning, 2012).
Apple market entry strategy to enter china was by opening a store and launched the
iPhone 4 in 2010(Williams, et al., 2019). Apple has adopted various effective strategies for
attracting the customers in China. When designing Apple products in China, local favour were
considered. For example, Apple introduced the iPhone 5s in gold colour option as in China
where this colour symbolizes wealthy and healthy in China. Beside, Apple is operating more of

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the 19 corporate offices and 22 retail stores in China market and Apple has made a critical
analysis for entering into the foreign market (Gubik and Karajz, 2014).
The strategy which is adopted by Apple in China market was beneficial for the
organization as it helped in gaining competitive advantages. Apple has also invested in China for
assembling products and iPhones are mainly assembled in China where the manufacturing unit
includes more than 230,000 employees. For covering the requirements of Apple, the organization
has started production in China. The decision of Apple for outsourcing its manufacturing
operations for China is actually for manufacturing the large number of Apple products within
short time period. It is also beneficial as china includes maintaining flexibility and immediately
adapting for the need of Apple. Apple executives also said in a report that the United States no
longer has talents with the required skills (Surdu and Mellahi, 2016).
Launching an iPhone is considered as an example as the demand of the iPhones is huge
every year. Apple knows it needs to be completed as soon as possible. Apple recognizes that this
is not achievable in U.S. manufacturing and will cause delays. Therefore, they required the
services of Chinese manufacturing and were able to complete their tasks rapidly. It is analysed
that in China manufacturing requires the large number of engineers for performing the
manufacturing and production. Due to their abundant labour supply, it helps them in completing
the work in large amount in less time. It is impossible for the United States to hire 250,000
workers in one night. This helps in making the China more flexible as well as effective supplier
(Verbeke, 2013).
Recommendation
Apple needs to focus on the retailing chain in China as a recommendation. Besides, Apple short
start buying small innovative companies to attract more talent and expertise since this will help in
exploring untapped local market. On one hand, high quality software and applications will be Apple
needs in the near future while developing software and applications that we never expected would
give Apple more advantages. Further, Apple should reduce the number of junk services that
currently offers and creates space for value-added services in its App Store. Apple is also required
to invest in developing iPhones brand in china market and strategy of brand development helps in
ensuring company providing the quality for adding the value to its customers.(words-1116)

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Appendix
Appendix(1) Threshold capabilities of Apple
Appendix(2) Apple’s resources and capabilities(source from: Rancord Society. 2020)
Appendix(3) competitive advantages of Apple

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Appendix(4)_ Organizational structure of Apple
Appendix(5)_ Apple’s internationalization strategy(UKEssays.com. 2020.)

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