Apple Inc.: International Business Strategy and Operations Analysis

This report provides a comprehensive analysis of Apple Inc.'s international business strategy. It begins with an overview of the company's global strategy, highlighting its market position, competitive advantages, and financial performance. The report then delves into Apple's international operations and management structure, examining the roles of its headquarters and subsidiaries, and how the company leverages learning across country borders. Furthermore, it explores Apple's ability to implement significant global changes through brand marketing, R&D investments, and product innovation. The analysis includes discussions on Apple's supply chain management, its approach to differentiation, and its strategies for maintaining a competitive edge in the global market. The report also includes visual aids such as figures and tables to support its findings.

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INTERNATIONAL BUSINESS STRATEGY
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Introduction
Apple Inc. is an IT company that serves the range of products including cell phones,
computers, television products and tablets. Customers of Apple seek high performing
products that are aesthetically satisfactory and will be able to deliver assurance in terms of
durability. The company was founded in the year 1976 as small computer software and
hardware organisation. Since then the company has determined itself to provide creation of
technological devices and has managed to develop a range of retail stores across the world to
fulfil the demand made by the customers.
However, the study focuses on the existing condition and market scenario of Apple by
highlighting its Global business strategy and management structure. Since the company is
planning to open a subsidiary in India it is necessary for the company to understand the
highly competitive industry while producing new products and pricing. Using collected
information from various reports the study reveals Apples comparative and existing
performance in terms of industry.
1. The global strategy adopted by the firm
From the annual report of Apple, the company’s current international business
strategy has been found. Apple Inc. is located in CA that is popularly known as USA based
multinational company that develops designs and sells consumer electronics and personal
computing devices as well. The company’s business in the international context is classified
by SIC and NAICS. In this regards, the company is placed on the top S&P list with almost
$415,655.2 million of market share that is equal to 2.97 indexes (Dodgson 2018). However,
during the development of international strategy the company has encountered incredible
growth over the period of previous years. In the year between 2008 and 2013, the share return
of the company seemed to be increased by 331% (Apple Inc. 2018)

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Figure 1: Annual sales and profit of Apple
(Source: Forbes 2017)
The justification for their international growth was due to the two-fold strategy; firstly
the technology industry has shafted itself owing to which Apple has managed to raise its
capital with the flow of technology (Ferreira et al. 2014). Secondly, the company managed to
capture the computing market through the enhancement of existing technology thereby rating
increased demand for the newly delivered products. For adopting global marketing strategy
the company diverted its service towards the educational process and home-oriented use to
retain the customers. However, most of the Apple products are manufactured in China and
assembled in the market of USA, but the companies’ penetration in the China market has
been found to be extremely limited. It is due to this reason that Apple had to face increasing
difficulty in China (Meyer and Peng 2016).
The increasing environmental issues in China had been a big concern for the
Company. For the purpose of international business strategy, Apple's supply chain
management has also developed remarkable value by sourcing the nicest parts from all
around the boundaries and used it for the cheap workforce and for assembling. In this aspect,
Apple invests almost $10.5 billion of the capital expenses in tooling products and in
manufacturing operational equipment (Apple Inc. 2018). For developing international FDI
theories that company uses the Ricardian theory of competitiveness and product lifecycle
theory for building a partnership with several companies around the international boundaries
while managing huge control over its products and designing of the product (Serra and Kunc
2015). Since the early decade, Apple's business model has been consistent in growth with the

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integration of new operations in the business model. The company's business model has
managed to directly affect the shareholders while moving its business to a different market.
In this context, Apple has committed to bringing it up the best experience for the user
through the use of innovation in hardware, software devices, and peripheral devices as well as
their services. In case of international business strategy, Apple’s business is leveraged by its
innovative capability to design and establish its own system of operation along with seamless
incorporation and innovative design within the product (McArthur 2018). Moreover, Apple
boosts continuous investment in R&D, advertisement processes, which are necessary for the
development of products and sale of innovative products. However, as a part of the
international strategy, Apple consistently expands its field for the production if third-party
digital contents through the application of the iTunes store. In iTunes store, the organisation's
app sore I bookstore facilities help the consumers to discover and install the different
application through the operating Mac and windows computer as well as IOS processes such
iPhone, iPad and other iPhone devices (Gerschewski et al. 2015).
2. The firm’s international operations and management structure.
(a) The role of the HQ versus the subsidiary
Apple Inch HQ is located in CA, USA, with a unique management structure that is the
most crucial factors that provide the company success. However, under the HQ of Apple Inc.,
there is a CEO who is responsible for the entire system of management within the
organisation. Under the CEO, there are eleven departments for the executives that operate
directly under the leadership of the company’s directors (Marquis and Raynard 2015). The
CEO of Apple has the authority to supervise and manage all the operating department of the
company that is authorised by the senior vice president including CFO, COO, legal
departments, design operations, IOS software departments and retails engineering along with
global communication department (Terjesen et al. 2016). The responsibility of the hierarchy
executives is straight forwarded to the departments without any connection for the matrix.
The entire structure of management is oriented towards decision making. In this regards, the
governing CEO of the company motivates the other present employees of the company to
share all their decisions. The company maintains a straight forwards approach while making
any decision in support from the top executives of Apple. These unique structures of
management help the company to grab opportunities faster, in case if the board of directors

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finds any missing ideas they take significant action to fix the issue. The HQ management
structures (Fratocchi et al. 2014).
On the other hand, the subsidiary branches of Apple are opened in different locations
that are listed owner of Apple. These subsidiaries are accountable for managing the business
in various locations investing the money from the HQ Apple. Apart from these, a branch of
the subsidiary is more independent than the original entity of business as it acts on behalf of
the original company (Khan et al. 2015). Therefore, despite not being autonomous in its
form, the subsidiary branch manages to conduct business in an independent way thereby
offering more credibility to the original holder. The subsidiary branches of Apple in different
countries and location helps the companies to provide less tax liability owing to reduced
yearly turnover. The major role of the subsidiaries of Apple is to increase the cultural
cohesiveness of the organisational as well as the employee, by passing down the learning and
innovation on to other countries through the product (Jia et al. 2016). Developing subsidiaries
in a different location is a part of strategic evolution to promote and increase the sales of the
product.
(b) The ability of the firm to leverage learning across country borders
Apple has increasingly turned global with is market, by opening branches across the
world. Its home market is the high-end US based with its most popular products that are
driven towards the education and home use. It is the increasing rate of growth that has helped
the company to move towards manufacturing across 140 nations. Apple Inc. began with an
idea of a single mind, which was Steve Jobs. Steve Jobs along with his friend Steve Wozniak
created the first Apple computer that ignited the path revolution in the way technology.
However, the most leveraging learning ability of the company is its differentiation (Kane et
al. 2015). The company makes ample effort to differentiate its products as well as service
from its rivals companies.
In this context, Apple’s philosophy of design is based theory of minimalism that
allows them to remove clutter from its products in its external appearance along with its user
interface. In case of the price, the company is known as the high price leader. Initially the
company implemented the strategy of skimming, eventually; the company launched a lower
price version with limited features in the mobile phone industry (Clarke and Boersma 2017).
It is the differentiation strategy of the company that has 71% of the market profit in the

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global; scenario. Across the global market, Apple's cost leadership tactics are achieved by
low-cost input to manufacture the cheapest but high standards products (Apple Inc., 2018).
The company obtains high-cost leadership by establishing long-term business agreements
with partner companies to sustain its innovative business while focusing on the creation of
new products with an innovative solution. Steve Jobs has always managed to keep a huge
difference between Apple and all other technology companies since long (Wesley and
Barczak 2016). In this aspect, Jobs have always pointed on the original group working for
Mac who had backgrounds in anthropology, art and history.
The company has leveraged its ability to learn across boundaries by releasing
products that are innovative in form; they help to connect with other products. Each of the
products manufactured by Apple motivates the use of other Apple products creating brand
loyalty. By doing so, the company integrates both horizontal and vertical incorporation of
business in its strategy (Bernard and Fort 2015). In vertical integration, the company builds
and develops its own hardware, the operating system as well as application. These leveraging
strategies of Apple have been diligently followed in their business since long making it a
holistic process of product development. Therefore, these, attributes of business and learning
increase the ability of the company to enshrine across the global borders (Paik and Zhu
2016).
(c) The ability of the firm to implement a significant global change
Apple is one of the companies that use brand marketing to implement global changes.
It has successfully promoted the “think different” advertisement by using catchy slogans that
increase the quality and innovative perception towards the brand, Apart from this company
also promoted eco-friendly brand along with its products such as MacBook PRO. However,
Apple products are usually designed and created in an impressive way within the industry
like MacBook, iPod, iPhone and IPad. It’s the R&D that acts as the way to differentiate from
the other company (Ross et al. 2017). In this context, Apple tends to maintain a very few
numbers of products lines in relation to its competitors. Its system of manages chose the
appropriate areas for growth, so they focused on the resources in an outgrowing way.
According to the R&D report of Apple, its expenses increased to $3.4billion from $1.7billion
in the course of the previous three years (Yoffie and Cusumano 2015).

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Figure 2: R&D and expenses of Apple Inc.
(Source: Yoffie and Cusumano 2015)
It is the unpreventable growth if smartphones and tablets that brought almost
1.2billion of mobile devices in the international scenario. It has been estimated that the
purchase of tablets will be growing 3x by the year 2020 and almost more than a half of the
workforce all around the world will own a smartphone by the year 2020 (Chen and Ann
2016). In this aspect, it can be said that organisational that residing in a global landscape
needs to accumulate the challenges coming in their way. They have the potential to achieve
the international advantage by following the strategic objectives in a careful way, in case of
Apple; iPhone has been the primary production in the merging economics of the world.
Figure 3: R&D of technological companies
(Source: Chen and Ann 2016)
Apples, primary production continues to increase its dominance all over the world
mobile marker. Apple has increasingly focused on the high scale intensive manufacturing

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process, however, have failed to realise the manufacturing standards of the products that are
hindering the company’s ability to move towards more international force (Harris and Patten
2014). Therefore, the company is yet to achieve the multinational capability. However, with
the introduction 5C iPhone the company is trying to move through the merging markers with
a product that is more inclined towards the domestic customer and purchasing power. From
all these aspects it is evident, despite the difficulties faced by the organisation, Apple has
strong R&D for the development of innovative technology to with the rising competition and
cost of the workforce (Lee et al. 2015). In the case of marketing skills that promote
environmentally friendly practice to retain customers and sustainability.
3. The firm’s strategic use of joint ventures, alliances, or mergers and acquisitions.
The supply chain management of the company has developed remarkable value for
Apple, for which the company has managed to source the best parts from all around the world
with the use of cheap labour for assembling purposes. In this context, Apple spends almost
$10.5 billion for its capital expenses for tooling and manufacturing its products. One of the
instances of this is that the company manage to invest a huge amount of money through the
prepayments to the US-based company for manufacturing its screen technology (Ghezzi et
al. 2015). By doing so, Apple is beginning to innovate at the component level and then built a
partnership with the organisation that outfits innovative technology. The company also uses
the method of vertical alliances in the initial system of the supply chain. It is mostly when
Apple needs a product or specification that is out of accessibility, the company partners with
alongside companies to produce high-quality products that help the growth of leading
technology from a variety of fields. Acquisitions and alliances provide the Apple with a
shield for protecting its growing business thereby providing bargaining power in the
international market (Demil et al. 2015).

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Figure 4: Ipad unit sales of the company
(Source: Hacklin et al. 2018)
However, Apple could have taken part in building a joint venture with a range of
companies for maintaining the expansion of their product line, revenue and client base. In this
context, the company could have taken an effort to build a joint venture with HRS or AT&T.
These major joint ventures could provide the company with high benefits (Hacklin et al.
2018). HRS organisation operates with an international hotel portal for the visitors of the
business and for leisure purpose. The company characterises for more than 250,000 hotels in
almost 180 countries covering different location. Again, AT&T is the leading company in
telecommunications with millions of active consumer all over the world. The company is an
existing provider of Apple Inc. these partnerships could be beneficial for the company. Joint
ventures with HRS could have provided apple by connecting them with a large number of the
consumer through the use of Passbook that would help them to enhance application function.
On the building, joint ventures with AT&T would have helped the company to connect a
large number of American iPhone use by providing them increasing customer feedbacks.
Based on the given information from the report Apple is financially strong and self-
sufficient. Apple has always been able to finance its own operation by its existing liabilities.
The financial structure of the company is increased with almost 100% equity with dues for
long-term debts. These show that the company is financially and operationally independent
and has a high financial position that provides them with the opportunity to expand their
business. Along with almost of $110 trillion investment and revenue of $95,641 the company

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has successfully reserved its earning and has the capability to invest it on larger acquisitions
(Oberholzer-Gee and Yao 2018).
4. The international dimensions of the firm’s social responsibility strategy of the firm
b) The Company implements an autonomous policy of dominance to address CSR. In
this context, Apple is determined to produce the highest standards of corporate social
responsibly by treating their suppliers with safe working conditions and by treating all their
employees with dignity as well as respect. The review report of Apple’s supplier’s
responsibility has revealed that the company takes stringent actions to abolish the unethical
practices amongst the suppliers. The company in order to expand its CSR activities of the
home country provides educational activities in support of the innovative design of products
provided with incredible designs and remarkable outcomes. However, for expanding their
CSR activities the company is planning to build its new corporate campus named as Apple
Park that is on progress to be built as the largest LEED platinum registered building in North
America (Ghezzi et al. 2015). In this project, more than 80% of the new campus is built on
open space with nearly 9000 drought tolerant plantations that are powered by 100%
renewable energy.
In this aspect, the company is depending on their major manufacturing partners to
help them with power production with entire renewable energy. In order to preserve and
restore resources, more than 99% of the paper in their product packaging is made from
recycled sources (Apple Inc. 2018). The company for doing this has partnered with
conservation fund and WWF for accomplishing their objective of safeguarding suitable
working forest and make all the product packaging requirements. Though this company is
planning to develop a closed loop supply chain where all their companies' product will be
made up of recycled resources for lowering the need for mine resources from the products.
They are also encouraging their consumers to return their products through the process of
Apple to renew the program.
Apart from these, activities taken by the company to address CSR, Apple leads the
market share that has been collected by its iPhone device in all the major countries such as
Australia, Canada, Japan, U.K as well as USA. Through the process of home country policy,
the company built its products with a complete freedom of expression that can be easily used
by the students. IPad is a simple product that could be used by anyone specifically useful for

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students that helps them to carry an idea wherever they go. On the contrary, Mac products
offer with the fully designed Apple that encourages ambition in a building project. It has been
for long years the company has made extensive effort to simplify technology to empower
education and influence students in support of best education philosophy (David et al. 2017).
In this context, the company also provides students with the concession for buying Apple
products. It has been 30 years that Apple has committed itself to advance the tradition of
education through the provisions of learning and teaching through technology. They have
designed products with education in thought such as durable MacBook that prepares
educators to incorporate technology and learning. In this aspect, Apple has maintained a long
relationship with education and environment by offering special requirements in schools and
to educators while delivering fewer costs on product installation.
Though this innovative service and unique business strategies the company’s revenue
earnings have reached high at $95,641(Apple Inc. 2018). During these years Apple has
substantially improved its business in terms of profitability. In terms of ROA, ROE, and
profit, the company has financially strengthened itself with adherence to CSR policies as well
in a better ration than its growing competitors. It has been seen that the gross profit margin of
the company is much higher than the average industry margin of 43.5 (Oberholzer-Gee and
Yao 2018). Therefore, it proves that Apple has the high competitive advantage more than the
collaborative capital of Microsoft and Google that has the advantage of the high financial
position to expand their business as well as acquisition.
Conclusion
Therefore, it can be said from the above study that the management of Apple making
a high effort to expand its business into more global core for the benefits of the future
interest. It has been seen from the study that the management strategy of the company is
completely included towards differentiation and competitive advantage that is specifically
built upon the innovation of the product and service. However, its premium business and
pricing strategy have the ability to attract a large number of customers as well may turn down
customers who are not able to afford the process. The low market is not visible to Apple that
has left unfocused by the company. Therefore, the company needs to adopt different models
to address various segments, by introducing low-cost models for attracting environmental
sustainability. Apart from all these, Apple growth will help it to depend on innovation and

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maintain its business strategy. The strategic direction of Apple is moving towards success
with the expansion of the market by effectively competing in the industry.

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