Apples incredible success has implemented them as leaders

QUESTION

Achieving Global Competitive Advantage: AppleApples incredible success has implemented them as leaders of the technology market on a globalscale and are now seen as one of the world’s most valuable brands. Which such releases as theiPhone, the Mac and the iPad Apple has built an innovative brand culture which has led them torecord sales and revenue to the point where the competition is struggling to compete. Since of therelease of the iPhone in 2007 Apples revenue has grown from $5 million to over $32 billion, all in thespace of 8 years (Statista, 2015). These figures establish Apples triumph and shows the vast customerdemand for their products world-wide. In this essay I will examine how Apple uses this remarkablecompetitive advantage globally to create a competitive advantage. I’ll be using Spulber’s (2007) staranalysis framework to showcase theories and data about Apple’s international dominance.Home CountryI will use Porter’s Diamond (1990) to show how Apple use national competitive advantage. Porter’sDiamond is split up into four factors which must abide by each other to achieve competitiveadvantage. Porter argues that favourable demand conditions will not result in competitive advantageunless the state of rivalry is sufficient to respond to them (Hill, 2010).American founded Apple now have 268 stores in the US (Apple, 2015) and serve 1 million customersdaily (Gunther, 2013). The pie chart below shoes the revenue of Apple products by region. It showsthe strength in which Apple have used their home nations but also shows the true global dominancethey hold with high percentages comingfrom different regions over the world.The reason for this is America’s luxuryspending habits and high level oftechnology. ‘The United States willaccount for one quarter of the world’sspending growth through 2020’ (BenShabat et al). This shows that despiteChina’s growth between 2011 and 2012Apple will continue to dominate UnitedStates for years to come. This meansthere is a strong demand condition in theUnited States for Apples products due to the immense spending on luxury products in the country.The socioeconomic factors Apple appear to in target in America is the income level and occupation.When companies develop pricing strategies for their brands and products, they consider the incomelevels of their target markets (Brookins M, n.d). In 2014 the USA had the 8 th highest GDP per capita inthe world, this shows that America is one of the wealthiest xcountries therefore desirable for Appleto continue to distribute and design from their home country.Apple have managed to directly and indirectly create work for Americans since their globalexpansion. In fact, Apple generated 598,500 US-held jobs in 2012 through direct employees, theirown iOS app community and other industry jobs that are dependent on Apple. Apple is supportingindustries by creating employment in the technology sector while they also build a technologicalempire for themselves.Competition in the market increases competitiveness (Porter, 2007). As far as competition goesApples closest domestic rivals are Samsung and IBM. ‘This 21 st century market is huge and lucrative.With so much at stake and competition so fierce manufacturers are pressed to cut costs and drivehard bargains’ (Agar, 2013). Apple’s main strategy is premium pricing to their customers using newproducts, they also have a strong brand reputation with attracts repeat customer service.Partner Country FeaturesTo embolden their success Apple have set up global collaborations and partnerships, also known asstrategic alliances. A strategic alliance is a cooperative arrangement between two or moreorganisations designed to achieve a shared strategic goal (Singh and Gulati, 1998). In 2007 Applemade arguably its biggest alliance to date, AT&T (Marketline, 2007). Both AT&T and Apple gainedaccess and reaped the benefits of using each other’s assets in particular for apple as this alliance wasa key part of the release of the iPhone. Strategic alliances benefit innovative brands like Apple due tothe ability to share costs and risks of innovating and the capability of reaching new markets quickerand in a more cost efficient way. Strategic alliances can be seen as a risk with possible transactioncosts, a diffusion of strategic assets and an effect on competitiveness and innovation. Hill (2010) tellsus the success of an alliance seems to be a function of three main factors: partner selection, alliancestructure and the manner in which the alliance is managed. Apple’s business model is acclaimed byscholars and practitioners in the strategic management field for its value creation potential (Ozcan &Eisenhardt, 2009).A joint venture with both Microsoft and Intel (Hiner, 2010) followed as Apple started alliances withlarger corporations. A joint venture is a relationship in which two or more persons or businessentities combine their efforts or their property for a single transaction or project or a related seriesof transactions or projects (Jentz et al). By participating in this joint venture Apple will have had tolearn from Microsoft and Intel while keeping their own strategies and information to themselves togain competitive advantage.Supplier Country FeaturesPorter’s value chain (1985) is analysed to recognise how Apple benefits from their supplier countries.Porter explains the value chain as a general framework for thinking strategically about the activitiesinvolved in any business and assessing their relative cost and role in differentiation (Porter, 2008).Simister (2011) tells us how the value chain can be used to diagnose and create competitiveadvantages on both cost and differentiation. Apple have a significant high supply chain effectivenessdue to the demand of their products and the low costs they can develop the products for. Applesability to maintain such a high level of innovation in the technology sector, the constant ability todecide what the next gadget will be and the pure volume of products and technology manufacturedremains the reason they have such a worthy supply chain.I have researched the success Apple has made in its home country but now it’s time to look at howApple work on a global scale to make their products so desirable, profitable and affordable to many.The graph above (2007) shows the minimum wage for the USA and that of Asian countries. The graphshows the severe difference in minimum wage in America compared to Asian countries. When wecompare the United States figures to that of Lao, Bangladesh and even China which is 20% less ofthat of America’s a picture is already painted on why America use these countries for low labourcosts. Although measures have been taken to improve these minimum wages this data was takenfrom the period of the iPhone’s first launch. Apple outsources the iPhone to different parts of theworld for the cheapest labour and cheapest materials. An iPhone contains hunderds of parts, about90 percent of which are manufactured in countries outside the United States. Apple sourcessemiconductors from Germany, memory chips from Korea, display channels from Taiwan and raremetals from Africa (Cavuisgil et al, 2014). Apple’s ability to obtain comparative advantages such aslabour, land and resources from specific countries has given the company a distinctive advantage intechnology, profits and market share. Apple’s endeavour of comparative advantage has come withcriticism over the work conditions in foreign countries due to the work conditions. The news brokeout in 2010 about suicide deaths in Apple workshops and by 2012 there had been 14 deaths andover 150 threatening to commit suicide (Telegraph, 2012).Customer Country FeaturesSince breaking into the competitive global market Apple have used different international strategiesto not only maintain their success but to expand and continue to innovate and explore thetechnology market. Heracleous (2013) talks about quantum strategy which is the ability to balancestrategic features that are considered contradictory or distant. Apple’s quantum strategy is praised byHeracleous ‘outstanding, serial innovation and addictive product design, both of which commandpremium pricing and redefine markets’. We can back up Heracleous’ statements with figures whichdisplay where and on what scale Apple’s global markets are expanding.The graph above which is taken from Apple’s website is the most recent data on Apple’s globalrevenue. The graph demonstrates the sheer explosion of the Apple market in China and the Asianpacific. So why have Apple been so successful in China and Asian countries? This is all part of Apple’sinternational strategies and is no way a lucky stroke. Andexer (2008) tells us that an internationalmarketing perspective has already become the state-of-the-art managerial thinking with the purposeof being able to penetrate new emerging or old evolving markets with – at times – enormouspotentials, such as the markets in the Asia-pacific region.Below shows Apple’s smartphone unit sales in South East Asia in the space of a year. This has led toApple confirming they will open their first Southeast Asia Apple store as well as recently opening onein China (Techcrunch, 2015) due to the regions fast growing smartphone market.There are many ways the mode of entry into a foreign market could go wrong. Kumar andSubramaniam (1997) tells us that mode of entry is a very unstable decision because there is a lot ofuncertainty and unpredictability in the host country environment which the decision maker may nothave information about. This demonstrates Apples success in the market which means they nowpossess brand loyalty and a barrier to entry to competitors looking to enter international markets.Brand loyalty in particular is how Apple retain their customers who are impressed by the sheerinnovation they possess and upgrades on previous technology.ConclusionExpanding out of America and not only entering new markets but penetrating them has given Appleastounding global competitive advantage. The amount of control they have over their value chain,the quality strategic alliances that have assisted them and their mode of entry into foreign marketshave led them to be the most profitable company in the world (Fortune.com, 2015).ReferencesAgar, J. (2013) Constant Touch: A Global History of the Mobile Phone. : Icon Books.Andexer, T. (2008) Analysis and Evaluation of Market Entry Modes Into the Asia-PacificRegion. [online]., pp. 1-2. [Accessed 18 November 2015].Anon, (2014) Apple to Team with IBM. The Information Management Journal [online]. 48(5), p. 7. [Accessed 04 November 2015].Anon, (2011) Android seizes top smartphone os spot in southeast asia (Graph). CellularNews [online]. [Accessed 16 November 2015]. Accessed on http://www.cellularnews.com/story/Reports/51733.phpAnon, (N.D) How and Where Iphone Is Made: A Surprising Report on How Much of Apple’sTop Product Is Us-Manufactured,. [online]. [Accessed 06 November 2015]. Accessed onhttp://financesonline.com/how-iphone-is-made/Apple Inc, (2015) Q1 2015 Unaudited Summary Data. . Accessed onhttps://www.apple.com/uk/pr/pdf/q1fy15datasum.pdfBrookins, M. (N.D) Examples of demographic segmentation. Small Business [online].[Accessed 09 November 2015]. Accessed on http://smallbusiness.chron.com/examplesdemographic-segmentation-12367.htmlCho, D.S. and Moon, (2013) From Adam Smith to Michael Porter: Evolution ofCompetitiveness Theory. (Graph) 7, pp. 126-130.Dewan, S. (2010) How a Crackdown on Worker Protests in Dhaka Hurts the U.S. Economy(Graph). Foreign Policy and Security [online]. [Accessed 09 November2015].https://www.americanprogress.org/issues/security/news/2010/08/25/8277/frombangladesh-to-you/Gunther, C. (2013) Apple retail stores serve 1 million customers daily, 407 locationsworldwide. [online]. [Accessed 05 November 2015].Heracleous, L. (2012). Quantum Strategy at Apple Inc: Organizational Dynamics.,p3-5.Hiner, J. (2010) The 10 Greatest Moments of Microsoft-apple Collaboration. Hardware[online]. [Accessed 07 November 2015]. http://www.techrepublic.com/blog/10-things/the10-greatest-moments-of-microsoft-apple-collaboration/Jentz, G., Miller, R. and Cross, F. (2008) Limited Liability Companies and Special BusinesForms. Business Law, Alternate Edition. 11, pp. 709-710.Kearney, A.T. (May 2012) Consumer Wealth and Spending: The $12 Trillion opportunity.[online]., pp. 3-5. [Accessed 11 November 2015].Kell, J. (2015) The 10 most profitable companies of the fortune 500. Fortune [online].[Accessed 15 November 2015]. Accessed on http://fortune.com/2015/06/11/fortune-500most-profitable-companies/Kumar, V. and Subramanian, V. (1997) A contingency framework for the mode of entrydecision. Journal of World Business [online]. 32 (1), pp. 10-11. [Accessed 13 November2015].La Monica, P. (2012) Apple literally does rule the world (Graph). Cnn [online]. [Accessed09 November 2015].MarketLine (2007) Apple inc and AT&T Mobility sign marketing agreement.http://advantage.marketline.com.ezproxy.uwe.ac.uk/Product?pid=FD37838 [Accessed 25November 2015]Moore, M. (2012) ‘Mass suicide’ protest at Apple manufacturer Foxconn factory. TheTelegraph [online]. [Accessed 14 November 2015]. Accessed onhttp://www.telegraph.co.uk/news/worldnews/asia/china/9006988/Mass-suicide-protest-atApple-manufacturer-Foxconn-factory.htmlOzcan, P. and Eisenhardt, M.K. (2009) Origin of alliance portfolios: entreprenuers, networkstrategies and firm performance. Academy of Management Journal. 52, pp. 246-279.Porter, M.E. (2008) Creating and Sustaining Superior Performance. Competitive Advantge.2, p. vx.Porter, M.E. (1985) Creating and Sustaining Superior Performance. Competitive Advantge.Russel, J. (2015) Apple confirms it will open a retail store in Singapore, its first inSoutheast Asia. Tech Crunch [online]. [Accessed 13 November 2015].http://techcrunch.com/2015/11/15/apple-confirms-it-will-open-a-retail-store-in-singaporeits-first-in-southeast-asia/Simister, P. (2011) Advantages & disadvantages of value chain analysis. DifferentiateYour Business [online]. [Accessed 09 November 2015]. Accessed onhttp://www.differentiateyourbusiness.co.uk/the-advantages-disadvantages-of-valuechain-analysisSingh, H. and Gulati, R. (1998) The Architecture of Cooperation: Managing CoordinationCosts and Appropriation Concerns in Strategic Alliances. Cornell University: SagePublications.43 (4), pp. 781-814.Tamar Cavusgil, S., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L. (2014)International Business. Australia: Pearson. Pg 148-149

ANSWER:

REQUEST HELP FROM A TUTOR