Market Entry Strategic Report: Analysis Of Apple Inc. For ENTRY Into European And Asian Markets
Macro-Environmental Risks
Apple Inc., previously known as Apple Computer, Inc., is an American manufacturer of PCs, computer software, and computer peripherals. It was the 1st successful PCs Company alongside the graphical user interphase popularizer. It is headquartered Cupertino, California. Apple Inc., currently designs, manufacture as well as markets mobile communications alongside media devices, PCs and portable digital music players. It sells an array of associated software, accessories, services, third-party digital content alongside applications as well as networking solutions. Apple’s segments encompasses Rest of Asia Pacific, Greater China, Japan, Americas, besides Europe. Its Americas segment entail both South America and North America while the Europe Segment encompasses European nations, the Middle East, India and Africa. The Greater China segment encompasses Hong Kong, China, alongside Taiwan while the Rest of Asia Pacific segment entails Asian countries (excluded from Apple’s other operating segments) and Australia. Apple’s products and services are among iPad, iPhone, iPod, Mac, Apple Watch, a portfolio of consumers besides professional software applications, Apple TV, iPhone OS (iOS), watchOS and OS X operating systems, iCloud, Apple Pay along with an array of accessory, support and service offerings (Gaurav and Shainesh 2017). The two countries that will be used in this analysis is France as a European market and China as an Asian market.
The macro-environmental factors or risks are environment or factors in which a business or sector operates, and shall affect its performance. These factors or risks can arise from demographic forces, economic forces, natural forces, technological forces, political forces and cultural forces.
The demographic forces or factors in boh include size, density, location, age, gender, race and occupation amongst many others. The demographic environment can greatly pose a risk to Apple and hence the need to be taken care of in the Company’s innovation. This is because unless the Company incorporates a “something for everyone” attitude in its devices, it will be hard to compete other rivals that have also tried very hard to integrate such attitudes of everyone into their products. This is why an iPhone, for instance, is catering for audiences of every age (LIU 2017).
Economic factor deals with consumer purchasing power alongside spending patterns. Apple Inc., macro-environment is economically never widely different from many of the firms out here. Despite being a giant company and with a stronger global economy and market presence which it is, it remains not wise to imagine that Apple is fully immune to the main economic recessions which has been ongoing for many years. One of the major economic risks faced by Apple is during the economic recession as the purchasing power of the consumer is lowered and hence reduced sales leading to a reduction in revenue and income (Zhu and Sardana 2020).
Geo-political Risks and Opportunities
The literature reveals that Apple Inc., current highest sales is on mobile devises and not merely PCs, nonetheless, for instance, the price of an iPad falls between 499 and 829 dollars. This presents a risk of less sales for Apple Inc., as this price remains hefty for several individuals to pay in case they stay amongst the uncountable people without employment or those who get retrenched during the economic downturn. Moreover, the unstable national economies further possess an economic risks for Apple to sell its products and services and hence a significant variable which must be considered for the success of Apple Inc., global expansion. Natural factors can pose such risks as insufficiency of raw materials, and increased levels of population and also increased cost of energy and the need for environmental protection.
Technological factors include emergence of new innovations alongside ideas which create a novel product by other competing business hence a risk to Apple Inc. Apple Inc., is increasingly facing a risk of ever-rising technological capabilities of its rival firms. This is because the advancement in technological capabilities of other competing firms is threatening Apple Inc., as more novel participants might enter this industry hence slashing its market share. Therefore, for Apple Inc., to ensure accomplishments of its corporate mission and vision statements, it remains gainful to reinforce its business capabilities by exploiting such opportunities as growing cloud computing demand, rising technological integration in business, expanding mobile market alongside and also safeguard its business against the looming competitive threats illustrated in this section.
Political factor encompasses laws, government agencies which restricts the organization to efficiently work hence a risk. Another political risks is that government viewpoint on economy, religion, and culture on marketing ethics might impede the business operation. Apple Inc., is also facing serious risks due to the legal factors which limit is business operations. Some of the specific legal factors that impede Apple Inc., business operations include privacy regulations and legal challenges against the practices and policies of Apple Inc. The pressure by the government on the privacy in this digital era has culminated in surging regulations on privacy on Apple Inc., business. Such a legal macro-environmental factor remains a risks or threat which might impose costly compliance requirements to the regulation and additional restrictions on the Apple Inc., as a technology firm. Moreover, Apple Inc., is facing a legal risks associated to its policies and practices on after-sales services alongside additional business areas. For instance, in the United States, EU and Australia, among other nations, Apple Inc., has encountered strong legal battles and criticisms about its policies on third-party repair service. Premised on this section, Apple has to stress on privacy safeguard alongside regulatory adherence in each of its service and product, and take into consideration adjustment in its practices and policies to tackle the present political and legal pressures.
Market Attractiveness of European and Asian Markets
Cultural factor or risks include negative ideas, values, attitudes, population and beliefs that affect the purchasing behavior of a consumer. Apple Inc., is further affected more by socio-cultural factors which poses such risks as changing trends on the manner individuals purchase Apple Inc., services and products. For instance, when Steve Jobs, then then CEO of Apple Inc., suggested a move past the Macintosh PCs and into the digital globe, it significantly altered Apple’s complexion. Starting with a debut of original iPod in the year 2001, the Company started catering for surging social desire for having a portable as well as digital devices. A negative change in socio-cultural trend is a risks to Apple Inc, since it has to adjust to such trends to thrive irrespective of how much investment was put in the current product which consumers are now considering being modified. For instance, an iPod was made so successful because it was genuinely the 1st gadget of its kind, as past and then-competing mp3 players stored “solely an hour of music” while the iPod managed to store more than 1000 of customer’s favorite songs. However, as the years passed by, and the fame of listening to music on-the-go while having a hugely expansive music library fitting one’s pocket, the initial iPod then had to metamorphose into increasingly glitzier models, and ultimately iPhone and iPad. Socio-cultural risks affecting Apple international anti-Apple Inc., sentiments. Despite such socio-cultural opportunities as rising utilization of mobile access and surging reliance on digital systems, Apple Inc., is increasingly facing a social risk or threat of opposition against the operations of its business. This is because the anti-Apple Inc., sentiments remain mounting, which questions the Apple Inc., business practices including the Apple Inc., lawsuits against the third-party repair service providers repairing such products as MacBook and iPhone. Such sentiments have apparent potentials of reducing the Apple Inc., brand image alongside consumer confidence in the technological products of the corporation. Such strategic concerns thus calls for Apple Inc., to continuously improve its practices and policies along with its approaches to technological innovation. Moreover, the marketing mix or 4Ps of Apple Inc., must encompasses strategies which match this social external risk (Chen and Liu 2016).
The geo-political factors chiefly present opportunities for Apple Inc. The political factors in the macro-environment or remote have been opportunities for Apple to expand. This is because the political factors shows the government influence as well as that of other organization on Apple business. In the case of Apple, the following remain some of the chief political external factors. These include improving policies of trade (opportunity), stable politics in developed nations (opportunity) and trade disputes, specifically between China and United States (risk of threat).
Global Business Strategy
Better generally, free trade policies get established over the period. Such an external strategic variable surges the opportunity for Apple Inc., to effectively distribute additional services and products globally (Vasilaki and Tsakalidis Jr 2019). The existence of stability of political landscape of advanced economies remains another geo-political opportunity for Apple to expand and grow, taking into account the decreased political challenges affecting Apple Inc., business operations in such developed nations. In spite of such trends which present opportunities, the political external factor of disputes of trade, specifically between the US and China, is increasingly creating a risk or threat against the Apple’s potential growth and expansion and the its global sales revenue of its services and products, including consumer electronics (Hussey and Figwer 2018). For instance, the expanding US-China tensions might result in China imposing higher tariffs on imported electronic constituents utilized in the product assembly by Apple. Premised on the geo-political factor analysis, Apple Inc., is able to enhance its performance by taking advantage of the overhead mentioned geo-political opportunities it its macro-environment or remote environment, even so caution remains essential to guarantee stability in spite of trade disputes.
1. European Market: Entry into France
The attempts by Apple to enter French market with iPhone remained a tougher sell. Indeed, the first weeks of Apple Inc., foray in France remained somewhat rockier or unattractive as compared to the United States debut, with only smaller crowds, toothless exclusivity for its carriers and confusing pricing options (Yusoff and Husnina 2018). This made Apple Inc., learned fairly fast that France remained an extremely different destination, specifically with respect to mobile phones. Apple Inc., iPhone initially went on sale via wireless carrier Orange in France which marked the 3rd European economy to carry the iPhone within its boundaries. Indeed, such a launch further marked the debut of 3rd iPhone pricing strategy in 3 economies: France, Germany and the UK (Remeikien?, ?epel and Gaspar?nien? 2019).
For a while, the iPhone moved really slower than had been expected for Apple in France and Apple remained blasé regarding the challenge it faced in France with the iPhone debut being somewhat chaotic, with last-minute alterations to pricing plans which never seemed to have in the initial plan (Chaston 2017). Orange which was the “exclusive” carrier of iPhone in France offered 3 payment plans. The unattractiveness of the Apple Inc., was compounded by the fact that French law required that carries offered customers options of unlocked phones which cost customers a hundred euros or waiting for 6 months for free unlocks. This made the prices of iPhone shot to 111277 dollars for shoppers who wanted them instantly unlocked (Minto, Voelkerling and Wulff 2017). Thus, unlike the United States iPhone owners who remained comparatively new to smartphones, and hence its attractiveness, French owners were not new to the smartphones and hence the unattractiveness. Apple Inc. market entry into French market only became more attractive when it unveiled a 3G phone which was increasingly attractive for both carriers and consumers (Kumar, Anand and Nim 2018).
International Market Entry Options
The attempts by Apple Inc. to enter Chinese market has been quite challenging due to the cheaper alternatives to iPhone offered by Xiaomi and Huewei. Indeed, as Apple Inc., warned in 2018 that its revenue for the final 3 months of the year would be as much as ten percent lower than anticipated, it chiefly impugned the China’s decelerating economy. Whereas China remains attractive to Apple Inc., because it is the global biggest smartphone market and accounting for nearly 33% of units sold globally, Apple’s entry has not been easy (Chowdhry, Verma and Mathur 2020). Apple Inc., has, however, profited by self-positioning as an aspirational, luxury brand besides tapping into the China’s expanding middle class which include Hong Kong and Taiwan, the Greater China region being Apple Inc., biggest revenue source (Burki 2018). However, Apple Inc. devices are costing as much as Rmb12700 or 1856 dollars more than double its rivals’ top-end phones (Liu 2019). Apple has further been attractive since it has worked tirelessly to gratify the authorities in those vital markets. For instance, in the year 2017, Apple Inc., moved all its Chinese consumers’ private data to a one billion data center located in Guinzhou while expecting stringent localization of data requirements. Apple Inc. has also faced criticism for removal of 674 VPN apps that safeguards users from administration surveillance and censorship, form its Chinese app store. This has helped Apple Inc., becomes an attractive in entering China, nonetheless, its growth in China has remained uneven (Suárez-de Vivero and Mateos 2017). This is because by 2017 August, it had witnessed eighteen months of declines in revenue in a row, culminating to forecast that Apple Inc. stood destined to failure, though it proceeded that with 4 quarters of double-digit growth (Bratton and Boak 2020).
France
|
Strengths · The economy welcomes innovation and business and both provides French economy a boost since it supplies citizens and expats with job opportunities · It encourages funding for startups while managing business taxes stay simple |
Weakness · The language barrier is a problem for people not speaking French as most individuals stick to French in doing business. There is thus generally rude staff or a variation in cultural belief. · Living cost is higher in France and there is also low customer service |
|
Opportunities · France has a better digital space industry which permits growth in novel sectors. The country is witnessing advancements in e-commerce, information technology and telecommunications. · French population loves American products and the government provides thus importation of American products pleases consumers and encourage overseas business, trading as well as partnerships. |
Threats · Devastating terrorist attacks as the country is a victim of many acts of terrorism from Islamist terrorist cohorts · It is also threatened by higher volume vehicle break-ins with frequent stealing of valuable possessions. |
China
|
Strengths · Largest market for mobile devices · Largest population ready to buy the mobile device products · Low cost of living · Good customer service · Amongst the fastest growing economies · A boost in GDP · Cheap labour · Rising mobile use in both populated areas and rural areas |
Weakness · The problem with all-seeing government and hence restrictive · Government disallows social media to be utilized by people |
|
Opportunities · New industries and migration and hence need for improving service sector alongside urban migration |
Threats · Negative implication on the increase which makes Chinese suffer as a result of negative perceptions · A problem with air quality and smog in China · Less safety regulations |
Conclusion
The macro-environmental scan demonstrates that a greater share of external factors in the remote/macro-environment of Apple Inc., give opportunities. Provided Apple Inc., present industry position, it might exploit such opportunities to effectively expand its reach in worldwide IT services and goods market. Nonetheless, Apple has to develop appropriate strategies to efficiently tackle the risks acknowledged, specifically such in political-legal dimensions of its macro-environment. The best country of entry is China since it is the global largest market for electronic devices and with the world largest populations which presents ready demand for the Apple products.
References
Bratton, J. and Boak, G., 2020. Strategic Management, Innovation and Leadership. Organizational Leadership, p.35.
Burki, U., 2018. Green supply chain management, green innovations, and green practices. In Innovative Solutions for Sustainable Supply Chains (pp. 81-109). Springer, Cham.
Chaston, I., 2017. Macroenvironment. In Technological Entrepreneurship (pp. 95-117). Palgrave Macmillan, Cham.
Chen, F.M. and Liu, Y.Q., 2016. Research on the risk factors of mobile business: based on the sorting Delphi Method. In International Journal of Engineering Research in Africa (Vol. 21, pp. 215-230). Trans Tech Publications Ltd.
Chowdhry, D.G., Verma, R. and Mathur, M. eds., 2020. The Evolution of Business in the Cyber Age: Digital Transformation, Threats, and Security. CRC Press.
Gaurav, R. and Shainesh, G., 2017. The changing face of customer centricity. In The Palgrave Handbook of Managing Continuous Business Transformation (pp. 175-187). Palgrave Macmillan, London.
Hussey, R.M. and Figwer, K.J., Hand Held Products Inc, 2018. Method and system to protect software-based network-connected devices from advanced persistent threat. U.S. Patent 9,954,871.
Kumar, V., Anand, A. and Nim, N., 2018. Assessing the Relative Impact of Major Sources of Innovation on the Brand Equity of a Firm’, Innovation and Strategy.
LIU, H., 2017. How information strategy and business strategy influence the organizations.
Liu, Y., 2019. The Effect of Geo political risk on China’s OFDI: A Research Based on Countries along the line of The Belt and Road Initiative. Advances in Social Sciences Research Journal, 6(12).
Minto, A., Voelkerling, M. and Wulff, M., 2017. Separating apples from oranges: identifying threats to financial stability originating from FinTech. Capital markets law journal, 12(4), pp.428-465.
Remeikien?, R., ?epel, M. and Gaspar?nien?, L., 2019. Evaluation of e-business micro and macro determinants by multiple indicators multiple causes model. Inžinerin? ekonomika, pp.591-600.
Suárez-de Vivero, J.L. and Mateos, J.C.R., 2017. Forecasting geopolitical risks: Oceans as source of instability. Marine Policy, 75, pp.19-28.
Vasilaki, M. and Tsakalidis Jr, G., 2019. Apple Inc. Equity Valuation.
Yusoff, M. and Husnina, N., 2018. Determinants of Risks and Performance in Apple Inc. Available at SSRN 3181705.
Zhu, Y. and Sardana, D., 2020. Multinational enterprises’ risk mitigation strategies in emerging markets: A political coalition perspective. Journal of World Business, 55(2), p.101044.
sian Market: Entry into China