International strategy of Apple

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)

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).

Apple’s international operations and management structure

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 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).

(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 finds any missing ideas they take significant action to fix the issue. The HQ management structures (Fratocchi et al. 2014).

Use of joint ventures, alliances, or mergers and acquisitions

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 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. 

International dimensions of the firm’s social responsibility strategy

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).

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.

Product differentiation and pricing strategy

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 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.

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).

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 has successfully reserved its earning and has the capability to invest it on larger acquisitions (Oberholzer-Gee and Yao 2018). 

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 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 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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