Global Strategic Management
Phase of Global strategy
- Single-country strategy: In 1976, after founding the company, they launched and developed the first personal computer products is Apple I, Apple II, in the United States
- Export strategy: With rapidly increasing revenues, Apple exported its product to the world and continued to launch and improve products
- International strategy: After receiving recognition from customers around the world, they continued to strengthen their position by launching a new product called Imac At the same time, they opened more retail chains and acquired many companies to expand its scope of operations
- Global strategy: As of 2020, Apple maintains up to 510 retail stores in 25 countries, more than 1,5 billion products are actively used worldwide Some typical Apple suppliers: China, Japan, Thailand, India,…
Drivers for a global strategic perspective
Globalization: Apple is a company in a developed country, with economic, political, trade barriers advantages, so it is easy to expand its product distribution chain to the global market
Information and communication technology (ICT): Apple products are widely introduced and promoted both online and offline, in online stores to easily reach customers around the world such as: TopZone, Apple Store,…
Market drivers: Consumers are increasingly demanding products with high quality, good security and modern, neat design
Cost drivers: Products are standardized, competition is not based on price However, to reduce cost, Apple retains the creative stages and outsources the remaining stages such as production, assembly, transportation, storage,…
Government drivers: The US government signs trade agreements such as WTO, NAFTA, USMCA,…
Competitive drivers: Apple has many competitors both domestically and internationally such as: Microsoft, Samsung, Dell, Asus,…
Global orientation: Have a clear direction, always leading in technology Global experience: Has extensive experience and understanding of foreign markets.
External Environment
Diamond matrix
- Labor force: Ranked 3 rd in the world and highly qualified
- Capitalization reaches 3 trillion USD in January 2022
- Leading the world in technology, science b Demand conditions
- Market demands are large, which is the driving force for growth and scale expansion
- Customers want diversity in color, style, price, features,…
- The strictness of customers with the desire for high-quality products c Related and supporting industries
- Support comprehensive development to attract consumers
- Provide necessary documents for successful operations d Firm strategy, structure and rivalry
- Strategy: Positioning strategy, focusing on product quality, expanding retail stores worldwide
- Structure: Equality and closeness between departments in the company
- Competitive: Promote the development of competitive advantages in quality and cost.
EFE matrix
Analyze the external environment with factors at the levels of the world environment, macro environment and industry environment Total weighted score is 2,66 Our recommendations are:
- Penetrating into developing countries, taking advantage of technology and rapid new product launch speed
- Limit dependence on foreign supplies, improve customer experience
CPM matrix
The Competitive Profile Matrix identifies a firm’s major competitors and its particular strengths and weaknesses in relation to a sample firm's strategic position
Compare IOS operating system of Apple with Android of Google and Windows Phone of Microsoft
+Apply promotions, incentives and customer appreciation policies
Internal Environment
Resources
Apple is a leading technology brand, famous for its matchless technology and products Its resources play important roles in enabling the firm to conceive of and implement strategies that improve its efficiency and effectiveness Apple resources include both tangible and intangible resources
Apple’s tangible resources include machinery, finance, technology and ecosystem, brand equity
- The components go to Apple manufacturing locations in China, the Czech Republic, Malaysia, Thailand, and South Korea among others The manufacture of iPhone mostly takes place in East and Southeast Asia because the labor force there is cheap and abundant Their manufacturing facilities belong to only two companies: Foxconn and Pegatron
- Apple has announced financial results for its fiscal 2023 fourth quarter ended September 30, 2023 The Company posted quarterly revenue of
$89.5 billion, down 1 percent year over year, and quarterly earnings per diluted share of $1.46, up 13 percent year over year Definitely, the company has a sustainable financial foundation As long as Apple continues to innovate, there will be heightened demand for its products and services This leads to pricing power, expanding profit margins, and improved cash flow, which help drive the stock price higher while also allowing Apple to return capital to shareholders
- Apple’s ability to tightly integrate its hardware, software, and services has been a significant source of competitive advantage By using technology products and services, Apple creates a seamless and cohesive customer experience by controlling the entire ecosystem Technological innovation is one of the keys reason that Apple is very popular
- Apple is one of the most famous corporations, because of its " bitted- apple" logo, which is very unique However, IOS is a trademark or registered trademark of Cisco in the United States and all the uses of the trademark need to be under license
Apple’s intangible resources include the firm's reputation, the marketing, and customer’s loyalty
- The reputation of Apple and its global popularity is also a key advantage that Apple has sustained well The company operates its business mainly on a geographical basis Its business is divided into the following geographic segments – Americas, Europe, Greater China, Japan and Rest of Asia Pacific Americas include both North and South America Apart from the company owned stores, Apple also sells through online channels and authorized resellers in markets around the globe Global presence of the brand is an intangible resource that helps the brand achieve high sales and revenue
- Apple is known as a leading marketer For years, its unique marketing strategy has helped drive sales and engage customers better The brand has built a distinct image for itself and a great reputation as an innovative technology brand Its excellent marketing strategy is also a key source of popularity for the brand Its marketing strategy has also helped it establish itself as a customer centric brand
- Customer loyalty is one of Apple’s intangible resources Consistent focus on innovation, quality and customer convenience has helped Apple build a large customer base and strong customer loyalty The company has a large customer base and its customers are very loyal Apple has also built an ecosystem of related products which has helped it sustain its customer loyalty Most Apple customers buy several products from Apple like smartphones, laptops and accessories.
Core competencies
- VRIO shows that pursuing innovation is one of Apple's main core competencies Apple's mission statement is: “To bring the best user experience to customers through innovative hardware, software, and services.” The company brought several mind blowing products starting from Mac computer to iPhone, iTunes, and several more products and services Apple has a powerful brand because it is associated with creativity and quality Its products are innovative because they combine design and functionality in a way that no other company has been able to replicate It is why the demand and popularity of Apple products is high from all over the world despite the premium price tags
- Product quality can be the driver of demand and popularity Apple’s reputation in terms of product quality has remained unchallenged Apple's designers work hard to create products that not only look great, but function flawlessly Apple products are made with high-quality materials that are built to last For example, the aluminum used in the MacBook's casing is incredibly durable, easy to dissipate the heat, and the glass used in the iPhone's screen is scratch-resistant The product’s quality is unchanged between the US local market and international market
- Apple Inc ecosystem integrates the following key elements: Company image of creativity that motivates customers to upgrade their devices frequently Perception of status and effectiveness that is associated with using Apple products Efficient devices and services that perform best with other Apple products and services By offering a range of interconnected products, services, and platforms, Apple makes it challenging for international customers to switch to using products of competitors
The VRIO analysis table shows that the core competencies depend on business strategy and product quality Apple is a resource that functions as a core competency that satisfies all of the VRIO analysis framework Apple has maintained its value, rarity, imitability, and organization very well The company has been successful in creating a brand and a loyal consumer base The company has given tough competition to its competitors and gained a leading position and market share
⇨ Overall, Apple receives a 2.86 total weighted score, which on a 1-to-4 scale is indicating a strong internal position However, there is still room for improvement We recommend Apple should be less dependent on iPhone sales as now it’s a major source of revenue; it can also introduce more innovative products; improving work culture for employees; enhancing shipment lead time.
Internationalization process
Entry mode analysis
Apple sells their products and services both directly from The Apple Store and indirectly from Apple Authorized Resellers (AAR) to the international market
Apple chooses to access some international markets through retail with a chain of stores named “Apple Store” The Apple Store is owned and operated by Apple Inc The stores sell various Apple products, including Mac, iPhone, iPad, Apple Watch, software… located in big cities.Currently, Apple Store is present in 25 countries and territories other than the US Most recently, in India, Apple opened two apple stores in Sanket and New Delhi In some other countries such as Vietnam, Apple opened an e- commerce website “apple.com” with a full range of Apple products The store also provides warranty, installment, shipping and delivery services to its customers In May
2021, in an interview with Funke Mediengruppe, Deirdre O'Brien said, "Apple is sticking to its plan to open more stores around the globe in the future"
The Apple Authorized Resellers (AAR) sell Apple products in some capacity on behalf of Apple Inc Their specific support and return policies vary based on the store's policy Sales and deals on Apple products are often specific to certain resellers, and those stores cannot discount Apple products without permission In some countries that does not have The Apple Store, most products are completely brought to AAR in
Vietnam by Apple itself appointed distributors ( in Vietnam, AAR’s products are usually from Singapore) In another South East Asian country - Indonesia - there doesn’t have a physical Apple store yet Apple’s market share there is tiny, at just 1% in 2022, according to Canalys data But “This is a golden opportunity for Apple,” Tim Cook said, because Indonesia is the world’s sixth-biggest smartphone market It is believed that Apple will supply more and more products in this developing country
Apple's transformation has also been promoted by strategic partnerships with other international companies They had been joining other companies in a new alliance, which would have seen consumers enter a brand new era for 'smart' technology Since
2000, Apple started to partner with Foxconn Technology Group - the largest electronics manufacturer in the world Foxconn is the trade name of Hon Hai Precision Industry – the largest exporter in the region of Greater China This tech giant is assembling all Apple’s products across China and Taiwan In 2004, TPK Holdings - the largest touch- panel supplier in the world partnered with Apple Inc This Taiwanese company is also the largest supplier for Apple’s iPads and iPhones When it comes to manufacturing and distributing products, strategic alliances allow companies to expand their productions, quickly meet the demand According to StatCounter, the Android mobile operating system holds the largest market share of 70.77% globally, as of August 2023 iOS, on the other hand, holds a global market share of 28.52%, as of August 2023 With the right alliance, partners can outpace the competition with new solutions and drive innovation These strategic alliances are creative and revolutionary and have the ability to change the international market in a dramatic way
Apple is very interested in acquiring international or start-up companies to boost its product and service offerings On 24th September, Apple acquired Shazam Shazam is an application that can identify music based on a short sample played using the microphone on the device which is really useful Now these functions are available on Siri, Apple Music, iTunes and so on In October 2023, the company acquired BIS
Records - a Sweden record label which focuses on classical music, especially works that are not already well represented by existing recordings This acquisition is valued at $3 billion Up to the present, Apple has made 112 acquisitions across sectors According to Apple's CEO Tim Cook, the company has spent over $218 billion for acquisitions for the last 6 years.
Motivation of internationalization
Apple is one of the biggest international corporations and they get most of their business from the international market They have Apple Stores in 17 countries and the Apple online store is available in 39 countries Apple products are sold mostly through resellers and carriers and there are very few countries where you cannot buy Apple products According to John Dunning, there are four motives for internationalization and they are absolutely applied to Apple Inc.:
- Seeking for resources: Apple Inc have been looking for foreign countries so as to reach an abundance of natural resources, human resources,
- Seeking a new market: The company invests in foreign countries to supply for its large domestic market and regional market and to overcome the barrier of exporting or to locate closer to customers
- Seeking for efficiency: Apple finds ways to invest in foreign countries to reduce the cost through cheaper labor or to make use of materials Moreover, the company is able to gain benefit from government policies and integration of international activities
- Seeking for strategic asset: The company seeks to invest in international markets to obtain important knowledge resources, to learn from different consumer preferences…
Expand process
Apple Inc is not a born global firm because it follows the traditional internationalization process Therefore, the Uppsala model is suitable to explain the development of Apple Inc
The Uppsala model explains how industries expand their operations and investments in overseas markets It is a stage-by-stage process along the international path in the form of logical steps, based on their gradual acquisition and use of information gathered from foreign markets and operations There are four steps of Uppsala Model:
Step 1: Market knowledge leads to market commitment
Step 2: Market commitment leads to more market knowledge
Step 3: Market knowledge leads to market commitment
Step 4: Market commitment and so on
In 1993, Apple Inc opened its workplace in China, and the company faced several issues when the corporation operated its first office in Beijing The initial revenue in China was extremely lower than the company expected After this situation, Apple Inc opened its first physical store in China in 2008, but Apple products have previously been offered at high-price in the Chinese market Apple quickly increased its presence in China through official stores, authorized retailers and distribution centers Thanks to the economic growth, the upper class acquired Apple's products and because of the technology development (the LTE network), China had been a fast-growing market for Apple However, the company had to face many difficulties relating to the environment, strict government policies, and price-conscious Chinese customers Therefore, Apple's dominance in China is gradually being replaced by domestic competitors with advanced technology and cheaper prices As a result, Apple partnered with international manufacturers in China such as Foxconn, Wistron Thanks to that, China became the largest assembly capital of Apple worldwide
Another statistics of Apple in India, there are significant changes in the production of the Apple devices for Indian customers and exports Bank of America's reports show that Apple has already increased its iPhone production in India from to 7 per cent in 2023 Therefore, there are previous speculations suggesting that Apple aims to manufacture 25 percent of iPhones sold globally in India by 2025
In conclusion, it is clear that the first and fourth steps of the Uppsala model were applied in Indian and Chinese markets by Apple Inc Apple Inc started manufacturing its devices in these developing countries so as to keep and enhance the company’s market position.
Advantages and disadvantages of entry modes
- Education levels in countries are increasingly emphasized, so customers can easily adapt to Apple’s products Customers prefer to experience, and use Apple products at stores
- Technology in the world is increasingly developing, causing an increase in cybercrime rates Apple genuine imported devices are highly secure and are favored by customers
- Apple is a big brand so it doesn't have to advertise but customers can still know about it So Apple saves a lot of costs when entering the market both in direct and indirect ways
- Ensuring the quality and stability of the quantity of input materials Alliances with international manufacturing and assembly companies help Apple produce large volumes to meet the international market
- Low risks of technology appropriation Apple can take advantage of partners' available technology The corporation does not have to invest in chip factories or assembly factories Therefore, the profits are maximized
- Does not have problems integrating different cultures, structures, procedures… while entering new markets The firm will not encounter conflicts related to cultural integration with the partner country or partner business structure 4.1.3 Strategic acquisitions:
- Provided with high experiential knowledge in foreign countries
- The firm could take advantage of existing relationships with customers, suppliers and local authorities
- If Apple acquires a company in the same industry, it will have the chance to eliminate its future competitors
- Apple found it hard to control operations abroad Risks exist for Apple when venturing into the markets of underdeveloped or developing countries In these countries, the level of internal human resource management and sales is not really effective
- Regarding the domestic market, the current price of the product is too high compared to the average income According to statistics from CompareDial, Vietnam is in the top 10 countries with high iPhone 14 prices compared to average income Specifically, a Vietnamese person needs to spend up to 45.86% of their total annual salary to buy the basic 128 GB iPhone 14 model
- Alliance can cause monopoly or oligopoly situations It would harm other businesses in the same industry That may make product prices raised high, creating consumer pressure Monopolistic firms have minimal incentive to improve the quality of the goods and services they provide, so their product may become overrated
- Sometimes in an alliance relationship, one party may earn unequal benefits This can lead to conflict between the companies
- Acquisition causes foreign integration problems, affecting preferential policies if any
- Managers of acquired foreign subsidiaries may have a weak attachment to the Apple Inc As a result, Apple would face with human resource problems.
Five forces model
5.1 Threats of new entrants -> moderate force
In low barriers to entry into the industry, the threat of new enemies can be considered high The nature of barriers in place in a particular industry will establish the degree that threats of new entrants pose to the industry, it can be argued that the threat of new entrants in the PC, tablets and smartphone industry is very high since Huge amounts of capital for research and developing and marketing have to be spent so as to bring Apple’s products to the market In addition, economies may take the chance to enter the market and access the distribution channels effectively Some of the new entrants to the industry that have contributed to the decrease in the profitability in the industry include OnePlus, Xiaomi, HTC, Asus
5.2 Bargaining power of suppliers -> weak force
Suppliers in this sector include suppliers of the various raw materials used in manufacturing of specific products The power of suppliers will normally be determined by the amount of suppliers in the given industry This means that few suppliers in any industry will imply that the suppliers have more bargaining power
Apple has hundreds of suppliers, with its most recent supply list documenting the 200 that make up 98% of its procurement spend Apple works with global suppliers to acquire the necessary components to manufacture its products These components are then transported to Apple's manufacturing facilities, where they are used to assemble finalized products Once products have been assembled, they are sent to Apple's distribution centers
5.3 Bargaining power of buyers -> strong force
The large array of PCs, smartphones and tablets has created a lot of power at the hands of the consumers However, once the initial purchase has been made, brand loyalty may begin to formulate Apple has maintained a customer retention rate of over
90 percent for the past three years iPhone users were 18% more loyal to the brand of their device than Android users 84% of iPhone owners plan to purchase another Apple device to replace their current one Apple had 74.6% trade-in brand loyalty The consumer has a lot of bargaining power, however – it may be expensive both financially to terminate contracts and personally as they may lose their apps and software which they have built their device around
5.4 Threats of substitute products -> weak force
A substitute product can be described as a product that is unique while compared to another product in the market but can meet the needs usually met by the product that it is different with Some of the substitutes to Apple products include Xiaomi or Samsung products On the other hand, the Android operating system of Google competes with the iOS of Apple, found in iPhones Therefore, substitute threats cannot be said to be very high
5.5 Rivalry among existing competitors in the industry -> strong force
Rivalry between competing firms in a given industry can be existing in different types Competing firms compete in forms of price competition, product launching and product research & development among others For example, the price difference between Xiaomi and Apple phones is quite high iPhones are typically more expensive than Android devices, with the latest models often costing over $1,000 However, iPhones tend to hold their value better over time, making them a better long term - investment for some users.
Subsidiary and corporate level strategy
Subsidiary and corporate level strategy
Differentiation strategy is to position the product in a unique way, different from competitors, that difference must be felt by customers and bring benefits to them That difference can be expressed through product design or reputation, product or service characteristics, product support policies, etc Businesses will depend on their competitive advantage and potential Finance and creativity of the business to choose the factors that determine product differentiation For Apple products, from Macbook computers to iPod music players, iPhone and iPad mobile devices, Apple has taken advantage of its USP (Unique Selling Proposition) which is its operating system genuine iOS or Mac to target a portion of the consumer market and send a strong message that its products are superior to its competitors in the market In general, Apple has used the differentiation strategy in the following ways:
Apple impresses with its beautiful design: since its founding, Apple has paid great attention to the design of its product lines, all of which are at the forefront of all trends, with eye-catching designs - making an impression from everyone the first look The company's iPod, iPhone, and iPad technology products did not have new and outstanding features right from the first days of launch but mainly came from the product design For example, Apple's iPod was not the first music player invented, but this Apple product is loved because of its beautiful product design jewelry for the user Or the iPad with its luxurious, thin, and light design is what reminds customers of Apple
Instead of using the Windows operating system like other computer companies, Apple uses a unique, exclusive Mac operating system for its product lines This operating system has many users becoming loyal supporters of the product because of its elegance high security, ease of use, and stable operation This is also exploited by Apple in iPhone and iPad phones with the iOS operating system The iOS operating system with high- capacity RAM helps Apple phones and tablets perform better than their Android competitors In particular, Apple products are innovative, durable, and of high quality Furthermore, Apple also continuously upgrades its products and services to help improve customer experience Apple products all synchronize data, making information management between devices easier and more convenient
• One area in which Apple beats its rivals is the differentiation of its products, where it has dominated in computers, mobile phones, digital music players, and online music stores (Harrison & John, 2009) Here, Apple’s strategy is to engage a single company to provide operating systems and hardware for its products (Hill & Jones, 2012) This allows the company to concentrate on design quality Moreover, the company has positioned itself in the high-end market because it has a reputation for creating products that are highly valued by customers Another differentiation strategy that Apple has adopted relates to the distribution of its products, where it has established retail stores around the world Moreover, the company’s service delivery is unique and superior, as it boasts of a state-of-the-art bar for technical support, continuous and dedicated customer service, and allows customers to first sample their products before buying them
According to the Brand Finance Global 500 ranking, from the early days of 2022, Apple has become the most valuable brand globally According to that statistics table, the brand value of 355.1 billion USD belongs to Apple and it is 5 billion USD higher than Amazon.Apple has adopted this strategy by producing cost-effective, high-quality products using affordable and economically viable raw materials, which is enhanced by the presence of a powerful, innovative management team and staff in the production, marketing, and delivery of products Another cost leadership strategy that Apple has applied is forming business alliances with other successful companies, allowing the company to concentrate on innovation and market intelligence
First was the Mac computer line, then Apple added the iPod, iPhone, iPad, apple watch, AirPods, and in recent years Beats, HomePod, and Apple TV AirTag Apple has gone from being a computer company to a real consumer brand This can easily be illustrated by looking at search trends, in this case, overall interest in Apple's various product lines over the years
With the high level of integration between personal computing and online entertainment products, there is clearly an economic opportunity for computer manufacturers such as Apple to be able to price more attractively for customers increasing the opportunity to win customers in the competitive market, thus strengthening the economy of scope Apple releasing the iPhone and many AirPods products is a step in that direction Not only does diversification rejuvenate the company's image, but it also allows Apple to understand modern consumers This understanding is reflected in the company's innovative consumer products such as the Mac Air, pro, and Airpods Because Apple discovered the close connection between computing and personal entertainment, the financial company is more vibrant than at any time in history The success of AirPods and iPhones has boosted the sales of Apple products These networking products are tightly integrated with home computing products Therefore, the company can draw the attention of customers to unique music according to its computer model
Furthermore, the integration of Apple products that contribute to attractiveness also makes customers more loyal and certainly reduces the likelihood of customers switching
If you look closely, the interest in Apple is growing, the Mac is growing as a platform, even in relation to other non-Apple operating systems, which is also supported by data from other sources , like StatCounter's statistical operating system One of the factors is certainly the knock-on effect of the growing number of iOS devices, which is bound to be pulling more users into the Apple ecosystem In the news: iPhones and iPads get significantly more attention by the media than Macs or iPods From 0 to more than 300 Apple retail stores in a decade: This gives Apple its own retail chain where it can highlight products on its own terms as they are launched, without having to rely on other retailers or sell only online
One of the "sources" most trusted by Apple is China As of 2020, among Apple's top
200 suppliers, 51 are based in China (including Hong Kong), up from 42 in 2018, becoming the place with the most largest supplier for Apple today and accounts for 21% of global suppliers The number of suppliers in mainland China has tripled since 2012, while its US competitors have dropped more than 32% from 37 to 32 suppliers Most of the companies that remained like 3M, Corning, Micron, Lumentum, and Qualcomm – – all provide high-value chips and materials that are difficult to replace The rise of Chinese suppliersQuoc speaks of the land's increasingly outstanding production capacity and technology in this country
Currently, Apple's main assembly partner is Foxconn - a Taiwanese electronics company headquartered in Shenzhen but with many factorie s spread across China, some in India
Components for the iPhone are produced all over the world As revealed by CEO Tim Cook, iPhone parts are produced in India and Thailand In the US alone, electronics manufacturer Corning in Kentucky and Texas also participates in the supply chain Investopedia's report also shows that Apple is collaborating with at least 9 manufacturers, assemblers, and suppliers of components for the iPhone, including Foxconn, Wistron, Pegatron, Goertek, Luxshare, Qualcomm, Intel, Murata, and Samsung Partners' factories are spread around the world, such as China, India, Thailand, Malaysia, Czech Republic, Korea, Singapore, Brazil and the Philippines
Apple outsources most of its manufacturing, assembly, and logistics operations to outside partners This allows Apple to focus on its core activities, such as research and development, design, and marketing
There are many benefits of outsourcing for Apple
- First, it helps Apple reduce costs Apple does not have to invest in factories, equipment, and personnel to produce its products Instead, Apple simply pays its partners to produce products according to their requirements This helps Apple save a significant amount of costs
- Second, outsourcing gives Apple more flexibility Apple can easily adjust its production scale to meet market demand If demand increases, Apple can easily sign contracts with new suppliers to increase production On the contrary, if demand drops, Apple can easily reduce production without having to lay off employees
- Third, outsourcing helps Apple focus on its core operations Apple can focus on research and development, design, and marketing, activities that bring high value to the company Outsourcing manufacturing, assembly, and logistics activities helps Apple free up resources to focus on these core activities
Of course, outsourcing also has some potential risks
- First, Apple depends on outside partners to produce its products If these partners have problems, such as strikes or natural disasters, Apple could be affected
- Second, outsourcing can lead to loss of quality control Apple cannot directly control the production of its products This may result in the product not being of the desired quality
Strategy formulation
After illustrating the space matrix it is obvious that Apple should follow aggressive strategies which includes forward and horizontal integration, market development, market penetration, product development and diversification (related or unrelated)
- The most valuable brand in the world
- Brand of choice in the programming and creative fields
- Developed Liam – Apple device recycling robot
- Participate in areas that lack competitiveness
- Products are difficult to compatible with third-party platforms
- Parental Control software on Apple devices does not work well
- The dream destination of the world's leading experts in the field of technology
- Trend of using green technology
- Trend of using smart wearable devices
- Many of Apple's large and small partners do not agree with the 30% revenue sharing policy
- Regulations on using USB-C charging port to protect the environment
- The Covid-19 epidemic has not yet been completely extinguished in China
- AirTags are being used for bad purposes
- Counterfeit and fake Apple brand goods have not been controlled
- Fierce competition from other leading competitors
- Risk of reduced security as required by the US government
1 Leverage the highly loyal customer base to introduce new, environmentally friendly products and capitalize on the trend of using green technology
2 Expand business potential in India by customizing products or services to meet local preferences
1 Introduce promotional strategies to make products more acce ssible and appeal to a broader audience, tapping into the trend of using smart wearable devices
2 Strengthen compatibility with third-party platforms to enhance the user experience and attract a wider customer base
1 Collaborate with large and small partners to address concerns about the 30% revenue sharing policy, fostering stronger relationships within the business network
2 Enhance security measures to counteract potential risks associated with the US government's requirements
1 Address the high price issue by offering bundled packages or discounts during promotions to mitigate the impact of fierce competition
2 Collaborate with regulatory bodies to navigate and comply with USB-C charging port regulations, turning potential threats into opportunities for innovation
The GSM Matrix gives us an overview of Apple's core businesses In general, the best competitive advantage of a business is when the SBUs are in region I of the matrix Region II proves that businesses are being left behind in a good growth market and requires businesses to focus resources on developing SBUs in this region if they want to increase their competitive position and be among the top in the industry
We have a strategy for each SBU as follows:
With the iPhone product, Apple has carved out a unique position in the market, boasting a dedicated customer base and an exclusive operating system that sets it apart Implementing a growth concentration strategy will help Apple solidify its position and sustain its presence in the traditional smartphone market To execute this strategy, the company needs to strengthen Research & Development, continually introduce new products and features, and Apple is already doing well in this regard with the iPhone SERVICES: Market Development Strategy
As Apple's user base continues to grow, consumers increasingly invest in service experiences, making the industry's growth rate exceptionally high in 2023 Therefore, for Apple's services segment, opting for a market development strategy aims to enhance customer experiences, increase market share by continuously improving service quality, satisfying customer needs, broadening the customer base, and maintaining a strong competitive position in rapidly growing markets
As of 2023, Apple leads the tablet market with a 37.5% market share, surpassing competitors like Samsung and Lenovo combined at 35.9% While dominating, increased competition poses a significant challenge Therefore, Apple may choose a market development strategy to explore opportunities by expanding its existing iPhone customer base, attracting new customers globally, expanding distribution channels, and incorporating existing products into new market regions, ensuring Apple doesn't lose market share to emerging competitors
In 2023, Apple ranks fourth among the world's largest personal computer providers The MacBook currently holds a relatively small market share, facing intense competition The current higher pricing of MacBooks compared to the market average is a contributing factor Hence, Apple can apply a low-cost strategy to enhance competitiveness within this segme nt To implement this strategy, Apple should leverage its existing supply chain, build and develop manufacturing and materials management departments, and prioritize cost-effective production to deliver competitively priced products
This is a relatively new SBU in the market, experiencing rapid growth in recent years due to increasingly diverse consumer demands for high-quality audio experiences and other devices Therefore, for this SBU, Apple can implement a market development strategy to expand distribution channels, increase participation of existing products in new market areas, and attract new customers to broaden its customer base
- Stars – iPhone: since Apple's early days, the iPhone has been the main product With high security and durability, market demand for iPhone is very high However, with the emergence of more and more competitors and breakthrough phone lines such as folding screens (Samsung) or unique designs (Nothing Phone), the iPhone's growth rate is considered to be slowing down
- Cash Cow – MacBook and iMacs: this laptop line is one of the leading products on the market today With high quality and good optimization for work, Macbooks are often sold at very high prices, especially after the introduction of the M1 chip
- Question mark - Apple TV: this is a new product with low profitability at the present because it cannot be compared with long-standing competitors such as Amazon "Fire stick"/Alexa, However, it has a strong growth potential in the future as smart TVs become increasingly popular
- Dogs – iPad: is a product only suitable for graphic designers and businesses, but with a very high price and not possessing too many mass-market functions for ordinary users, its attractiveness is gradually declining, thereby having a lower growth rate
The QSPM method falls within so-called stage 3 of the strategy formulation analytical framework Hence there are a number of alternative strategies and below is a QSPM for Apple with the two recommendations:
From QSPM analysis, it can be clearly seen that Market penetration is a more attractive strategy with a Total Attractiveness Scores (TAS) of 3.15 which is more than that of the other strategy (2.8).
Recommendation
- To bring the best experience to users as well as to protect the reputation of the Apple brand, it is necessary to address common problems and technical errors in iPhone product lines such as battery draining quickly, unable to connect to Wifi, unable to turn on/off the device, hang up phenomenon, FaceID not working
- Upgrading and improving the iOS operating system gives phone users a better experience; Flexibility in allowing users to install applications and software from third parties Improve phone quality: regularly improve and update new operating systems for Apple, performance, configuration, and duration of the battery
- Invest in research and application of new technology into products with breakthrough features that attract customers, in line with the positioning of high-quality phone products
- Increased social responsibility: Apple is making a number of efforts to increase so cial responsibility, such as using recycled and environmentally friendly materials in product manufacturing However, the company needs to continue these efforts to ensure that its products are produced in a sustainable and responsible manner
The price skimming strategy is an effective pricing strategy that helps businesses gain high profits in a short time However, if used excessively, this strategy can cause adverse effects, especially for high-tech products like Apple's iPhone Apple's continuous increase in iPhone prices in recent years has caused doubt in consumer psychology Many people believe that the price of the iPhone exceeds the real value of the product, and that the quality of the iPhone is not worth that price This has led to a decline in consumer trust in Apple and caused them to consider choosing products from other brands In addition, Apple's reducing iPhone prices too quickly can also cause negative reactions among consumers, especially loyal customers P eople who buy iPhones at high prices will feel "cut off", and they may feel disappointed in Apple This may cause them to turn away from Apple and switch to using products from other brands To avoid the adverse effects of the price skimming strategy, Apple needs to be careful when setting the initial price as well as the discount period The company needs to carefully consider