An Analysis Of Apple Inc.’s International Business Strategy.pdf

BANKING ACADEMY OF VIETNAM INTERNATIONAL BUSINESS

AN ANALYSIS OF

APPLE INC.’S INTERNATIONAL BUSINESS STRATEGY

Lecturer: PhD Tran Ngoc Mai Credit group: 231MGT28A01

Group: 08

Hanoi, November 21st 2023.

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TABLE OF CONTENTS

Introduction Of Apple Inc 4

Chapter 1 Global Strategic Management 11

1 Phase of Global strategy 11

2 Drivers for a global strategic perspective 11

Chapter 2 : External Environment 12

Chapter 4 Internationalization process 19

1 Entry mode analysis 19

2 Motivation of internationalization 21

3 Expand process 22

4 Advantages and disadvantages of entry modes: 23

5 Five forces model 25

Chapter 5 Subsidiary and corporate level strategy 27

1 Subsidiary and corporate level strategy 27

Chapter 6 Strategy formulation 32

The SPACE Matrix 32

Introduction Of Apple Inc

1 Overview

Apple Inc is a multinational technology company headquartered in Cupertino, California, United States It was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne on April 1, 1976 Apple is renowned for its innovative and iconic products, as well as its commitment to designing and developing user-friendly hardware, software, and services

One of Apple's most notable contributions to the technology industry is the Macintosh computer, which was introduced in 1984 and played a significant role in popularizing personal computers Over the years, Apple expanded its product lineup and introduced groundbreaking devices such as the iPod portable media player, the iPhone smartphone, and the iPad tablet, revolutionizing their respective markets and transforming the way people communicate, listen to music, and consume digital content

Apple is known for its sleek and elegant product designs, often incorporating premium materials and cutting-edge technologies The company's commitment to seamless integration between hardware, software, and services has been a key differentiator, fostering a loyal customer base

In addition to its hardware offerings, Apple has developed a robust ecosystem of software and services This includes the macOS and iOS operating systems, which power its computers and mobile devices, as well as services like iCloud, Apple Music, Apple TV+, Apple Arcade, and Apple Pay The App Store, one of Apple's most successful ventures, provides a vast marketplace for third-party developers to distribute their applications to millions of users worldwide

Apple's success has translated into financial prosperity, making it one of the world's most valuable companies Its business operations extend globally, with a network of retail stores spanning numerous countries The company has also diversified into other areas such as wearables with the Apple Watch and AirPods, as well as services like Apple Fitness+ and Apple News+

Throughout its history, Apple has emphasized innovation, simplicity, and user experience, often disrupting established industries and setting new trends Its products and services have had a profound impact on various aspects of modern life, shaping the way people work, communicate, and entertain themselves

In August 2018, Apple Inc (AAPL) became the first company to cross $1 trillion, hit the $2 trillion mark on Aug 20, 2020 and the world’s first $3 trillion company on Jan.3, 2022

LOGO Meaning

The Apple Inc logo is one of the most recognizable corporate logos in the world The logo consists of a bitten apple silhouette, usually depicted in a monochromatic or metallic color scheme Over the years, the logo has evolved in design and style, but the basic concept has remained consistent The meaning behind the Apple logo has been subject to various interpretations and speculations Here are a few connotations commonly associated with its logo: simplicity and elegance for the iconic bitten apple shape is clean and minimalist; knowledge and enlightenment for the bitten apple has been associated with the biblical story of Adam and Eve; creativity and innovation; byte and computing since the bite taken out of the apple may allude to a “byte” in computing, a unit of digital information; playfulness and whimsy with its suggestion that Apple products are not only practical but also enjoyable and fun to use

2 Operational Aspect of Apple Inc 2.1 Human Capital

The Company believes it has a talented, motivated and dedicated team, and works to create an inclusive, safe and

employs 161,000 full -time employees worldwide

2.2 Supply Chain Management

Although most components essential to the Company’s business are generally available from multiple sources, certain components are currently obtained from single or limited sources that are not commonly used by its competitors, and new products introduced by the Company often utilize custom components available from only one source

Substantially all of the Company’s manufacturing is performed in whole or in part by outsourcing partners located primarily in Asia, including China mainland, India, Japan, South Korea, Taiwan and Vietnam The company maintains strong relationships with suppliers and focuses on quality control, ethical sourcing and ESG Each year the Company publishes its “Supplier list” for shareholders’ information

2.3 Retail Operations

The Company distributes its products and certain of its services through cellular network carriers, wholesalers, retailers and resellers, many of which distribute products and services from competitors The Company also sells its products and services and resells third-party products in most of its major markets directly to consumers, small and mid-sized business, and education, enterprise and government customers through its retail and online stores and its direct sales force

Apple has expanded the number of retail locations and its geographical coverage over the years, with 527 stores across 26 countries and regions worldwide

2.4 Products and services portfolio Products

iPhone

iPhone is the Company’s line of smartphones based on IOS operating system The iPhone line includes iPhone 14 Pro, iPhone 14, iPhone 13, iPhone SE, iPhone 12 and iPhone 11

Mac

Mac is the Company’s line of personal computers based on its macOS operating system

The Mac line includes laptop MacBook Air and MacBook Pro, as well as desktops iMac, Mac mini, Mac Studio, and Mac Pro

iPad

iPad is the Company’s line of multipurpose tablets based on its iPadOS operating system The Mac line includes iPad Pro, iPad Air, iPad and iPad mini Wearables, Home and Accessories

- Airpods, APPLE's wireless headphones, including Airpods, Airpods Pro and Airpods Max;

- Apple TV, APPLE's media streaming and gaming device based on its tvOS operating system, including Apple TV 4K and Apple TV HD;

- Apple Watch, APPLE's line of smartwatches based on its watchOS operating system, including Apple Watch

- Beats products, HomePod mini and accessories Services

Cloud Services

It provides cloud services to store and keep customer’s content up-to-date and available across multiple Apple devices and Window personal computers

Digital Content

The Company operates various platforms, including the App Store, that allow customers to discover and download applications and digital content such as books, music, video, games and podcasts

The Company also offers digital content through subscription-based services, including Apple Arcade, a game subscription service; Apple Fitness, a personalized fitness service; Apple Music, which offers users a curated listening experience with on-demand radio stations; Apple News, a subscription news and magazine service; and Apple TV+ which offers exclusive original content and live sports

Payment Services

The Company offers payment services, including Apple Card, a co-branded credit card, and Apple Pay, a cashless payment service

Revenue distribution of APPL in recent years:

Sourced from Apple's 2022 annual report

3 Mission and vision

MISSION STATEMENT: "Apple is committed to bringing the best user experience to its customers through its innovative hardware, software, and service."

VISION STATEMENT: "We believe that we are on the face of the earth to make great products and that's not changing."

4 Finance and achievements

Apple is the world's largest technology company by revenue and one of the world's most valuable companies It is also the world's third-largest mobile phone manufacturer after Samsung and Huawei In August 2018, Apple became the first public U.S company to be valued at over $1 trillion.and just two years later, in August 2020, became company worth the first 2 US dollar ratio It operates the iTunes Store, which is the world's largest music retailer As of January 2020, more than 1.5 percent of Apple products are in active use worldwide The company also has a medium level of high

brand equity and is ranked as the most valuable world brand However, Apple has received widespread criticism regarding its labor practices, environmental practices, and unethical business practices, including anti-competitive practices, as well as its sources root of root data

6 Target Customer

Apple company positions itself as a premium brand offering products and services with advanced functions and capabilities for additional costs Accordingly, Apple's target customer segment comprises well-off individuals who are willing to pay extra for technology products and services with advanced design, functions and capabilities Under the leadership of Steve Jobs, Apple mainly used mono-segment type of positioning, appealing to the needs and wants of a single customer segment However, after Tim Cook became CEO, the multinational technology company has been consistently increasing its product ranges shifting from mono-segment type of positioning to multi-segment positioning

Apple understands customers No one can argue with Apple's success when it comes to delighting its customers All Apple employees, whether they interact with customers or run things in the back of the store, must be on the same page They must have the same goal, which is to deliver the best possible customer experience.

Apple greets its customers as they enter the store and provides product information based on their need as opposed to trying to make a huge sale Instead of trying to sell every customer the latest, most expensive tablet, Apple employees will delve into what the shopper's intended use is For example, is he just using it to surf the Internet or does he want to watch movies? And to reduce the customer's effort, Apple has a "smart button" near each product that customers can push when they need help They don't have to wait for someone to approach them, or seek out an employee when they need help Finally, Apple has done such a great job of making customers feel like it cares about their needs that when customers are ready to buy they buy Apple Sales associates don't have to be pushy or try to make hard sales

Chapter 1 Global Strategic Management

1 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,…

2 Drivers for a global strategic perspective- Macro globalizing drivers:

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,…

- Industry globalization drivers:

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,…

- Internal globalizing drivers:

Global orientation: Have a clear direction, always leading in technology Global experience: Has extensive experience and understanding of foreign markets

Chapter 2 : External Environment

- 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 2 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 3 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

- Competitive advantage: + High product quality +Always innovation +Product diversity +High market share +Customer loyalty - Recommend:

+Reduce product costs +Improve customer service

+Apply promotions, incentives and customer appreciation policies

Chapter 3 Internal Environment

1 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 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 " apple" logo, which is very unique However, IOS is a trademark or

bitted-registered trademark of Cisco in the United States and all the uses of the trademark need to be under license

- 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

2 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

IFE Model

⇨ 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

Chapter 4 Internationalization process

1 Entry mode analysis 1.1 Exporting:

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

1.2 Strategic alliances:

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

1.3 Strategic acquisitions:

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

2 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…