Apple Company’s Business Strategy: China Market

How would you characterize Apple’s business strategy? What factors contributed to their success in the Information and Communication Technology (ICT) industry?

The development of business strategies in Apple depends on the choices made by its leaders. In the case study under analysis, the work and contributions of two leaders, Steve Jobs and Tim Cook, are discussed. For example, Job offered the Digital Hub strategy. This business strategy helped to introduce Apple PCs as a significant anchor in order to emerge and support digital lifestyle devices.

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In his turn, Tim Cook promoted the development of a dividend program and paid the company’s attention to supplier technological advances. In both cases, these strategies brought a number of benefits and much success to the company. Though it was hard to predict the steps of the leaders, their business strategies characterized them as confident and ready to take risks and work people. Apple is a huge company with an incredible potential. Its leaders knew how to use its resources and opportunities to succeed. There were several factors that contributed Apple’s success in the ICT industry. First, the company and its leaders demonstrated their persistence in taking new steps and fearlessness to start something new in the China market.

Second, Apple was passionate and patient at the same time. Then, in regards to the existing competitiveness, the leaders demonstrate their ability to improvise and make the agreements with different organizations. Finally, the success in the ICT industry was explained by the possibility to develop and use connections in China and the US at the same time. In general, Apple’s business strategies and intentions not to stop, but offer new products and ideas to Chinese customers proved the fact that the company was ready to develop and improve from different points of view.

Why has Apple been successful in China?

There are many discussions about the reasons for and explanations of Apple’s success in China. On the one hand, the China market is open for many organizations worldwide. In the case study, it is mentioned that e-commerce is one of the industrial distribution channels that reduce barriers to entry. A number of new players could join the market. The success of Apple was hard to predict, and no guarantees were given. On the other hand, Apple faced no challenges and difficulties to introduce its products and services and even use the repositioning strategy to attract customers’ attention. Taking into consideration such challenges and opportunities in the China market, Apple was still successful, and the reasons for that success were as follows:

  1. Apple focused on middle-class customers. The company understood that China was a middle-class nation with the intentions to buy and use luxury products. Cook admired the middle class’ aspiration to buy new products made by Apple.
  2. Price policies were properly chosen in the market. Affordable prices and fixed structures provided customers with the guarantees and available opportunities. However, Apple production was never called or defined as cheap. Chinese people wanted to have luxury products, and the prices were appropriate.
  3. Apple tried to understand consumers and their choices. It was necessary to hire people, who could make observations and conclusions about what customers wanted to have with Apple.
  4. Finally, Apple was able to learn from the mistakes of other companies that developed their business in China. Samsung failure was the best example for Apple. The China’s market could be harsh, and Apple used the Samsung lesson to avoid mistakes, take smart actions, and investigate new opportunities.

How did the information systems and the organization design implemented by Apple align with its business strategy?

In the case study under analysis, the author did not focus on the clarifications of information systems and the organization designed used by Apple. The reason for such silence could be the company’s intention to stay competitive and never inform its competitors about its hardware and software. In other words, Apple aims at keeping its competitive advantage at any cost. However, the implementation of the information systems and the organizational design could be discussed in terms of services and ideas offered to its customers.

For example, the creation of brick-and-mortar stores promotes the development of transaction information systems with the help of which the company could communicate with customers, exchange news and money, and observe customers’ behaviors under different conditions. Another example of how Apple aligned its information systems with its business strategy was the creation of several offices in China, but the main office was still located in the USA. Finally, the company succeeded in management information system because it knew how to cooperate with customers, how to use teamwork, and what ambitions had to be underlined to support people in taking their steps.

Apple is a real innovation leader. It is necessary for the company to find and use information in order to improve its design and improve the already working systems. This approach should help the company not only to stay competitive, but also to be motivated and not to lose its working core. The changes of price policies and customers’ lifestyles were the results of successfully implemented information systems in the work of Apple, its leaders, and managers. iTunes applications remain to be the best example of how transaction information system is aligned with its business strategy.

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Perform Porter Five Forces Analysis of the Smartphone Industry in China. Be specific.

Porter’s five forces analysis helps to comprehend the peculiarities of the chosen industry and identify the main threats and powers for different stakeholders. Relying on the information taken from the case study, it is possible to investigate the smartphone industry in china and clarify if the success of Apple could be achieved by other organizations regardless their actual location.

The threat of new entry is moderate because the smartphone industry continues developing, and it is hard to make certain conclusions. For example, e-commerce may reduce the barriers to entry, and advanced technologies are available to many companies. However, customers’ loyalty, constant pushing to innovate, and even patents may create certain difficulties for new competitors.

The threat of substitutes is also moderate because it depends on the possible impact of the products. On the one hand, smartphones complete a number of functions, and it is hard to introduce similar products that could create competition in the smartphone industry. On the other hand, OS may vary in different companies. Though Apple is one of the leaders in the market, there is a threat of using other similar devices. Besides, the Chinese economy may not be stable, and people may want to find cheap substitutes to overcome their financial problems.

The bargaining power of suppliers remains to be moderate because of the necessity to deal with two types of suppliers only: hardware and software. Supply equipment for such products as Blackberry cannot be ignored, and hardware is hard to find. Despite strong hardware suppliers’ positions, software suppliers cannot be stable. Therefore, the power of such suppliers is low.

The bargaining power of customers is high because of the necessity to differentiate products and add value to potential buyers. Customers have many choices, and the smartphone industry depends on the choices ordinary people make.

Finally, the rivalry among existing competitors is high because competitions cannot be stopped, and such companies like Apple or Samsung have many new strategies and approaches to use in their development and penetration to the China market.

Access Apple’s resources and capabilities using the resource-based view framework. Can Apple gain and sustain a competitive advantage in China? Why or why not?

The resource-based view framework is used to develop an analysis of a competitive advantaged of Apple. In the case study, the author does not pay enough attention to its tangible and intangible resources directly. However, it is possible to clarify some points using the history of the company and the description of its penetration in the China market. Key resources of Apple are all those assets, attributes, and information that could be used to implement business strategies in the market.

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Apple’s main tangible resources are Foxconn manufacturer and a number of stores located in China. Intangible recourses include available human resources like creative leaders and skilled workers and intellectual resources like a well-known brand and significant patents. A competitive advantage of Apple in China is possible due to such factors as the company’s rare and valuable brand reputation, imitable and sustainable customers’ loyalty (e.g. when customers waited for hours for a new Apple’s store was opened), and exclusive executives, who are ready to distribute Apple’s products, improve its supply chain management, and identify its competitors. Taking into consideration this information and main aspects of Apple’s current state of affairs in China, it is possible to say that its competitive advantage is high, and the company could demonstrate great achievements in the nearest future.

What has been the impact of Moore’s Law on Apple?

Moore’s law was a result of an empirical observation made by Gordon Moor in 1965. It stated that the number of transistors per one integrated circuit could be doubled each year as soon as it was invented and introduced. In other words, that law explained that every piece of the processing power of computers, smartphones, and iPads increased exponentially. The development and growth of the technological advantage are crucial for many companies like Apple, and Moore’s Law was the attempt to explain the directions of that technological development. In the case study on Apple in China, no information about Moore’ Law and its possible effects on the company was given.

Such disregard of the law could be explained by the fact that in China, Apple could easily ignore the law under consideration because it was able to set the prices which customers were ready to pay. Moore’s Law informed people about the possible growth of speed and power of technologies. It showed people that such companies like Apple comprehended the dependency of people on the desire to have more and enjoy the quality of products. Different series of iPhones and price changes had clear reasons and explanations. Customers knew what to expect from Apple, and Apple could use its powers to obtain good results and benefits.

What challenges does Apple face in China? How would you recommend they address this?

In the case study, the author discussed how Apple integrated the China market and developed its working relations with different stakeholders including China Unicom, China Telecom, and China Mobile. At this moment, Apple is one of the most successful US companies that offer different products and services to the Chinese middle-class customers. A certain attention has been already paid to an integrated consumer electronic ecosystem and the available supplier technological advances. However, in addition to many achievements and successful outcomes, Apple still has to deal with certain challenges and obligations.

For example, there is a limited partner access and the inability to investigate the market in order to choose an appropriate company for cooperation. Besides, Apple is challenged by the necessity to spend high costs for the development of new products in China. New buildings have to be found, and new people should be hired. Technology synchronization challenges are always defined in the case study. Finally, Apple has to deal with its brand image problems. Though challenges cannot be avoided, Apple is able to find appropriate solutions and continues developing and stabilizing its positions in the China market.

Developing the recommendations for the company, it is necessary to say that the success achieved by Apple is the example for many organizations. However, Apple is far from being a perfect company with no challenges and technology problems. There are still many questions and concerns that prevent Apple’s leaders to the leaders in the smartphone industry in China. It is recommended to focus on competitors and customers at the same time.

On the one hand, Apple is ready to deal with the challenges caused by its competitors’ actions. On the other hand, Apple should find enough time to cooperate with customers. Apple should not only sell products and services, but also be interested in what is interesting to ordinary people. Price and quality are not the only requirements to be met. Apple has to continue its investigations and improve the relations with customers, use the opportunities of its suppliers, and develop its competitive advantage.

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