Team Research Proposal Paper

Apple Inc.

Institutional Affiliation

‘TEAM’ Proposal Worksheet

Team Members: Ayeisha and Antonio

Assignment of Team Members Responsibilities:

Team Proposal Elements	For Groups with 2 Members	Identify each team member as Member 1 or Member 2 and type their names below
Introduction	Group Member 1	Ayeisha
Company History	Group Member 1	Ayeisha
Problem Identification	Group Member 1	Ayeisha and Antonio
Alternative 1 & Cost-Benefit Analysis* (*A cost-benefit analysis is required if any of your alternatives to the problem include a monetary amount to address the issue)	Group Member 1	Ayeisha
Alternative 2 & Cost-Benefit Analysis*	Group Member 1	Ayeisha
Alternative 3 & Cost-Benefit Analysis*	Group Member 2	Antonio
Alternative 4 & Cost-Benefit Analysis*	Group Member 2	Antonio
Selected Alternative	Group Member 2	Antonio
Implementation and Timeline	Group Member 2	Antonio
Conclusion	Group Member 2	Antonio and Ayeisha

Table of Contents

3 Apple Inc.

3 Introduction

3 The History of Apple

5 Problem Identification

6 Identification of Alternatives

7 Cost-Benefit Analysis

8 Conclusion

10 References

Apple Inc.

Introduction

Apple Inc. is one of the leading tech multinationals based in the United States. The company, whose headquarter is in Cupertino, California, operates in numerous countries. It specializes in the manufacture and sales of computer hardware and software, consumer electronics, and internet services. Some of its well-known products are Smartphone iPhone, the Mac PC, the iPad tablet computer, and the iPod. Apple is among the first technology companies to manufacture smartwatches. It has also produced the Apple Television digital media player. Apple has been expanding its operations, especially to emerging markets such as China. The company has been growing its market share in China, but some of its products have not performed as expected. Apple’s success in China resulted from the need for a symbol of status. The factor enabled it to compete successfully with locally manufactured phones. However, the company has not been performing well following a decline in the sales of the iPhone in the market. The paper analyses possible solutions to the problem.

The History of Apple

Apple established in 1976 through a partnership of three individuals, including Steve Jobs, Steve Wozniak, and Ronald Wayne. However, Jobs was the leader and mastermind of the company whose initial business objective was to produce computers. Its first computer product, Apple I, hit the market in July 1976. The product was the first product that the firm manufactured. Wozniak single-handedly designed and built the computer. The first product exhibited at the Homebrew Computer Club. It was not a complete computer in the sense of the modern-day computer but only sold as a motherboard. Wayne sold his company shares to the other two partners within the same year. The firm incorporated in 1977 with just the two remaining partners. It also obtained additional funding from external investors, including Mike Markkula. Apple experienced exponential annual revenue growth of about 533 percent during the first five years of operation (Weinberger, 2015). The annual sale of the company grew from $775,000 to $118 million between September 1977 and September 1980. There were signs that the company could be successful in the computer market.

Apple went public in 1980 through its initial public offering that generated capital for its operations. It launched the popular Macintosh (Mac) computer in 1984. The computer was the first one to get into the market without a programming language. It became successful in the market after a TV commercial that Ridley Scott directed. However, the product’s sales were not strong because of some functional limitations and high prices. Apple’s board removed Jobs from his managerial duties in 1985 because of power struggles with the CEO at the time. Consequently, Jobs and Wozniak resigned from the company to pursue other interests. Apple launched a few products, such as low-cost Mac models, TV appliances, and video cameras. However, the products did not perform well and experienced a period of decline and restructuring between 1991 and 1997 (Weinberger, 2015). The new management of Apple struggled to introduce various unsuccessful consumer products. They invested many resources in the projects, risking ruining the company economically. The efforts were not helpful to the management’s desire to gain a bigger market and improve its stock prices.

The management tried many projects in efforts to revive the company, but none of the strategies appeared to work. They decided to bring back Jobs in 1997 as the CEO on an interim basis. His role was to be a strategic adviser for the company to revive it from the potential ruin. The board of directors overthrew Amelio in July 1997, allowing Jobs the chance to restructure the company and return it to success. Apple also secured a $150 million investment from Microsoft because it was on the verge of Bankruptcy. The move accompanied by the launch of innovative products, such as Apple Online Store, iPod, and iTunes. The company released its first iPhone in 2007, a revolutionary product in the mobile industry. Consequently, Apple shifted its focus from computers to consumer electronics. Later, the company released the iPad in 2010, Apple Watch in 2014, and many other mobile devices. Steve Jobs resigned from the company in 2011, and his position occupied by the current CEO Tim Cook (Weinberger, 2015). The company has been successful in various areas, although it faces challenges in others such as the decline in iPhone sales in the Chinese market.

Problem Identification

The current business problem facing Apple is the decline of the iPhone sales in the Chinese market. The company has been performing well in the market in the past few years. China is the company's second-largest market and generates about 25 percent of its total profits. Interestingly, Apple has performed well in the country despite the fact that there are cheaper locally manufactured gadgets. The success attributed to the need for a high-status symbol. However, the company has not been doing great since 2017, especially in the iPhone market. The decline associated with the aggressive strategies of Chinese competitors who have launched cheaper, but comparable products. Apple has been producing similar products and pricing them higher than the predecessors. Consumers do not see the difference, and therefore, they continue buying the previous products. As a result, the company loses after investing considerable resources in the manufacturing of the new product (Tan & Zhan, 2017). Apple's high price tag is also a significant challenge in the Chinese market because consumers are seeking similar but cheaper alternatives (Wang, 2017). The price is a challenge to the company selling within a market with several options. The firm should determine ways to address the declining sales and the loss of market share.

Identification of Alternatives

Apple must address the problem to remain successful in the Chinese market. The market is one of the fastest developing internationally and holds considerable potential for Apple. Therefore, the management should find the most effective course of action to address the problem and return the iPhone to success. The first alternative solution is to reduce the price of the iPhone. The newly introduced iPhones do not always have to be highly priced. The answer informed by the fact that there are cheaper alternatives in the market. It is a viable option because Chinese customers are looking for cheaper alternatives that are similar to the iPhone. Competitors in the market have maximized on the high price of the iPhone. Apple should find ways to reduce the cost to attract a broader clientele. This solution is likely to succeed because of the iPhone's superior quality. Lowering the price can be a viable option as long as Apple continues to make a considerable profit.

However, the proposed solution has disadvantages. The manufacturing process for the iPhone is resource-intensive. Therefore, when the product presented to the market, the primary goal of the company is to gain returns on investment in the manufacturing process (Dolata, 2017). The management runs the risk of failing to recover the production cost if the company reduces prices to compete with the local products. Therefore, the firm should adopt the strategy cautiously to prevent further losses. They should price the product lowly, but not too low to reduce the profit margin.

A second alternative is to produce cheaper options for the iPhone. The new version must balance between quality and price to attract Chinese Customers. The company could manufacture products depending on the needs of each market. The firm should conduct research and development on the new product instead maintaining the pricy iPhone, which is failing to compete with locally manufactured options effectively. The alternative will make Apple highly competitive in the market because its brand is well known and can be used to market the cheaper products. It is a viable alternative because the firm has the financial power to produce new products. Notably, the company will provide a more economical choice at a lower production than the current Apple products. As a result, it can sell them at competitive prices to gain a higher market share than what iPhone has generated. Also, low-cost product versions can enable the firm to counter price competition from its rival Chinese companies (Goworek & McGoldrick, 2015). The company will need to strategize to remain at the top of the game.

However, the strategy, just like the first one has a negative side that the management should consider. The iPhone had a high value in the market and used as the symbol of status. Therefore, there is a risk of the proposed alternative failing to achieve the same situation, and potentially affecting the state of the iPhone. Thus, the development and marketing should be done carefully to avoid diluting the value of the iPhone. Additionally, it is possible for the newly introduced product to compete with the iPhone, leading to complete loss of the market in the country. Notably, the company does not intend to kill the iPhone market in the nation (Dolata, 2017). The alternative poses the danger of losing the value of the product in a business environment with vast cheaper options.

Cost-Benefit Analysis

The management should have information to make the decision. A cost-benefit analysis is an effective way of getting the information. Notably, whatever alternative the company takes, there will be costs and benefits. The management will invest in research and development to develop a new product to compete in the Chinese market. The company will lose revenue if the administration decides to reduce the price of the iPhone in the Chinese market (Dolata, 2017). Apple has an anticipated profit margin, which will overcome if it sells some of its products at a lower price than optimally set. The management will assume the option for the Chinese market only, but the firm will feel the ripple effect resulting from a reduction in the profit margin. Therefore, Apple’s management should consider the costs to select the most viable solution.

Apple will benefit from either of the choices. Developing a rival product will potentially increase its market share in China and increase its revenue. The Apple brand has always performed well in the market. Consequently, a new product under the same brand will also play well. The company will beat the competition by making the price competitive (Rawal, Awasthi, & Upadhayay, 2017). There are many technology companies in China, both local and multinationals that benefit if Apple loses the market share. The company might need the cheaper product to retain its market share. Apple's management will help if they decide to reduce the cost of the iPhone to increase its appeal to the consumers. Experts suggest that the company is witnessing a decline in sales because of the high cost of its products (Tan & Zhan, 2017). As a result, reducing the cost will attract more customers and potentially improve the performance of the product.

Conclusion

The management should use the results of the cost-benefit analysis to find the best solution to the problem the company is facing in the Chinese market. The results indicate that the most viable solution is launching a low-cost product in the market that will compete with the cheaper alternatives. The production of the iPhone is a resource-intensive activity, making it costlier. Reducing its price will affect the company's profitability. Therefore, it is more useful for Apple to design and develop a product that is aligned with the needs of the Chinese market and that will effectively compete with cheaper alternatives. The management will create and produce the new product using sufficient findings from market research. The price of the product will match the production cost and give the company the desired sales and profit margin.

References

Dolata, U. (2017). Apple, Amazon, Google, Facebook, Microsoft: Market concentration-competition-innovation strategies (No. 2017-01). Stuttgarter Beiträge zur Organisations-und Innovationsforschung, SOI Discussion Paper.

Goworek, H., & McGoldrick, P. (2015). Retail marketing management. Harlow: Pearson.

Rawal, P., Awasthi, A., & Upadhayay, S. (2017). Creating a Hunger Driven Smartphone Market by Xiaomi. International Journal of Engineering Science, 11250.

Tan, K. H., & Zhan, Y. (2017). Improving new product development using big data: a case study of an electronics company. R&D Management, 47(4), 570-582.

Wang, Y. (2017). Why iPhone X isn't the answer to Apple's China problem. Forbes. Retrieved from https://www.forbes.com/sites/ywang/2017/09/12/why-iphone-x-isnt-the-answer-to-apples-china-problem/#676e96fd10a2.

Weinberger, M. (2015). 32 photos of Apple's early days before it ruled the world. Business Insider. Retrieved from http://www.businessinsider.com/history-of-apple-in-photos-2015-8?IR=T.