Signature Assignment: Challenges of Expansion to a Foreign Location

Lourde Owens

Eco/561

Dec. 11, 2017

Mark Erenburg

Apple

Apple is an electronics publicly traded company in the USA, it was ranked the most profitable company in the USA in 2012 with Steve Jobs as the CEO.

Apple is an innovative company that has revolutionized the electronics industry that ranges from both hardware and software. The products are i pods, i phones and I pads. The company’s main strategy is innovation and differentiation which has been at the companies’ core drive in achieving its success. In the area of technology and innovation, the companies’ environmental analysis has strategies that are affected by both opportunities and threats which are paramount to the firms’ survival in the market.

Apple’s external environment

It can be divided into macroeconomic factors such as the need for lower costs products to satisfy the consumer’s needs, technological, demographic and social factors. The Socio-cultural effects include the need to create portable devices that have a perfect design of the products that are easy to use. The forces that shape the industry are the bargaining power of buyers and the suppliers. The threat of new entrants, substitute products or services, and competition, in the technology industry, the bargaining power is high because consumers always have alternative choices at no cost.

The supplier’s bargaining power affect a firm’s strategy that has affected the way Apple viewed its suppliers. The strategies that Apple implemented reduced suppliers’ bargaining power and helped limit the cost of its products when faced with economic turmoil and increasingly demand of consumers.

The market structure of the apple company

It is a competitive one that’s dominated by huge companies such as IBM, HP, and Del. The market is a perfectly competitive. This implies that:

· There is perfect knowledge and no information failure.  The Knowledge is freely available to all participants in the market hence minimal risk taking and entrepreneur roles are few.

Apple Company in its market strategic focus on differentiation of its products, Jobs the CEO has worked towards diversifying the companies’ products .The company operates in a global market that has allowed it to capture a larger market share in different countries that have emerging trends of technological innovations.

While the industry growth is experiencing tough completion, product differentiation has enabled Apple Company to expand and focus more on the product differentiation and product design Apple has dominated the global profit share of the mobile phones, with 65% of the profits in 2017.  Counterpoint reports indicate that during summer of 2016, Apple was selling over 50% of the global premium smartphones and launching quality products too, with high sales and marketing capabilities

Barriers to entry in this market

The barrier to entry in the market is what makes the Apple Company so dominant and that In order to successfully compete against Apple, a company must have a better customer loyalty compared to apple. The Apple Company has a very big consumer base, and most people own their products due to the level of utility derived from the products, they keep on purchasing their products.

The barriers include:

· Cost for changing the consumers preferences.

Apple has all their products together by use of applications. They include iTunes for music and i Cloud for storage of data. These gives the competitors of apple lower chances of consumers purchasing their products. This kind of competition makes other companies to convince customers that their products are cheap alternatives

· High competition in the industry

Since Apple has already secured a competitive advantage over others in the market, it can use their pricing strategies to keep other competitors from competing favorably in the market.

Current stage of the business cycle

The apple company is currently performing well and maintaining its standards in the growth stages. Apple’s products have not yet reached the maturity stage because of the constant innovations that the company has embraced, improving its technology and the products that they offer. Just to explain how apple has managed to sustain itslf in the growth stage, apple came up with multiple products, or existing products with new features .an example is the newly expected I pad mini and the IMac.

The Real gross domestic product (GDP)

Apple Company contributes to 0.5% of the USA GDP, which amounts to 0.15% of the global GDP; the success of apple implies that the company is much richer in the countries as compared to the other companies, meaning that the company performs well not only in the USA but also in the global arena. The diverse nature of the company has seen it create employment out and in of the country, hence reducing the level of unemployment.

The decision making model that can be adopted by Apple Company

The analysis and decision-making model

Facts

· During the economic boom the economy is stable and funds are available for people to invest in various projects, however the period of recession is characterized by the low incomes and funds therefore become less available for investments leading to a corresponding low profits and losses in investments

· Every investments involves risk taking and therefore the uncertainties caused by the economic fluctuations can lead to either making of profits or losses. When the prices of commodities go up, the demand for the same products will reduce

· Reduction of and laying off of workers is a business strategy that is important in terms of cost reduction in order to prevent the firm from continually recording losses. The process of strategy formulation is

· Competitor analysis is the business strategy used by Charles in order to identify the competitor’ s strengths and weaknesses

The alternative courses of action

	Employers	Employees	Insurance	Government	Customers
Diversification	Acquisition of new customers and market base	Gain alternative experiences from new investments	Acquisition of premiums through risk protection	Increase its tax base	Variety of products to purchase
Divestment strategy	Reduction in income	Loss of jobs	Loss of clients	Reduction of investments hence low incomes	Reduction in the purchasing power
Joint ventures	Spread of risk	Acquisition of new skills	Reduction in premiums	Reduction of tax base	Acquisition of quality products

The beneficial causes of action that apple can undertake and their effects

· The spread of risk along a large base by the investors

· Acquisition of skills by the employees through the joint ventures where they are able to share ideas and skills

· Acquisition of a broader range of products by the customers

· Increase in the tax base for the government in order to provide services to the citizens

Conflict of interest

· The most suitable strategy that can be adopted in this case is diversification since it will impact positively on most of the stakeholder’s interests.

References

Yoffie, D. B. (2012, Aug 14). Apple Inc. in 2012. Harvard Business Review , 1-15.

Linden, G., Kraemer, K. L., & Dedrick, J. (2009). Who captures value in a global innovation network?: the case of Apple's iPod. Communications of the ACM, 52(3), 140-144.

Yoffie, D. B., Alcacer, J., & Kim, R. (2012). HTC Corp. in 2012.

Lescop, D., & Lescop, E. (2016). The Apple Twist.