Apple’s Business Strategy
Apple Inc. is one of the market leaders that operates internationally in different countries including China. In the first place, it is important to discuss the corporate strategy of the company. Apple Inc. is often associated with expensive and high-quality products with the unique and modern design. In this instance, the company’s corporate strategy has nothing in common with the principles of cost-leadership approach since its products are expensive and exclusive. It could be said that these characteristics comply with the ideas of differentiation strategy due to the modern design and interesting features such as iTunes and Apple Store.
A combination of these factors explains Apple’s leadership in the smartphone market globally, but its price-to-quality ratio makes the devices affordable only to some niches of consumers. Nonetheless, Apple’s ability to create an associated lifestyle while building a perception that Apple’s user is a successful and creative individual makes its products desired and causes an upward shift in their demands. Speaking of China, applying the concepts of the strategies mentioned above would not be effective. In this instance, the enterprise had to re-conceptualize its corporate vision and provide a unique and exclusive consumer experience for a lower price. Combining the benefits of each method mentioned above helped Apple introduce an affordable 5C model to increase its market shares in China.
The Importance of the Chinese Market to Apple’s Growth
As it was mentioned earlier, China was one of the emerging economies, and it attracted many companies to this segment. It could be said that Apple was one of the enterprises that wanted to discover the benefits of the Chinese market. In the first place, Apple viewed this expansion as an opportunity to increase its revenues, and it was referred to the fact the China experienced growth of IT sector while creating favorable conditions for the technological companies including Apple. At the same time, entering Chinese market would not only cause an upward shift in the revenues and ensure stable financial performance but would also enhance Apple’s recognition in Asia and around the world. Consequently, penetrating Chinese market could be considered as an essential step for Apple’s economic growth and development.
Impact of China’s Economic Slowdown on Apple’s Growth
Nonetheless, the Chinese market was not always associated with prosperity, continuous growth, and development. Due to the cyclical nature of the economy, sometimes, it could experience downturns and financial crisis. These changes affected Apple dramatically. In the first place, they adversely impacted sales since Chinese consumers considered iPhones as expensive. This change in consumer preferences provoked the development of competitors.
For example, firms that offered cheaper products such as Huawei, ZTE, and Lenovo were gaining their popularity in China. At the same time, these economic fluctuations drove the development of counterfeit products and copycats. These manufacturers copied Apple’s products and sold them for lower prices while intensifying rivalry. Based on the analysis of the factors indicated above, it could be said that Apple not only experienced a decrease in its revenues but also lost its market share and recognition in the Chinese market.
Strategies to Grow in China
As it was mentioned earlier, the Chinese economy is highly attractive to the investors and international companies. Nonetheless, there are many challenges and obstacles that have to be considered. In the first place, Apple has to prioritize establishing agreements with mobile providers in China. Taking advantage of this approach will help the company discover and address the needs of the target audience. At the same time, it will ease the communication process and design effective promotion strategies since local mobile providers and retailers have a profound understanding of Chinese market. This aspect will help avoid misunderstandings and intercultural conflicts.
Another strategy that Apple can consider is focusing on localized offerings. In this instance, the company has to conduct a continuous analysis and evaluate the needs of the customers and their preferences. Relying on these principles will help the company expand product lines in China while paying vehement attention to requests from the clients. Apart from the fact that consumers play a key role in determining demand and sales volumes, one cannot underestimate the significance of competitors. In this case, their actions and corporate strategies have to be evaluated on a regular basis. Considering their activities and being able to respond to the highly sensitive prices of rival firms will help define the right prices for Apple’s products and determine the need to prioritize a cost leadership method.
As it was mentioned earlier, the Chinese market is associated with a plethora of challenges, and one of them is the existence of counterfeit products and copycats. It remains apparent that Apple has to pay critical attention to these issues, as underestimating these factors may damage company’s image. To avoid these problems, the enterprise has to develop the terms of the contracts carefully when establishing relationships with Chinese manufacturers. It could be said that all strategies mentioned above have to be considered of paramount importance, as they will not only improve company’s financial performance but also help avoid intercultural conflicts and issues.
The Resource-Based View Framework
It is evident that the content of the sections provided above offers valuable insights about Apple’s performance in the Chinese market. In turn, these findings can be actively used to conduct a sufficient analysis of Apple’s smartphones in China. In the first place, product characteristics and their design can be discovered as valuable since they add unique technological features to the devices. They make gadgets modern and unique.
These resources can be considered as rare, but they can be actively imitated by counterfeit brands and competitors. Nonetheless, the company cherishes this transient advantage and reflects it in its organizational structure by paying critical attention to suppliers and actions of copycats. In this case, to turn these resources into a distinct competitive advantage, it is necessary to expand product lines and focus on developing localized characteristics.
Similarly to iPhones and other Apple’s devices in the Chinese market, the brand image tends to be valuable and rare, and it is supported by the organizational activities. For example, it is reflected by creating an exclusive association with a particular lifestyle, having store locations, and providing exceptional services. Nonetheless, one of the major challenges is the rising popularity of copycats and counterfeit products.
Eliminating these threats can help the company turn this resource into its distinct competitive advantage. It could be said that analogous situation takes place with locations since the case study clearly shows that there are many fake Apple Stores in China. Lastly, the local distribution network is valuable. However, it is not rare and expensive to imitate by the competitors, but this competitive parity helps Apple maintain its market share. Nonetheless, not being able to reflect this important aspect in its organizational structure sufficiently makes the company non-sustainable.
