Marketing Across Cultures - Essay Example

Apple Computers, now Apple, Inc., began as a vendor of Macintosh computers in the early 1980s. It remained competitive under the leadership of Steve Jobs for many years. Jobs was forced out of Apple in 1985, while changes were made in reduction of operating costs and increased revenues. For a short time Apple became the leader of desktop publishing applications as well. As IBM and other computer manufacturers began offering low cost products, Apple found it difficult to charge premium prices for what it believed was a superior product. Apple faced several years of stagnation until Jobs was called back as interim CEO in 1997. Before Jobs returned Apple had lost its focus or core competency, offering 15 different products, none of which were in high demand on the computer market. He immediately put together a group of seven board members, including former CEOs from Oracle, Intuit and IBM. Apple implemented several changes under Jobs’ new leadership. Among them were cost control measures, streamlining and reformulating the product line and introduction of new products such as the iPod. After the introduction of the iPod, revenues increased from “below $10 million to $40 in 2005” (International Center for Market Research 2006). Apple’s diversification into electronics and media, with its online i-tunes store, created renewed interest in the company. Revenues from Mac computers has increased since 2005 as well. The challenge for Apple, Inc. currently is determining what types of products and services will generate greater revenues. Consumers’ electronics and technology needs change over time, as new products appear on the market. Different segments require different product types, based on lifestyle and occupation. For those in creative occupations such as web design, graphics and advertising, Apple’s Macintosh computers with desktop publishing and graphics software are desirable products. For music lovers iPods are more desirable. This is a much larger segment, including several decades of consumers, though the largest portion is likely between the ages of 14 and 21. With Apple’s global reach, various cultural differences and needs must be met. Strengths for Apple include technical talent acquisition and vision. Apple has recently acquired NeXT Software Inc. to combine technologies for future development projects such as new operating systems. In November, 2006, Apple Inc. hired former IBM executive Donald Rosenberg as its Senior Vice President. While Apple lost quite a bit of its technical staff in the last decade, it still manages to acquire the best technicians and developers, with an intense hiring process. Though employees still work long hours the company is striving "for a corporate culture in which every individual can thrive professionally and be rewarded for what he or she contributes" (Niznik). Dress codes are nonexistent as employees are encouraged to dress comfortably. Relaxed dress codes do not necessarily invite the most talented technicians and developers, however many silicone valley employers have adopted similar codes for Employees. For Apple to attract the best talent, it must keep workplace standards and expectations inviting. Diversity is more important than ever for Apple Inc., as it operates offices in Europe and Asia. Work habits are different in the UK and France, with shorter 35 hour weeks. Japan’s workplace structure is also very different. Many workers are provided with onsite housing, meals and other amenities that help to keep employees close to the job. Vision for Apple Inc. is evident in its branching out into the media and electronics Industries. This strategy does not mean that Apple plans to move away from computers. The company has recently acquired Software development organizations and other technologies that will allow it to combine its capabilities for new operating systems with much more diverse capabilities. Despite its new product offerings, Apple’s transformation has been gradual by today’s standards. This has enable the company to conduct more thorough market research and investigate markets more fully. Apple also realizes that electronics technology in general, beyond personal computers is desirable in many overseas markets. This is particularly true in Europe and Asia where cell phones with advanced capabilities have been on the market for several years. Weaknesses for Apple Inc. may come from smaller market share for its computers, relative to other companies. It also comes in the relatively high price tag that remains on the new Macintosh models. For many consumers, the desire to own a Mac system does not outweigh the desire for the latest technology at a more competitive price. Though many believe that Apple’s core competency still remains its Mac computers, it appears that a new core competency of electronics technology in general may be its new strategy. Apple will likely not sell nearly as many Mac computers, even with new capabilities in its operating system, in its foreign markets. At the moment, Apple is being compared to Sony, based on its move into the electronics world. Many are guessing as to what technology Apple will next introduce to consumers. Though the ipod was a change for Apple, it does not appear that the company will jump head first into electronics manufacturing. According to Steve Jobs, “Apples DNA hasnt changed, the place where Apple has been standing for the last two decades is exactly where computer technology and the consumer electronics markets are converging.” Mr. Jobs is quick to point out that Apple is not pushing technology onto consumers. Even analysts state that the shift to consumer electronics has been slow, deliberate and smooth. It is a new direction or branch that Apple has taken, but not the only one. Though ipods and i-tunes are desirable, global markets may not value such products as in the US. Apple does have an opportunity to produce lower cost computer products in the global markets. Its current high end computers may not be as desirable in developing markets. China and India, as new global exporters have made economic gains, though it remains to be seen whether individuals in those nations will ever reach disposable income levels comparable to the US. Apple can take advantage of its current technologies to produce less costly computer models. While Apple is “utilizing differences to create competitive advantage” (Bradley 2002) with the introduction of the iPod, and more recently with its i-Phone, it can gain advantage with personal computers in global markets as well. Its recent acquisition of new software technologies, combined with its current knowledge should allow the company to develop and implement operating systems at a lower cost than development from the ground up. Apple also has an opportunity to introduce other electronics devices into US and Foreign markets. Unless it wants to compete with other electronics manufacturers, it must take care to selectively develop only those electronics technologies that are relatively new or innovative. For example, technology such as GPS, while popular and relatively inexpensive, would be a difficult market for Apple Inc. There are more than a few companies that have introduced such technologies, and have done an excellent job of market penetration. Apple should focus strictly on those technologies that are inexpensive and useful to all markets. It took some time to change its focus from strictly personal computers to electronics. Apple introduced the iPod at just the right time. MP3 players were relatively new. Most did not have the capabilities of the iPod in terms of storage. Apple also added desirable features with little added cost, such as color choice, different levels of storage capacity and other features. It is difficult to believe that with Mac computer sales taking so little of the market, the popularity of the players was due to brand recognition. TV, billboard, banner ads and other advertising efforts were successful in this instance. Threats to Apple include possible pricing out of the computer market entirely by Dell, IBM/Lenovo and Compaq and others. Personal computers have been dropping in price for the past decade. Unless Apple’s new operating system far surpasses anything available on the market today, it must work to reduce production costs that are passed on to consumers, without sacrificing quality. Apple must also keep technology competitors in mind with new electronics products it may wish to introduce. It can not afford yet to rely on electronics and media to make up for slow computer sales. Additional threats come from computer companies like Japanese owned Lenovo. Products can be developed and manufactured at a much lower cost in Japan. Therefore, IBM/Lenovo products are offered to consumers at highly competitive prices. India is Also a rising producer of software and other knowledge related services related to technology. Many US firms complain about the lack of talented professionals in technology related fields. This explanation for outsourcing may also be faced by Apple with future projects. It must carefully establish working relationships in those global markets that can provide the development and expertise for technology. The political environment in many European markets is favorable, should Apple Choose to move at least some of its operations to global locations. Business tax in Ireland is at less around 12%, with many additional deductions for research and development. France has a “business tax of 33%,” which is still lower than 38% in the US. (Regulation 29139/92/EC 1992). Both European countries welcome foreign Companies, as they generally boost economies. Both European companies are more mindful of environmental processes, so any manufacturing that might occur in those countries would have to be carefully planned. Japan is a location Apple which it has already moved into. While wages are generally lower, employers in Japan must pay into the governmental retirement fund and one of two health insurance plans for all employees. There are no exceptions for part time workers. Japan is home to many foreign workers, many of whom are there illegally without permits. Apple executive must ensure that managers in its Japanese offices do not mistakenly hire such workers. The Japanese government has recently increased its efforts to monitor business hiring activities. Not only does Apple risk sanctions for workers it may mistakenly believe are legal residents, it could face quite a bit of negative publicity in the process. This might even have more of a negative effect on its US and European consumers who are generally more watchful of human rights issues that the Japanese. The economic environment in the US is one of great diversity. While GDP has changed little over the past few years, consumers have become more mindful and demanding of what is considered “a good value.” Apple has failed to move many Windows users into Mac systems. There are many Mac users who have been exposed to the apple computers at some time in the past, and feel an affinity for the systems. Many graphic arts and design professionals also find Mac systems offer more flexibility and ease of use in applying their skills. However, this is not the norm, as most firms opt for Windows based systems. Apple products are generally a bit more costly, so there is little appeal for the home user without prior exposure. Unless the new system development project is successful in converting many new users, Apple Inc. will not likely realize great revenue with its proposed project. The iPod and new iPhone are the greatest sources of new revenue in the US for Apple Inc. Such electronic products are desirable by many teens and young adults across the US. They are also very affordable for many households. Parents use cellular phones to keep in contact with their children while they work. The new look and additional features of the iPhone, which also serves as an MP3 player is a more desirable choice. Today’s teens have more influence on the choices and products their parents select than in the past. Though the iPhone has been unlocked for use in the UK and Croatia, it has not been done so legally. Additionally, it requires the purchase of additional Sim cards and Sim card reader, “adding roughly $100 worth of ingredients” (iphone.faq). The cellular provider O2 in the UK is currently receiving calls about release dates for the iPhone. The product will also be offered through German and French carriers. It is evident that the product is desirable in Europe as well. Apple Inc. will also receive 10% of the overseas cellular carrier services. Apple is introducing the iPhone overseas into the same markets as it previously offered the iPod. It is using data from iPod sales, rather than relying solely on connectivity issues or technology. In the respect, at least some of its global strategy is to offer products in areas where the economy allows such purchases and where costs are considered reasonable. The social environment of those European nations where the iPhone is offered is one of adaptation to many American values and products. The same European nations embrace other products and brands such as Levis and Coca Cola. Though Apple computers may not be as desirable, other American products are reasonable priced and offer Europeans an easy way to connect. Apple has not released any information about iPod or iPhone offerings in Japan, China or India. The European markets also have the highest number of English speaking residents, so marketing and promotion are made much easier. Translations and messages are less likely to be interpreted in an offensive manner. Though Apple Inc. is entering a very competitive market, it can gain competitive advantage if consumers believe it offers the best product. “Jobs set a goal of capturing 1 percent of that market in 2008; to do so, Apple would have to sell some 10 million phones” (Wolverton 2007). This is realistic as long as the product lives up to its hype and consumer expectations. The Apple computer did live up to consumer expectations. It was the competition that forced many consumers to shop around and compare pricing, no matter how good the quality. Many who use computers today were not using them when the Apple computers were introduced. Therefore, they are comparing apples to oranges, not realizing the differences. Such consumers might also opt for lower cost cellular phones and service, not realizing or needing the capabilities of the iPhone. The market for this product truly appeals to the mostly under age 30 crowd. Many individuals in sales, field service and other mobile jobs are provided with corporate cellular phones and services. It is unlikely that corporations will embrace or even value the features of the iPhone. This is a market segment that Apple Inc. will not likely capture with this particular product. The iPod is also geared for teens and younger adults, though there are some scattered “over 40” users who run or spend quite a bit of time away from others, listening to music. Apple seems to be ignoring the business sector and the baby boomer generation in the US. This could be dangerous down the road, as younger people begin to start families and change priorities. Apple Inc. possesses the talent and technical capability of bringing many new electronic products to the market in the US and in Europe. The key is in developing those products that older generations will consider useful either in their daily chores or in their work. Products will need to be more cost effective to be desirable in the business sector as well. It has its work cut out in providing computer products that businesses will find desirable enough to convert from Windows operating systems. What Apple Inc. will bring to the market in terms of new product or reinventing of a product such as its computers remains to be seen. Whether it will provide something that other major market segments find valuable, depends on its mindset and openness to change. It is evident that through willingness to change or branch out, Apple Inc. has once again increases revenues. Apple Inc. has the capability to develop just about any product it desires. “The importance of a firm’s competences is often seen as strategically more important than its tangible resources” (De Wit & Meyer 2005). Apple possesses both the competence and resources to develop new products. The company will need to research, plan and develop new products to capture the other market segments as the younger generation ages. Steve Jobs has reengineered Apple in a way that makes the company more reflexive or responsive to current markets. Continuing to change as market demand changes is key to Apple Inc.’s future success. It has the capability, though it will also need continued vision and willingness. References Bradley F 2002, International Marketing Strategy 4th edn, Prentice Hall. De Wit B & Meyer R 2005, Strategy Synthesis: Resolving Strategy Paradoxes to Create Competitive Advantage, Text and Readings 2nd edn, Thomson, London. International Center for Management Research 2006. Available from [25 August, 2007]. iPhone FAQ. Available from [24 August, 2007]. Lascu D 2006, International Marketing 2nd edn, Atomic Dog, Ohio. Regulation 29139/92/EC 1992. Available from [24 August, 2007]. Usunier J & Lee JA 2005, Marketing Across Cultures 4th edn, Prentice Hall, UK. Wolverton T 2007, ‘iPhone signals a broader transformation at apple,’ The Mercury News. Read More