The International Business of Sabic Multinational Organisation - Case Study Example

Table of Contents Required Considerations for Apple to Maintain Competitive Advantage in Overseas Markets 4 Issues Face by a Firm While Entering in the Overseas Markets 5 Conclusion 10 References 11 Bibliography 14 Introduction The entry of a business firm in the overseas market can be anticipated to face certain critical situations due to varied market conditions and thus deliberate activities needs to be performed. Firms entering in the overseas market are needed to consider certain major determinants or entry modes that include licensing, joint venture, exporting and proprietorship (Agarwal & Ramaswami, 1991). Moreover, apart from the aforementioned factors, there are also certain other important aspects that are equally important for a firm to consider entering into the overseas market which includes cultural differences, political as well as financial environment, legal system and technological infrastructure. In this similar context, it can be affirmed that two significant strategic perspectives play an imperative role in generating along with attaining sustainable competitive position in the overseas market such as Industrial Organization (I/O) and Resource-Based View (RBV) of the organisation. I/O is fundamentally based upon the assumptions that the valuable resources of a particular business firm are homogeneous as well as vastly transportable in the business market. On the other hand, RBV is principally based upon the notion that the business firms are heterogeneous in respect to their internal competencies and valuable resources (Korsaa & Jensen, 2010). In this discussion, the issue relating to the fact that a firm that already has sustained competitive advantage in its domestic market may not have the same advantage in an overseas market will be take into concern. Moreover, the procedure regarding how a firm might exploit its resource advantages to secure successful market entry and create competitive advantage in a new overseas market will also be portrayed in the paper. In this regard, Apple Inc. as a firm would be considered. Competitive Advantage of Apple in Domestic Market Apple Inc. is regarded as an American based multinational business corporation that produces as well as sells broad assortment of products that include personal computers as well as computer software and consumer electronics among others. It has been apparently observed that the business markets of Apple are highly competitive due to the introduction of various attractive products like iPods and iTunes among others. The introduction of these products ultimately generates superior competitive position over its chief business market competitors particularly in the domestic market. In this similar context, there exist certain imperative factors that support an organisation to attain considerable competitive advantage. The factors comprise proper determination of business strategy, identification of producing pioneering products or services, implementation of effective business strategies, smooth partnership with dealers and utilisation of advanced technologies. It has also been observed that in order to gain superior competitive advantage, it is required for any organisation to continuously develop its existing products as well as possess the ability to manufacture different innovative products in a timely and efficient manner. However, the designing as well as the selling of the products made by any organisation requires an extensive approach to maintain its growth in the business market and also to compete with its chief competitors. In relation to determine the competitive advantage of Apple in the domestic market, it has been viewed that the technological advancements that employ by the organisation in making products are quite attractive as well as unique as compared to its competitors. The production and the selling of these products contributed in raising the profitability of the organisation by a considerable level. Apart from producing attractive and unique products, Apple has been recognised to provide quality products or services in the domestic market in order to increase the satisfaction level of the customers. The important business strategies of Apple such as extensive market campaigning, delivering branded products to its customers, making physical availability of the products in the stores as well as online ultimately supports the organisation to generate competitive advantage in the domestic market (Bush, 2012). Required Considerations for Apple to Maintain Competitive Advantage in Overseas Markets There are certain imperative factors that need to be considered by Apple in order to maintain its competitive position particularly in new overseas markets. The factors include adequate accessibility of raw materials, identifying as well as mitigating any sort of labour problems, resolving the issues linking with governmental restrictions and smooth capital flows. Furthermore, the organisation i.e. Apple requires to distribute its broad assortment of products through maintaining proper distribution channels and implement pioneering technological advancements by a considerable level. Apart from the aforementioned considerations, the organisation needs to adopt a decisive business strategy with the intention of preserving competitive position in the overseas markets. In this regard, the strategy can be of offering the products particularly at a low price in comparison with the competitors (Goldsmith International Business School, 2012). Thus, on the basis of the above discussion, it can broadly be stated that the aforementioned factors can largely support Apple to maintain competitive advantage in the overseas markets. Issues Face by a Firm While Entering in the Overseas Markets There are several issues that face by the firms while entering in the overseas business markets. In this regard, the effect of Foreign Direct Investments (FDI) can be considered as one of the critical issues that might face by a firm i.e. Apple while entering in overseas markets. From the perspective of home country i.e. the US, Apple might face the significant issue relating to FDI while entering into overseas markets. In this regard, it has been observed that since the commencement of World War II, US was viewed as one of the dominant figures in outraging direct investors in the market context. The major impact of FDI on the host country has been recognised to be linked with capital flows in terms of balance-of-payments as well as investments. Moreover, apart from the aforementioned aspects relating to FDI issue, the other decisive factors like the dissimilarities in labour costs as well as other inputs, distinctions in financial returns linked with tariffs, tax rates and government interventions may also affect an organisation such as Apple while conducting business in overseas markets. According to Kokko (2006), efficient technical know-how, skills of labour, effective control over trade monopolies and markets among others acts as valuable determinants for raising superior competitive position of a firm over other firms. In this connection, it can also be contemplated that for an organization such as Apple, in order to gain competitive advantage in the market, the aforesaid factors are essentially needed for entering in the overseas markets. Moreover, the facet of licensing agreements is also regarded as one of the important determinants for providing barriers to enter into the foreign markets by considering certain major factors such as political as well as cultural among others (Kokko, 2006). The restriction concerning governmental laws is also considered as the other crucial issue that might face by a firm like Apple while entering in the overseas markets. In order to enter into the overseas markets, governmental restrictions broadly affects the performances of the organisations through the introduction of different governmental interventions that occur delays in the deliverance of products from the home country to overseas markets. Extreme market competition due to the presence of large rivalries and frequent technological alterations are the important issues that Apple is facing extensively. Apart from these factors, the other crucial issues that might face by Apple while entering into business markets are low priced products that offers by its competitors and threat of substitute products. It can be affirmed that these particular issues can impose adverse impact upon the functioning of the business strategies that adopts by Apple. From the standpoint of technological advancements, it has been viewed that different organisations in the overseas markets produces innovative products with upgrade features in order to meet customers’ demands and most importantly to enhance their productivity as well as profitability by a greater extent. Thus, on the basis of this ground, it can be stated that the company can be challenged with making deliberate efforts to a considerable level as the tastes and preferences of the customers keeps on changing with price alterations. This would make the organisation more difficult to maintain its rate of expansion in the overseas markets as compared to its competitors. Finally, governmental restrictions as well as trade barriers would drastically influence the overall performance of the organization and maintenance of its success rates in the overseas markets as compared to its competitors (Apple Inc., 2011). In the context of cultural factors, it can be stated that the cultural differences have imposed a greater impact on the approaches relating to learning as well as teaching aspects. The products of Apple have influenced the educational processes for the students to plan and execute their means of teaching along with learning skills through computing processes by maintaining a learning environment in schools and colleges. In the present day context, students access valuable information from different online sources through the execution of computers that eventually become a challenge for Apple to continuously provide innovative products with upgraded versions in the business markets (Apple Inc., 2013). In the context of logistics, it has been observed that the logistical problems and outsourcing factors can generate significant issue to the firms that are seeking for entering into overseas markets. In this similar context, Apple outsources its products through better execution of its logistics along with transportation facilities. Moreover, the company effectively depends upon its different outsourcing partners for supplying the products in the business markets. It is certainly a challenge for the company to maintain effective communication and handle the logistic matters strictly in order to preserve their brand image. The failure of technological systems would ultimately affect the performances as well as the overall operational processes of the organisation that in turn will restrict their scope to enter in the overseas markets (Apple Inc., 2011). Exploitation of Resource Advantages to Secure Successful Market Entry and Create Competitive Advantage With regard to the exploitation of resource advantages to secure successful market entry and generate superior competitive position in a new overseas market it can be stated that Apple can follow as well as implement various modes of market entries that include licensing, exporting and joint ventures In this similar context, exporting mode of market entry is regarded as a low investment activity that can initiate by the organisation in order to secure successful market entry This particular mode provides a firm with effective operational control facilities that helps the organisations to regulate different market conditions as compared to its competitors. In this context, it can be stated that Apple needs to propound certain risk factors before entering into the foreign or overseas markets. The introduction of various attractive products of Apple such as iPad and iTunes among others would ultimately support the organisation to generate significant competitive position in a new overseas market by a considerable level. Furthermore, it is also to be noted that through exporting method it is possible for a company such as Apple to establish its market base in overseas or in other foreign countries. Thus, on the basis of the above discussion, it can be affirmed that through the execution of exporting mode, it is possible for the organisation i.e. Apple to gain greater competitive position in the overseas markets (Evans, 2005). From the viewpoint of securing successful market entry as well as generating competitive advantage, it can be stated that Apple might follow the entry mode of licensing. This particular method of licensing is typically regarded as a low-risk as well as a low-investment decision that provides lesser control of the firm towards making any sort of investments. This entry mode assists an organisation to enter into a new overseas market by making proper usage of proprietary technology. Through licensing of governmental laws as well as rights along with trademarks and copyright ventures, it might be possible for the company to enter into the overseas market with innovative products. However, in the context of licensing, licenses are generally provided to the companies in terms of fees and amount of royalties through revenues. For entering into the market it is necessary for a firm Such as Apple to ensure certain rules and regulations. Thus, it can be stated that through the process of licensing, it is possible for Apple to secure successful market entry along with creating superior competitive position in a new overseas market (Johansson, 2009). Apart from the significant aspects of exporting and licensing, joint ventures can also support Apple in securing successful market entry and generating significant competitive position in overseas markets. This is owing to the reason that the aspect of joint ventures delivers effective dimensions in handling several significant issues that include governmental restrictions, trades laws and capital flows among others (Agarwal & Ramaswami, 1991). Through joint ventures, it might be possible for the organisation i.e. Apple to exploit and capitalize various aspects of effective functioning in the overseas market through deploying and combining valuable resources in the market context (Chen, 2005). Conclusion From the above observation, it can be comprehended that Apple which is regarded as one of the leading computer selling and manufacturing companies has its product base in various parts of the home country and continues to sustain its competitive advantage in the home market effectively. Through its innovative products from time to time it has made its dominant position extensively in the home market. However, in order to enter into overseas markets, certain policies or entry modes that include joint ventures, exporting as well as licensing are required to be followed or adopted. In order to enter into overseas markets, Apple needs to consider different important aspects such as Industrial Organization (I/O) and Resource Based View (RBV). These dimensions are required to maintain as they are quite indispensable for the firms to gain superior competitive position over their chief business market participants. References Agarwal, S. & Ramaswami, S.N., 1991. Choice of Foreign Market Entry Mode: Impact of Ownership, Location and Internalization Factors. Introduction. [Online] Available at: http://aib.msu.edu/awards/23_1_92_1.pdf [Accessed January 14, 2013]. Apple Inc., 2011. Form 10-K. Risk Factors. [Online] Available at: http://www.sec.gov/Archives/edgar/data/320193/000119312511282113/d220209d10k.htm [Accessed January 14, 2013]. Apple Inc., 2013. Challenge Based Learning A Classroom Guide. Introduction to Challenge Based Learning. [Online] Available at: http://images.apple.com/education/docs/CBL_Classroom_Guide_Jan_2011.pdf [Accessed January 14, 2013]. Apple Inc., 2011. Form 10-K. The Company Depends on Component and Product Manufacturing and Logistical Services Provided by Outsourcing Partners, Many of Whom are Located Outside of the U.S. [Online] Available at: http://files.shareholder.com/downloads/AAPL/1826229879x0xS1193125-11-282113/320193/filing.pdf [Accessed January 14, 2013]. Bush, T., 2012. Developing Organizations Competitive Strategies: Staying Ahead of the Competition. Second to Market Strategy. [Online] Available at: http://www.ipedr.com/vol35/018-ICMAI2012-E10029.pdf [Accessed January 14, 2013]. Chen, T.J., 2005. Liability of Foreignness and Entry Mode Choice: Taiwanese Firms in Europe. Literature Review. [Online] Available at: http://homepage.ntu.edu.tw/~ntuperc/docs/publication/2005_05_Chen.pdf [Accessed January 14, 2013]. Evans, R.E., 2005. Entry Strategies Report on a Turnkey Project for Apple’s Ipod in Nigeria. Executive Summary. [Online] Available at: http://globalitek.homestead.com/Rachael_-_Turnkey_projects_Nigeria_and_iPod.pdf [Accessed January 14, 2013]. Goldsmith International Business School, 2012. Global Competition. Reasons for Internationalization. [Online] Available at: http://www.goldsmithibs.com/resources/free/Global-Competition/notes/Summary%20-%20Global%20Competition.pdf [Accessed January 14, 2013]. Johansson, J. K., 2009. Global Marketing. Licensing. [Online] Available at: http://kafebisnis2010.files.wordpress.com/2011/11/ebooksclub-org__global_marketing__foreign_entry__local_marketing__and_global_management.pdf [Accessed January 14, 2013]. Korsaa, C.R. & Jensen, L.R., 2010. Integrating Business Models and Strategy for Sustained Competitive Advantage. Competitive Advantage. [Online] Available at: http://studenttheses.cbs.dk/bitstream/handle/10417/1771/caroline_ramos_korsaa_og_lisbet_roege_jensen.pdf [Accessed January 14, 2013]. Kokko, A., 2006. The Home Country Effects of FDI in Developed Economies. Motives for Foreign Direct Investment. [Online] Available at: http://swopec.hhs.se/eijswp/papers/eijswp0225.pdf [Accessed January 14, 2013]. Bibliography Hoskisson, R.E. & et. al., 2008. Competing for Advantage. Cengage Learning. Khosrowpour, M. 1992. Emerging Information Technologies for Competitive Advantage and Economic Development: Proceedings of 1992 Information Resources Management Association International Conference. 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