Apples Africa Strategy - Case Study Example

Apple’s Africa Strategy Introduction Over the past few decades the landscape underlying the economic scenario in a major portion of Sub-Saharan Africa has undergone a fundamental change. A significant area of the African continent has exhibited economic growth in an uninterrupted manner for the first time in the modern history of the continent. Hence Africa is gradually coming out of its image of being an economically unviable continent and is getting acclaimed for the diverse opportunities hidden within the economic layers of its different countries. in this paper we shall study the activities of Apple Inc in the African countries. Company background The Apple Computer, Inc., was established on April 1, 1977 in California. The company along with its wholly-owned subsidiaries (collectively named as ‘Apple’) designs and manufactures mobile communication devices and other media devices, personal computers, “portable digital music players” (United States Securities and Exchange Commission, 2012) and various other services and peripherals. In the computing market the company has earned the reputation for being the leading innovator and manufacturer of leading-edge products in the sphere of modern electronic gadgets (Sutherland, 2012). Apple continues to maintain its position with its new launches of sector-disrupting products. The launch of iPhone cemented Apple’s standing in the market and has created enormous consumer pull. Since its establishment in 1976 the company has grown through trough and crest to become the 17th company in the list of Fortune 500 companies, with a net worth of US $108,249 million (CNN, 2012). The launches of new products have helped the company to penetrate into fresh markets and challenge the existing business models. One of the key elements in the way Apple approaches innovation is that while many companies focus on their products for growth, Apple concentrates on “the interplay between the product and the service that allows it to fundamentally change the underlying business model operating in the sector” (Innovation Leaders, n.d.). Business organization Apple controls the administration of its business primarily on the basis of the location in which it operates. The operating segments rely on the nature, preferences and location of its customers and the retail division for its management. The company has its operating segments in the North and South Americas, Japan, Europe segment and the Asia-Pacific region. The Asia-Pacific segment envelops the Asian countries and Australia, excluding Japan and the European countries, the Middle-East and the African countries are included in the European segment (United States Securities and Exchange Commission, 2012). Business Strategy The company’s commitment to its customers is to provide them with the best experience of using its hardware and software products and services. The business strategy of the company influences its exceptional ability “to design and develop its own operating systems, hardware, application software, and services” (United States Securities and Exchange Commission, 2012). This is a unique advantage for the company that allows it to offer its customers a combination of new design, technology and hardware enriched with superior ease-of-use, flawless integration, and attractive design. Besides making continual investments in marketing and advertisement the Company also invests in research and development to design more sellable products and put into use more innovative technologies. Marketing and advertisement plays a critical role in the sales of the company’s products. Apple puts considerable emphasis on expansion of business on different platforms. At present the company is concentrating on “the discovery and delivery of third-party digital content and applications through the iTunes Store” (United States Securities and Exchange Commission, 2012). Apple also provides support to a community that develops digital content and “third-party software and hardware products” (United States Securities and Exchange Commission, 2012), which complements the products of the Company. The Company also makes strategic decisions for the expansion and improvement of distribution network so as to effectively reach out to more customers. Alongside providing high quality sales services the company also emphasises that its customers receive all kinds of post sales support. The African landscape and first mover’s advantage Investment climate of African economy Although Africa inspires an image of an oil-rich country, unlike most oil producing countries Africa does not exhibit similar high rates of growth. The African countries suffer from volatility in their growth rates due to the supposed ‘resource curse’. The resources are not properly exploited since the countries are not yet welcome to investors and entrepreneurs. Although a majority of the countries are displaying low but stable economic growth rates, most of the sustained growth is recorded in the Sub- Saharan African countries, those are not highly dependent on indigenous resources. The non-resource dependent countries have been found to contribute the maximum portion of the growth between 1998 and 2008. These areas account for only 40 percent of the African population with a GDP growth rate of 5.6 percent (Broadman, 2009). It is not doubted that Sub-Saharan Africa is a tough place for implementing business plans. Africa cannot be considered as a single unit geographically or economically. Among varied forms of difficulties, some are, governance policy issues, that plague many countries in the continent. Political insurgency is one of the significant causes of slow of economic progress in some economically important countries in Africa. Such factors further affect the investor’s perceptions about the investment climate of the continent and influence their investment decision (World Bank, 2013). Besides, it is quite a misnomer to even refer to ‘Africa’ as a unit of analysis. Sub-Saharan Africa is a heterogeneous continent consisting of 47 countries that are very different from one another (World Bank, 2013). Going by the testimony of economic performance of the continent, entrepreneurs do not receive very warm indications about the investment climate of the country. However, on the other hand, this fact indicates that “an increasing portion of Sub-Saharan Africa is presenting significantly profitable opportunities for new investments and/or expansion of existing investments” (Broadman, 2009, p. 52). Africa’s investment opportunities Multinational corporations (MNCs) based in the South have shown agile activities in appreciating these opportunities and capitalizing on them; while their Northern counterparts are not yet showing much invest tendencies in the African countries (Broadman, 2007). A majority of the multinational companies based in the North have adopted “a ‘wait and see’ approach” (Broadman, 2009, p. 53). However, among the traditional and largest investors in the continent are some names of the MNCs domiciled in Europe and the USA and almost “90 percent of the cumulative stock of foreign direct investment (FDI) in Africa originates from Northern companies” (Broadman, 2009), particularly European and American countries. More companies from the North are stepping up their existing investment activities or are starting up new investments in some of the African countries. Some of the US private equity funds are proactively making investments in these countries. It can be concluded from this picture that although the Southern companies are not dominating the business environment in Africa, these companies are making deliberate attempts to cash on the entire availability of the first mover’s advantage of investing in the African continent. Thus, the “static corporate strategy of ‘wait and see’” (Broadman, 2009, p. 53) would not yield good profits for a long time. Analysis of the company’s strengths, weaknesses, opportunities and threats Strengths The position of Apple in the international gadgets market, as the leading innovator, acts as the greatest strength for the company. In the present day competitive business scenario slashing prices or good operations are not the keys to success. Innovation is critical to growth for any company. Setting innovation aspirations clearly helps Apple to identify the likely source of innovation opportunities. These sources are central to the success of the company since it has constantly researched about the nature of these sources and exploited them to make ground-breaking moves towards success (Jagersma, 2003). In Africa the company has identified the avenues in which the company might move so as to gain the first mover’s advantage in the field of technological superiority. Apple possesses a very strong marketing team that utilizes these opportunities to vigorously promote the company’s products among the population of Africa. Although the economic situation of the countries in Africa are not yet totally accepting of these hi-tech gadgets some parts of the population is highly receptive of the promotions and advertisements of Apple devices. Brand reputation plays a crucial factor in this zone and strong marketing further promotes brand name for the company. It is in the key position to make use of this advantage and at the same time minimise risks associated with running business in the underdeveloped African countries. Weakness The products of Apple are not cheap. Due to their high price, the target population for Apple are the customers belonging to the high income group. Since the countries in Africa are still developing and shows low rates of economic growth, the company faces a limitation in the amount of sales. Its target audience is concentrated to a segment of the total population. Among the competitors of Apple are Amazon’s Kindle Fire and Samsung’s Galaxy Tab. With the demise of its co-founder, Steve Jobs, Apple is at present passing through a tough phase. Apple is also facing threat of imitation. Very recently the company had brought legal charges against Samsung on the ground that the look of Samsung’s Galaxy tab is copied from that of Apple’s iPad (Levy, 2011). Opportunity The market for tablet is still underdeveloped in the African countries. This opportunity is being utilized to the fullest extent by Apple. There is an opportunity for iPad publishers to increase their production as with the increasing trend of online book publishing in these countries. The number of iPhone and iPad users is increasing which provides a great opportunity for these publishers to make further promotions of their products. The company can utilize this opportunity to increase its profit margin by applying charges on the download of applications by the developer companies. Besides, since the company caters mainly to the wealthy population of the African countries, the company has a good chance of finding a profitable business through the rich class of audience in these countries (Hasan, 2013). Threat Apple is presently facing significant competition from other players in the industry. Among others the biggest rivals of Apple are Blackberry, Windows Tablet, Google Nexus One and Kindle. Ipad applications are not free for download. This is creating a threat for the company since now there are various applications in the market, launched by Windows, which are available to the users for free. With an increasing number of people using the different versions of Windows operating system, the competition for Apple is rising steeply. These existing software and applications score high due to the fact that these are free and can be run on the Windows. Windows 7 is a new competitor of Apple. Some companies have reported that the applications launched by Apple are not compatible with the software products offered by them. Thus the combination of high cost and low compatibility is acts as a tough barrier for the company to attract an extensive mass of audience. The lowest price for Apple’s mini iPad is US $330 approximately. The cost is almost US $130 more than the products of its competitors (Chen, 2012). In this respect, Microsoft Vista and Windows 7 are gaining market share rapidly. Recommendations and conclusion Apple Inc. is one of the leading companies in the field of modern mobile phones, desktops and laptops and portable digital music players. It has the advantage of making the first move in the African continent. Therefore it can utilize this opportunity to increase its profitability and move ahead of its competitors (Newlands and Hooper, 2009). In Africa, Apple sells its products through Apple stores. It can improve its sales by appointing whole sellers and distributors, who would improve its networking across the country in which operates. Establishment of retail stores would be increasing its exposure to the target audience thereby making it more acceptable to the population. Moreover, with a greater number of distributors, the company can increase its networking and sales while cutting down on the costs of setting up stores all over the country. The company might also make promotion of its products through the social media and newspaper. In Africa, the limit to sales is brought by the limited promotions. Direct marketing has to be boosted up in order to improve sales figures. The population has good access to the internet. The younger generation spends considerable amount of time surfing the internet. Hence, the social media can be used as an advertising channel. Promotions made on the social networking sites can be expected to be very effective since on these sites linkage among people is very high and these connections might be utilized for brand promotion of the products of Apple. Besides, the discussion above sheds light on the fact that the products of Apple are priced high. With the steep competition faced by the company across the globe, the day is not very far when other developers and producers would start making investments in the countries in Africa. At that point of time, Apple’s advantage would be marred if the company cannot offer its products at a lower price. Although the price of products is decided by the quality of products, similar quality of products is soon to be offered to the population of Africa by the competitors of Apple. Therefore in order to cut price, the company has to reduce the manufacturing costs of its products. The innovative nature of Apple Inc. is the prime reason that makes the company to stand out among its competitors. Utilizing this unique opportunity the company has been able to cater to the needs of the people of Africa. Since the company’s vision is to concentrate on providing good service to its customers the company benefits from the investments tht it makes into its R&D department (Innovation Leaders, n.d.). While the business opportunity in Africa is still under the process of development Apple has a long way to travel along the path of its success story. References Broadman, H. G., 2007. Africa’s Silk Road: China and India’s New Economic Frontier. [online] Available at: [Accessed 30 March 2013]. Broadman, H. G., 2009. ‘First-Mover’ investment advantages in sub-Saharan Africa: Why northern multinationals should react (quickly) to their southern counterparts. [online] Available at: < https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CDAQFjAA&url=http%3A%2F%2Fwww.cesifo-group.de%2Fportal%2Fpls%2Fportal%2Fifo_applications.switches.DocLinkIfoDL%3FgetDoc%3Dforum4-09-focus7.pdf&ei=ynJWUbecG8PprQeBy4E4&usg=AFQjCNH9D1-wRf-MlFH6_tnfPxUPoXGiJQ&sig2=hchQWXBtNn8PAdF0Q9Zduw&bvm=bv.44442042,d.bmk> [Accessed 30 March 2013]. Chen, B. X., 2012. Apple, Facing Competition, Introduces a Smaller iPad. [online] Available at: < http://www.nytimes.com/2012/10/24/technology/apple-facing-competition-introduces-a-smaller-ipad.html?_r=0> [Accessed 30 March 2013]. CNN, 2012. Fortune 500. [online] Available at: [Accessed 30 March 2013]. Hasan, R., 2013. Apple Inc. - An Analysis: PESTEL Analysis, Porters 5 Forces Analysis, SWOT Analysis, Comprehensive Analysis of Financial Ratios, and Comprehensive Analysis of Share Performance of Apple Inc. Munich: Grin Verlag. Innovation Leaders, n.d. Innovation Leaders. [online] Available at: [Accessed 30 March 2013]. Jagersma, P. K., 2003. Innovative or die. Journal of Business Strategy, 24(1), pp. 25-28. Levy, G., 2011. Will Apple lose its shine without the boss as it faces competition from Samsung and Amazon? [online] Available at: < http://www.dailymail.co.uk/news/article-2046267/Steve-Jobs-dead-Will-Apple-lose-shine-boss.html> [Accessed 30 March 2013]. Newlands, D. J. and Hooper, M. J., 2009. The global business handbook: The eight dimensions of international management. Burlington: Gower Publishing, Ltd. Sutherland, A., 2012. The Story of Apple. New York: The Rosen Publishing Group. United States Securities and Exchange Commission, 2012. Form 10-K. [online] Available at: < http://www.sec.gov/Archives/edgar/data/320193/000119312512444068/d411355d10k.htm> [Accessed 30 March 2013]. World Bank, 2013. Africa. [online] Available at: [Accessed 30 March 2013]. Read More