Possibility of Apple Inc Entering into Turkish Market - Case Study Example

Introduction Organizations expand into international markets for various reasons and one of the key to the success of international firms is to actually evaluate the markets and property scrutinize the overall macro environment before making a decision to enter the market. The overall decision to enter into market therefore largely depends upon how much data an organization can evaluate and whether it is capable of replicating its overall competitive advantage in the new markets also. Apple is one of the leading consumer electronics firm in the world which is predominately present in the North American and European market. However, it is also considering entering into other markets also including China and Turkey. In China, it has already launched its flagship product iPhone whereas in Turkish market it is in the early start of moving into this market. (Denlinger, 2010) This paper will discuss and explore the possibility of Apple Inc entering into Turkish market. Company & Product Service Background Apple Inc is one of the largest consumer electronics firm in the world offering a diversified range of goods and services. It manufactures and sales smart phones, tablet PCs, computers, laptops and other consumer electronics items. Apple Inc is an American company however it also sales its products in different other markets also however, its primary market is mostly based in the North American market. It is also important to note that Apple started as a computer manufacturing company however, it diversified into other businesses also. It was the first company to roll out Apple Mac and present a GUI based computer system along with the mouse and the keyboard. Apple’s flagship products include Apple iPhone which is its highest selling product in the market and is also the highest selling Smartphone in the world. Apart from this, Apple also offers iPads in different variations which are considered as tablet PCs. Other range of products includes iPods, computer monitors, computers, laptops etc. International Strategy The existing strategy of Apple in other markets indicates that it partners with the mobile phone carriers to offers its handsets besides offering other products through a distribution network. As such, in order to enter into the Turkish market, Apple can actually form the strategic alliances with the existing mobile phone carriers in the market. There are three large mobile phone operators in Turkey i.e. Turkcell, Vodaphone and Avea and Apple can easily partner with anyone of them to enter into the market. What is critical to note however, is the fact that Turkcell is the largest carrier in the country with best reception and coverage? To achieve the rapid growth, Apple therefore may have to form the strategic alliances with the largest mobile phone service provider in the country. In different markets, Apple has entered into through a combination of forming strategic alliances with the local mobile phone service providers while at the same time opening up its own Apple Stores. As such the overall strategy is to therefore enter into the market through strategic alliances and also making direct investment into the country. Apple has been able to achieve this through its strong brand name and quality products. In Turkish market, it can also replicate this strategy and open up its flagship stores in cities such as Istanbul which is also the hub of international tourists. Background of the country Turkey is important country in the sense that it is at the crossroads of both the east and the west. Geographically, country is divided into two parts with one part being part of the Europe whereas the other is part of the Asia. This offers Turkey a unique position to culture and offers it an opportunity to present itself as a modern country.1 Turkey is an Islamic country therefore its culture is being affected by the majority religion being practiced by the masses. However, its links with the Europe suggests that Turkey can be a modern country which is ready to enter into the post-modern society in Europe. Turkey therefore is considered as a modern country with strong roots in both the Eastern and Western culture with rich history and culture. Considering its proximity with the Europe, this market can easily be explored for making investments. Since Turkey also stands the chance to enter into the European Union therefore it can really present an exciting economic opportunity for international firms. (Alex Spillius, 2013) PESTLE Analysis Political Factors Though Turkey had policies on liberalization wherein country is being lead to the modernity however, it is critical to note that there are currently issues regarding the banning of social media sites by the Turkey’s government. Over the period of time, Turkey has been able to establish a liberal political structure in place which is considered as conducive for the international organizations. It is also important to note that Turkey has been subject to the volatile political environment as military takeovers have been the regular feature in the past. Apart from this, Turkey has also been target of the terrorist attacks in the past thus making it relatively difficult for the country to actually maintain a stable political environment. Economic Factors Turkey is one of the countries in the region where foreign direct investment flow is on the rise. Turkey has put in place a well planned privatization plan also which focuses upon selling the non-productive assets of the government while at the same time ensuring that the foreign private investment is pouring into the country. The privatization process is believed to generate the sufficient funds for the government to build on the infrastructure of the country. A developed infrastructure specially in the telecom sector of the economy therefore can help Apple to actually utilize advanced networks for its services. Social System One of the key demographic trends in the country is the fact that more than half of the population of the country is under the age of 30 thus making it one of the most attractive countries for investment. Since the country is also moving towards modernity therefore a higher proportion of younger population will make the more attractive for foreign investment as smartphones are being used by the younger generation. Technological Factors Technological factors are the most important in this industry as the technology is changing fast. The overall survival of the firms operating in this industry depends upon how quickly the firms adjust to the changes in technology. Rival firms depend also largely on how effectively they utilize the technology to gain advantage in the market. Legal Environment Turkey has a comprehensive legal framework in place as the overall judicial system of the country is divided into different courts. There are different courts which deal with the domestic issues whereas different set of courts are in place to actually deal with constitutional and other commercial matters. The overall business registration process is relatively easy and free from the bureaucratic hurdles and the legal procedures are relatively swift and easier. This makes it relatively easy for the foreign businesses to actually make an entry into the market and start doing business. Environmental Factors Turkey has been high on the overall biodiversity within European Union and is famous for its overall environment due to its overall environment diversity. The bio-diversity in the region allows it to grow different agriculture products while at the same time having access to the relative natural resources. There is however, relatively high level of pollution in the country making it relatively difficult for the companies like Apple to ensure consistent environmental protection standards across all its markets. SWOT Analysis Strengths 1. Apple is one the largest consumer electronics firms in the world. 2. It has an established brand name and millions of loyal customers 3. Strong presence in developed economies of the world 4. Strong R&D Weaknesses 1. Major presence in developed economies only thus it has very limited official presence in countries outside North America and Europe. 2. Reliance on few select products/brands which may restrict its growth potential. 3. Manufacturing is done mostly through one factory only. Opportunities 1. Opportunities to grow into developing and emerging markets. 2. Diversification into low end cost effective products. 3. Expansion into wearable smart watches Threats 1. Competitive threats from Samsung and Microsoft are relatively high. 2. Supply chain issues in Asian factories of the firm. 3. Rapidly changing technology Industry Analysis Threat of New Entrants This industry is dominated by very few but very large organizations which have been able to capture the market through their advanced technology and research and development capabilities. Apple has also been able to develop the technology which is not only patented but also hard to replicate. Due to technology barriers, it becomes relatively difficult for the new entrants actually to enter the market and dominate the industry. Capital extensive nature of the industry is also another reason as to why new entrants are not common in this industry. Threats of Substitutes Due to typical nature of the products sold by Apple i.e. the smartphones, the overall threats of substitutes remain due to uncertain nature of the technology. Since technology changes fast therefore it is relatively possible that the new technology may replace the existing products and introduce new substitutes in place of the existing products. Bargaining Power of Suppliers Mobile phone industry is dominated by the large firms such as Apple and Samsung which have millions of customers. Every year these companies sell millions of handsets to consumers in every part of the world. Considering the large size of the market and the firms itself, the overall bargaining power of suppliers is negligible. Suppliers in this industry operate at two level i.e. the one who supply the parts to manufacture electronic items and the one who actually assemble those parts and ship the completely manufactured product. Bargaining Power of Buyers Apple sells its products at premium mostly due to its high quality and durability besides it has been able to develop a loyal base of customers for itself. However, due to the availability of cheaper alternatives in the market, Apple has been forced to reduce the price of its products after the launch of new models of the same product. Apart from this, due to higher degree of competition in the market, Apple has not been able to increase the prices of its products and is offering the new variants of its same products at the same prices. As such the overall power of buyers is relatively highly also due to low switching cost. It is because of this low switching cost that Apple has partnered with different carriers in order to lock-in the customers to continue to use the same phone. Rivalry in the Industry The overall rivalry in the industry is relatively high and intensive competition between the major competitors forces them to continue to battle against each other. It is critical to note that the overall competition in the industry is on different parameters i.e. the hardware and software. On the hardware market, Apple has a direct competition with Samsung, Microsoft, HTC and other manufacturers. On the software market, Apple has to compete with Google’s Android operating system which is also the mostly used operating system on the smartphones. Microsoft is another competitors on the software market wherein it also offers its own Windows Operating System for the smartphones. (Rapoza, 2013) Competitor Analysis Apple is in direct competition with two of the most important players in the industry i.e. Samsung and Nokia. Nokia’s handset business is being purchased by Microsoft and it will now being competing with Apple with the name of Microsoft. Source: http://9to5mac.com/2014/01/30/apple-regains-lead-over-samsung-in-us-smartphone-market-thanks-to-new-iphones/ The above figures suggest that Apple has the highest market share in US with Samsung, the leading competitor is having a market share of 31% whereas Nokia has a market share of 2% only in US in smartphone market however, worldwide, its share is relatively large. In the US market, Apple leads the market however, in other parts of the world, Samsung leads the market with Nokia also lagging behind. It is however, important to note that the Apple is not official present in different parts of the world which naturally restricts its ability to penetrate into other parts of the world also. Samsung has successfully deployed the strategy of rolling out different flagship products and also bring its low and high priced items. This allows Samsung to actually cater to the both ends of the market. (Forbes, 2012) Conclusion In order to enter into Turkish market, Apple has not only entered into the market through a direct foreign investment but it also has to establish strategic alliances with mobile phone carriers to offer its handsets. The industry is relatively competitive and requires a continuous innovation and investment in technology to actually survive. Recommendations Apple offers high end smartphones and other products which caters to the needs of those who can afford. However, in markets like Turkey where the overall purchasing power is relatively low, it is important that Apple must come up with new and low priced variants of its products. Though it has already launched a low priced edition of its flagship product iPhone however, it needs to further penetrate into this market by improving the overall quality of the services. Product diversification therefore is important for Apple to successfully enter into the Turkish market. It needs to diversify its portfolio and develop more innovative and affordable products to offer to the Turkish consumers. Without this, it may be relatively difficult for Apple to actually fully penetrate into the market. References Alex Spillius. (2013, Sept 21). Turkey will probably never be EU member. Retrieved April 29, 2014, from The Telegraph: http://www.telegraph.co.uk/news/worldnews/europe/turkey/10325218/Turkey-will-probably-never-be-EU-member.html Denlinger, P. (2010, June 05). For Apple, The Best China Strategy Was Not Having One. Retrieved April 29, 2014, from Forbes: http://www.forbes.com/sites/china/2010/05/06/for-apple-the-best-china-strategy-was-not-having-one/ Forbes. (2012, September 06). Samsungs Market-Flooding Strategy May Not Work Much Longer. Retrieved May 22, 2014, from Forbes: http://www.forbes.com/sites/greatspeculations/2012/09/06/samsungs-market-flooding-strategy-may-not-work-much-longer/ Rapoza, K. (2013, August 19). In Emerging Markets, New Competition For Apple, Android. Retrieved May 22, 2014, from Forbes: http://www.forbes.com/sites/kenrapoza/2013/08/19/in-emerging-markets-new-competition-for-apple-android/ Read More