Globalization in the mobile industry: Apple inc - Essay Example

?Globalization in the Mobile Industry: Apple Inc. – A Case Study Part Background Globalization has been a continually evolving process. With technological advancement as a macro-environmental factor that influence people and organizations on a global scale, the mobile industry is most sensitive to updates and developments that impinge on organizational strategies and performance. Contemporary organizations that see globalization as the most natural path towards unprecedented growth meet diverse challenges and experiences that prove to be enriching and noteworthy. As emphasized by Prasad, et al. (2011) in their book entitled Globalization of Mobile and Wireless Communications Today and in 2020, the authors have noted the role that globalization played in expanding the “basic need for humans to communicate to “from anywhere at any time”, which was unthinkable only 25 years ago” (p. 1). In this regard, the current study aims to determine how globalization in the mobile industry contributes to a revolutionary success, as exemplified from the experience of Apple Inc. in their design and marketing of the iPhone. The main issues to be tackled in the discourse focus on determining and expounding on the factors that were contributory to the iPhone’s phenomenal success. In a study conducted by Laugesen and Yuan (2010), the authors specifically delved into closely examining the success of Apple’s iPhone through a review of related literature and by qualifying criteria for success according to “market size, share and growth rates, average revenue per user (ARPU) and churn rates and content/services, as well as consumer satisfaction and mobile usage” (p. 91). As any remarkable organization could reveal, the factors in succeeding in their respective endeavors include both internal resources and strength in their core competencies and in the organization’s ability to capture opportunities in the external environment, as well as address impending threats and intense competitive pressures. However, the current case study would determine what is unique in Apple’s experience that made the iPhone an icon in product design and technological application. Apple is known worldwide as the organization that designs “Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced iPad 2 which is defining the future of mobile media and computing devices” (Apple Inc. 2011, par. 7). Contemporary data reveal that Apple’s stock prices has been exhibiting a steady upward trend since the beginning of 2011 and recently closed at a price of $398.55 (Yahoo Finance 2011). With a present pool of 46,600 employees as of 2011 (Pingdom.com 2011), the company remarkably generated robust financial gains for the third quarter of 2011 amounting to “quarterly revenue of $28.57 billion and record quarterly net profit of $7.31 billion, or $7.79 per diluted share” (Apple Inc. 2011). All these information attest that Apple has succeeded in its implementation of marketing strategies that make them potentially the global leader in smartphones in the coming year, as evidenced in the report published in OSX Daily, to wit: “Apple will overtake HP as the world’s top PC vendor by mid-2012, thanks to tremendous iPad growth and increasingly strong Mac sales. Currently, HP holds the top spot at 16% of the PC market, but Apple is already sitting very closely behind at 15%, and the anticipated release of iPad 3 early next year could very well be the product that pushes Apple into the lead” (OSX Daily 2011, pars. 1 & 2). In a study conducted by Campbell and Pastina (2010), the iPhone was regarded as divine and concurrently labeled as ‘Jesus phone’ (Campbell and La Pastina 2010). As emphasized, “the story of the ‘Jesus phone’ highlights the creative appropriation of religious language and imagery by technology fans, especially bloggers, to communicate particular ideas, not only about this technology, but also about religion” (Campbell and La Pastina 2010, 1196). However, more than seeing the issue from the point of view of religious and technology fanatics, the issue could also be related to globalization in terms of being defined as “a process that encompasses the causes, course, and consequences of transnational and transcultural integration of human and non-human activities” (Al-Rodhan 2006, 2). In this perspective, iPhone embodies the prototype of a globalized product where people from diverse demographic and cultural background envision possessing. Therefore, aside from scrutinizing iPhone on its distinct features and characteristics, the success of the product would be determined on the basis of the strengths of its manufacturer and the ability to design effective strategies that enabled it to defy rules of traditional product success. The case study would also be evaluated using the dimensions of globalization, cited by Riggs in his key concepts of globalization as attributed to Chase-Dunn to have identified the five dimensions as: “economic, political, common ecological constraints, cultural values and institutions and the globalization of communication” (Riggs: Dimensions, 1998, par. 2). These dimensions were likewise validated by Al-Rodhan (2006) who averred that “globalization involves economic integration; the transfer of policies across borders; the transmission of knowledge; cultural stability; the reproduction, relations, and discourses of power; it is a global process, a concept, a revolution, and an establishment of the global market free from sociopolitical control” (Al-Rodhan 2006, 3). Using these elements to evaluate the success of the iPhone, the current study hereby earmarks to achieve the identified issues through the dimensions of globalization as the theoretical framework, in conjunction with a success model that was presented in Laugesen and Yuan’s (2010) study. The model would support the rationale for the iPhone’s phenomenal success, not only on its own conceptualized design, but due to the image built by its creator. Therefore, as part of the analysis portion, a more closer evaluation of the organization would be expounded to assist in discussing the main issues identified herein. Part 2: Theoretical framework As previewed above, the theoretical framework for the study is based on the dimensions of globalization noted by Chase-Dunn (1999) in his study entitled “Globalization: A World-Systems Perspectives” published in the Journal of World-Systems Research. The author indicated that globalization is “a long-term upward trend of political and economic change that is affected by cyclical processes. The most recent technological changes, and the expansions of international trade and investment, are part of these long-run changes” (Chase-Dunn 1999, 190). The dimensions noted in Chase-Dunn’s discourse would be used to explain the issues identified in iPhone’s success, with the aim of identifying which particular dimensions are applicable and influential in the process. Likewise, the success model designed by Laugesen and Yuan (2010), shown below would assist in explaining the collaborative efforts of consumer factors (culture, demographics, user preferences), corporate factors (technology, branding and marketing, and business model) and finally, environmental factors (regulatory factors and on the mobile infrastructure). When one closely evaluates the model, there are factors that are closely related to the dimensions of globalization, such as cultural values and constraints, communication as manifested in technological factors, and political dimensions through the regulatory policies and rules of international trade. By recognizing that the interplay of these crucial factors are necessary for the success in the product launching and marketing of the iPhone, Apple aptly took into consideration the role of a service provider and an online/offline mediator. The organization’s commitment through the various phases of the product’s life cycle as addressed to customers’ needs and satisfaction formed a complete loop in addressing holistic requirements. In addition, by examining the factors that would be instrumental in paving the way for a product’s success, other global organizations would benefit from the lessons that would be learned from iPhone’s experience. Figure 1: The iPhone Success Model ` Source: Laugesen and Yuan 2010, p. 99 The next part would discuss in greater detail, the issues that were identified in part 1 using the theoretical framework on the dimensions of globalization, as well as the success model described herein. Part 3: Analysis - Application of Theory to Evidence To reiterate, the main issues identified for the case study are determining and expounding on the factors that were contributory to the iPhone’s phenomenal success. As a global organization, Apple had applied and implemented a success model that incorporated various factors pertinent to the customers; the company, per se; and the environment (Laugesen and Yuan 2010). These factors and success criteria would be closely examined as follows: 3.1 Success Criteria First and foremost, there must be some measure to gauge and support the contentions that indeed, Apple’s product, the iPhone, was a phenomenal success. According to Laugesen and Yuan (2010) in their article, the basis by which success was measured included the following criteria: “market size, share and growth rates, average revenue per user (ARPU) and churn rates and content/services, as well as consumer satisfaction and mobile usage” (Laugesen and Yuan 2010, 91). On a more simple and obvious measure, the number of units sold would attest the phenomenal success of the product. To date, Viticci (2011) indicated that the number of iPhone sold, as of January 2011 totalled 16.24 million (p. 1). Since its launching in July 2007, iPhone unit sales already reached a staggering 16. 9 million as of June of 2011, a slight decrease from the 18.6 million units sold as of March 2011. The figure below traced its instrumental growth pattern of number of units sold from June 2007 until June of 2011: Source: Elmer-Dewitt 2011 From the information, one could compute that the total number of iPhone units sold, until the last recorded date already reached 125.5 million or an average of 7.38 million per quarter (or 1.84 million units per month). Using market share as another gauge of success, the number of shipments corresponding market share across PC vendors in the United States alone, for the 3rd quarter of 2011, as compared with the same period in 2010 indicate that Apple posted as 12.9% market share, ranking third after Hewlett Packard’s 28.9% and Dell’s 21.9%. Source: Gartner's Preliminary U.S. PC Vendor Unit Shipment Estimates for 3Q11 (Thousands of Units); cited in Slivka 2011 However, as previously noted, on a global scale, as a smartphone vendor, Apple ranks number 1 for the second quarter of 2011, with the following statistics that validate their success: Global Smartphone Vendor Shipments (Millions of Units) Q2 '10 Q2 '11 Apple 8.4 20.3 Samsung 3.1 19.2 Nokia 23.8 16.7 Others 27.1 53.8 Total 62.4 110.0 Global Smartphone Vendor Market Share % Q2 '10 Q2 '11 Apple 13.5 % 18.5 % Samsung 5.0 % 17.5 % Nokia 38.1 % 15.2 % Others 43.4 % 48.9 % Total 100.0 % 100.0 % Growth Year-over-Year % 50.4 % 76.3 % Source: Business Wire 2011 Finally, from the customer satisfaction survey conducted by J.D. Power and Associates on smartphones, Schroeder (2011) revealed that Apple had consistently topped the list for six consecutive times. Using the illustrative figure, the bar chart indicates that Apple has exhibited notches above the industry average for customer satisfaction, far exceeding the rest of its competitors in the smartphone category. Source: Schroeder 2011 3.2 Success Factors Laugesen and Yuan’s (2010) success model clearly identified the crucial factors that need to be incorporated to ensure effectiveness in results and performance. Their findings appropriately summarized the success factors that were instrumental in paving the way for iPhone to exemplify unprecendented and phenomenal growth: “Demographics - Target the right group of adopters User Preferences – Understand and meet preferences Culture – Find and exploit cultural niches Technology – Hardware plays a ‘best-supporting’ role Business Model – Develop a business model based on core competencies Marketing – Focus on fulfilling consumer needs Service Providers – Maintain control through content access and distribution Regulatory – Make regulations work for you Infrastructure – Take advantage of the available infrastructure” (Laugesen and Yuan 2010, 96). The recommendations appear to be simple and generally known as theoretical frameworks to effective business management and global governance. They include globalization dimensions that explain the relevance within which these factors need to be integrated in the organization’s business model to succeed. Focusing on fulfilling customers’ needs have been widely known and is the greatest marketing philosophy encompassing past generations. The need to incorporate culture and focusing on internal strengths and core competencies are not new. One strongly believes that what made iPhone an exemplary success in contemporary products is being attached to the Apple image – an icon of global performance whose leadership manifested genuine talent and innovative skills at designing products that revolutionized all facets of organizational performance on a profound global scale. Part 4: Conclusions & Recommendations The current study achieved its identified aim to determine how globalization in the mobile industry contributes to a revolutionary success, as exemplified from the experience of Apple Inc. in their design and marketing of the iPhone. Through the dimensions of globalization used by Chase-Dunn (1999), in conjunction with the success model proposed by Laugesen and Yuan (2010), the discourse effectively analyzed and explained that through incorporating lessons learned about taking a closer look at one’s customers and using strengths from core competences as sourced from internal resources, global organizations could use these to their advantage. The global dimensions noted included economic, political, common ecological constraints, cultural values and institutions and the globalization of communication. From these dimensions, the applicable factors manifested in iPhone’s experience encompassed cultuarl values, political requirements through regulatory policies, and the need for clear and effective communication through company resources, policies and procedures. Through the phenomenal success of iPhone, as gauged from diverse success criteria, Apple has proven that a success model, effectively designed and implemented could enable them to succeed. The success criteria through market shares,number of units sold, and customer satisfaction validated iPhone’s performance, both in the local and international markets. The success factors that were clearly identified included closely reviewing demographics, use preferences, culture, technology, business model, marketing mix, service providers, and environmental factors such as regulatory policies and infrastructure applications. There must be closer integration and incorporation of company factors with environmental factors to ensure that regulations are met and required infrastructures that sustain the production of the organizations’ products are used effectively. The business adage that focuses on matching internal strengths with external opportunities continue to apply even on a global perspective. Further, aside from the identified success factors, another element that contributed to iPhone’s success is Apple’s ability to immediately solicit feedback from customers and to address weaknesses, as required. iPhone was considered as the first major line in Apple’s products which usually undergoes a “major redesign every other year and a minor refresh in-between” (Gobry 2011, par. 4). Depending on the response and the demand of the customers, Apple has inculcated significant feedback to make iPhone exemplary in every count. In addition, the organizational culture of Apple exemplifies commitment to adhere to only the best and excellence in product design. As revealed, Apple’s organizational culture is considered one of the “most distinct corporate cultures in the business” that was envisioned by the creator, the late Steve Jobs (Reisinger 2010, par. 4). According to Reisinger, the focus on design is primost in the organization’s culture. Other noted unique features in Apple’s organizational culture included believing that Apple is the best among global organizations; responding to complaints and acting on them immediately; practicing and respecting confidentiality in corporate information; and finally, “domination is everything” (Reisinger 2010, par. 5-15). Ironically, despite one of their strongest beliefs that “only Steve Jobs is indispensable” (Reisinger 2010, par. 13), his recent demise attested that the statement could not be ultimately sustained. The organization thereby learns that life goes on and their organizational mission, vision and values continue under the philosophies and legacies left by their creator. Finally, as other global organizations learn of Apple’s strategies, by emulating their experience and continuously designing new technological applications, the future could still possibly and inevitably see another innovative product that could pattern or even surpass iPhone’s performance. In this regard, global organizations must remain vigilant of the opportunities that abound in the external environment. Aside from the success factors and the dimensions in globalization that were enumerated in the discourse, the crucial strategy that should remain in every organization’s list is determining the needs of its clientele and designing strategies that would not only meet these needs, but surpass them beyond expectations. Part 5: Referencing & Bibliography Al-Rodhan, N.R.F. 2006. Definitions of Globalization: A Comprehensive Overview and a Proposed Definition. Geneva: Geneva Centre for Security Policy. Apple Inc. 2011. Apple Reports Third Quarter Results. [Online]. 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