The Environment of the Mobile Phone Market in Chile - Essay Example

? Apple Company Recommendation Proposal of the of the Table of Contents Table of Contents 2 Executive Summary 3 Introduction 3 Purpose 4 Background 4 Discussion 5 Methodology and Analysis 5 Presentation of Data 6 Recommendation and Conclusion 9 References 10 Appendix 12 Executive Summary The study has been prepared for understanding the environment of the mobile phone market in Chile. The main focus of the study is proposing a recommendation of the entry strategy of Apple into the Chilean market. The study will start with a brief introduction of Apple Inc and its products. It will reflect the recent internal problems of the company and the targeted customers. The study will also reflect the position of trade and business between United States and Chile, followed by the background of the Chilean mobile phone market. The study will discuss the methodology adapted for finding a solution to the problem followed by the analysis of the data collected from the customers of Chile. The data presentation section will reflect the responses of these customers based on which the analysis have been done. Finally the study will be concluding with the recommendations provided to Apple Inc for its entry into the new market. Introduction Apple Inc., which was formerly known as Apple Computer Inc. is a multinational corporation whose headquarter is located in Cupertino, California. It is involved in the designing, development and selling of computer software, consumer electronics and personal computers. The most renowned hardware products of the company are Mac line computers, the iPad tablet (computers), the iPhone smart phone and the iPod music players. The software of the company includes the OS X & iOS operating systems, Safari web browser, iTunes media browser, the iWork creativity and other production suites. Apple was founded on 1st April 1976 and it was incorporated as the Apple Computer Inc. on 3rd January 1977. Presently, it is the second largest IT Company in the world after the Samsung Electronics and also the third largest mobile manufacturer in the world after Nokia and Samsung (Gartner, 2012). By May 2013, the company has opened almost 406 retail stores in more than fourteen countries followed by various iTunes Stores and online Apple Stores (ifoAppleStore, 2013). The company is second largest in the world as a publicly traded corporation because of the market capitalization of US $ 414 (as on January 2013) (The Telegraph, 2013). The company has approximately 72800 full time (permanent employees) and 3300 full time (temporary employees) (APPLE INC., 2012). The annual revenue (as on 2012) was $156 billion. Purpose The main purpose of this project is to develop a recommendation proposal for the expansion of the business operations of Apple in Chile. One of the recent problems of Apple is related to its innovation. The company needs to implement strategies for overcoming this situation. It needs to find an innovative product apart from the general category of products offered by the competitors. The company’s inability in leveraging the value from the $137 billion of cash pile reveals that the innovation problems of the company are really big and significant. The expansion of the business in the Chilean mobile market will increase its demand in the new market. As the per capita income of the company is high, the customers will be willing to pay for the high end products with latest technological skills as they will earn better experience. This will help the company to earn higher revenue and solve the business problem related to the innovation. The target customers of Apple are: The middle or upper income customers who are always willing to pay a higher price for the purpose of better experience are the target customer segment of the company. The people who prefer having fun with the latest technology are set as the target customers for the company. Background The entire study deals with the entry of Apple Inc into the Chile mobile market. The United States – Chile FTA (Free Trade Agreement) completed its eighth year and the trade and business in the products and services still continues to be a profound success. During January 2004, the duties were decreased to zero for more than 90 percent of the United States exports to Chile and all the remaining tariffs are planned to be phased out by the year 2015. In the year 2011, the bilateral trade between Chile and United States reached to $ 24.8 billion, which is a 300 percent increase of the bilateral trade levels before the implementation of the United States – Chile FTA. The exports from United States to Chile reached $ 15.8 billion and the imports from Chile to United States reached $ 9 billion. According to OECD (Organization for Economic Cooperation and Development) report in the year 2012, Chile has high dependence on the exports of the metals. The business environment faces the lack of competitive pressure which allows innovation. According to a report by the Budde Comm Research Company, in the year 2012, the mobile phone market penetration is the highest in Chile after Uruguay, Panama and Argentina. According to this report the three main players in the mobile market of Chile are Telefonica’s Movistar, Almendra’s Entel and the America Movil’s Claro. Since all the three companies are telecom connection provides, thus Apple does not possess any direct threat or competition from them. But Apple should enter into a partnership with a network service provider in Chile in order to avoid the threats associated with political and the legal environment of the new market. There is Apple store in Chile, but the company exports the products to the retailers in Chile. The company has never opened a retail store or an online store in Chile (Heim, 2011). It could not recognize the strength of the Chilean mobile market. The local retailers sell the products of Apple at a price range almost 10 to 15 percent higher than the original price of the products. The per capita income of Chile is high (approximately $ 18,400) as compared to the other Latin American countries. There is an opportunity for the company to expand its business in Chile by opening a retail or online store. It will offer premium or high end products like highly priced Smart phones to the customers. Discussion Nokia leads the Chilean market in the mobile phone section, but its market positioning is under high threats due to the increase in demand of the Smart phones of Samsung and Apple. The lack of a proper political and legal framework in the country has created a challenge to the foreign companies in entering Chile by expanding their operations. Various regional problems like poor infrastructure for supporting the road transportation based logistics, tension between the political parties, lack of proper government policy related to the foreign investments etc will provide entry barrier to Apple Inc in expanding its operations in the country. However, the Fondo Capital Abe program established in the year 2011 by the Chilean government has made the credit availability to the foreign companies and other entrepreneurs much easier. There are various guidelines provided by Subtel for facilitating high quality services related to the mobile internet. Apple needs to follow those guidelines for achieving competitive advantage over its competitors in the new market. The pressure from the competitors can be low for Apple as the mobile manufacturing industry in Chile is fragmented. The two significant competitors of Apple in Chile will be the Nokia and Samsung. According to a report, Samsung leads the mobile phone market with 32 percent retail market penetration when it is related to the general mobile phones. But when it comes to the Smart phones, the Apple iPhone leads the market with a market share of 29 percent (Euro Monitor International, 2012). The main threat to Apple in the new market will be from the Samsung. Apple should start its operations by entering into partnership with a network service provider. The company should provide Smart phones to the Chilean customers initially, due to the increasing demand. This will help the company to achieve competitive advantage in the new market. This is a short term strategy for the company. Afterwards the company can perform product development in Chile as well. Methodology and Analysis Research philosophy is the process of collecting the data followed by analyzing it and finally interpreting the result for finding a solution to the particular research problem (Tobin and Joseph, 2006). The research philosophy mainly consists of two types of approaches. One is the positivism and the other one is interpretivism. Positivism focuses on analyzing the interdependency of the internal and external variables. This type of research model can be conducted by means of two different methods. One is the descriptive research method and the other one is the experimental research method. Interpretivism, on the other hand, is a research model which is based on the perceptions of the human beings mainly (Seale, 2012). This type of research model helps in the proper understanding of the non statistical variables (for example- human behavior, human perceptions, their social motives etc.) (Spradley, 1979; Plummer, 1983). The two approaches are opposite to each other, but they are of equal importance. In this recommendation proposal, the interpretivism has been selected as the study deals with the understanding of the business environment in the new market based on which a strategy will be determined. There are mainly two types of research strategies for finding a solution to a particular research problem. One is the qualitative research methodology and the other is the quantitative research methodology. Both the research strategies are very effective descriptive methods for the purpose of analyzing any research problem. Quantitative methodology generally involves various statistical calculations, other computational techniques etc (Kumar, 2011). While making any survey, it takes into consideration the close ended surveys (Alby, 2012). This method relies on the collection of secondary data which has been collected from previous researches. The qualitative research strategy is opposite to the quantitative research strategy. It describes the individuals in their natural situations and tries to analyze any problem based on the social belief, culture, human behavior etc (Smartpsych, 2004; Vaivio, 2008). In this recommendation proposal, qualitative research strategy has been implemented in order to analyze the behavior of the target customer segment in the new market based on which, the company will determine its entry, pricing and other pricing strategies. The analysis of this study is based on the open ended survey conducted on five Chilean customers to find out their perception on the entry of Apple Inc in Chile. The researcher will be analyzing the data which have been collected during the interview session. The data collection has been done by means of conducting a semi structured interview of five open ended questions. The questionnaire set has been provided in the appendix. The presentation of data collected from the Chilean customers, are provided in the next section. Presentation of Data Question 1: Do you prefer buying overseas products? Kindly explain. Customer1 Customer2 Customer3 Customer4 Customer5 Quality High Experience Varieties of features Innovative products (new to the market) Question 2: What factors are considered by you before making the final purchase decision related to a product? Customer1 Customer2 Customer3 Customer4 Customer5 Features Price Demand Durability After sales service Brand name Question 3: Kindly elaborate on your perceptions of using high end mobile phones? Customer1 Customer2 Customer3 Customer4 Customer5 Social Status More features Social Trend Wastage of money Question 4: What perceptions you have about the mobile phones of Apple Inc.? Customer1 Customer2 Customer3 Customer4 Customer5 Latest wireless technology High end mobile phones High Brand name Quality product design Question 5: Do you think it will be advantageous if Apple opens a retail store in Chile? Please explain. Customer1 Customer2 Customer3 Customer4 Customer5 Increase in product availability Directly approachable High quality service Low price Recommendation and Conclusion The Chilean people prefer to stay with their families and they prefer maintaining a stable life, avoiding all the uncertainties (Geert-Hofstede, 2013). Thus Apple should design a product which will match with the feminine nature of the country. The Smart phones of the company should offer benefits in respect of solving daily problems, increasing family bonding by means of various applications. The company has maintained its niche segment by the availability of quality smart phones. Apple should open a number of retail stores in Chile for increasing the product availability and consequently the product demand. The establishment of retail stores in Chile will help the company to increase its brand visibility among its customers. Moreover, the local retailers of Chile sell the products of Apple at a price range almost 10 to 15 percent higher than the original price of the products. The opening of the retail stores by Apple will allow the availability of products at the original prices to the customers. The customer segment with higher disposable income should be targeted by the company. The company should offer its Smart phones in the initial phase followed by i-OS based different products of the company in the next phase. The prices should be lower than the offerings by the local retailers of Chile. The company should plan for an effective promotional strategy to promote its products in the new market. An implementation of all the above mentioned strategies will help Apple to achieve competitive advantage over its competitors (Nokia and Samsung) in the new market. References Alby, F. (2012). Methods of collecting data: Interviews and questionnaires in practice. Retrieved from http://www.egohid.eu/Documents/Methods%20of%20collecting%20data,%20interviews%20and%20questionnaires%20in%20practice%20%28Dr%20Alby%29.pdf APPLE INC. (2012). UNITED STATES SECURITIES AND EXCHANGE COMMISSION. Retrieved from: http://www.sec.gov/Archives/edgar/data/320193/000119312512444068/d411355d10k.htm Budde Comm. (2012). Chile - Mobile Market - Overview, Statistics and Forecasts. Retrieved from http://www.budde.com.au/Research/Chile-Mobile-Market-Overview-Statistics-and-Forecasts.html Euro Monitor International. (2012). Mobile Phones in Chile. Retrieved from http://www.euromonitor.com/mobile-phones-in-chile/report Gartner. (2012). Gartner Says Worldwide Sales of Mobile Phones Declined 2 Percent in First Quarter of 2012; Previous Year-over-Year Decline Occurred in Second Quarter of 2009. Retrieved from http://www.gartner.com/newsroom/id/2017015 Geert-Hofstede. (2013). Chile. Retrieved from http://geert-hofstede.com/chile.html Heim, A. (2011). iPhone 4S just launched in Chile and in Brazil, where it costs up to $1,830. Retrieved from: http://storyfindr.com/story/4eeaf2103ad4bb2e7857937b ifoAppleStore. (2013). At a Glance. Retrieved from http://www.ifoapplestore.com/at-a-glance/ Kumar, R. (2011). Research Methodology. New Delhi: APH Publishing. Plummer, K. (1983). Documents of Life: An Introduction to the Problems and Literature of a Humanistic Method. Crows Nest, New South Wales: Allen & Unwin. Seale, C. (2012). Researching Society and Culture. London: SAGE. Smartpsych. (2004). Research methods: Data analysis. Retrieved from http://www.smartpsych.co.uk/wp-content/uploads/2012/02/psych_methods1.pdf Spradley, J. P. (1979). The Ethnographic Interview. New York: Rinehart and Winston. The Telegraph. (2013). Exxon overtakes Apple as biggest public company. Retrieved from http://www.telegraph.co.uk/finance/9827795/Exxon-overtakes-Apple-as-biggest-public-company.html Tobin, P., & Joseph, K. (2006). The Use of Stories and Storytelling as Knowledge Sharing Practices: A Case Study in the South African Mining Industry. Retrieved from http://upetd.up.ac.za/thesis/available/etd-07302006-065725/ Vaivio, J. (2008). Qualitative management accounting research: rationale, pitfalls and potential. Qualitative research in accounting & management, 5(8), 239-246. Appendix Do you prefer buying overseas products? Kindly explain. Customer 1: Customer 2: Customer 3: Customer 4: Customer 5: Which features of a product are considered by you before making the final purchase decision? Customer 1: Customer 2: Customer 3: Customer 4: Customer 5: Kindly elaborate on your perceptions of using high end mobile phones? Customer 1: Customer 2: Customer 3: Customer 4: Customer 5: What perceptions you have about the mobile phones of Apple Inc.? Customer 1: Customer 2: Customer 3: Customer 4: Customer 5: Do you think it will be advantageous if Apple opens a retail store in Chile? Please explain. Customer 1: Customer 2: Customer 3: Customer 4: Customer 5: Read More