Apple and the Diverse Global Market Environment - Case Study Example

Student Name: Tutor: Title: BRW Research Report Course: BRW Research Report Title: Apple and the diverse Global market environment Abstract The world is a global village with the advances in technology and development of different modes of transport. Virtual offices have become the order of the day for many international companies. Penetrating the global market is not easy and a company has to deal with unfamiliar territory with diverse culture. Understanding the global customers is important for the business to use the right language while trying to woe them to buy its products. Emerging global markets can be attractive but risky. A company has to be adequately prepared to deal with the challenges of operating in a new environment with diverse cultures. Apple Inc was started by Steve Jobs and his colleagues with the aim of manufacturing personal computers. The company has ventured into other areas like smart phones, tablets and the launch of the iPhone was the hallmark of modern communication gadgets. The iPhone6 series has just been launched. Apple is the third largest mobile phone manufacturer after Samsung and Nokia. Strong leadership and corporate culture at Apple has enabled it to penetrate new global market and remain a market leader in the technology industry. Apple is an example American firms that have been successful in the global world and have a global customer base. Definitions Apple-an American multinational corporation dealing in a variety of products including consumer electronics Diversity-variety, having different forms or types Corporate Culture- shared set of beliefs, customs and norms of a corporate organization Emerging global markets- an economy with low to middle per capita income. Introduction and Background Apple is an American multinational corporation with its capital at Cupertino, California. Apple develops, designs, and sells computer software, consumer electronics, personal computers and online services. Hardware products like iPad tablet computer, iPhone Smartphones, iPod media player, and Mac personal computers are produced by Apple. Online services provided by the company comprise of iTune store, iCloud, and App Store. Consumer software credited to the company include iOS operating systems, the Safari web browser, iLife, and iTunes media browser. Apple was founded in 1976 by Steve Wozniak, Ronald Wayne, and Steve Jobs for the purpose of developing and selling personal computers. It was incepted as Apple Computer, Inc. on 3rd January, 1977 (Aaker, 2012). Apple is ranked as the second largest information technology company in the world with regard to revenue after Samsung Electronics. It is the third largest mobile phone producer after Samsung and Nokia. Apple has managed to come up with products that are cool, simple to use, intuitive and offer the most amazing consumer experience. Figure 1: Smartphone Market Share Through its leadership Apple Inc has taken calculated risks and confidently penetrated new markets. New business models like iTunes have been created by Apple Inc Corporation. The innovation culture of Apple id coupled with that of its leadership. The demand for a product that is basically new is absolutely unpredictable. Even customers have no idea if they will like a new product prior to using it (Verganti, 2013). Demand for something new like the recently launched Apple’s iPhone6 cannot be predicted. The world is directed by improbable, high-impact events, both negative and positive. Such events include social media explosive rise, the subprime crisis, and the September 9/11 attacks. These events prompted changes in the world and their impact was not predictable. Majority of the people were not aware of what was to come. This scenario applies for new products and brands. It is difficult to predict if the new products will have a breakthrough in the local and international market. The success of such products is purely speculative and pegged on the past performance of the company’s product launched but it cannot be a replica of the current situation (Kotler & Keller, 2005). This article discusses the global market challenges and opportunities and how Apple Inc has survived in global market despite the risk of uncertainty. Diversity in the global market Global marketing is the ability of a company to market its products in any parts of the world. A global firm has to have the capacity to retain the reach, capability, knowledge, skills, expertise, and insights to provide value to customers globally. Global companies have the advantage of geographically diverse business portfolio which offers a natural hedge against any volatility in the local market, currency risk and country risk. Nevertheless, getting into many emerging markets is taking a global company into regions with unfamiliar risk that may be challenging to navigate. A global multinational must have the right management infrastructure as well as skills to deal with the diversity of operations at the global scale (Kotabe & Kristiaan, 2004). American firms have identified lucrative markets internationally for their services and products. The markets are huge with regard to population, in such countries like India and China. The purchasing power of businesses and consumers in many countries is sufficient for American companies to want compete in the markets. International marketing has its pitfalls and some companies from the United States have made costly mistakes by ignoring to research adequately international markets prior to committing resources. A key strategy to success is delivering products as well services that customers have a compelling need. The consumers have needs that have to be met and the product has to provide a solution in the most effective way that gains are not hard to communicate. Identification of true needs of large population of people in global market is a challenging task. Not having experienced their culture in day to day lives can make marketing executives to make mistake by assuming what people in different countries need or want is similar to the American market. Owing to movies, internet and other forms of communication, American corporate symbols and culture are famous around the world (Mohr, Sengupta, & Slater, 2010). However, this does not mean that the companies’ products will be popular when they are launched in other countries. A potential customer being aware of a brand name is not equal to preferring it. It can be tedious and expensive to gain the trust of local consumers who are more familiar to their local companies and are loyal to them. The American firms can appear to trying to take over the position occupied by local companies resulting into resentment or rejection. The Chinese are proud and consider their companies superior to American companies hence it is not easy to gain their trust and penetrate their market substantially. Local companies can deny foreign companies entry or market growth through having strong brands that are respected and loved. Consumers are persuaded to buy products through marketing messages communicated through media including print media like magazines and newspapers’ advertisements. Humour is often employed in the commercial messages to make the consumers pay attention. Nevertheless, what can be considered funny in one culture can be very offending in another culture. In order to realize effective advertising it requires more than merely accurately translating the message from one dialect to another (Kotler & Keller, 2005). It compels a deep comprehension of customs, culture, morals and religious perceptions that are dominant in a given country. The motivation behind the purchasing decision for consumers varies from one culture to another or one country to another. Business managers from different countries can confront other barriers to effective communication apart from the differences in languages. The traditional length of business negotiations is different. Americans are fast in their negotiations but other countries people focus on establishing personal relationships prior to considering a business deal. They can do business with a person they related with at a personal level. Managers from other countries may value facial expression more than words being used. People want to understand the people they are dealing with before entering into a business contract. Regardless of advanced technologies like video conferencing, managers in other countries can prefer building personal relationships before a business deal is agreed. This can mean to increased travel costs and more personal engagement by senior executives before a deal is reached. American company more often than not forge relationships with distributors found in other countries and use them to penetrate the new markets. Apple is a good example of a company that has used that channel to gain access to some global markets. Sales representatives used are from the local countries since they know how well to convince their fellow countrymen and women to buy products that they are selling (Sitkin & Bowen, 2013). These sales representatives can be more trusted that foreign marketers. Local public relations and marketing firms can be engaged to help international companies to communicate effectively in the local market. The global market and its challenges The management of global organizations has been a challenge for many years. The nature of the challenge is changing following increased changes in economic activities in the world. However, global companies are still struggling to adapt. Working in a global environment that has diverse cultures poses challenges to many global businesses. Purchasing patterns of consumers and demands have also undergone a transition. Sitkin & Bowen (2013) explain that the introduction of online, catalogue and home shopping networks have resulted in shifting buying patterns. Trends in the global market are constantly changing and global companies have to adapt in order to remain relevant. The unique differences among emerging market countries call for the need for multiple supply chains, each designed for a specific place and supported adequately by locally established capabilities as well as talent. Many business managers believe that the huge reserves of skills, experience and knowledge in the global workforce of their firms represented a crucial asset. Many companies find out that deploying and developing talent into emerging markets is a major challenge. Fisher (2008) says that large global multinationals enjoy economic leverage because they are able to invest in shared infrastructure stretching from research and development centers to functions of procurement. As global firms grow bigger and diverse, complexity in management of costs come about. In the present global business environment, whereby multinational corporations are pressured to increase revenues for the purpose of survival, creativity holds the key to realizing new product development efforts result into innovations with the appeal worldwide like Apple’s iPad. In order to leverage culture for the purpose of new product development, international corporations want to understand how cultures differ with regard to creativity and the influence of those disparities on approaches applied in the development of new products. Global new products are growingly developed in and for multiple cultures. Conceptualization or culturally reflective understanding of creativity is needed (Sitkin & Bowen, 2013). While as there is a belief that creativity is culturally tied, the major concept of creativity applied in management and business assumes that creativity is culturally insensitive or indifferent. This knowledge disparity is addressed through the study of the importance of creativity in new product development practices across global or cultural context. Global marketing is marketing taking place scale taking advantage of differences in global differences and other opportunities in order to meet global objectives. Companies are struggling to adapt to a global environment that has fundamentally changed overtime. New expectations of global consumers and disruptive digital technologies are compelling global multinationals to adjust and subsequently innovate. New technologies proliferation from mobile and social applications to in-store digital experiences represents a set of challenges for which marketers are not fully prepared. The degree of investment in the company has to be at a global level but at the same time consider the requirements in the local market (Verganti, 2013). The challenge emphasize the need of a chief executive officer being technology-savvy and sensitive to local-global relationships as well as the capacity to adapt to and adopt disruptive technologies and marketing that is personalized and social media-driven. A new crop of consumer familiar and empowered by ubiquitous technology that is affordable has led to changes in the rules for marketing (Aaker, 2012). Senior managers believe that interconnected consumers have led to the breaking down of barriers between local and global marketing. The major challenge of global marketing has been conveying relevant messages in the local market, but in an era where products meant one country are shared around the globe, the challenge is to provide the global consumer with an intricate balance of the global, regional, and local campaigns at the same time. Dealing with the global consumers’ diversity with strong regional subcultures is considered as huge challenge by about 77% of senior marketers (Ramaswamy, 2010). Many companies marketing activities are not fully interconnected across traditional and digital channels. Senior markets have to embrace the global mindset and stop overreliance on traditional single-channel marketing campaigns for the purpose of realizing the gains of cross-channel experiences. International market has advanced and is demonstrated in the daily lives of the consumers. National or local regions’ boundaries are anymore restricted to the competitive forces. In order to breakthrough in the global market it is imperative for companies to be concurrently responsive to both local and global market conditions and varying elements linked to the process of international marketing. Fostering creativity and innovation Business managers acknowledge the new competitive frontier in the ability to be innovative continuous in one environment. Learning, innovation, and creativity skills are crucial in work and life and should be at the center of the 21st century curriculum. Experts are of the view that systems can be established and applied to produce innovation while some experts are of the opinion that systems kill innovation and it is better to create a culture that advances and supports innovation. Bagnall (2005) argues that managers who have successfully established cultures of creativity and innovation suggest that one import concept is to depart from focusing on efficiency as a fundamental working procedure and embrace collaboration, participation, experimentation and networking. Of course focus, discipline and process are still vital. Fostering creativity and innovation is more often than not counterintuitive to the practices and beliefs of administrators and managers who are efficiency-minded. Teachers have to attend to and support creativity of students through providing environments for students to engage in complex, deep thinking, use strategies that are nonlinear and unorthodox, and pursue ideas that are extremely new and sometimes radical. These opportunities have to be present in environments that are upbeat and positive, offer tools for experimenting; tolerate failure and include minimum students’ work overt evaluation. Moreover, schools have to consider putting into practice models for innovation management copied from the business world. Peter Drunker, a management expert, offers such a model. He explains that there are about seven windows of opportunity that provide possibilities for innovations. The list includes changes in perception, new knowledge, demographic shift, market/industry changes, incongruities, and unexpected changes (Fagerberg, Martin & Esben, 2013). Apple has exploited changes in the market trends as they develop products that are sophisticated and meeting the current needs of the consumers. Consumers want Products which are more portable and easy to use. Consumers in the modern world have high expectations from brands and look for value beyond traditional products. If customers are dissatisfied with a company’s products, they will shift their loyalty to another producer who can meet the prevailing needs. Apple corporate culture of creativity and innovation Steve Jobs describes the culture of Apple like ‘that of a startup’. The essence of what propels Apple to the top is the same thing that makes startups to innovate. This is the foundation of high-performance cultures. His explanation shows the apt collaboration that embody the creative acts of innovation exhibited at Apple and that has successfully exemplified the culture of the company. Culture is a shared set of beliefs, customs and norms. According Ramaswamy (2010), the culture of an organization is reflected in its vision, goals and policies and the manner in which individual members carry themselves around. Leadership is in charge of driving culture and culture in turn drives innovation. Steve Jobs at his team provided this kind of leadership at Apple. Steve jobs inspired the culture of innovation and creativity at Apple. Steve Jobs eradicated passive aggressiveness and enhanced debate during development of new ideas. Tension of creative conflicts bears new ideas. These ideas are a foundation for new products development. Risks are mitigated through exploring new angles. Steve Jobs gave the vision on how the company has to be run to succeed. The holistic visions results into cohesion in the company and increased productivity. Apple was created by Jobs and his colleagues as the best parts of a startup. It is the people who create the culture of an organization. Corporate culture separates the winners from the rest of companies in the industry (Wischenbart, 2013). Apple has remained prolific and innovative in the technology industry coming up with products that are amazing. A startup culture set up the winning mentality that has made the company to penetrate new markets and establish itself globally. The vision by Steve Jobs of a ‘computer for the rest of us,’ resulted into PC revolution and transformed Apple into an icon of American business. Apple breakthrough into global IT market With growth of technology, Apple has penetrated global markets, reaching unprecedented levels of profit and revenue. In the modern business world any company has to remain ahead of the curve by understanding the changing trends in technology and engaging news ways of becoming and meeting the needs of customers. There are various ways of penetrating the global market employing different strategies. Application of multiple strategies by Apple has enabled it to be dominant in the market despite the global economy that is recovering. Apple uses several strategies to make its presence felt in the global market. Some of these strategies include importing and foreign outsourcing, foreign licensing, exporting, as well as foreign direct investment. Importing and foreign outsourcing facilitate production at cheaper costs making products like iPad to retail at $499 instead of unaffordable $14,970 (Fisher, 2008). Historically the mainstay Macintosh computers by Apple have not sold much outside the United States owing to their high prices and limited distribution. Analysts observe that Apple’s iPod music player assisted in the company in penetrating into more markets and aroused the appetite of consumers for similar products. Figure 2: First Macintosh-1984 The huge breakthrough into global market for Apple came with the launch of iPhone4. It was launched in eighty-eight countries. The change demonstrates how overseas sales have become important for Apple, which lagged behind other players in becoming a global player in the industry prior to the launch of iPhone series. Tim Cook, the Chief Operating Officer, reported in the quarterly earnings that iPhone sales were recording triple-digit growth in Asia and Europe. Apple referred to the launch of iPhone as the fastest international roll out. Using partnerships and foreign licensing Apple has expanded its brand into market shares that were unreachable. Apple has established a supplier Code of conduct owing to its business dealings in the foreign markets. Apple is focusing presently on China for global expansion (Aaker, 2012). For Apple, China is an emerging market owing to cheap labour and strong economy with the largest population in the world. iPad, iPhone, as well as other products in China by a company known as Foxconn. Foxconn is the largest producer if electronic components in the world. China can be the biggest market in the entire world owing to its huge population. The biggest competitors for Apple are Google, Microsoft, Research in motion and Hewlett Packard. The competitors engage in almost the same global market since they belong to the same industry. Being competitors in the same industry means they share contract manufacturers as well as suppliers to offer components or products or both. Figure 3: iPhone Performance Apple stands out from the rest because they produce their own hardware and software that has a unique operating system. Previously Apple has encountered international trade barriers with India due to economic differences and the rigid, highly controlled retail market in India. In the year 2006, Apple planned to put up a technical support center in Bangolore but the plans were revoked when it was determined that it was not cost-effective. The barrier was overcome by Apple though the use of other support centers in cheaper environments. Apple has succeeded in creating substantial value in the very competitive consumer electronics industry through innovation and establishing a path that stands out from other largest competitors in the industry, differentiating its products successfully from those of the competition through choosing to focus on design elegance, quality, and customer service that is superior (Verganti, 2013). Apple uses the World Wide Web and the Internet in the marketing of its products and services to consumers around the world. Apple has focused on online consumers as its target audience owing to increased technological innovations and growing accessibility to internet connections. Despite the slowdown in the world economy due to the economic downturn, Apple has remained a competitive force in the consumer electronics. Figure 4: Apple Abroad Competitors have tried in vain to replicate the success reported at Apple with its product mix but no company has successful penetrated the market mix created by Apple. The marketing objectives of Apple are to increase market share, increase profits, and maintain its brand image. For the purpose of maintaining its competitive edge Apple persistently re-examines its marketing mix to make sure that they are meeting the expectations of the consumers. Apple’s goal is to deliver a product which is affordable, unique, easily accessible and within the current trends in the market. Advertising, customer loyalty, word-of-mouth, and brand recognition have made Apple to take advantage of repeat sales as well as new business. Apple’s strategy comprise of announcement of the latest technological advances at particular times in the course of the year during invitation only technological conferences and events. The advertising budget in 2010 reached $690 million (Wischenbart, 2013). Apple remains active in searching for new ways of expanding its brand globally. Apple’s key resources, core competences, and capabilities and considering its current position in the industry and coupled with trends in the global environment, it is evident that Apple will continue to create considerable value using persistent related diversification. Conclusion The global market is diverse and complex and requires keen understanding before a company ventures into it. A global company has to integrate its workforce with the local labour in order to understand how to operate in the foreign market. Launching totally new products is intricate and unpredictable particularly when the global market is involved. Having a defined corporate culture and strong leadership can drive the vision of a company into becoming a global market leader. Apple Inc has grappled with new challenges in global markets but managed to establish itself as a global company with its customer base spread all over the world. How a company deals with risks in the unfamiliar environment determines how successful it will be. The company has to commit enough resources before venturing into the global market. Apple has spent millions of dollars in advertising in order to create brand awareness. Under the stewardship of Steve Jobs and Tim Cook, Apple encouraged an environment of innovation and creativity that resulted in new product development such as iTunes, iPod, iPad, and iPhone series. Focusing on efficiency alone cannot breed innovation but embracing collaboration, networking and experimentation can. Apple has used outsourcing in other countries like China to bring down costs of production. The company creates product awareness prior to the launch of new products. The iPhone6 was the latest product to be launched by the company. Companies wishing to penetrate global emerging markets can a lot from Apple case and know how deal with multiple cultures in the global environment. References Aaker, D 2012, Brand Leadership, Simon and Schuster, New York. Bagnall, B 2005, On the Edge: The Spectacular Rise and fall of Commodore, Variant Press, Melbourne. pp. 109–112. 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Verganti, R 2013, Design Driven Innovation: Changing the Rules of Competition by Radically Innovating What Things Mean, Harvard Business, London. Wischenbart, R 2013, The Global EBook Market: Current Conditions & Future Projections, O'Reilly Media, Inc, Beijing. Read More