International Strategy And Competitive Advantage For Global Company Apple
According to Iliev et al (2004, p. 133), Apple Inc. was selling its products exclusively in America, initially. Nowadays, Apple has expanded significantly beyond domestic market. Apple has so far succeeded to become a multinational organization, selling products and resourcing law materials globally. To minimize the impact of the existing rivalry in the PC industry at the global edge and to maintain competitive advantage, Apple applies non-competition strategies, (Yoffie, 2004). This section examines the strategies adopted by Apple Inc to penetrate and to manage rivalry in the global market. Further, this part looks into the competitive advantages of Apple Inc, which enable it to maintain a competitive edge In the PC industry globally. In addition, the paper briefly highlights the benefits and shortcomings of the strategies adopted by Apple Inc, giving potential solutions and strategies based on the available data.
According to Iliev et al (2004, p. 133), Apple Inc. uses a combination of product development and product proliferation strategies to achieve and maintain its international competitiveness. Iliev et al notes that product proliferation strategy is similar to the approaches used in creating barriers to entry. In such an approach, if new niches develop, the leader in a given industry benefits most. For example, Apple got the first-mover advantage in the digital music market where it was the first company to provide online music through iTunes and the iPod. The other companies in the industry started to move into the niche, competition was raised and rivalry decreased
Product development, on the other hand, refers to the process of innovation of new or better products so as to replace the old ones. Apple has managed to lead in the PC industry in innovation and design hence, it has been able to exploit available opportunities and to gain significant market share in the international market. For example, in 2002 and 2003, iTunes and the iPod were made available by Apple at windows version. As a result, demand for the products skyrocketed and helped to propel revenues for Apple to record high. In fact, today, iTunes account for 70% for global market for digital music downloads, (Jones, 2011).
The combination of product development and product proliferation strategies is beneficial to Apple since the perceived value of the products of Apple Inc. generated through innovation and superior design proves to be inimitable competency. Thus, as much as this advantage exists, Apple will continue to lead in the PC industry. However, the product proliferation strategy adopted by Apple Inc. a major shortcoming. According to Iliev et al (2004, p. 133), this tactic leads to high pressure for cost reduction and for local responsiveness. This makes this approach the most difficult to realize, but if a company succeeds, it can obtain a low-cost structure and also a considerable level of customer acceptance. According to Iliev et al (2004, p. 133), Apple applies this approach, but, it has not yet attained the optimal point. As a result, the majority of computer owners in the global market do not know much about Apple’s technology. For Apple to attain appropriately low-cost situation, it has to come up with ways to persuade PC users in the global market from the very entry of their innovative and technological superiority.
Apple Inc faces great competition form other companies in the PC industry such as Dell, Compaq and Gateway. This forces Apple to come up with competitive strategies which best fits generic business-level strategy in the industry life cycle (Lubeck et al, 2009, p. 8). According to Lubeck et al, Apple is keen to constantly watch the other players and tries to predict the step that each of them is likely to take in the future in order to be ahead of them. Further, Apple possesses competitive advantage in specific areas resulting from its distinctive competencies. First, Apple enhances the quality of its products through improved product design, (Iliev et al (2004, p. 135). According to Besanko et al, (2009, p. 362), this helps in creating value through functionality and better product quality, thus leading to more pricing options and differentiation.
Moreover, the Human Resource Department of Apple Inc facilitates it to reach superior quality since it recruits high skilled workforce that ultimately leads to better product quality, thereby also leading to more pricing options and differentiation. Also, the Research and Development department of Apple Inc plays an important role as a source of superior innovation and comes up with new brands of products that create more value to the customers and enhances usability. As well, this factor results in more pricing options and to differentiation. Finally, the information systems in Apple Inc enhances internal communication and also, external coordination which in turn, optimizes business processes. This helps to reduce costs due to increased efficiency. According to Iliev et al (2004, p. p. 135).Apple adopts a model which acknowledges these distinctive competencies and sets a business model which facilitates it to enforce and to organize its competitive advantage. Therefore, all these above competencies enable Apple Inc to achieve superior level of innovation, enhance quality of its products and increase efficiency in production, hence provide Apple with a competitive advantage.
In conclusion, Apple uses both product development and product proliferation strategies to achieve and maintain competitiveness in the global market. This approach is beneficial since the perceived value of the products of Apple Inc. generated through innovation and superior design proves to be inimitable competency. However, this approach leads to high pressure for cost reduction and for local responsiveness and hence, it becomes the most difficult approach to realize. As demonstrated in this part, Apple Inc. needs to come up with ways to persuade PC users in the global market from the very entry of their innovative and technological superiority so as to attain the benefits of the strategy of cost reduction. As noted in the essay, Apple Inc. possesses various competencies including; product design, branding, usability, and internal communication and external coordination. These competencies enable Apple to attain a competitive advantage against its competitors.
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It is widely recognized that Apple is a premium brand that demands and earns a price premium. This price premium spans the entire Apple product lineup encompassing the Macintosh, iPod, iPhone, software, and accessories. Apple’s positioning is aligned with targeting a less price-sensitive customer. As a result, Apple’s culture and internal activities are structured to meet the needs of these customers, strategists call this needs-based positioning. Apple has thus created a culture and a set of activities to differentiate itself from rivals in order to meet the needs of its target customers.
If Apple were to attempt to compete for all customer segments, it would have to lower product prices. The danger with such an approach is that it would not only undermine and erode the company’s premium brand image but it would also undermine the company’s culture and internal activities.
So what has Apple done in recent history to the Macintosh product line to demonstrate this premium positioning? Each new Mac revision has either maintained or been subjected to a modest price increase while Apple has simultaneously improved product features. A few examples include the introduction of the unibody MacBook and MacBook Pro, larger displays on the iMac, and the replacement of the $499 Mac mini with a higher-priced ($599) model. The motive is clear, protect the brand position vi
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