Global Marketing and Management Book Report

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Global Marketing Strategies and Management Techniques of Apple Inc.

The central objective of this report is to perform an environmental analysis of a country in which our selected company shall aim to establish a market for its products and services. The company chosen for the purposes of this report is Apple Inc. The country selected for the analysis is The People's Republic of China. The aim of this report is to assist the management of Apple Inc. In assessing whether the country presents a viable business opportunity or not. The product chosen for this purpose is the Apple iPhone 4S.

The Apple iPhone 4S is said to be the best technology that the company has come up with in the iPhone product line. With the dual-core A-5 chip, 8 megapixel iSight camera, io5 and iCloud functions coupled with a speech recognition personal assistant dubbed Siri, it is one the most dynamic and hi-tec gadgets available. It is ideal for the youth population that requires all applications and gadgets be packed into one. China with an estimated population of 1,343,239,923 (July 2012 est.) (Anon., 2012) is one of the perfect target markets for this product.

The report takes into considerations the economic, political, legal and regulatory environment that prevails in China and what potential marketing implications it would have on the Apple iPhone 4S. Also taken into account are the social, technological, cultural factors of the nation in order to assess the outcomes of these factors on the marketing and distribution of the product. An analysis of the internal environment of Apple Inc. has also been conducted to see how the culture of the company mixes and adapts to the new overseas markets.

Another feature of this report is the SWOT (Strength, Weakness, Opportunities and Threats) Analysis that has been taken on to determine the level of competition that Apple Inc. shall face in China. The greatest competitor that Apple Inc. shall encounter will be the cheap local copies of the iPhone that are likely to be available within a very short time span of the launch of the product in the country.

Introduction:

Purpose:

The motive of this report is to highlight the factors that need to be considered by a company when launching a product or a service in an overseas market. In this case, an evaluation of the political, environmental, social, economical, technological and regulatory environment of China has been undertaken with regard to the marketing and management of the product Apple iPhone 4S, of Apple Inc.

Scope:

While investigating the factors that make up the economical, political, social, technological and other regulatory environment of China, it was important to consider the outcome of the different factors on the overall environment and the implications they would have on the marketing of the Apple iPhone 4S in the country. Also kept in mind was the presence of potential competitors of the Apple such as Nokia and HTC with own line of Smartphones as well as cheap local copies of the iPhone itself. An appraisal of the internal environment of the Apple Inc. was also undertaken in order to ensure adaptability with the new foreign market as well as other internal cultural issues of the company were considered.

Limitations:

This report is limited to the environmental analysis of China. For Apple Inc., the corporate value chain and competitive strength assessment models have been used . It does not take into account other models.

Background:

The company chosen for the purposes of this report is Apple Inc. It's a company that has been crowned the most admired company in the world by Fortune magazine four years in a row from 2008-2012 (Anon., 2012). It excels in the design and production of personal computers, softwares, communication devices, servers, portable music players and related accessories and softwares, network solutions and other services. Its most famous products include the iPod, iPhone and iPad along with Macintosh processor-based personal computers with the iTunes media browser and iOS mobile operating system softwares. Apple Inc. operates through 357 retail store located in 10 different countries including Canada, United Kingdom, Japan and Germany. It also has its own online store (Anon., n.d.). Its worldwide annual revenue by 2010 was U.S.$65 billion and had grown to U.S.$108 billion by the end of 2011 (Anon., 2012), making it the largest technology company in the world with regard to revenue and profits (Anon., 2010) along with maintaining about U.S.$82 billion in cash reserves (Nuttall, 2011). Currently, it is bigger than Microsoft and Google combined!

Known as the fifth generation iPhone, the Apple iPhone 4S is a touch screen style smartphone that retains most of the attributes of its predecessor iPhone 4 (Mies, 2011) with additional new features that include a dual-core A-5 chip, an eight megapixel camera, and the newest addition to the iPhone applications family, Siri, a voice controlled personal assistant packed with a cloud storage and computing service called iCloud.

The target audience for this new gadget is chosen to be the People's Republic of China, with a population of an estimated 1,343,239,923 individuals as of July 2012 and a basic age structure comprising of 73.6% of individuals of ages between 15- to 64-year-olds; China presents itself as a thriving potential market for the product Apple iPhone 4S.

Environmental Analysis:

There are many factors in the macro-economic environment that influence the decisions of management teams of a certain product within an organization. Trade barriers, government policy changes, changes in demographics, changes in the taxation laws and rates and the invention of new laws are all examples of macroeconomic changes. In China, with its huge populations and a mobile penetration rate of only 35% (Anon., n.d.), there is huge potential for market growth in the favor of Apple.

Political Factors:

Political factors refer to the policies that the government comes up with every now and then. It is the degree of government intervention in the economy and how much it distorts the market forces. Governmental moves such as subsidizing certain firms, provision of certain goods and services and major priorities of the government have a huge impact on many vital areas of the marketing strategy and how the management team conducts itself and the product team. In the given case, the Chinese government rigidly controls mobile phone companies in China and exerts authoritarian control over its citizens. Apple will need to be very cautious when stepping into this country.

China is a Communist nation which means that the major industries and companies are state-owned and operated. With strict censorship rules, it is possible that Apple may have to disable its Wi-Fi feature in order to comply with the Communist Party's rigid internal control guidelines (Elgan, 2008). The PRC government has been variously described as communist and socialist, but also as authoritarian, with heavy restrictions remaining in many areas, most notably on the Internet, the press, freedom of assembly, reproductive rights, and freedom of religion (Anon., 2011).Currently, the Chinese government exercises heavy control over the mobile phone industry. There are only two mobile service providers in China: China Unicom and China Mobile. Both of these companies are not only owned by the state but are also heavily affected by changes in the government policy from time to time.

Economic Factors:

The economic environment of a country is the amalgamation of economic factors that make up the economy of that nation. Factors that affect the economic environment of a country include interest rate changes, changes in the exchange rates, inflation rates, economic growth rates, government intervention, and changes in trade policies and monetary and fiscal policies etc.

According to the 2012 statistics, it has the world's second largest economy, after the United States of America, by both purchasing power parity (PPP) and nominal GDP (Altucher, 2010). With regard to nominal GDP, it is worth U.S.$7.47 trillion (Anon., 2012) while its PPP GDP reached a staggering U.S.$11.316 trillion (Anon., n.d.).China is the world's fastest-growing major economy (Anon., 2012). According to the IMF, China's annual average GDP growth between 2001 and 2010 was 10.5%, and the Chinese economy is predicted to grow at an average annual rate of 9.5% between 2011 and 2015. Between 2007 and 2011, China's economic growth rate was equivalent to all of the G7 countries' growth combined (Walker, 2011).

The income factor, with respect to the economic environment of a country, is the most vital indicator that suggests about the existence of the potential for most products and services. It is used primarily as an indicator to evaluate the purchasing power parity (PPP) of a country. This furthermore becomes the most important factor that helps a business to make decisions regarding the questions to opt for investing in the said country or not. Likewise, China's remarkable rise in PPP in recent times puts Apple Inc. In a very good position, providing it a huge opportunity to raise its revenues by penetrating the Chinese market. The availability of quality infrastructure within China makes it even simpler for Apple Inc. The sales…[continue]

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