International Expansion Plan for Apple Inc.'s iPhones (Research Paper Sample)

International Expansion Plan for Apple Inc.’s iPhones
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International Expansion Plan for Apple Inc.’s iPhones to Africa
Introduction
Apple Inc., also known as Apple, is one of the major global corporations that deal in electronics of various types. The company manufactures and sells communication gadgets such as mobile phones and television sets. The company also sells personal computers and other technology equipment. Apple is attributed indirectly with the invention of Android phones software by Google in a bid to make competition stiff for it. For the purposes of this paper, the specific products that shall be analysed in the context of international trade shall be iPhones and digital television (Wright, 2012, p. 39).
A brief overview of the company is that the company began from humble background way back in 1976. The company was less known for quite a long time. Apple had started as a computer manufacturing company before shifting to exploit actively other consumer electronics from 2007. Given the wide range products that the company later adopted, Apple is classified in different market segments. In mobile phones market, Apple comes in third place after giants like Samsung and Nokia. In terms of information technology, Apple comes at a second place in global rankings. The company boasts of some of the best computers such as Macintosh that cannot be attacked by malware. After the introductions of the iPhones, the company has revolutionized many other technological products although it has not been keen on expansion strategies. This report is about strategies that Apple can use to expand into international markets. Since Apple produces many products, this report shall focus on how Apple can expand the market share of its iPhones and digital entertainment sets such as televisions sets to Eastern African markets and eventually into the whole of Africa.
Host Country
As Apple seeks to expand into a foreign market, such a decision should be motivated and informed by a thorough analysis of such a market. The choice of the selected East African market has been informed by the observation that this region is growing quite fast as far as technology market is concerned. East African has been identified as the point of entry into East, Central and Southern Africa regions. Countries such as Rwanda and Kenya have incorporated technology within its mainstream education system. In Rwanda, the government has emphasized ICT and innovation. For instance, it is the official policy of the Kagame administration that all pupils from primary level, an equivalent of grade 1 to grade 7, be taught using technology (Seed, 2007, p. 11). As a result, the government had tendered and received solar powered laptops. The Kenyan government is also in the process of implementing the same policy.
The above examples are to emphasize that countries in this region are quickly embracing technology as an important aspect of their development. Kenya is poised as the best entry market as a strategy of venturing into other regions of Africa particular Eastern and Central Africa. Apart from this observation, the choice of this country is also motivated by the observation by World Bank that Kenya is poised for technological advancement, as the current generation increasingly prefers to engage in mobile banking. The launch of M-Pesa, a mobile banking service, is also one of the advancements of this market that has been hailed by economic observers. Consequently, it is predictable that such an economy that is slowly embracing technology is poised for a major growth. Such will be a growth sustained on a strong foundation of reliable and affordable technological products.
Besides, the technological aspect of this county is also poised to change massively in the next few years with what the government calls digital migration. Currently, radios and television sets still receive analogue signals. To address problems associated with poor picture quality, the government had passed a resolution that all media houses shift to digital transmission of signals. It is observable that a majority of the population who live in the rural areas still poses CRO televisions that are not capable of digital decoding. To address this problem, other businesses have come up to provide analogue signals to digital signals conversion decoders. This is particularly so since the LED television sets that are available on the market are quiet expensive since they are imported. Import tax makes the price eventually be high. Apples competitive advantage in venturing into this market will be that it will be able to produce locally and reduce the unit costs of productions. With reduced costs of production, the company will be able to sell profitable at affordable prices and beat Samsung and Sony in technology products. The competitive advantage in this case is based on firm specific resources (Carare, 2013, p. 295).
The product that Apple should launch is digital television sets with inbuilt capability for free-to-air digital signals. This product is tradable as it is comes in at a time when the country is poised for massive technological growth. There is increased consumption of these products and the major suppliers, Nokia and Samsung, have not yet considered establishing themselves in this market. They rely on imports from other areas of production. The only concern as far as barriers to trade are concerned is that import tax may make the final product relatively as costly as those produced by Nokia and Samsung may.
Another reason for selecting this market is that it has opportunities to supplement the firm’s possession of full range of resources and capabilities for establishing a competitive advantage in this market. For instance, many shopping malls in this region have the tendency of subletting space within their mainstream shops. Even so, Apple is a brand that is already known and there would be no need partnering with these malls since they also display products manufactured by other companies such as Nokia and Samsung. Apple has managed to compete side by side with these firms. Establishing a manufacturing industry in the form of direct foreign investment would give Apple a competitive advantage over its competitors through direct customer contact and price reduction. Other concerns such as distribution will be addressed within the context of legal provisions. With the patent rights, Apple can appropriate return to its sources as its products are protected with a strong legal approval. The transaction costs for this direct foreign investment will be minimal as the company has little history of franchising. Even so, strategic partnering will help particularly in the entry period.
In this market, research shows that there is a rising quest for technology products. Farmers in the countryside rely on mobile banking to receive money and buy inputs. Another advantage is that technology products are cherished. The advent of social media has driven many youth into buying phones with internet capabilities majorly for social chatting. Given that Apple’s iPhone has these capabilities, it has a high market in this market.
PESTLE Analysis of the mobile industry in this market is as follows. As far as the political environment is concerned, governments in the region have reduced unnecessary red tape so that new businesses can be registered. In Kenya, the new constitutional dispensation created semi-autonomous regions called counties. A governor who makes major decisions on investment in the county governs each county. Economically, these semi-autonomous regions compete against each other in terms of development agenda. Apple is likely to receive incentives to start up, thereby reducing costs. The societal cultural aspects are not homogenous. The cultural environment has not been observed to be affected by technology although technology mat be adapted to fit its special needs at a much later stage (Wild and Wild, 2011, p. 67). Technologically, this market is still not advanced although it is embracing new technology very fast. As far as legal environment is concerned, once the certificate of incorporation has been issued, Apple will be able to operate in the whole country. Semi-autonomous regions are only charged with issuing of annual licences, which are minor legal provisions. The environmental provisions will be governed as per the National Environmental Management Authority’s provisions.
Market Entry Strategy
Having seen that the East African market, particularly Kenyan and Rwandan, are growing very fast in terms of ICT and technology, yet with little exploitation, Apple has to design an entry strategy. In order to master this environment very fast, a hybrid market entry strategy would be most appealing and profitable. As opposed to using one model, Apple should employ a hybrid entry strategy where it identifies selected business for joint ventures. Such would be a joint venture for marketing and distribution only and a wholly owned subsidiary that is fully integrated. In all the above strategies, Apple should also consider cross-subsidisation (Grewal et al., 2013, 389).
The idea behind such a hybrid approach is that it keeps the joint venture business running as the company explores the business environment in details to for purposes of informed decision-making. The decision for this particular method for market entry has been informed by observation of how other firms also operate at the international market (Grewal et al., 2013, p. 379).Grewal and others observe that subsidiary model allows easy task coordination, decision making, output and process control as well as observation of distributor performance.
Using this model, and integrating it with a joint venture to create a hybrid, Apple stands to gain in this format. First, the jo...