Management in Action - Social Economic and Ethical Issues

CASE STUDY : Report

On

Apple- Global Competitiveness Environment

By

ANISHA GOYAL- B06

ABHINAV GUPTA– B25
VANSHIKA SONI -B57
AKASH SINGH –D21
HARSH BISHT –D38
MBA (GENERAL) Class of 2022

Section -B
Under the Supervision of

DR SHIKHA MISHRA
AT

AMITY BUSINESS SCHOOL

AUUP, SECTOR 125 NOIDA, UTTAR PRADESH

 Global Competitiveness Environment
Global competitiveness refers to a country's capacity to produce high-quality goods and services
at reasonable rates, resulting in adequate returns. Competitiveness refers to a firm's, sub- sectors,
or country's ability and performance in comparison to other firms, sub-sectors, or countries.
Organizations must compete not just in their ability to access new markets and gain economies
of scale in the global competitive environment, but also in their ability to efficiently manage
knowledge flows in an information-based economy. Furthermore, in order to improve
competitiveness, challenges include seeking global efficiency, local responsiveness, and
effective knowledge and information transmission amongst subsidiaries at the same time.

Multinational enterprises that adopt multinational strategies, such as General Electric, strive to
utilize worldwide breakthroughs, but their lack of flexibility and efficiency prevents them from
being locally responsive. Firms pursuing a multi-domestic strategy, such as Philips, have
excellent local responsiveness but have had difficulty leveraging knowledge transfer and
competences across all subsidiaries. MNEs developed a global strategy based on high
centralization and tight control of their activities from headquarters, preventing product adaption
to meet local needs.

Globalization is crucial for gaining a worldwide competitive edge. For enterprises operating
globally, the merger of distinct and traditionally separate national markets into one global market
place has several benefits as well as drawbacks.

However, increased competitiveness alone will not be enough to meet the problems that today's
global environment presents. No firm can generate world-class knowledge and competence to
compete in a competitive market by focusing just on the home environment. As a result, MNEs'
most recent conundrum is how to produce and disseminate information while also increasing
innovation and learning. As a result, some businesses are adopting a global approach to acquire
these skills; yet, the industrial and administrative heritage that each company possesses
frequently obstructs the proper implementation of the transnational structure.

Importance of Global Competitiveness

 To improve efficiency.
 To stimulate foreign direct investment.
 To improve living conditions.
 To preserve a country's trade balance between imports and exports.
 In order to achieve macroeconomic stability.
 For the country's economic progress.
Macroeconomic policies, government practises and laws, the cost of doing business, education
and skills upgrading, R&D and innovation, sustainable environmental management, conformity
with international standards, and total factor productivity are all necessary for global
competitiveness. Because businesses operate inside the government's regulatory framework, it
plays a critical role in boosting competitiveness. Governments must become more business
responsive through reengineering processes and policies to be more approachable, as well as
removing bureaucratic red tape that stifles commercial productivity.

Business will benefit from a more integrated, synchronised, and stronger network between
government agencies, the private sector, and academics. Efforts should also be made to improve
public service accountability and honesty. Manufacturing companies encounter plenty of
obstacles and issues. These factors provide a significant barrier to successful local and global
competitiveness. In the case of Nigeria, it faced numerous challenges when functioning on a
worldwide scale. Globally competitive enterprises thrive against worldwide competition by
leveraging a vast knowledge base, a global human network, and Internet technologies without
major capital commitment, travel, or even an international presence.

Factors Affecting Global Competitiveness

Government-created rules and regulations are followed by businesses. In order to improve

competitiveness, the government plays a critical role.
Physical infrastructure
Physical infrastructure is essential for a country's global competitiveness to improve. This would
facilitate faster delivery of goods and services by facilitating easier mobility of people, products,
and services.
Coordination among public-sector agencies
The corporate climate should be such that public-sector entities can better coordinate their
efforts. Providing assistance and incentives for R&D activities, HRD and education, fostering
innovativeness and creativity, facilitating the improvement of industrial blocks, and increasing
SMEs' productivity are among the finest strategies.
High total factor productivity
Economic growth is aided by high total factor productivity (TFP). It improves national
competitiveness by demonstrating the synergy and efficiency of both capital and human resource
usage.
Productivity campaigns
Productivity campaigns are significant because they raise public knowledge about productivity
tools and approaches while also providing channels for people to us
 Apple Inc.

It is an
American multinational technology company that specializes in consumer electronics, computer
software and online services. Apple is the largest information technology company by revenue
and, as of January 2021, it is the world's most valuable company, the fourth-largest PC vendor by
unit sales and fourth-largest smartphone manufacturer. 

It is one of the Big Five American information technology companies,

alongside Amazon, Alphabet, Meta, and Microsoft. Apple was founded in 1976 by Steve
Jobs, Steve Wozniak and Ronald Wayne to develop and sell Wozniak's Apple I personal
computer. It was incorporated by Jobs and Wozniak as Apple Computer, Inc. in 1977, and sales
of its computers, among them the Apple II, grew quickly. It went public in 1980, to instant
financial success. Over the next few years, Apple shipped new computers featuring
innovative graphical user interfaces, such as the original Macintosh, announced in a critically
acclaimed advertisement, 1984, directed by Ridley Scott. The high cost of its products and
limited application library caused problems, as did power struggles between executives. In 1985,
Wozniak departed Apple amicably, while Jobs resigned to found Next, taking some Apple
employees with him.
Most of Apple’s products seem to be a trigger of revolution in electronic market and this reason
contribute Apple as a market leader. The main strategy to run its business is not only creating
innovation product but also incremental improvement. The strength of Apple is “think
different”. With innovative ideas and aesthetic designs, Apple has changed how people listen to
music and communicate. One of the success products of Apple is iPhone which is a
revolutionary device. It combined the feature of music device (iPod) and mobile phone
technology with the key feature on this product that is “multi-touch” and “multi-tasking” on the
graphic user interface. The phone supports a camera, a multimedia player, a blue tooth, web
browsing and internet connectivity. However, the price of iPhone is higher than other mobiles in
the market and the aim is targeting a niche market. From this reason, iPhone faced with various
challenge to get market share and compete with existing player in the mobile market. With
innovation and unique features that is the selling point, iPhone sustains this competitive
advantage by continue development and create the new innovation with its best.

Products

 iMac: Consumer all-in-one desktop computer, introduced in 1998.

 Mac Mini: Consumer sub-desktop computer, introduced in 2005.
 MacBook Pro: Professional notebook, introduced in 2006.
 Mac Pro: Workstation desktop computer, introduced in 2006.
 MacBook Air: Consumer ultra-thin, ultra-portable notebook, introduced in 2008.

Apple’s business strategy in terms of product differentiation and strategic alliances.

Product differentiation
Apple products are significantly costly, they targeted a certain segment of the market by
producing high quality products which are potentially durable and unique for example the iPhone
range and newly launched iPad in 2010. Businessweek investigated that apple are planning to cut
the price of their computers considerably low and far more affordable to all individuals, the iMac
and MacBook laptops were designed for the purpose of multimedia, most media companies uses
the apple products to run their businesses as apple provide loads of incentives from its software
Mac OSX. Aggressive competitions from Microsoft with windows 7 multi-media may have lead
Apple to reduce their prices to gain market-share.

Core Competencies and Growth Strategy

Apple`s customer orientation is to introduce the iPhone series and recently the iPad. Both
devices are made at high specifications, enabling users and businesses to access their data easily
and efficiently. It was reported that these high tech devices were faster than any others products
in the market.
The products are unique at this stage as Apple is reputably known as ‘innovators’. Following this
trend, Apple company structure has always been an example. They are often known as re-
designing or re-structuring their organisation for instance hiring new employees of high
competencies from the IBM Company who joined Apple in 2009. Their production plants are
outsourced from china in which they have exclusive relationship with suppliers and chip-set
manufacturing companies such as Foxconn Limited from China.
Apple marketing strategy is planned on a geographical segmentation; in the UK for example they
have subsequently sub-contracted their products to network providers such as Vodaphone,
Orange and Three networks. These telecommunication mobile providers offer amazing discounts
on pay as you go and sometimes delivering free iPhones to customers with a contract on a pay
monthly basis.
Secondly Apple has a massive advertising campaign on private TV Cable and Newspapers. On
the other hand, Apple`s activity and main core competencies comes with its R&D. The company
believed an investment in R&D should keep them at competitive advantage within the industry.
In brief, to maintain and acquire its position in the market, the Apple Company has developed its
online support in delivering updates in its software applications also known as accessible via
iTunes for example updates on its operating systems and useful applications to home users and
businesses.

Competitive Advantage
Apple Corp. is a computer and consumer electronics company that makes and sells a number of
devices, including smartphones, tablets, and music players. Brand strength, innovation, supply
chain management, and premium pricing strategy were cited as major reasons in the company's
competitive advantage by investment analyst firm Market Realist.

1. Brand Strength
According to yearly rankings provided by brand consultancy firm Interbrand, Apple was
the world's most valuable brand in 2017, ahead of Google, Coca-Cola, and IBM. Apple's
brand strength gives the company a lot of visibility in the marketplace and helps to
generate customer loyalty. Customers who buy one Apple product are encouraged to try
another because of the company's excellent branding and product interrelationships.
Apple's iPhone, iPad, and Mac all use the same software and applications and work in the
same way, making it an obvious choice for customers looking for a new gadget.

2. Innovative Products
Apple has a long-standing reputation for product development and innovation. The
business pioneered the graphical user interface, which was first utilised in its own
computers, and, more recently, established new levels of performance for cellphones with
the iPod music player. The company's ability to build novel products that share the same
operating system, software, and apps is a crucial competitive advantage. This reduces
product development risk, timeliness, and costs, allowing the organisation to deliver a
steady stream of new items while staying ahead of the competition. According to the
website Innovation Excellence, Apple's unique strategy of making goods that
complement each other promotes customer loyalty and helps construct a barrier to
competition.

3. Strong Integrated Supply Chain

Apple has a substantial competitive advantage thanks to its ecosystem of suppliers,
developers, and business partners. The corporation owns chip makers, has complete
control over manufacturing, adheres to stringent software requirements, and runs its own
stores. Deals with major music and entertainment firms provide a rich stream of media
for the company's whole line of products. It also includes a community of over 6 million
 independent software developers that create apps for Apple's devices. This provides
Apple complete control over the product research, manufacturing, and marketing
processes — a competitive advantage that is tough to replicate.

Porter’s Model
A Five Forces analysis of Apple Inc. sheds light on what the company does to ensure industry
leadership despite the negative effects of external factors in the competitive landscape of the
computer software and hardware, consumer electronics, and online digital content distribution
markets.

This Five Forces analysis, based on Porter’s framework, points to the following strengths or
intensities of external factors in Apple Inc.’s industry environment:

Competitive rivalry or competition: Strong force

1. Bargaining power of buyers or customers: Strong force

2. Bargaining power of suppliers: Weak force
3. Threat of substitutes or substitution: Weak force
4. Threat of new entrants or new entry: Moderate force

 Competitive Rivalry or Competition with Apple (Strong Force)]

Apple faces the strong force of competitive rivalry or competition. This component of
Porter’s Five Forces analysis model determines the intensity of the influence that
competitors have on each other. In Apple’s case, this influence is based on the following
external factors:
1. High aggressiveness of firms (strong force)
2. Low differentiation of products (strong force)
3. Low switching cost (strong force)

Companies like Samsung and LG aggressively compete with Apple. Such aggressiveness,

observable in rapid innovation, aggressive advertising, and imitation, impose a strong force in
the industry environment. Moreover, in terms of product differentiation, available products in the
market are generally similar in fulfilling specific purposes.

 Bargaining Power of Apple’s Customers/Buyers (Strong Force)

The bargaining power of buyers is strong in affecting Apple’s business. This component
of Porter’s Five Forces analysis model determines how buyers’ purchase decisions and
related preferences and perceptions impact businesses. In Apple Inc.’s case, buyers’
strong power is based on the following external factors:
1. Low switching cost (strong force)
2. Small size of individual buyers (weak force)
3. High buyer information (strong force)
It is easy for customers to change brands, thereby making them powerful in compelling
companies like Apple to ensure customer satisfaction. On the other hand, each buyer’s purchase
is small compared to the company’s total revenues. Porter’s Five Forces framework indicates
that this condition makes customers weak at the individual level.

 Bargaining Power of Apple’s Suppliers (Weak Force)

Apple Inc. experiences the weak force of the bargaining power of suppliers. This
component of Porter’s Five Forces analysis model indicates the influence of suppliers in
imposing their demands on the company and its competitors. In Apple’s case, suppliers
have a weak bargaining power based on the following external factors:
1. Moderate to high number of suppliers (weak force)
2. Moderate to high overall supply (weak force)
3. High ratio of firm concentration to supplier concentration (weak force)

 Threat of Substitutes or Substitution (Weak Force)

The competitive threat of substitution is weak in affecting Apple Inc.’s computing
technology, consumer electronics, and online services business. This component of
Porter’s Five Forces framework determines the strength of substitute products in
attracting customers. In Apple’s case, substitutes exert a weak force based on the
following external factors:
1. Moderate to high availability of substitutes (moderate force)
2. Low performance of substitutes (weak force)
3. Low buyer propensity to substitute (weak force)

 Threat of New Entrants or New Entry (Moderate Force)

Apple Inc. experiences the moderate force of the threat of new entrants. This component
of Porter’s Five Forces analysis model indicates the effect and possibility of new
competitors entering the market. In Apple’s case, new entrants exert a moderate force
based on the following external factors:
1. High capital requirements (weak force)
2. High cost of brand development (weak force)
3. Capacity of potential new entrants (strong force)

BCG Matrix of Apple

Apple's BCG Matrix includes Dogs, Stars, Cash Cows, and the Question Mark. We will examine
Apple's low growth products, items that attract sales, high growth products, and products that
may attract sales or become low growth products in the future in this reading of the BCG Matrix.
 Dogs

Dogs are examples of items that had the potential to flourish but were unable to do so
owing to poor market growth. The product becomes a source of loss for the company
when it fails to deliver the expected outcomes, and management withdraws future
investments in the company. Future investments are considered as a waste of firm
resources that could be put in a question mark or star category instead, because no major
return on investment is predicted from the product.

 Stars
The star businesses of a corporation also have a significant market share, but what sets
them apart from the cash cows is that their individual industries can go even further.
Apple's iPhones are unquestionably the company's stars. Apple manages to achieve new
sales records with each new release of the iPhone. Apple's iPhones, which are known for
their design and technology, have a devoted following, allowing the corporation to
outperform the competition in the market. Apple's iPad and smart watch are also
considered the company's stars, and they are quickly becoming the company's cash cows.

 Cows 
In Apple's BCG matrix, there are two items that come into the cash cow group. Apple
iTunes is the first, and Apple MacBooks and iMacs are the second. Apple's iTunes,
MacBooks, and iMacs have been a cash cow for the corporation over the years. The
company has carved out a place for itself and has a devoted following of customers who
only use Apple products. However, as the computer industry becomes more portable and
mobile, the demand for laptops and desktop computers declines. As a result, we can also
classify Apple iMacs and MacBooks as dogs.

 Question mark
Apple TV is profitable, but it is not reaching its full potential. If Apple can resolve a few
ecosystem difficulties, it may truly dominate the TV market. There are several rumours
about an Apple TV product that might be as successful as the iPod/iPhone/iPad.
Conclusion
Apple Inc. follows an international strategy in which domestic clients are prioritized
while overseas business is pursued as a means of repeating home-market success. This
means that Apple's goods are standardized: engineering, design, and production are all
under the control of a single source, giving the corporation more control and a
competitive edge over competitors. Since a result, differentiation becomes the most cost-
effective competitive approach, as international strategy is not. Furthermore, a worldwide
strategy is particularly suited for high-end items, allowing for greater firm control. Apple
has a strong brand image, with items that are perceived as high-end and luxurious.
Because the need for local responsiveness and cost reduction is quite minimal, the
corporation does not need to change its IR.