International Strategic Plan to Help Apple Company Expand in China

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Table of Contents

Executive summary
Profile
Competitive profiles
Entry mode
Product
Conclusion
Reference List

Executive summary

Since China is enjoying a speedy economic growth, many individuals are starting their ventures in the country thus creating stiff competition. In this regard, multinational companies, like Apple Company, have found a good center for economic development in addition to affluence.

Apple Company should choose licensing, joint ventures, and wholly owned foreign enterprise licensing as its modes of entry. An evaluation of the business atmosphere in China would give a general image of the market.

Additionally, with an excellent evaluation of the market, Apple Company can capitalize on the viable opportunities and reduce the existing threats, as a precise strategic planning will give the company a stable and suitable setting for its growth.

Profile

Economic

Economic aspects have a direct impact on companies since they influence the accessibility of capital, charges, provision, and demand. In the contemporary era, the economic development of China has been fast and the industrial segments can attest to this assertion.

From around 1978, China turned out to be a market centered economy. In addition, as the central bank in China, the Bank of China employs monetary strategy to raise or reduce the rates of interest and regulate the sum of money in the financial system to attain a steady economic development.

The Bank of China as well assumes the responsibility of regulating conflict and surplus, in addition to raising taxation for import duty (Isenberg, 2008).

In a period of inflation, the financial system is short of investment and exports normally suffer from the price hikes since inflation raises the cost of exports but it supports imports.

Socio-cultural

Disproportionate income distribution and poverty act as hindrances for the development of China and thus the government should regulate the taxation system, decrease income variation, and enhance socio-cultural security to increase the safety of existence.

With the changing way of life, individuals desire to work from home, which increases the need for such things as computers. Moreover, the level of single households is on the rise and companies have a tendency of deploying such employees far away from home (Acs, 2006).

With regard to attitude of work and leisure, individuals become more considerate and flexible when they have an opportunity to take pleasure in life after work.

In this regard, it is critical for companies to set aside time for leisure activities of their personnel and encourage the capacity to communicate and socialize irrespective of their cultural origins, and thus improve their health of body and mind in addition to creating a suitable ground for their effectiveness at work.

Legal

The legal aspects deal with the manner in which regulatory and government strategy impact economic aspects and judgments by the government.

Following the economic change in 1978, the financial system of China is rising outstandingly and influences the encouragement of the growth of non-public companies, foreign trade, industrial manufacturing, in addition to the employment report.

When the security of consumers is increasing, Apple Company and other international companies will acquire gains from carrying out business in China.

The emergence of foreign trade in China is leading to a rise in foreign direct investment (FDI) and in 2008, the FDI rose to around 110 billion US dollars in China. Moreover, the excellent association involving nations is very significant for economic growth (Li & Zhou, 2010).

Competitive profiles

With China enjoying a fast economic growth, many individuals are starting their ventures in the Chinese market thus creating competition amid different companies as aforementioned.

In a bid to draw foreign direct investment and operate a thriving business in the Chinese market, it is critical to assess the macro-environment and recognize the aspects that would influence financial systems of different companies like the cost of demand and supply (Doole & Lowe, 2008).

Additionally, there exist some suggestions for local and foreign shareholders and business individuals to access the market in China and distribute information such as high-expertise, cultural, and management proficiencies with companies in China in a bid to create competition and encourage rapid growth of the economy in China.

Entry mode

The following are some of the entry modes available in China.

Licensing

In this entry mode, one company that has intangible possessions offers a foreign company the permission to utilize that possession for a particular period.

The licensed possession could contain exclusive rights, patents, and procedure in addition to trademarks (that encompasses designs and names of brand).

It is normal in the manufacturing sector for companies to be given the right to make use of some process expertise in return for royalties (for example companies like Apple that deal with computers and other electronics).

Franchising

Franchising denotes a special kind of licensing and signifies a situation where a company supplies a different company with intangible possessions as well as other support for a long period in exchange of compensation in terms of costs and royalties.

Whereas the licensing method is widely practiced in the manufacturing segment, franchising mode of entry is commonly practiced in the service sector.

Strategic alliance: In this mode of entry, at least two companies collaborate to realize strategic objectives. Strategic alliance is mostly practiced between a business and its customers, competitors, and suppliers.

Joint venture

For the case of a joint venture, the partners structure an autonomous and jointly possessed but detached company in a bid to realize particular business objectives. The types of joint ventures include frontward/rearward incorporation, buyback and multi-phase.

Wholly Owned Foreign Enterprise (WOFE): WOFEs denote facilities that are possessed and run by a single parent corporation via foreign direct investment, which could be the outcome of attaining an installation at hand or a development of a new installation from scratch.

Chosen mode of entry

Apple Company could use licensing, joint ventures, and wholly owned foreign enterprise as its modes of entry in the Chinese market.

The company would choose licensing as its mode of entry since it does not have to take up expansion charges and risks associated with venturing in a foreign market.

Apple Company would choose joint venture as a mode of entry as being a multinational company it might gain from the knowledge of a local partner in the competitive situations, culture, and business systems of China (De Wit & Meyer, 2010).

Lastly, Apple Company could employ wholly owned foreign enterprise as its mode of entry as for a company anchored in control over technical proficiency, this mode of entry decreases the risk of losing management over that proficiency.

Wholly owned foreign enterprise offers a company the type of firm control over functions in a number of nations that is essential for pursuing an international strategy.

Product

Product components around physical product

The products of Apple Company such as computers and cell phones denote a significant building block in different systems envisaged for the Internet.

Some of the components that could be built around these physical products include cameras, Near Field Communication (NFC) module, and visual markers.

Visual markers anchored on Radio Frequency expertise could assist cell phones to recognize every kind of physical object rapidly and effectively.

Most computers and cell phones could as well be fitted with powerful cameras that can even decode universal barcodes that can be accessed on virtually every consumer good.

Moreover, computers and cell phones can read Radio Frequency Identification tags with the help of inbuilt Near Field Communication module.

Apple Company could offer value addition to clients by enhancing its physical products with digital services, thus making sure that there is an unending attractiveness and constant contact with the product (Jones, 2010).

Demographic profile of customers

Some of the demographic characteristics of the customers of Apple products are as follows

Middle and high-income customers that are ready to pay more for greater user experience.
Customers that have fun with technology: this segment could represent customers that enjoy shooting digital videos and photos
Lovers and fans of music between 12 and 35 years of age
Experts in media and design
Low income earners that can only afford cheap products with basic features

Competitors

Table 1: Competitive Analysis

Factor	Our Firm	Strength	Weakness	Competitor A	Competitor B	Importance to Customer
Products	Computers, mobile phones, music players and other electronics	Has a range of products that suit all classes of customers	Competitors are copying its products	Supplies similar products as Apple Company	Offers similar products as Apple Company	A wide range of products to choose from
Price	Suits all levels of customers	Advanced products are available at a higher cost	Very high prices when compared to prices offered by competitors	Cheap products available	Offers products at a cheap cost	Get products at reduced prices
Quality	Has provided of low to high quality	Customers desiring high quality products get them	High quality products are very expensive	High quality products are offered at a low cost	Quality does not very high prices	Get excellent quality
Selection	Has the greatest market share	Has managed to convince most customers	Is slowly losing to competitors	Are waging competition for an outstanding selection	Posing a tough competition	Benefit from the competition through low prices and high quality
Service	Has the best and most convenient services	Customers are assured of good service	Offer some of their services at a high cost	Slowly catching up	Employing fast-paced digital technology	Go for excellent service
Reliability	Well known for excellent products	Excellent products and services make it reliable	Higher prices make it gradually loose to competitors	Has not been clearly known thus customers have doubt	Is yet to be fully approved by most customers	Rely on dependable products only
Stability	Has maintained a leading position over years	Has the greatest number of royal customers	Is losing some customers to competitors	Has developed hitches occasionally	Products are not constantly available in the market	Never lack what they want
Expertise	Does not stop inventing	Employs modern technology	Advanced products go for very high prices	Is applying modern technology	Offers modern expertise	Acquire products of high expertise
Company Reputation	Brand loyalty is indubitable	Customers are ever attracted to it	Is losing regard to competitors	Has not gained sufficient reputation	Is slowly attracting customers	Choose where they benefit most
Location	Operates globally	Has managed the greatest share in almost every market	Its high prices are making it loose in some markets	Is a multinational corporation	Is slowly going global	Can get quality products wherever they go
Appearance	Appealing to all its customers	Its constant invention ensures outstanding appearance always	Its appearance is being blurred by low prices offered by its competitors	Is gradually appealing to its customers	Does not appear to offer aggressive competition	Go where it appeals most
Sales Method	Sales in its retail stores as well as online	Can reach customers that can have access to its retail stores	Acquiring products online has additional charges	Sales in its retail stores as well as online	Sales in its retail stores	Can get the products at their convenience
Credit Policies	Influenced by economic situation and degree of risk	Loyal customers do not have to pay in cash	Fail to have a one-suits-all credit policy	Value the circumstances for a credit policy	Bill some of their customers for the products they buy	Acquire products at the most convenient method
Advertising	Employs appealing slogans for particular products in its campaigns	Its slogans are able to attract a huge number of customers	Keeps changing its slogans and that may confuse some customers	Basis its campaigns on cheap costs	Music and media plays a key role in its ads	Choose products that attract them most
Image	Internationally regarded as a market leader	Uses its image in satisfying the needs of clients	Is losing its image as a result of criticism from some of its competitors	Shaping to image to appeal to most customers	Faces tough financial constrains that bar it from making sufficient progress	Acquire brands with the most preferred image

I would standardize a new product as interchangeability brought about by standardization yields a greater efficiency and cheaper costs of manufacturing new products and these gains are conveyed to the customers due to increased competition.

Price

I would set the prices of the products by first ensuring that I factor in every cost involved in the production and before factoring in the profits. Moreover, I would conduct a market research to know the prices offered by competitors for similar products.

I would standardize the price for products by employing calculated amount while considering impacts of cost reduction on the continued operation, which would be adaptable for the people as it will be considerable and as per the quality of the product (Santos-Álvarez & García-Merino, 2010).

Promotion

The promotional tools available for Apple Company are Internet advertisement, direct marketing, and sales promotion.

The tools that would be best suited for Apple is Internet advertisement since most people in the modern world have gone digital and the Internet has converted the world into a global village (Santos-Álvarez & García-Merino, 2010).

Standardizing a new promotion mix for Apple Company will ensure easy availability of products with a great number of varieties being in stock.

Distribution

The following are the min distribution channels for Apple Company

The min distribution channels for Apple Company

Figure 1: (Prashantham & Dhanaraj, 2010).

The best channel for Apple Company in China is the second one, viz. from the company through an agent to the customer. The company will standardize the new distribution channel, as standardization will ensure that a uniform terminology is employed.

Conclusion

China is a fast developing nation, which has several prospective business opportunities. Nevertheless, it is significant for Apple Company to evaluate the investment environment in China and ensure that it is safe before making an entry.

An assessment of the business environment would give a general representation of the market. In this regard, Apple Company can take advantage of the suitable opportunities and reduce any threats.

The right strategic planning will present Apple Company with a stable and suitable environment for its growth.

Reference List

Acs, Z. (2006). How is entrepreneurship good for economic growth? Innovations: Technology, Governance, Globalization, 1(1), 97-107.

De Wit, B., & Meyer, R. (2010). Strategy: Process, content, context, an international perspective. Belmont, CA: Cengage Learning Business Press.

Doole, I., & Lowe, R. (2008). International marketing strategy: analysis, development and implementation. Boston, MA: Cengage Learning EMEA.

Isenberg, D. (2008). The global entrepreneur. Harvard Business Review, 86(12), 107-111.

Jones, G. (2010). Organizational theory, design, and change. Upper Saddle River, NJ: Prentice Hall.

Li, J., & Zhou, Z. (2010). How foreign firms achieve competitive advantage in the Chinese emerging economy: Managerial ties and market orientation. Journal of Business Research, 63(8), 856-862.

Prashantham, S., & Dhanaraj, C. (2010). The dynamic influence of social capital on the international growth of new ventures. Journal of Management Studies, 47(6), 967-994.

Santos-Álvarez, V., & García-Merino, T. (2010). The role of the entrepreneur in identifying international expansion as a strategic opportunity. International Journal of Information Management, 30(6), 512-520.

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