Competitor-country Features:
Throughout the years, Apple has generated many breakthrough technological products, from its much acclaimed operating system (Mac OS), to the revolutionary ‘iTunes’ and more recently, the ‘iPhone’ and extremely high tech tablet, the ‘iPad’. It is largely down to a highly competitive global market that Apple has been able to maintain its stance at the top of the digital consumerism market. For instance, there are so many competitors in the market for Mp3s, such as Sony Corporation and Sharp Corporation; in developing the ‘iPod’, Apple demonstrated its ability to produce innovative products whilst under pressure from competitors. This has continued with emergence of the Tablets, and the ‘iPad’ which has dominated the Tablet market.
One of Apples main competitors is Samsung, a South Korean based multinational organisation, of which Samsung Electronics is an industrial subsidiary that specialises in similar products to Apple, such as smartphones, Mp3s and tablets. Until recently, Samsung was a major supplier in display screens to Apple, notably in line to be a supplier for the much anticipated iPad 3. However, they were dropped in favour of other suppliers such as Toshiba and Sharp. Samsung employs highly skilled workers to try and gain a competitive advantage, which is a factor featured in Porters Diamond model which I mentioned previously.
Samsung has used generic strategies and more specifically product differentiation in order to stay ahead of the competition, and in March 2010, made a huge statement to its competitors with the presentation of three-dimensional TVs (3DTV). This was done in partnership with another huge name; Dreamworks animation. This, combined with other supreme technological advances, helped to reinvent the Samsung brand and put them in direct competition with names such as Panasonic and Sony, two large Japanese multinational corporations.
Samsung has also used its home-country to its advantage when looking to promote the brand. In 1988, Seoul, Korea was the host for the 1988 Olympic Games. Samsung had an opportunity here and seized it, becoming the official sponsor of wireless technology at the Games, consequently amplifying the organisations image amongst the millions of viewers.
Partner-country Features:
Apple has a number of different partners, in order to achieve different aims. A main partner, and probably the most recognisable, is the UK based network operator O2. In late 2007, Apple and O2 clinched a deal for the mobile operator to be the sole provider of iPhones in the United Kingdom; a deal that would prove to be a major coup for both parties involved. Apple, received a huge sum of money for the deal, and was understood to be entitled to 40% of any revenue that O2 made from customers’ use of the iPhone.
In negotiations building up to the announcement of this deal, it is believed that Apple “…played off the UK’s four main networks – O2, Orange, T-Mobile and Vodafone – against each other.” (Richard Wray, The Guardian). With this being the case, then Apple successfully moved into the UK market with the iPhone and secured a big money deal in doing so. Apple, the foreign competitor, gained entry to the market and achieved a competitive edge over any other local competition.
A theory that can be applied here is the ‘Value Chain’ (Michael E Porter 1985), which suggests a manufacturing system or organisation is made up of a number of subsystems. These subsystems include:
- Inbound logistics
- Operations
- Outbound Logistics
- Marketing and Sales
- Service
O2 comes into this value chain as the final subsystem, a service. O2 ensures the product and service provided to the consumer is working effectively after it has been sold and delivered to the buyer. Essentially, O2 is in charge of maintaining the iPhone and consequently maintaining Apple’s reputation amongst UK customers.
Originally, O2 was the sole provider of iPhones, giving them a great competitive advantage over other domestic organisations as anyone who wanted an iPhone would have to go through O2; resulting in many customers changing networks. It was a great move by Apple, as O2’s rivals could see the obvious success the product was having, and eventually moved to secure the device for their own networks.
Supplier-country Features:
Apple has recently released a report concerning the responsibility held by the company regarding the supplier countries. In particular the report speaks about the “Apple Supplier Code of Conduct: Labour and Human Rights”. This code of conduct focuses on ensuring the following:
• Antidiscrimination
• Fair treatment
• Prevention of involuntary labour
• Prevention of underage labour
• Juvenile worker protections
• Working hours
• Wages and benefits
• Freedom of association
Clearly, Apple is trying to demonstrate to the global public that they have a firm stance on constant issues such as underage labour and wages and benefits, by attempting to eradicate such problems. Following audits completed by Apple, results showed that 97% of suppliers were in compliance with the prevention of underage labour.
Apple has a vast amount of suppliers in different areas of the world; it recently published a complete list of production suppliers. Despite the home-country, America, being highly advanced in this particular industry, Apple still has suppliers in countries such as China, in order to try and gain a competitive advantage over other competitors with innovative ideas and product development. For example, there is a supplier factory in Shanghai where the MacBook Pro is just one of the recent advancements in technology that is produced.
It is product differentiation such as this that ensures Apple stays ahead of rival competitors, and often this cannot be achieved by using suppliers from the home-country. In January 2012, Apple released a list of its major suppliers for the first time, revealing some big name companies such as Intel and Nvidia who both produce chips for Apple’s Macintosh range of computers. Furthermore, Samsung Electronics, Toshiba and Panasonic are listed as suppliers, although they are also major competitors in the same industry Apple operates in.
Customer-country Features:
In order for a company to remain successful in the market it operates in, it must appeal to, and satisfy the target customer. As Apple was entitled to 40% of any revenue made by O2 customers using the iPhone, Apple essentially pleases customers through O2. Any loyalty bonuses or incentives handed out by O2, Apple takes a cut.
Furthermore, Apple offers customers the chance to customise any product they buy in the Macintosh computer range, from internal memory size, to display monitor size. This gives the customer a sense of responsibility for their own product. They may also, personalise any product, be it an iPod or iPad, with engravings. Apple attempts to get personal with the consumer, so they feel valued and remain loyal to the brand.
A company’s mode of entry is the method they employ in order to gain access to a new, international market. In Apple’s case, they have exported, in this instance, to the UK, with the iPhone. This movement has meant Apple has increased in size on a global scale, launching stores all across the UK. It can sometimes be difficult for an overseas company to make an impact abroad, but given Apple’s reputation and status, it was inevitable that the UK population would welcome the company’s arrival. By using O2, and their large customer base, Apple made sure of their entry into the market.
Conclusion:
In conclusion, Apple truly is an enormous global corporation that has been successful over a number of years, and has indeed managed to achieve global competitive advantage over its competitors. This is down to a number of reasons. Firstly, the strategies the company employs, such as the strategic use of suppliers in different parts of the world, such as China and Japan, allows them to stay ahead of rivals and consistently come up with new innovative products and ideas. Secondly, Apple has a solid base upon which to build in its home country; America. The USA is a wealthy nation, with a highly skilled work force and the ability to train and teach workers too. This has helped greatly to propel them into foreign markets, ensuring they are not just successful on a domestic basis.
Overall, Apple is a highly successful organisation that has shown how to be dominant in foreign and domestic markets, with their migration into the UK with O2. Perhaps the statistic that, at the end of June, 2011, the U.S Government had an operating cash balance of “$73.8 billion”, while Apple had “$76.2 billion in cash and marketing securities”.
References:
Porter, Michael E., "Competitive Advantage". 1985, Ch. 1, pp 11-15. The Free Press. New York.
Wray, R. (2007). O2 wins Apple iPhone deal - at a hefty price. Available: http://www.guardian.co.uk/technology/2007/sep/17/mobilephones.apple. Last accessed 3rd Mar 2012.
Apple. (2012). Apple Suppliers 2011. Available: http://images.apple.com/supplierresponsibility/pdf/Apple_Supplier_List_2011.pdf.
Apple. (2012). Labor and Human Rights. Available: http://www.apple.com/supplierresponsibility/code-of-conduct/labor-and-human-rights.html. Last accessed 5th Mar 2012.
Russof, M. (2011). Apple Now Has More Cash Than The U.S Government. Available: http://articles.businessinsider.com/2011-07-28/tech/30049957_1_cash-balance-apple-debt-ceiling. Last accessed 5th Mar 2012
faculty.uml.edu/amehta/66.511/notes1.ppt. (2010). Spulber Star.Available: Spulber, D. (2007). Global competitive strategy. New York: Cambridge University Press. . Last accessed 1st March 2012.