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Introduction:
The Birth of a Brain Child Apple, Inc. started out as an idea of one man. This man was Steve
Jobs. Jobs and his friend, Steve Wozniak, were two high school drop outs living in the Silicon
Valley with extremely innovative and intelligent minds. The pair teamed up, while working for
Hewlett Packard, to start Apple, Inc. from the basement of Jobs home. The pair created the first
Apple computer on April 1, 1976. The rest, as they say, is history. The creation of that first
computerand subsequently the birth of Steve Jobs brain child-- is what started Jobs and
Wozniak on the path that has now revolutionized the way that many people all over the world
use a computer, search the internet, listen to music, and even talk on the phone. Apple, Inc. is the
perfect example of how a dream became a realityone step at a time.

From Brain Child to Innovative Success (A Brief History of Apple, Inc.):

Ron Wayne, Steve Wozniak, and Steve Jobs founded what would become Apple, Inc. in 1976;
however, soon after, Wayne left the company. Steve Wozniak introduced and designed Apples
first computer, the Apple I, to Hewlett Packard (HP); HP was not impressed and chose not to
pursue the venture. Jobs and Wozniak did not let this deter them from continuing to develop and
sell their computers. In 1978, the Apple II was introduced and sales went from 35,000 computers
in 1979 to 78,000 computers in 1980. Then, in 1980, the company (which consisted of about
1,000 employees at the time) went public and the stock offering did well. In the 1980s and early
1990s, Apple did well in sales due to new versions of Macintosh and their new market, the
office computers. In 1984, Apple made the Macintosh computer; the Macintosh made sales of
70,000 units soon after it was made. Shortly thereafter, there was a major power struggle among
executives. This power struggle would lead to the departure of Jobs and some other executives.
The combination of sales success and departure of the companys leaders found Apple at a
monetary loss in the mid 1990s which can be directly linked to unfilled orders for the Power
Macintosh line of computers. In 1997, Steve Jobs returned to Apple as an advisor when Apple,
Inc. purchased his new company NeXT, Inc. Jobs then became CEO of Apple, Inc. and
introduced the iMac, which sold 800,000 units by 1998. From that point on, the company did
very well. Jobs and Apple began introducing new, innovative products one at a time; the iPod
was unveiled in 2001 and the iPhone in 2007. In 2008, the iTunes store sold more music than
Wal-Mart (who was the leading music provider up to that point) and then the innovation
continued with the introduction of the iPad in 2010. The growth of Apple, Incs music sales was
in direct correlation to the fact that iPods sold 275 million worldwide between 2001 and 2010.
Jobs was consistently rated the no. 1 CEO due to the value he added to Apple by coming up with
these new products and, at this time, Apple, Inc. is considered the worlds best company by
many magazines.
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Apple, Inc.s Vision:

As found on the companys website, Apple, Inc.s vision is the following: Apple is committed to
bringing the best personal computing experience to students, educators, creative professionals
and consumers around the world through its innovative hardware, software and Internet
offerings.

Apple, Inc.s Mission:

As found on the companys website, Apple, Inc.s mission is the following: Apple designs Macs,
the best personal computers in the world, along with OS X, iLife, iWork and professional
software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple
has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the
future of mobile media and computing devices with iPad.
Apples Global operation

Apple, Inc.s Values:

As found on the companys website, Apple, Inc.s values are as follows:
We believe that were on the face of the Earth to make great products.
We believe in the simple, not the complex.
We believe that we need to own and control the primary technologies behind the products we
make.
We participate only in markets where we can make a significant contribution.
We believe in saying no to thousands of projects so that we can really focus on the few that are
truly important and meaningful to us.
We believe in deep collaboration and cross-pollination of our groups, which allow us to
innovate in a way that others cannot.
We dont settle for anything less than excellence in every group in the company, and we have
the self-honesty to admit when were wrong and courage to change.

Apple, Inc.s Business Strategy and Goals:

As seen in the companys vision, mission, and values, Apple In. has a clear strategy and set of
goals. Apple, Inc. defined their strategy and goals in their last annual report as the following: The
Company is committed to bringing. The Companys business strategy leverages its unique ability
to design and develop its own operating systems, hardware, application software, and services to
provide its customers new products and solutions the best user experience to its customers
through its innovative hardware, software, peripherals, and services with superior ease-of-use,
seamless integration, and innovative design. The company believes continual investment in
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research and development and marketing and advertising is critical to the development and sale
of innovative products and technologies. As part of its strategy, the Company continues to
expand its platform for the discovery and delivery of third-party digital content and applications
through the iTunes Store. As part of the iTunes Store, the companys App Store and iBook store
allow customers to discover and download applications and books through either a Mac or
Windows-based computer or through iOS devices, namely iPhone, iPad and iPod touch. In
January 2011, the Company opened the Mac App Store to allow customers to easily discover,
download and install applications for their Macs. The company also supports a The Innovative
Success that is Apple, Inc. 4 community for the development of third-party software and
hardware products and digital content that complement the Companys offerings. The
Companys strategy also includes expanding its distribution network to effectively reach more
customers and provide them with a high-quality sales and post-sales support experience.
Now that Apple Inc.s strategy and goals have been shown, a look at what effects the decisions
of the executive staff in regards to the general environment is needed.

Apples positioning:

Apple wants to demonstrate that in a world of networks based on industry wide

standards, their computers are powerful enough and, in effect, compatible enough to do
everything Windows PCs can.
Apples differentiation strategy for its Macs to warrant their premium prices.
Apple has had to keep wooing its loyal customer base of Apple users by superior product
design and features.

Apples competitive advantage:

A loyal customer base.

Apple's engineering and software skills could make it a force to be reckoned with in the
consumer electronics business long dominated by Sony and Matsushita.
Apple's own engineers design much of the hardware and virtually all the key software for
Macintosh computers. The result is a distinctive line of comp utters that are more stylish
and reliable and easier to use than their Wintel PC counterparts, and that, despite Apple's
small market share, often set the aesthetic and technical standards for what a PC should
be.
Apple has one of the best management teams in place.
Regular technological breakthroughs by Apple's component suppliers has helped it keep
pace in terms of performance with Windows PCs. Motorola, which makes the PowerPC
microprocessor for the Mac a RISC chip which technically delivers faster performance
for less complex design - has finally managed to improve the performance of its chips to
exceed the processing speed and power of Intel's Pentiums.
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Apple is the only vertically integrated computer company and thus can manage all
aspects of the customer experience.

Porters five forces analysis on Apple products:

Competitive Rivalry:
The personal computer and mobile device industry displays a high degree of rivalry, with firms
constantly cutting prices. The product is a commodity and there is little to differentiate one
technological product from another in terms of features etc. Price is a key and a price war is on
with margins further getting squeezed.

Supplier Power:
The components suppliers like memory chips, disk drives, keypads etc are widely available at
very competitive prices. The supplier power is low in such cases. However we have two key
inputs: the microprocessor and the operating system. Intel (with AMD being the other significant
player) dominates the microprocessor market for Wintel systems. Apple on the other hand,
sources a totally different chip called the Power PC chip from Motorola, which comprises less
than 5 % of the microprocessor market. So, supplier power is high in the case of Intel compatible
chips and medium for Power PC chips. Microsoft dominated the PC operating system market
following the launch of the IBM PC. Apple had its own operating system, the Mac OS, that was
technically superior to Microsoft products. It is estimated that Microsoft Windows is loaded in
more than 90% PCs shipped out. Supplier power was high.

Buyers Power:
The main customers for PC and peripherals could be categorized as a) Business b) Government
c) Education and d) Individual consumer. Apple products were sold primarily to the business
(creative), education, government, and consumer markets. Due to its differentiated product
Apple could command a premium in this market so the Buyer power was medium for its
products. The PC has increasingly become like a commodity with a plethora of players offering
similar features with very little differentiation. Price is the key element and buyer power is
sufficiently high.

Threat of Substitutes:
Due to the high level of technological change in this industry there were many potential
substitutes coming up to replace the PC. Some of the possible substitutes were Network
computers, Hand held Palm tops, smart phones, game consoles, Internet Appliances, TV set top
boxes and other simpler personal computing devices etc. There was also the possibility of
eliminating the need for operating systems to be loaded on personal computers with stripped
down versions being net-booted from servers.
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Threat of New Entrants:

The high level of competition, combined with low margins makes this industry not very
attractive for new entrants. The product was in the mature stage of its life cycle. However there
was a trend of increasing convergence of this industry with the consumer electronics industry
and thus the possibility of entry of major players like Sony etc. in a big way.

Complementary Products:
There are a host of complementary products available. The value of the PC and its operating
system is tied to the quality and quantity of application systems available on that platform.
Peripherals also constitute a complement e.g. media digital contents, Camcorders, digital camera,
MP3 players, hand held devices and other software and hardware.

Macro and operating environment analysis:

Macro environment:

Social factors:
Social trends which change over time
New versions of products to keep up with trends and technological changes in opinions
iPhone 3G, 3GS, 4, 4S, 5, 5C, 5S, 6, 6 Plus
Values, ideas, attitudes and beliefs in which consumers have in regards to these products

Technological factors:
New innovations and ideas to create new products
New technologies and introductions of products entice the consumer to buy the product
Can create negative sides for business,
Too hard to keep up with new technology,
New products being released straight after each other and not making a substantial profit,
MacBook Pro, iPhone, iPod and iPad changed the way the world looked at technology

Economic factors:
Consumer purchasing power and spending patterns
Economic factors of Apple revenue in 2008 were less compared to those in 2009
Revenue growth in 2009 increased by 10%
iPhone and iPod sales increased, however, computer sales decreased by 8%

Political factors:
Laws and policies that limit the company to work effectively and produce products that
go beyond technology and laws
The governments perspective of what can be sold and bought within a certain country
determines the availability and supply and demand of Apple products
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Legal factors:
Piracy with music, movies, and app downloads
Must ensure that all products are protected by copyright laws
All Apple Products do not cause copyright infringements

Operating environment:

Customers:
Trialling products and providing feedback on products
Customer satisfaction surveys may be used for feedback
Help in determining what products are being successful and what products are not
Enable Apple to see which direction the company should go in when introducing
new/developed products

Suppliers:
Crucial when Apple is determining their pricing and profit margins
Ensuring that all parts are working properly and are not faulty
Apple ensures that their workers undertake full training
Suppliers must treat workers fairly and ethically at all times
349 suppliers in China
139 suppliers in Japan
60 suppliers in USA

Competitors:
Competitors influence the pricing of products, and the services in which the product, or
Apple as a whole provides
Competitive pricing ensures that there is a market for the product
By having competitors in the market, this ensures that Apple would be able to continue to
strive to do better and be better.

Interest groups:
Help with new products and with market research
The testing of products before they go on the market
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SWOT Analysis for Apple:

Apple is a very successful producer of computer software and hardware that leads in its
competitive industry. To evaluate the progress, success, and faults of the company, the SWOT
analysis is used. The SWOT analysis is a strategic planning tool used to evaluate the strengths,
weaknesses, opportunities, and threats to the organization. This model is used to help it identify
internal and external areas that need improvement and internal and external areas that prove to be
successful.

Strengths:
Over the years, Apple has grown by offering superior products compared to competitors. Apple
has positioned itself to be a pioneer in the personal computer industry. It is one of the original
hardware producers in the market that controls both the manufacturing of its products as well as
its operating system. Apple is self-sufficient and creates its own internal components for the core
of its computers. Apple has set standards for high quality products in order to meet customer
satisfaction. It is dedicated to research and development in order to create new products, which
are expected to make Apples products more efficient and feasible to use. As a result of the
companys commitment to excellence, most of its products are compact and simple to operate.
Apple is known for its loyal consumers who purchase its products for quality, regardless of price.
Apple has ascended to a brand of distinction in the computer industry, which yielded a successful
net income. In addition, the companys stock price is the highest in the personal computer
industry. Apple is financed mostly by its equity. In fact Apple does not have any debt, so
investors would bear less risk by holding Apples stocks. The company is well-endowed and
capable of acquiring any firm that could enhance the value of the company. Its customer service
department is monumental and highly respected by consumers. Apple plans to maintain its status
through organizational stability and creativity

Weaknesses:
Advanced technology is being developed and produced for customers; therefore, Apple is faced
with the difficult task of ensuring consistency and quality within its products. For example, the
iPod, which is a global success, had many glitches and technological flaws including battery life
and screen faults that plagued iPods when they were first released. Currently, these flaws have
been resolved in newer models, though the products are still not perfect. With many other
companies creating similar products, it is imperative for Apple to remain competitive by solving
technological errors in devices. It is advantageous that Apple continue to invest in its Research
and Development department to remain competitive. Apple is a seemingly financially stable
organization; its lack of debt is a potential weakness for the infrastructure because it creates
potential risk for stock acquisition by other corporations.
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Opportunities:
The employees at Apple are sufficient in their expertise because they predict the target audience
for the latest technology. Because of their originality, Apple is known for its innovative thinking.
It has developed a product line that is both functional and attractive. The organization is
spreading beyond the confines of its products and into the lives of its consumers. The Apple
iLife applications allow users to connect to multiple programs through one package. ILife
provides a well-integrated elegant interface that enables users to tie into iMac, iTunes, iMovie,
iPhoto, GarageBand and YouTube accounts. The current opportunity for Apple is the
development and campaign of the new iPod shuffle - the worlds first talking MP3 player. Apple
has proven its quality by packing 4 gigabytes of memory into a device half the size of the
original Shuffle. Another area that Apple is pursuing is the use of Intel chips. The Apple Intel
chips will allow new machines to run the Windows Operation System and could also be used to
develop iTunes and music player technology that can be applied to a mobile phone. Apple must
continue to create opportunities through new, innovative software markets and strive to introduce
its groundbreaking hardware into these markets.

Threats:
The computer technology industry is a consistently transforming and highly competitive
industry. There are more competitive companies entering the market that Apple has saturated.
Microsoft is Apples historic rival, and has managed to maintain its competitive status. In the
computer hardware division, there are many competitors such as Hewlett-Packard and Dell. Dell
produces low-budget computers and products that appeal to economically cautious consumers.
Apple has a higher stock price than Dell and HP but Apples market share and total revenue are
significantly lower. It is imperative for Apple to consistently create new products that set
financial and technological standards for the computer industry. Apple has a growing
international market, specifically in Asia. The exchange rates challenge the organization and
create a shift in supply and demand. With the depreciation of the US dollar, the international
revenue is declining. The global economy threatens most industries in the global market, which
presents a revenue obstacle for Apple.

Apple Products:
The target market for the Apple products is primarily high income earners, businessmen, and
teenagers. Concentrated segmentation is where Apple produces their products in limited numbers
at higher prices. When the iPhone 6 was released, consumers were lined up over 24 hours before
the phone went on sale to ensure that they received one. In one store, there were thousands of
people lined up, however, there were only 40 iPhone 6s available to purchase. This shows how
exclusive the product is, and how Apple aims to produce products that are of high expense, but
good quality.
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High Income earners (High society:

As the new apple phones base price to purchase outright is $900, the phone is quite
expensive, and those on low income will not be able to afford it
Businessmen:
Being the newest technology available, most businessmen and women buy the iPhone
due to its versatility and new features
Health app
Tips app
Podcast app
Passbook
Keynote
Teenagers:
Teenagers usually want the most up to date technology, therefore, they are a huge target
audience for the new iPhone 6.

Dimensions:
Demographics:
31% of iPhone users are aged between 35 and 49
27% are aged between 25 and 34
20% are aged between 18 and 24s
46% of iPod users are aged between 13 and 17
47% of iPhone users have a household income of over $100k
Music enthusiasts
Media and design professionals as the software available on Apple devices is highly
revered by many
Stigmas developed in the 90s about incompatibility with Macs is a huge reason why there
used to be less Mac users as opposed to PC users
Apples market share and success is predict to boom over the next 10 years as those gen
X and Y who have developed those stigmas, establish that those problems do not exist
anymore
Apple does not target any specific gender or family size, however, there are apps within
Apples database in which are gender specific

Geographic:
Apples largest market is the Chinese
In China, many become attached to luxury goods and worship them in means in which
they must have those products
The USA and Malaysia are the cheapest places to purchase Apple products
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Apple is a global company, however there are numerous countries that are targeted as
Apple has a high market share in them:
USA UK France Canada Germany Australia Japan Italy China

Behavioral:
Those who have purchase an Apple product are almost certain to stick with purchasing
Apple products. This is die to growing familiar with the interface which is similar
throughout all Apple products
Apple has come to find that Apple users do not just see an iPhone or a Mac as a phone or
a computer, but a representation of their life and a part of them
Apple only does market research on their own existing customers so they can see what
they can improve, not what other non-Apple customers want

Marketing MIX:

Product:

Apple provides both goods and services

The main products include phones, tablets and computers
Services include: Garage Band, Keynote, iCloud
These services work in conjunction with all Apple products
Apple also provides support services in most Apple stores which are called Genius Bars
and they are for help with Apple products and maintenance work
Apple provides both consumer and business products
Most products that Apple sells are usually direct to the public
Apple has business deals with schools and other businesses in which they supply
products and software

Product Mix :
Breadth:
Mac
iPod
iPad
iPhone
Apple TV
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Software's

Line:
iMac
MacBook/Pro/Air
iPad/2/3/Air/Mini
iPod/Classic/Shuffle/Nano/Touch
iPhone 3G/3GS/4/4S/5/5C/5S/6/6 Plus
iOS
OS X
iWork

Depth:

iOS 2.0/3.0/4/5/6/7/8
OS X Leopard/Snow Leopard/Lion/Mountain Lion/ Mavericks/Yosemite
iPhone 8gb/16gb/32gb/64gb/128gb
iPod 8gb/16gb/32gb/64gb
iPad 8gb/16gb/32gb
MacBook with Retina Display

Product Life Cycle:

With the introduction of the new iPhone, all other iPhones will be on the decline, perhaps not
the most recent on prior to the iPhone 6, which is the 5C and the 5S
The iPhone 5C and 5S may be nearing maturity as they both have only been out for a year,
and the iPhone 5S is still similar to the iPhone 6, so may be still in the growth stage of its
life cycle
As for other products, as new versions of the same product are released, the older versions
either reach maturity or decline
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Apple Price:

Apple is a premium electronics brand that does not attempt to compete with its
competitors pricing. Apple uses price skimming on its products, whereas the initial
price of the products gets reduced over time. All products are premium priced which is
working well for Apple, as they are moderately affordable
The product life cycle affects the pricing of the products, as there is a new
version/generation of each product released every year. As those products age, they
become less popular, hence their price reduces and updated versions are released. When
those updated versions are released, the price of the new product is usually the same
initial price of the old product.
After a few months of being released, the new product may be reduced by $50-$100,
depending on how much the initial price was, and on the level of demand for that
particular product
Apples iPad pricing strategy includes the flexibility to lower the prices if consumer
response dictates such actions with low purchasing and sales. This would be consistent
with a similar $200 price cut on the iPhone in 2007 where sales plummeted
Phones running on the android software are marketed with penetration pricing, where the
initial price of the product is low, and then gradually increases over time. Apple have
proven that their pricing scheme works in this case, as they sold more iPhones in 2012
than other companies sold Android phones.
Working with Apple has its benefit. For instance, workers receive discounts when
purchasing Apple products, which is usually 15-25% off their products
Although Apple doesnt have sales, they reduce the price of their products when they
are bought in bulk or in large quantities.
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Place:

Apples products go from the manufacturer, to the wholesaler and then finally to the
retailer which is either an Apple Store, a certified retailer such as JB Hifi, Harvey
Norman, Dick Smiths etc. and online retailers such as Ebay, Kogan and Amazon. Apples
products are sold direct to the customer at retail price.
Apple headquarters is located in California (1 Infinite Loop, Cupertino, CA), and there
are hundreds of stores located globally. There are over 349 Apple retailers located in
China, as the Chinese are Apples largest market. More Apple stores are located in those
cities and countries that show a larger market with more and more expensive purchases.
Apple stores and certified retailers are usually located in shopping centers near more
upmarket retailers. Apple shops themselves are usually located in a city's central business
district as there is more foot traffic heading in that direction and most people work closer
to the city or in the city. Being aimed to target those with higher income, apart from
being located in the CBDs of cities, Apple retailers are located in upmarket areas of cities
and built-up areas.
Apple products are marketed using selective distribution, as more products are distributed
to retailers where there is a higher demand for Apple products, whereas a lesser amount is
distributed to retailers where there is lesser or no demand for those products
At Highpoint shopping center, Apple is located near other electronic retailers such as
Samsung which is one of their main competitors with the Samsung galaxy.
Being placed near or next to their competitors enables there to be constant foot traffic
flowing from all competitors, which may lead to new customers.
Apple is a retailer and an online retailer as they sell their products from their stores and
sell products online.

Promotion:

Apple promotes their products primarily through television advertisements, online ads,
and on billboards
Most Apple products are advertised through numerous different ads. They aim to make
an ad that appeals to most segments of the market. Their ads promote different aspects of
their products, just like these iPhone ads. They pick out certain parts of the iPhone that
can really help sell the phone, and then make a fun ad on it.
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iPod packaging stays consistent as the iPods mature and develop. Apple releases the
iPods in clear packaging which shows the consumer what the iPod looks like and what
they are purchasing.
Apple packaging is very sleek and modern, and promotes their products well because
Apple products are very upmarket and expensive.
The packaging shows off the product and promotes a higher level of technology
Apple also have their products set up in their stores for customers to trial and see how
their products work before they make up their minds in buy the product.
Although Apple do not have sales they have some offers throughout the year, or when it
comes to the end of the financial year.

Apple in China:

Situation Analysis:
Now a day's China is considered as world's primary engine for growth. World Band forecast the
continuous raise in China GDP growth rate. The largest number of mobile subscription users is
with the China and it's growing at over 20% per annum. If it's considered that population of
China is 1.3 billion and only 35% uses mobile than it show really important growth opportunity
for Apple. As compare to other emerging economies, China is the biggest receiver of foreign
direct investments worldwide so Apple has an opportunity to jump into this economy and retain
its existing brand image.

Stakeholders:
Apple got a strategy and according to that, it only got special partners. This strategy allows them
to deal with carriers in each country. Because of this, all the cards are held by carriers and the
mobile manufacturers doesn't have anything. But in China there are only two mobile carriers,
and they are China Mobile and China Unicom.
China Unicom would be an alternative partner of Apple; it got the smallest subscription base of
130 million. This decision wouldn't be the good decision for some reasons. In recent years China
Unicom has been doing efforts against China Mobile. Monthly growth of China according to
Operator proceeds in different ways. It's between China mobile and China Unicom. China
Unicom has adopted strategy to be a world leading broadband communication and information
service provider due to continues decrease in revenue. This change in strategy put Apple in a
difficult situation because if they choose China Unicom as their exclusive partner they would be
taking risk. But China Unicom uses a wireless technology name CDMA. And iPhone uses GSM
technology, so if Apple becomes partner with China Unicom they would have to build a 2nd
version of iPhone, but this decision wouldn't go with Apple's strategy.
Thus, if Apple become partner with China Mobile this would be more suitable. Apple have
largest smart phone and China mobile have the largest subscription base.

Political and Legal Environment:

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In China Government has complete control over mobile industry. (MII) Ministry of Information
Industry regulated the Chinese telecom market and all foreign companies need its permission for
entrance. China Unicom and China Mobile are also influenced by Ministry of Information
Industry. Apple should be careful while entering into the market because Chinese government
has absolute control over citizens and companies.

Economic Environment:
Form the past quarter China has been the fastest growing nation with an average annual GDP
growth rate of 10%. 2nd largest economy of the world is of China. And after China, United
Nations. In 2008 United Nations have a GDP of $7.8 trillion.

Social and Cultural Factors:

From past 10 years gross and disposable income has rapidly increased. And it is expected that
this growth would continue till 2015. Since 1980's Engel coefficient has been declining
according statistical figures. Urban and rural populations both are at welfare level and this allows
them to spend some of their income on non basic things. Chinese people who can afford are
more interested in adaption of new technologies and show their strong interest in new products.
Males are more than half of the population and eager to spend more on digital and electronics
product such as mobile phones and digital cameras.

Technical environment:
As China emphasized more on technology and science, it has become better connected to global
economy. Due to this emphasis scientific structure has been improved which results in increase
in available money for research purposes. Chinese government approximately used 2 percent of
its budget on R & D which is equivalent to Japan and U.S spending. In 2G network the solely
population coverage rate of China Mobile is 98%. China mobile haven't yet started to operate
with 3g network. If it is used on iPhone this would give best result. Fewer customers are satisfied
in 2G network because internet speed is too slow in it. It is intended that China mobile have 70%
3G coverage at the end of 2009.

SWOT Analysis of Apple in China:

Strengths:

Technical Innovation and 100% control:

Apple is widely known for their interest to detail and their ability to bring something new to the
environment. Apple really takes care of each and every step regarding the development of
iPhone and this thing gives them a clear cut benefit over their competitors. The mobile market is
characterized by the forcefulness that is rapidly moving. Apple controls the software and
hardware design and this let them to rapid bring something new to the environment.
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Google and Microsoft have adopted a strategy, in it they are developing software for Samsung
and L.G. They have to focus on developing software for manufacturers that is why they couldn't
spare time for developing mobile technologies. Apple doesn't have to consider different types of
hardware while developing applications but Google and Microsoft does.

Strong Band image:

One of the most healthiest and recognized IT brands in the World is Apple which has a loyal set
of enthusiastic customers that advocate the brand. This strong loyalty means that Apple has
ability not only to recruits the new customers but to retain them. This can be approved by that
Apple forces them to come back again and again for new products and services which increase
the opportunity for company to extend new products for their shoppers, e.g. the iPod.

Software Development Experience:

Apple got experience in software development. This in one of its most important strengths.
Apple has opened up an area to prepare a way for the most advance technologies. This
experience allows Apple to point out past competitor in highly competitive market.
Apple accomplished that sales would be possible if variety of applications are available for
iPhone. Apple develops a software development kit by using their experience in software
development. This kit allows the software developers to create original applications for the
iPhone. In just 9 months App store has with over 50,000 applications submitted and more than a
Billion downloads. It has been a huge success.
The competitors of Apple are Nokia, Microsoft, RIM, and Palm. There is race among them to
seizure resources of developer and empower them to create powerful application for their
devices. And Apple contrived to gain important advantage over its competitors in this race.

High switching costs:

In non Apple Phones iTunes are not available. There are switching costs related to buy a non
Apple phone and transfer music to it. iTunes now became the popular music application in
China.

Strong relationships with 3rd party Manufacturers:

Foxcon is the specialist manufacturer of high quality devices, Apple developed strong
relationship with it. The base of this relationship is on the list of strengths of Apple Company.

Upgradability:
In terms of upgradability iPhone is more valuable than the traditional phones. Traditional phones
remain the same throughout their life time but iPhone software can be upgraded. From App store
iPhone users can add apps to their phone.

Advertisement:
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Apple iPhone is heavily advertise by using the channel of internet and saved the 400 million of
company.

Weaknesses:

Technological complications:
No doubt Apple iPhone is the first in the arena of computer phone but like every new product its
has some weaknesses such as iPhone is not a 3G devise due to which it can't work in
technologically advanced countries like Japan and Korea. Both used the 3G compliant phones.
Some other iPhone features are not impressive like subpar camera and no removable memory.

High Prices:
It's a common concept that Apple offered high priced products that's why a survey shows that
52% of customers are happy with their current mobile devices because Apple iPhone is highly
priced round about 500 to 600 dollars. Apple should also consider the cost cautious consumers.

Distribution Channels:
Apple has decided to choose only the Cingular and Apple retailer as channels of distribution
which is considered as its weakness.

Problem of User interface:

Apple iPhone may suffer the "gorilla arm" problem due to its touch screen interface which
becomes flat, dull and solid results in uncomfortable for its customers.

Unique Product:
Apple iPhone is a unique product as there is no diversification and customization to offer.

Dependence on 3rd part party providers:

Finally all these weaknesses raised a question whether iPhone can be used for corporate use or it
just can be used as entertainment system.

Gorilla arm: A major side effect:

Gorilla arm is just a business term not a problem or we can say a major side effect that may
cause have obliterate the vertically oriented touch-screens. Humans can't carry such a huge
device all time because their arms will suffer the great pain after a short period. It can be
diminish by use of short term devices e.g. ATMs and horizontally mounted screens e.g. desktop
PCs but all these can be used to give rest human hands. In addition RSI issues can also come in
front of by the use of screen on surface.

iPhone Clones and Copyright in China:

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Apple can not rely on China's copyright laws as they are uncertain. Many iPhone clones
currently exist in the market. Product substitution is another big threat to IT consumable market.
A specific clone called Hi Phone, is similar to the iPhone, one can not distinguish between the
iPhone and clone. The existence of these clones is a threat to Apple. Because of it revenue of
Apple declined, and it is damaging Apple's band reputation. iPhone need to develop strong brand
acknowledgement and make agree their customers that the iPhone is far more superior to those
clones. Technology attracts only if it remain change. May be tomorrow's technology may be
totally different from today so research and development of new technologies and concepts is the
only source to become at competitive position.

Less spending trend in China:

Although China is considered as stable economy but iPhone is going to be released in time when
people are cautious about their spending.

Porter's Five forces Model:

Bargaining power of Buyers:

Broadly speaking there is a specific shopper group which is considered the principle purchaser of
iPhone and now a day's consumers have alternate choices of a single product so we can say
bargaining power of iPhone buyers is somewhat more powerful. Consumers become more
sensitive regarding prices so it raises a question whether buyers will pay a premium for Apple
cachet and technological convergence when they have an opportunity to equally fulfill their
needs with cheaper alternatives.

Bargaining Power of Suppliers:

Apple iPhone is one of the healthiest and recognized IT brands in the world. For Apple, iPhone
is not just the sum of its parts because if these parts and alternatives are available in market from
different sources they can't be as much interesting as Apple presents. What an Apple provides is
software that really appeal its customers as it together it all parts and permit its users to interact
with the phone in a compelling way. And of course, that software is owns and developed by
Apple from its suppliers but Apple is now thinking about forward integration with its suppliers.
So this makes sense that bargaining power of supplier is not powerful.

Threat of new Entrants:

Intense competition is going to face by iPhone from impressionists who sells similar and
comparable devices at a lower price. But this threat becomes more when we think about the
established players of cell phone industry like Samsung and LG rather than new companies
trying to enter in existed markets. No doubt another credible threat Apple has to face is from
software companies such as Google and Microsoft who are trying to carve out a niche for
themselves. Both companies are trying to developed software for mobile devices because
Microsoft has a lot of experience and Google has a team which is actively investigating on it. But
it could be only possible if, rather than satisfied themselves with creating software licensing for
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cell phones, any one of them will directly take initiative to enter into the existed cell phone
devise industry.

Threat of Substitutes:
User interface of iPhone which is driven by multi-touch screen is a feature that distinguishes
Apple from its competitors. No doubt various patents relating to this technology is claimed by
Apple but soon the other opponent will be able to offer the product with similar feature. Like LG
and synaptic, revealed the details of upcoming product with touch-screen interface feature.

Barriers to entry:
Although no of barriers have been faced by Apple in the development of iPhone but it should
considered the obstacles while entering in new mass market of China.

Economies of scale:
As Apple have vast experience of mass-marketing (mass production and mass consumption)
electronic devices so they have the ability to overcome and navigate the barriers.

Differentiation of Product:
This is favorable attribute of Apple because it has a strong brand image which makes it different
from its closest competitors. But as the technology become advanced day by day may be this
trait become strength of its nearest opponents. So Apple should do more research and
development to maintain its brand identity otherwise it may happen that competitor's products
have no product differentiation in near future.

Requirement of Capital:
Some cell phone companies have experience of manufacturing cell phones not software and
some companies have experience of making software only. But Apple has an ability to face the
friction of this barrier because it deals with both software and hardware. No doubt Apple has an
advantage over here because it invests ample of capital in manufacturing hardware and software
but this trait can be lost any time. So Apple should keep in mind every time when going to built
new strategy for new economy according to its budget.

Government Policies:
Whenever a company enters in new market two things discourage it. First one is current players
and second is patents, approval requirements & regulations of that economy. Apple has applied
for patent in Chinese economy which will make its product more reliable as compare to its
competitors.

Over Cost and independent in size:

Undoubtedly Apple invest a lot on knowledge, experience and R & D, and it requires a lot of
cost which Apple considered its positive trait which may not an easy task for competitors to
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emulate. Because Apple deals with lot of manufacturing resources and channels and this helps it
to minimize the friction of this trait. Moreover Apple has another advantage when we talk about
independence of size because of patent and technology for iPhone and it allows the Apple to
create short term monopoly.

Apple in Thailand:

Entry strategy:
Apple Inc. does not have subsidiary in Thailand decided to enter Thai market by adopting the
indirect exporting by sale its products through authorized dealers, for example, the main
authorized in Thailand are Copper wired, Com7, and SPV. Based on this strategy, Apple gave
the authorities to authorized dealers for doing their own marketing process under a contract of
the annual target import of Apples products, to their dealers, is set by the Apple Inc. Under this
market entry strategy, Apple Inc. transfers the almost all of the risks in doing business to
authorized dealers.
According to authorized dealers, they have to concern almost all of the risks; they are required to
make the profit on their own. For instance, authorized dealers need to find the prime location e.g.
in the big mall of Thailand, place where there is mass of people and target group to gain more
potential sales. Furthermore, authorized dealers have to recruit the employees by themselves but
all employees are required to be trained thru the Apples training programs prior to their works to
guarantee the high quality of customer services of Apple along with Apples business strategy.
The price is set identically all over the globe, only a bit different due to the vat of each country.

Situation analysis of Apple in Thailand:

Political Economy Aspect:

From the article of Bangkok Post newspaper, (Subhanij, Ph.D 2001), current Thai political
instability seemingly affects the overall economy in Thailand. However, Thailand's Political
Instability Index is still far better than country from Africa and in Central and South Asia. From
the studied, the growth of economy is driven by human and physical capital; technological
innovation, foreign trade and investment that are directly or indirectly rely on political stability.
Hence, the fiscal policy is not enough to push the growth of economy, the clearing of political is
also pay the significance role in the growth of Thai economy.

Financial Aspect:
From the journal Entering into business or Joint Venture in Thailand- A Cultural Perspective,
(Sheehan 1996), Thailand has steadily growth in GDP which mainly come from the agricultural
 21

sector. Later, the growths are from the export activities and the undertaking business of foreign
companies that mostly are from western company.

Legal and Technical Aspect:

According to Gomez-Arias and Montermoso (2007), the technology products have short product
life cycle because technology changes quickly. The initial reference customer who is the first
group of customers will be the source of revenue for the company that sells technological
products. The strong initial reference customer can be the client organization because of the
performance, competitive advantage, and vendor-client relationship. The factors for selecting
first initial customer are size, industry, approach to innovation, and previous relationship.
Moreover, the high technology products need the pre-launch activities for increase the product
success rate. The product development and improvement are important after product has been
launched. The initial reference customer can create market penetration and reduce business
uncertainty.

Social Aspect:
The cultural different in a global market can impact the marketing strategy. The brand
personality may not be experience by the way company want. The brand personality can be
differ depend on the cultural background which is religion, language, values, and standards. The
collectivism/individualism, masculinity/femininity, power distance, performance orientation are
the cultural factors that the business should concern. For example, Thailand is the collectivism,
which can affect the brand management directly because collectivist society has a narrow social
network. Consumers will buy the products based on their social network. In Thailand, family
opinion is very important in buying decision.

Culture aspect:
As the result of Thailand is a developing country, most of people in Thailand are uneducated and
poor (CIA World, 2010). There are some Thai people believe that the more luxury and expensive
that they buy, the more rich that they are looked by other points of view. They tend to buy the
luxury products to gain acceptance from other people because the new generation of society in
Thailand is evaluating people from their image not their mind.
Thai people tend to justify other people from their dress or their car, for example, most of Thai
people believe that people who drive Mercedez Benz are rich people. Moreover, most of Thai
people believe that most products that come from the foreign countries are providing the better
quality than domestic products (Kesornbua, 2010). As such, they tend to buy for themselves even
the price of the products are expensive than other domestic products.
This evidence reveals that Thai market is the good choice for Apple Inc. to expand the
penetration in the future. According to the culture of Thai consumers who tend to follow the
foreign trend and believe that foreign products have better quality than Thais products, Apples
products are surely gain advantage from this culture and perception of Thai people by their
innovation and modern style of its products.
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Porter Five Forces Model:

Followings are Porter Five Forces Model analysis for Apple in Thailand to demonstrate the
effect of these variables on Apple in China. Apple Managements can decide how to influence or
notice the particular characteristic of industry.

The threat of new entry:

Apple Thailand has passed the geographic boundary of Thailand and access in to the local
market using competencies of the parent company. In the national level, by the time that Apple
(US) expands its branch to Thailand, the Apples reputation was very well known. In domestic
level, entry to the market seem to be not the main issue of Apple due to global brand have built
the value and gain competitive advantages for Apple. Total number of iPhone have been sold in
Thailand up to 100,000 units in 2009 and expected to sell another 120,000 in 2010. It means that
firm can entrance to the new market by using competencies in term of the parent company.

The power of buyers:

It is not significant issue for Apple in Thailand. Inheriting marketing strategy from its parent
company, Apple Thailand can hold bargaining power above buyers. The evidences show that the
Apple products are the highest price in Thai market. However, the high price still limited the sale
revenue of Apple Thailand. The company seem to a bit concern on this issue, as we can see from
the recently announcement from Apple Thailand, there are some promotions from the iStudio
Thailand such as the 0% interest of 10 months installment.

The power of suppliers:

This force has been solved at the level of parent company. The company assigned a manufactory
in China to produce the majority of Apple's products (Blip Networks Inc., 2010). The unfold
information does not appear that how Apple Thailand import the product to it shops. However,
this strategy indicates that, globalization has declined power of some suppliers by increasing
alternative for the company. But the benefit still not provide to all type of business. It is show a
lot of benefit to manufacturing industry.

Threat of Substituted products:

In case of Apple Thailand, in general, there are enormous of substitutes which are; the existing
products in Thai market, Chinese-cheaper products, other global brands. Unavoidable, Apple
Thailand facing a high level of competition. In addition, cloning products from China also
disturb the stability of iPhone market in a period of time. At the end of the day, Apple Thailand
can win those substitutes due the clear of consumer group.

The competitive rivalry:

The factor in which the competitor cause us the most difficulty and worries cannot be denied. It
can be seen clearly in when a company has to think of new tactic and techniques to win the
competitor. In general, the global market drives global competition. Wherever the business
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opportunities can be see, the seekers all want to take those. The attractiveness of Thai market is
the bloom of IT market since 2009 (Business Wire, 2010). According to Jon Russell (2010)
BlackBerrys growth and popularity in Thailand owes much to this choice. Whilst Apples iPhone
has a cult following across the world, it is just one 23,000 baht phone against the BlackBerry
range which runs from the entry-level 8520 Curve at 12,000 baht to the high-end 23,000 baht
Bold. Currently, there are more than 10 brands in Thai market such as Blackberry, Nokia, and
Sony Ericsson. Apple Thailand response to its competitors by emphasize on the uniqueness and
prime service of its products. For example; Apple provides Apple care to warrantee and
extension warrantee of its product which its competitor in the market do not have. Moreover,
Apple Thailand provide free course for new Mac users and customer can get service from 26
shops in Thailand (iStudio Thailand, 2010).
Some issues during the process of these Five Forces are extremely important for organizations to
create a long-term business strategy and to hold on the competitive advantages rather than simply
list the forces. Being able to use Porter Model Analysis successfully includes identifying the
source of competition, the strength and likelihood of competition exist, and strategic
recommendations for the action company should act to develop defenses as barriers to
competition.
It is clear that globalization has raised the concern of the Apple Inc. Scope and scale of market
are vary and dynamic due to global competitors, technology change, customer behaviors and
major players who pay significant role in the Porter's five force model.