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Attractiveness
No of Competitors Low 2
Differentiation High 4
Apple is a Global company with a strong supply chain. In terms of sale and
product service it has clear guideline which can be easily accessed by any
consumer. Its advantage on this aspect with respect to its rivals is
moderate as Samsung,Google and windows have global presence as well.
It does have a distinct advantage over chinese products.
Justification
Apple products are known for being first in its class. Innovation
is the driving force in all apple products. Its competitors are
more like clones of apple products.
Source : 2017 -10 K annual report of Apple .
Business section
http://www.livemint.com/Companies/XuR9UJREa6snat6BQKe0
eJ/Apple-close-to-setting-up-manufacturing-plant-in-
Bengaluru.html
India needs Apple Inc to set its shop here for creating jobs in
manufacturing and Information Technology. Apple Inc needs
India to improve its revenues and maintain ints number uno
position in market value. India and apple Inc are tailor made for
Business.
Barriers to enty
Attractiveness
Apple Inc products are not just restricted to India. Its products have
universal appeal. The cost advantages can be exploited by increasing
the scale of production beacuase of its brand value
Apple products have unique appeal and most of its products are first
in its class.
Apple sells its products through reseller stores and through its own
website. Its distribution channel includes multiple channels with
Redington being a major player. However, distribution channels of
Samsung, Xiomi and other smartphone makers is better. Opening of
Retail stores of Apple shall enhance its distriution network. Apple
products are still to gain traction in Indian market. Apple is likely to
increase its channels of distribution based on demand. Source :
http://www.channeltimes.com/story/partners-wish-apple-
streamline-the-distribution-process/.
http://www.business-standard.com/article/companies/new-
distributor-for-apple-s-enterprise-solutions-won-t-impact-us-
redington-117080500882_1.html
Apple has huge cash reserve piles and has high Return on capital
Invested based on Annual 10K report for year 2017. It does need to
borrow money to start its shop in India.
In this digitalised world smart phones and smart services have taken over analogus world. Digital
India is the buzz word. India is primed to be a digital country. Landlines/fixed lines have lost their
relevance. Digitalisation is taking place in Banking sectors. Maps are digital. Sustitutes are
restricted for limited purposes.
Bargaining Power of Buyers
Attractiveness
The growing e comerce and increasing penetration of smart phone and digital usage
by consumers is an indication of huge market. The current 180 million digital buyers
is likely to increase to 339 million by 20202.of 22 to 25 % is likely to rise to 39%.
Added to this is the fact that India is second largest telecommunication market. It is
showing a high groth potential with a CAGR of 19%. However, the density of buyers
is skewed to lower end products and Apple product share is a mere 2.5% in the year
2017. Xiomi and Samsung coner more than 20% market share. Apple can increase
its market share by targetting youth which it is promoting by providing its products
at a lesser price for students and by shifting its production to India. It also needs to
provide better services in Maps and payment.
Source : https://www.ibef.org/industry/indian-
telecommunications-industry-analysis-presentation
https://www.statista.com/statistics/251631/number-of-
digital-buyers-in-india/
Consumers are unlikely to shift to land lines/ digital cameras with increasing
penetration of smart phones and smart devices. However, consumers can migrate
from Apple ecosystem to Andriod ecosystem as Andriod ecosystem is relatively
cheaper. Apple needs to pursue its innovation so that it retains its customer base.
Currently, apple brand value alone can retain its consumer base.
Apple products are wholly manufactured by them through their contracted
manufacturers. These products are not available in the open markets in bits and
ppieces for carrying out backward integration
Apple Inc is known for forward integration through franchising in the world. Infact,
Windows followed suit and started opening its own retail outlets. In India , however,
apple follows the policy of multiple distributors to leverage its costs. Opening of
Apple owned retail stores is a work in progress and the process of forward
integration is likely to be more robust from then.
Reeves and Bednar (1994) suggest a four-way classification of quality
definitions that incorporates excellence, value, conformance to specifications
and meeting and/or exceeding customer requirements. Apple products and
services meet all the requirements in global markets. In Indian context value
for money plays a major role. Indian consumer is not willing to shell money
when he can obtain a slightly low grade product or service for much cheaper
price. Apple products and services need to buil those bridges and gain
confidence among middle class Indin consumers that heir products and
services provide greater value than expected by a consumer.
Source : Research paper on "Impact of Buyer-
Supplier Relationships on
Quality Practices and Quality Performance".
Apple products and services are priced at a premium. They represent a significant
portion of buyer's purchase.
Profit margins for Apple products are high. The profit margins for I phone six was
touted to be close to 60% and that of I phone 7 is said to be close to 400$ from
open source. Apple accessories are pricey. I phone 8 cover costs 4000/- in India.
Bargaining power of suppliers
Attractiveness
Apple has 5 suppliers in India of which Redington tops the list. It also has Taiwanese
OEM for manufacture of Iphones in India. World wide 97% of its components are
manufactured by 200 odd companies as mentioned in its suppliers list where a
majority of suppliers are from China predominantly, and Taiwan and Japan
moderately.
A whole range of substitutes are available to Apple around India. Even in India it
can easily find suitable substitute.
It can easily switch suppliers. It has diversified from one primary supplier in
Redington to add fuor more suppliers as in 2017.
Apple supplier base is still at a nascent stage. It does not have enough capacity to
carry forward integration unlike in china
Apple has huge cash reserves and it can employ it to buy out suppliers. Redington
had to diversify and supply for chinese products to maintain its balance sheets.
As the competition between suppliers is high, it should ideally lead to better quality
logistic support.
Less number of suppliers necessitate Apple to ensure that a balance is struck
between demand and supply
As Apple products gain traction and popularity suppliers stand to gain from it. With
more exposure they shall be able to pose threat of forward integration
Government Actions
Attractiveness
Customs and
Tariff regulations
abroad. Fair 3
Overall score 3
Justification
FDI policies for single brand retail are relaxed. Import clause
for 30% domestic manufacture is present to promote
domestic industry.
Attractiveness(A) Weightage(W)
Rivalry among competitors 2.875 5
Barriers to Exit 3.6 3
Barriers to Entry 3.33 4
Threat of substitutes 4.33 2
Bargainig power of buyers 2.75 4
Bargaining power of supppliers 3.75 3
Government actions 3 2
Total 23
Overall Attractiveness
(AxW)/23
0.6250
0.4696
0.5791
0.3765
0.4783
0.4891
0.2609
3.2785
3.2785