Global Competitive Advantage: The Case of Apple
The organisation I have chosen to analyse in this assignment is Apple Inc. Apple is a global corporation that specialises in personal computers, computer software and other such technologies. Probably most famous for its Macintosh line of computers, Apple has become a strategic global force in the technology market with enormous profits and revenue turnovers. Apple, which started off as Apple Computer Inc. , was establish back in April 1976, California, and is still an American based organisation.
The name was changed to Apple Inc. in January 2007 as the company looked to transfer its focus from purely personal computers, to consumer electronics in general, such as the iPod, for which Apple has become so recognisable for. In order to successfully analyse Apple, the “Star Analysis” (Spuller, 2007) framework will be applied. “Star Analysis” provides a general guide and basis upon which to analyse a range of markets and countries, relating to a specific corporation.
This should demonstrate how Apple attempts to achieve global competitive advantage, through five different features. Home-country Features: The first section that this assignment will look at is the home-country features. Apple Inc. was established in California, USA, and that remains its home-country to date. Despite moving into
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The brand nationality can either hurt or help sales, depending on how the home country is perceived amongst the potential customer countries. For example, Apple has done well in the UK as customers here see the USA as quite an advanced nation, a nation from which they would feel comfortable and confident buying technological products from. Furthermore, when looking at the home-country features, one theory useful to touch on is Porters Diamond Model (Michael E.Porter), which suggests that some, nations are more competitive than others on a global scale.
The model contains four determinants which Porter argues can act as bases for the nation to eventually become globally competitive. These four determinants are factor conditions, demand conditions, related and supporting industries and firm strategy, structure and rivalry. Factor conditions can include high amounts of raw materials and a highly skilled workforce.
In relation to Apple, America is a well-developed nation with plenty raw materials and in most scenarios a very skilled workforce, or at least the potential to develop one, being an extremely wealthy nation. These are factors that can be built upon in order to gain more advanced factors of competition. In terms of demand conditions, the home-country demand for Apple has always been very high, which has in turn, increased the global competitiveness of local exporters and competitors.
It also has given Apple enough confidence and evidence to take their company abroad to other nations; through innovative new products and improvements in quality. The final two points of the diamond mention the importance of local supporting industries and suppliers, which can potentially lead to greater competitiveness in national firms, and the firms’ strategy, structure and rivalry; the domestic market Apple competes in is very competitive which enhances the chances of being competitive on a global scale, with innovation and development. 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.