apple international business case study

• International Marketing

Apple’s Global Strategy: Simplicity, Innovation, and Adaptability

• January 19, 2024
• LinkedIn 13

Table of Contents

Delving into apple’s global strategy, apple’s core values and the simplicity mantra, apple’s global branding strategy, apple’s global marketing strategy, case studies, apple’s global tax strategy.

• The Cornerstones of Apple’s Global Strateg

In the ever-evolving landscape of technology, Apple stands as a beacon of innovation and design, captivating consumers worldwide with its sleek products and user-centric approach. With a global presence spanning over 150 countries and an estimated $383.29 billion in revenue in 2023, according to Statista , Apple’s success is a testament to its astute global strategy , a harmonious blend of differentiation, adaptability, and unwavering commitment to quality.

Apple’s global strategy is rooted in the concept of “differentiation,” a strategic approach that sets it apart from its competitors. By consistently pushing the boundaries of innovation, Apple has carved a niche for itself, offering products that are not only technologically advanced but also aesthetically pleasing and user-friendly . This differentiation has allowed Apple to capture a loyal customer base and establish a strong brand identity across the globe .

Apple’s global strategy has evolved over time, adapting to the changing dynamics of the international market. In its early days, the company focused heavily on innovation, relentlessly pursuing cutting-edge technologies and groundbreaking designs. However, as the company matured, it recognized the importance of customer experience and began placing a greater emphasis on this aspect . Today, Apple’s global strategy is a seamless blend of innovation and customer focus, ensuring that its products and services align with the needs and preferences of consumers worldwide.

At the heart of Apple’s global success lies a set of core values that permeate every aspect of the company’s operations , from product design to marketing campaigns. These values, deeply rooted in the company’s identity, guide Apple’s approach to innovation, customer experience, and global expansion.

• Accessibility: Apple strives to make its products and services accessible to everyone, regardless of their physical or cognitive abilities. This commitment is evident in features like VoiceOver , which provides spoken feedback for visually impaired users, and AssistiveTouch , which allows users with limited mobility to control devices with gestures.
• Educational Support: Apple recognizes the transformative power of technology in education and actively supports initiatives that promote digital literacy and learning. The company’s initiatives include Apple Teacher certification programs, curriculum resources, and educational apps that enhance teaching and learning.
• Carbon Neutrality: Apple is committed to reducing its environmental impact and is working towards becoming carbon neutral by 2030 . The company has implemented numerous initiatives to minimize its carbon footprint, including transitioning to renewable energy sources, designing energy-efficient products, and recycling materials.
• Inclusive Work Environment: Apple is committed to creating a diverse and inclusive workplace where everyone is valued and respected. The company has implemented policies and programs that promote diversity hiring, provide equal opportunities for advancement, and foster a culture of inclusion.
• Privacy: Apple is a staunch advocate for user privacy and believes that individuals should have control over their personal data. The company has implemented robust privacy protections in its products and services, including encryption, data minimization, and transparency.
• Equity and Justice: Apple is committed to promoting equity and justice in its operations and throughout the world. The company supports initiatives that address social and economic inequalities, promotes human rights, and advocates for environmental sustainability.
• Supplier Responsibility: Apple is committed to ensuring that its suppliers adhere to high ethical standards and treat their workers with respect. The company has established stringent supplier codes of conduct and conducts regular audits to monitor compliance.

These core values, collectively, form the foundation of Apple’s global strategy. They guide the company’s product design, marketing campaigns, and customer service interactions , ensuring that Apple delivers products and experiences that are not only technologically advanced but also aligned with its values of simplicity, accessibility, and inclusivity.

Simplicity is a cornerstone of Apple’s design philosophy, evident in the clean aesthetics, intuitive interfaces, and user-friendly features of its products. This emphasis on simplicity has resonated with consumers worldwide , making Apple products accessible to a broad audience and fostering a loyal customer base.

By upholding its core values and embracing simplicity, Apple has not only achieved global success but also established itself as a role model for other companies seeking to build a sustainable and ethical business model.

Apple’s global branding strategy is a delicate balance of standardization and adaptation, ensuring that the company maintains a consistent brand identity while also resonating with consumers in diverse cultures and markets. On the one hand, Apple strives to project a unified brand image, conveying its core values of innovation, simplicity, and elegance across all its products, marketing campaigns, and customer interactions. This standardization helps reinforce Apple’s reputation for quality and consistency, fostering brand loyalty and recognition worldwide.

On the other hand, Apple recognizes the need to adapt its branding to local markets and cultures. This adaptability is evident in the company’s product offerings, marketing messages, and customer support. For instance, Apple has developed localized versions of its products with features and specifications tailored to specific regions . Additionally, the company’s marketing campaigns often incorporate cultural nuances and local references to connect with consumers on a deeper level.

Apple’s ability to balance standardization and adaptation has been a key factor in its global success. By maintaining a consistent brand identity, the company has built a strong foundation of brand recognition and loyalty . However, by adapting to local markets, Apple has been able to cater to the needs and preferences of consumers in different parts of the world, expanding its reach and deepening its customer base.

Examples of Apple’s Standardization

• Unifying Brand Elements: Apple employs a consistent design language across its products, including clean aesthetics, minimalist interfaces, and sleek silhouettes. This consistent visual language helps establish a cohesive brand identity.
• Global Marketing Campaigns: Apple’s marketing campaigns often feature universal themes of innovation, creativity, and personal empowerment, appealing to a global audience.
• Seamless Customer Experience: Apple’s customer support is available in multiple languages, and the company’s online store can be accessed in over 40 countries, ensuring a consistent experience for customers worldwide.

Examples of Apple’s Adaptation

• Localization of Products: Apple offers localized versions of its products, such as the iPhone and iPad, with features and specifications tailored to specific regions. For instance, the iPhone SE 2020 is optimized for Indian consumers with support for two SIM cards and regional cellular bands.
• Culturally Sensitive Marketing: Apple’s marketing campaigns often incorporate cultural nuances and local references to connect with consumers on a deeper level. For example, the company’s “ Shot on iPhone ” campaign features images captured by photographers from around the world, showcasing the diversity of visual storytelling.
• Localized Customer Support: Apple provides customer support in multiple languages and offers localized resources, such as online FAQs and tutorials, tailored to specific regions. The company also partners with local businesses to offer personalized support services.

Apple’s success in balancing standardization and adaptation is a testament to its understanding of the complexities of global branding. By striking this delicate balance, the company has been able to maintain a strong brand identity while also resonating with consumers in diverse markets , solidifying its position as one of the world’s most recognizable brands.

Apple’s global marketing strategy is a multifaceted approach that revolves around four key pillars: wide acceptance, brand value, competitive advantage, and low imitation . These pillars are intertwined, working together to propel Apple’s success in the global marketplace.

Wide Acceptance

Apple’s products have achieved widespread acceptance worldwide, attracting a loyal customer base across diverse demographics and regions . This widespread appeal is attributed to several factors, including:

• Innovative Designs: Apple consistently pushes the boundaries of design, creating products that are both aesthetically pleasing and user-friendly. The company’s sleek, minimalist aesthetic has become synonymous with Apple’s brand identity.
• User-Friendly Interfaces: Apple’s products are renowned for their intuitive interfaces, making them easy to navigate and use for people of all technical backgrounds.
• Effective Marketing Campaigns: Apple’s marketing campaigns are known for their creativity and emotional appeal, resonating with consumers on a personal level. The company often uses storytelling and cultural references to connect with diverse audiences.

Brand Value

Apple has built a strong brand value over the years, characterized by perceptions of quality, innovation, and premium craftsmanship . This brand value has been instrumental in attracting consumers and fostering brand loyalty.

• Reputation for Quality: Apple is consistently rated among the most reliable and durable consumer electronics brands. This reputation for quality has earned the company a loyal following among consumers who value long-lasting products.
• Innovation: Apple is renowned for its pioneering spirit, consistently introducing innovative products that redefine the technological landscape. This focus on innovation has helped maintain Apple’s cutting-edge reputation and attract early adopters.
• Premium Branding: Apple’s products are positioned in the premium segment of the market , commanding higher prices than its competitors. This premium positioning contributes to the company’s brand value and reinforces its image as a luxury brand.

Competitive Advantage

Apple maintains a competitive advantage in the global market through a combination of factors, including:

• Strategic Product Differentiation: Apple differentiates its products from competitors through unique features, design elements, and user experiences. This differentiation strategy has helped the company carve out a distinct niche in the market.
• Focus on Customer Experience: Apple prioritizes customer satisfaction, creating a seamless and personalized experience for its users. This focus on customer experience has helped foster brand loyalty and attract new customers.
• Global Retail Presence: Apple has a strong global retail presence, with over 500 stores in 23 countries, as per Statista . This extensive retail network provides consumers with easy access to Apple products and services.

Low Imitation

Despite facing intense competition from numerous technology giants, Apple has been able to maintain a relatively low level of imitation . This is due to several factors, including:

• Continuous Innovation: Apple’s relentless pursuit of innovation makes it difficult for competitors to replicate its products and services.
• Strengthened Intellectual Property Protection: Apple has a robust intellectual property portfolio, providing legal protection for its innovative designs and technologies.
• Brand Loyalty: Apple’s loyal customer base is less susceptible to imitation, as they are often willing to pay a premium for Apple products due to their brand loyalty and trust in the company.

Apple’s successful global marketing strategy is a testament to its ability to balance innovation, brand value, competitive advantage, and low imitation. By consistently delivering high-quality products, cultivating a strong brand reputation, and prioritizing customer experience, Apple has cemented its position as one of the world’s leading technology companies .

Apple’s remarkable global success is evident in its ability to penetrate and dominate markets as diverse as China and India. These two countries represent two of the world’s most populous and rapidly growing economies, offering significant opportunities for technology companies. Apple’s success in these markets is a testament to its ability to adapt its global strategy to local conditions and preferences .

China has become Apple’s second-largest market , with over 190 million active iPhones in use as of 2023 ( Statista , 2023). Apple’s success in China can be attributed to several factors, including:

• Pricing Strategy: Apple has adopted a tiered pricing strategy in China, offering a wider range of products at lower price points to cater to a broader range of consumers.
• Distribution Channels: Apple has established a strong network of authorized resellers and retail stores in China, making its products readily available to consumers across the country.
• Partnerships with Local Businesses: Apple has partnered with Chinese telecommunications companies, e-commerce platforms, and content providers to expand its reach and customer base.
• Localization: Apple has made sure to localize its products , marketing campaigns, and customer support for the Chinese market, ensuring that they resonate with local consumers.

Despite facing challenges such as piracy and counterfeiting, Apple has successfully established itself as a premium brand in China . The company’s commitment to innovation, design, and customer experience has resonated with Chinese consumers, who are increasingly embracing technology.

India is another key market for Apple, with a growing middle class and increasing smartphone penetration. Apple’s strategy in India has focused on tailoring its products and services to the specific needs and preferences of Indian consumers .

• Price Sensitivity: Apple has introduced more affordable iPhone models in India, such as the iPhone SE, to attract price-conscious consumers.
• Online Sales: Apple has heavily invested in its online presence in India, making it easier for consumers to purchase its products online.
• Partnerships with Local Businesses: Apple has partnered with Indian e-commerce platforms, mobile carriers, and banks to expand its distribution reach and payment options.
• Localization: Apple’s localization strategy for the Indian market has included the adaptation of its products, marketing campaigns, and customer support, including the development of Hindi-language versions of its software.

Apple’s success in India has been gradual but steady. The company has faced challenges such as competition from local smartphone brands and a lack of brand recognition in rural areas. However, Apple’s commitment to innovation and adaptation has helped it gain traction in this emerging market .

Apple’s global success has been accompanied by scrutiny over its tax practices, particularly its use of a subsidiary company in Ireland to minimize its global tax liability. This strategy, known as “ Double Irish with a Dutch Sandwich ,” has allowed Apple to shift profits offshore, effectively reducing its tax payments in the United States and other countries .

While Apple has defended its tax strategy, arguing that it complies with all applicable laws, it has faced criticism from governments, tax experts, and consumer advocacy groups . Critics argue that Apple’s tax practices amount to corporate tax avoidance, depriving governments of revenue that could be used for public services.

Advantages of Apple’s Tax Strategy

Apple’s tax strategy has several potential advantages for the company, including:

• Reduced Tax Burden: By shifting profits offshore, Apple can effectively reduce its tax payments, which can boost its profitability and financial returns to shareholders.
• Increased Competitiveness: Lowering tax costs can give Apple a competitive advantage over other companies, allowing it to invest more in research and development, marketing, and product development.
• Enhanced Shareholder Value: By reducing its tax burden and increasing profitability, Apple can improve its financial performance and boost shareholder value.

Disadvantages of Apple’s Tax Strategy

Apple’s tax strategy has also been criticized for several potential disadvantages, including:

• Public Image Concerns: Apple’s tax practices have tarnished its public image, raising concerns about corporate social responsibility and ethical behavior.
• Legal Challenges: Governments and tax authorities around the world have been investigating Apple’s tax strategy, and the company faces potential legal challenges that could lead to fines and penalties.
• Political Fallout: Apple’s tax practices have created political tensions, with some countries considering imposing stricter tax laws to prevent multinational corporations from shifting profits offshore.

A Balancing Act

Apple’s global tax strategy has been a source of controversy, highlighting the delicate balance between corporate profitability and societal responsibility . While the company may benefit financially from its tax practices, it also faces reputational risks and potential legal repercussions. Apple must carefully navigate this complex landscape to maintain its global success while addressing concerns about its ethical conduct.

The Cornerstones of Apple’s Global Strategy

Apple’s journey to becoming one of the world’s most recognizable and successful companies is a testament to its ability to balance simplicity, innovation, and adaptability. From its early days as a niche computer manufacturer to its current status as a global technology powerhouse, Apple has consistently demonstrated its knack for understanding and meeting the evolving needs of consumers worldwide .

Apple’s core values, particularly its emphasis on simplicity, have permeated every aspect of its business. The company’s products are renowned for their user-friendly interfaces and intuitive designs , making them accessible to a wide range of users, regardless of their technical expertise. This commitment to simplicity extends to Apple’s marketing campaigns, which often use storytelling and emotional appeals to resonate with consumers on a personal level.

Apple’s unwavering focus on innovation has been another driving force behind its global success. The company has consistently pushed the boundaries of technology, introducing groundbreaking products that have transformed the way people interact with the digital world . From the revolutionary iPhone to the sleek AirPods, Apple has consistently redefined the standards for innovation in the technology industry.

Alongside innovation and simplicity, Apple has also demonstrated remarkable adaptability in its global expansion . The company has successfully tailored its products, marketing strategies, and customer support to suit the unique needs and preferences of different cultures. This adaptability has been crucial in Apple’s ability to penetrate and dominate markets as diverse as China and India, where local competitors pose significant challenges.

Apple’s approach to globalization is not without its critics. The company’s tax strategy, which has been the subject of intense scrutiny, has raised concerns about corporate social responsibility and ethical behavior. As Apple continues to expand its global footprint, it will need to address these concerns and demonstrate its commitment to operating responsibly and ethically in all the markets it serves.

Looking to the future, Apple faces a number of challenges and opportunities. The company will need to continue to innovate and adapt to the ever-changing technological landscape . It will also need to navigate the complexities of global markets, ensuring that its products and services remain relevant and appealing to consumers worldwide.

Apple’s journey to global success is a compelling case study in how a company can build a strong brand and establish a lasting presence in the international arena. By embracing simplicity, innovation, and adaptability, Apple has demonstrated that it has the vision and resilience to continue to thrive in an increasingly competitive and interconnected world .

As Apple embarks on the next chapter of its global journey, it remains to be seen how the company will navigate the evolving landscape of technology, consumerism, and globalization. However, one thing is certain: Apple’s commitment to innovation and its ability to understand the needs of consumers worldwide will continue to be key drivers of its success in the years to come.

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How Apple Is Organized for Innovation

• Joel M. Podolny
• Morten T. Hansen

When Steve Jobs returned to Apple, in 1997, it had a conventional structure for a company of its size and scope. It was divided into business units, each with its own P&L responsibilities. Believing that conventional management had stifled innovation, Jobs laid off the general managers of all the business units (in a single day), put the entire company under one P&L, and combined the disparate functional departments of the business units into one functional organization. Although such a structure is common for small entrepreneurial firms, Apple—remarkably—retains it today, even though the company is nearly 40 times as large in terms of revenue and far more complex than it was in 1997. In this article the authors discuss the innovation benefits and leadership challenges of Apple’s distinctive and ever-evolving organizational model in the belief that it may be useful for other companies competing in rapidly changing environments.

It’s about experts leading experts.

Idea in Brief

The challenge.

Major companies competing in many industries struggle to stay abreast of rapidly changing technologies.

One Major Cause

They are typically organized into business units, each with its own set of functions. Thus the key decision makers—the unit leaders—lack a deep understanding of all the domains that answer to them.

The Apple Model

The company is organized around functions, and expertise aligns with decision rights. Leaders are cross-functionally collaborative and deeply knowledgeable about details.

Apple is well-known for its innovations in hardware, software, and services. Thanks to them, it grew from some 8,000 employees and $7 billion in revenue in 1997, the year Steve Jobs returned, to 137,000 employees and $260 billion in revenue in 2019. Much less well-known are the organizational design and the associated leadership model that have played a crucial role in the company’s innovation success.

• Joel M. Podolny is the dean and vice president of Apple University in Cupertino, California. The former dean of the Yale School of Management, Podolny was a professor at Harvard Business School and the Stanford Graduate School of Business.
• MH Morten T. Hansen is a professor at the University of California, Berkeley, and a faculty member at Apple University, Apple. He is the author of Great at Work and Collaboration and coauthor of Great by Choice . He was named one of the top management thinkers in the world by the Thinkers50 in 2019. MortentHansen

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Technology and Operations Management

Mba student perspectives.

• Assignments
• Assignment: RC TOM Challenge 2017

Globalization with Apple

If the cost of manufacturing continues to increase in China as predicted, will it continue to be the best place to manufacture for Apple products?

Apple Inc has received a lot of bad publicity for using Chinese manufacturing companies to build most of their products. As a consumer would you be willing to pay at least $100 more for an iPhone to know it was designed and manufactured in the United States? (1)

Apple’s role with International Trade

Apple along with other manufacturing companies has taken manufacturing overseas to reduce costs and improve efficiencies. Many of the upstream components and subassemblies are also manufactured in China and Southeast Asia, so to do final assembly in the United States would create huge logistical challenges. China also has much larger and more nimble factories than in the United States. (2) Labor is starting to become an issue during peak seasons, usually over the summer due to the large number of manufacturing companies looking for labor. Companies are competing for moderately “skilled” labor to meet the demands of product launches. During an iPhone launch contract manufacturers need to hire or re-allocate around 250,000 people to work on finally assembly of the new iPhone. There are also all of the upstream suppliers who are also in need of employees to work on their sub-assemblies and components that go into the finished good. Apple now pays a premium on top of minimum wage to their contract manufacturers to ensure that they receive the labor needed to not delay production. Even with China’s population it is still a challenge to meet the demands of labor when so many companies are competing for the labor. Apple is currently heavily weighted in China for final assembly manufacturing, but if there were any changes in government regulations or tariff rates as stated by President Trump, it could put Apple at a significant disadvantage to getting product to customers in a timely manner and take an enormous hit to margins. (3)

Apple’s current strategy

Pathways to Just Digital Future

For the mid term, Apple has started to look at other countries to do their final assembly production. Apple is looking to produce in other countries, not just to reduce costs but to also increase revenues. IPhone market share in India isn’t in the top five smartphones so there is a large opportunity to establish its brand with the worlds 2nd largest populated country. (5) India is a strong candidate because the labor wages are approximately 25% the cost of labor in China, they have the experience and skill to quickly learn the manufacturing process for iPhones, and they have the ability to keep up with labor demands during peak seasons. (6)

President Donald Trump and Apple CEO Tim Cook met to discuss Apple’s future of manufacturing overseas. President Trump claims that Tim Cook has promised to build three large plants in the United States. Apple continues to explore its options of where to manufacture based off of costs, complexity, potential and capability. Producing in the United States poses other risks such as speed to market, increased costs, and manufacturing flexibility.

Recommendations for Apple

I think the Apple management team should make a bigger effort to explain the benefits of manufacturing overseas other than costs. Benefits include international opportunities to its employees, speed to market for its customers to have the latest and greatest technology, and efficiencies in the supply chain with the sub-component suppliers. Apple should also promote the number of foreign workers they have sponsored to work in the United States to add to the country’s diversity and accomplished population.

I also think that Apple needs to ban together with other manufacturing companies such as Microsoft, Alphabet, and Amazon to contest the current President’s goals of bringing all manufacturing back to the United States and “making America great again”. To bring that much manufacturing back to the United States would be a drastic change that would cause the companies to invest a significant amount and money and resources toward the move back and the country may not be able to keep up with the high demands of skills and labor needed to produce all hardware products.

Key Outstanding Questions

• With the rising labor costs in China and the competition for labor should Apple consider moving back to the United States or to another country? If so, which country?
• Do you think the United States can handle bringing back all manufacturing jobs in the medium term?

(Word Count 798)

• Swearingen, Jake. “Apple Isn’t Building 3 Factories in the U.S., No Matter What Trump Says.” Nymag.com, 25 July 2017, nymag.com/selectall/2017/07/despite-trump-claims-apple-wont-build-3-factories-in-u-s.html.
• Blodget, Henry. This Article Explains Why Apple Makes iPhones In China And Why The US Is Screwed. Business Insider, 22 Jan. 2012, businessinsider.com/you-simply-must-read-this-article-that-explains-why-apple-makes-iphones-in-china-and-why-the-us-is-screwed-2012-1 .
• Kharpal, Arjun. Apple is exploring moving iPhone production to the US: Report. CNBC, 18 Nov. 2016, cnbc.com/2016/11/18/apple-is-exploring-moving-iphone-production-to-the-us-report.html .
• Apple CEO Promised to Build 3 ‘Big’ Plants in U.S., Trump Says. Fortune, 25 July 2017, fortune.com/2017/07/25/apple-ceo-big-plants-trump/.
• Vincent, James. Apple has started assembling iPhones in India. The Verge, 17 May 2017, theverge.com/2017/5/17/15651842/apple-iphone-india-assembling-begun .
• Zhu, William. Comparison of Manufacturing Between India vs. China. LinkedIn, 9 Sept. 2016, www.linkedin.com/pulse/comparison-manufacturing-between-india-vs-china-william-zhu/.

Student comments on Globalization with Apple

I agree that it is not viable to bring a great deal of labor-intensive manufacturing back to America. The cost seems too high for most companies and would ultimately be passed through to the consumer. I think a better approach is understanding the root causes that are driving companies to manufacture abroad (e.g., is it purely cost of labor or other factors). The New Yorker posted an interesting article about Trump’s manufacturing policies (see link below). I believe the labor content required for manufacturer is going to decrease while the need for skilled workers who can operate specialized manufacturing equipment will grow. Both the US government as well as US based companies like Apple should evaluate how they are positioning American workers to shift to the changing environment and help these employees receive the requisite training they need to handle the shift to the modern factory.

https://www.newyorker.com/business/currency/why-donald-trump-is-wrong-about-manufacturing-jobs-and-china

Although the future of unskilled or low-skill labor seems very much in question, this article also brings into question the very long-term implications of new technology and the effect on capital and labor investment. If machines/capital are able to replace more and more human labor, will the production shift back to the countries where the final goods will be sold? Or will it still make sense to manufacture those items in certain countries based on the labor base and the price of the labor in those countries? Furthermore, what affect will the shift from human labor to capital for production have on those countries that have relied heavily on manufacturing jobs to boost the middle class?

Very interesting topic!

There were two things that came to my mind as to how apple can combat wage inflation. 1. Automation: How much will Apple invest in automation and work with their suppliers to reduce dependency on labor, especially eliminating the low to medium skill jobs. However, this is not easy and will take time. 2. Diversification of supplier base: Given the need to expand the manufacturing footprint and move to cheaper locations, India is a potential destination for apple with one of the solutions being to manufacture the older iPhones in Bangalore [1]. Yet, developing new suppliers and maintaining quality and scale in India is a whole new challenge.

However, on the isolationist policy and moving manufacturing back to US, Apple could potentially move manufacturing of some of the low volume high complexity items to US, employing few workers as a show of good faith. But with regards to scale and cost, I am unable to see how they would ever be able to manufacture a large portion of their demand in the US.

[1] http://mashable.com/2017/03/24/apple-iphone-india-6-6s-se/#Q9i1Fz2vCsq2

Thanks for sharing your insights on Apple and the implications protectionists policies will have on the company moving forward. To answer your first question regarding Apple’s response to rising labor costs in China, I do think that in the short term Apple should consider diversifying its geographic footprint to expand into neighboring countries with lower labor costs. That being said, I believe increasing dependence on automation will have a tremendous impact on Apple’s strategy moving forward as it considers labor costs management. As more and more workers are replaced with machines, Apple prospects of moving manufacturing back to the US in line with Trump’s protectionists agenda may increase. I think the central question to answer here is what type of labor Apple will need from a manufacturing prospective in the automated landscape of the future.

Lastly, I think one other element that will figure into Apple’s decision to invest more in US manufacturing is where its key partners and suppliers are going. Foxxconn, one of Apple’s largest manufacturing partners, already has plans to build new factories in the US [1], and if this trend continues I believe that Apple may consider increasing their US investment as well.

[1] https://www.cnbc.com/2017/05/09/foxconn-us-factory-likely-may-be-used-for-iphone-and-ipad-displays.html

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Apple in China

By: Mary B. Teagarden

China is Apple's fastest growing market but the road to success has not been smooth. This case documents Apple's journey on this road to success; the role that Tim Cook played on this journey; the…

• Length: 12 page(s)
• Publication Date: Mar 21, 2016
• Discipline: Information Technology
• Product #: TB0439-PDF-ENG

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China is Apple's fastest growing market but the road to success has not been smooth. This case documents Apple's journey on this road to success; the role that Tim Cook played on this journey; the basic dynamics of China's telecommunications sector, the world's largest and most dynamic; and obstacles Apple is likely to encounter on the road to its future there. Apple's products are predominantly contract manufactured in China by Foxconn, a Taiwanese company that was the focus of considerable criticism and negative publicity for poor working conditions and suicides among its young workers. Apple, an aspirational brand in China, was named the top brand in the world in 2015 by Brand Finance--followed in second place by their global nemesis, Samsung. The growing consumer power of the Chinese middle class has accelerated demand for Apple products. Apple's popularity in China led to considerable counterfeiting or copying of their prototypes, products, know how, trade secrets, service model, and store concepts. It has spawned a cottage industry that supplies fake Apple stores with logos, uniforms, shopping bags, shelves and other accessories to make them appear real. Face-seeking behavior, the propensity of some Chinese to show off high status consumer goods, further spurs the activities of Apple counterfeiters and imitators to meet market demand. After more than a quarter century of continuous high levels of economic growth, China's economy is cooling. Despite a panoply of obstacles, Apple CEO Tim Cook maintains that China is key to Apple's bottom line now and in the future.

Learning Objectives

Apple in China provides an opportunity to develop understanding of the company's early entry into China and the evolution of their sales and manufacturing activities there. It is a vehicle for understanding the driving forces in the Chinese information and communications technology industry; challenges associated with Apple's market entry; intellectual property challenges encountered by Apple; and the evolving competition with indigenous competitors in this sector. The Apple in China case been taught in MBA and EMBA Competitive Strategy; MBA Regional Industry Analysis: and Strategic Management of Technology and Innovation. The Apple in China case provides a platform for analysis from multiple perspectives:

• Driving Forces in the Chinese Smartphone Industry viewed through a Five-Forces Analysis

• Apple's China Market Entry Challenges including CAGE analysis; analysis of addressable market; cross cultural issues; branding and reputation management.

• The Rise of Indigenous Competition in China viewed through its impact on the competitive environment that Apple encounters.

Mar 21, 2016

Discipline:

Information Technology

Geographies:

Industries:

Electronics manufacturing, Information technology industry, Telecom

Thunderbird School of Global Management

TB0439-PDF-ENG

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Apple Inc.: Global Supply Chain Management

Nov 12, 2020

• Apple Podcasts

Fraser Johnson , professor of operations management at the Ivey Business School, joins host Matt Quin to take another look at his  award-winning  case,  Apple Inc.: Managing a Global Supply Chain  (2014), as well as the recently published update,  Apple Inc.: Global Supply Chain Management  (2020).  In this episode, Johnson and Quin discuss Apple's business model, how he has brought the company into the classroom over the years, and why junior faculty ought to consider writing cases. Professor Johnson is the Leenders Supply Chain Management Association Chair at the Ivey Business School, Western University, where he teaches courses in supply chain management and operations. Johnson is also the Director of the  Ivey Purchasing Managers Index , one of the most widely watched and utilized indicators of future economic activity in Canada.

Hi, I'm at Quinn. Thanks for joining us for decision point from Ivy Publishing at the Ivy Business School. Today we returned to another award winning and best selling case. Apple INC managing a global supply chain, originally published in two thousand and fourteen. Authoring Professor Frasier Johnson from the Ivy Business School, presents a snapshot of Apple up against competitors such as blackberry and Samsu. Unlike other companies with leading supply chains, such as Walmart, apple's approach to supply chain strategy and supplier management padded, investing far less in assets to support distribution. Instead, the company is now famous for its focus on innovation, new product development and brand management. In this episode we ask Professor Johnson about how apple was able to use its business model and supply chain strategy to help it continue capturing significant value from hardware sales. We also take a look at the updated two thousand and twenty case in the increased complexity for apple as it continues to add services in products to compete in the mature smartphone market. I hope you enjoyed today's episode. So, Frasier, thanks very much for joining us today. Apple was a really different company in two thousand and fourteen. What prompted you to write the case then, and how have you audit what's changed as you've taught it throughout the years? Well, apples a fascinating company. A lot of the cases that are done in the supply chain area tend to be with traditional manufacturing companies like Toyota or large retailers like Walmart, and one of the things that really interested me about apple was or business model with the IPHONE, with these annual product introductions, with big spikes in demand, and exactly how were they able to get their supply chain organized to be able to meet these big peaks in demand that they were facing. So the great thing about cases is it puts the student in the seat of a protagonist. This particular case Examines Apple from the perspective of Jessica Grant. She's an analyst with a Toronto based Money Management Firm. You, as an author, did a great job of giving students a primer of how apple was able to reach the margins with the iphones through supplier relationships and really tight coordination of the supply chain. Can you remind listeners what's at stake in the case for apple when it was set in two thousand and fourteen. Well, apple was one of the early innovators in the smartphone business and if you take a look at what's happened to the company over the last decade or so, the iphone is a way that apple connects with their consumers. Those they do things like sell services to individuals. Really, you know, the analogy that I use in the teaching note is that the iphone represents the the the razor that they used to be able to sell the blades to the consumers. So as apple looks to expand as market in the smartphone business, really what it does is give them a platform to be able to connect with their consumers. And from the students perspective, you're putting them in the role of the analyst in the case allows them to take a look at the entire business operation as opposed to taking the role of a functional executive with a specific functional related problem. So let's talk teaching notes for a second, because you've written a lot of case as many of them are best sellers. Let's dive into the teaching note part of this. In the teaching note you mentioned flexibility as a key part of the apple supplier management strategy. With recently apple moving away from mentell process. There's in away from Samsung as a screen supplier. It seems that the company is really continuing to embrace this approach of flexibility. What do you see in the company? Back in two thousand and seven when apple launched the iphone, they basically outsourced everything. HMM. So to bring a iphone to market they had to work closely with their suppliers. And the other interesting part of this is a short product life cycle of the IPHONE. They bring a new product ote every year and that was one of the it's one of the other important parts of the case. How do you work with suppliers where you're constantly launching and relaunching a new product every year, in selling product in the in the millions? So if you take a look at a company like Walmart, for example, they practice every day low pricing, so they try to minimize the bull whip effect and provide stable demand so they can work with their suppliers to reduce their total costs. Apples a complete opposite. They embrace variability. They have, as I said earlier, these annual releases with huge product introductions, with high volumes and then volumes taper off slowly until they bring out a new product and repeat the process all over again. And so you've built this in these comparators, in in the narratives. So one of the things that we know is important about the uptake of a case, in the sales of a case, is also the teaching note, and you write great teaching notes. You've mentioned apple versus Walmart. What are some other things that you try to include in a teaching note to help a faculty member use it in the classroom? What are your keys to success? Well, you know, what you want is, as somebody writing a case, to have a teaching note that resonates with other instructors. So when I say resonates, it's got to be something that they can relate to. It doesn't want to be so complicated that when they read the case and then take a look at the teaching note, become intimidated with the material that they see. They have to be able to understand it. They'd be had to be able to translate the material that you provided the teaching note into a classroom setting, so being able to talk about the issues at instructors face, including a teaching strategy appropriate questions to ask as part of delivery of the material are all very important. The other thing that I think is important to recognize is it before the case is completed, you've also got to write the teaching note. So don't publish the case and then come back to the teaching note a month later or two months later. Rate both documents simultaneously, because you have to use your teaching note as a quality control check to make sure that there's enough information in the case for the students and the instructors to be able to complete the analysis properly. And I know something you've done and our other colleagues have done is way to finalize that teaching note, if you will, until you've taught it a couple times and see how certain questions go or there might be some new information that comes out that you can include. So I know you've done that a few times as well. Right. Yeah, for many of the cases that I've written I will go back to the great staff at I've publishing and make revisions to the teaching note and perhaps to the case I'm talking about, minor at it to make in case issues have come up in the class discussion and I can help clarify the case by making qualifying statements. Sometimes when you're right a case, even with the editing process that you go through, sometimes students don't always interpret the information properly. So gives me a chance to be able to go back in and, you know, just a couple of sentences put not tend to clarify what certain peoples of data mean. For example, one of the tips that you gave is to try to not make things overly complicated. At the time of the case there's a lot happening at at apple with the five c being released. Profit margins were down slightly from, you know, two thousand and nine to two thousand and eleven. What do you think of and consider as you're writing a case to maintain that focus without, you know, there's a lot that you can put in a case. How do you remain so focused as an author? Well, I think that you're right a case in a particular point of time and as you as you say, you know, a lot has happened at apple in the last decade, or I guess thirteen years, since they brought out the first iphone, and you know the way that I view a lot of cases. You like my one an apple my other cases on Walmart and Amazon, is that they're almost live cases in the sense that, you know, I keep crack of what's going on in these organizations throughout the year before I teach the case so that we can use the information in the case is kind of a launching board, but we can also I can also incorporate through the introduction of power point slides, for example, and other information in terms of more recent developments. In the case of Apple, you see them, for example, insourcing more product buying the chip division from Intel and moving more to insourcing mode as opposed to an outsourcing mode, and that's the kind of stuff that you can incorporate into the class discussion. You've mentioned that you've released an updated case, which is great. We encourage faculty to do that and authors to do that. We welcome that and it's a smart thing to do because the cases evolve, the companies evolved in the situations, in the environment that the business is working evolved as well. Could you talk a little bit about the new case and the new complexities for Apple? Is As we sit here, in two thousand and twenty I wrote the first apple case, as you stated earlier, in two thousand and fourteen and if you take a look at what was happening to apple at that point, the sales for iphones were on the upsway and you know, if apple had a problem at that point, it was simply keeping up with demand. Now, if you take a look at what's happening in two thousand and twenty, the situation that the company faces and the challenges for its supply chain or are a lot different. As we talked about earlier, it's more moved to more of an insourcing model. On the other side of it, sales of the IPHONE are now starting to flatten out and the smartphone market is starting to mature. So we've see in back in two thousand and fourteen, apple competing in an environment where the markets growing margins are pretty healthy and it's having trouble keeping up with the man to in two thousand and twenty, where you're facing consecutive years of sales declines of the IPHONE and a maturing market with a lot of price pressure on margins. The other thing that you see with apple in two thousand and twenty compared to two thousand and fourteen is an increased emphasis on services. So one of the things that we can talk about in the new case is how does apple manage its services supply chain? So it really gives you a double edge. On one side we can talk about changes to the iphone and what apple does to manage its iphone successfully, but also how do they use the iphone in terms of its relationships and connectivity with its customers as part of its services supply chain? I've mentioned before how popular this case is. It's been climbing up the best seller list for years. Why do you think that is it? Is it the brand? Is it because the student can hold this thing in their hands and have a relation with with the company? What do you think is made us so popular? You know, I like to say cases like this teach themselves, and you know it's an overused line maybe in some areas, but students are familiar with the company, instructors are familiar with the company. The brand is strong. Even students that don't necessarily get excited about coming to class and talking in a case discussion do like the technology companies and I think there's something in the case for people that most people, particularly students, can relate to in terms of the technology and how they use their iphones and even the debate among the students in the class, among the iphone users versus the non iphone users. So every time I teach the case I ask you know, who's using apple products, and iphones included, and who's not using them, and why is that? You know, why do you like apple? Why do you use your products? On the other end of the spectrum, who are the Anti Apple people and why have they made a conscious decision not to participate in what I call in my new case apple ecosystem? And that kind of allows us to talk about the company strategy, which then evolves into a further more detailed discussion about how they're able to support Tho strategy with their supply chain capabilities. Yeah, it's a very accessible for for students of many Undergrad students, Grad students, high school students, can they can all take a different approach with it, but apple is a company is pretty accessible. Have there been any challenges or surprises when you've taught this where you go, oh, that's a different perspective or I have to remember to the include that in my next version of the case. Anything that comes to mind. The major event for me was in two thousand and nineteen as I was teaching the case and my supply chain management elective. And you know, as I'm standing up in front of the class talking about what's happening with a company in two thousand and nineteen, about exactly how much it changed at at Apple, and you know that point. You know after I, as I do after every class, I make notes to myself in terms of things that I want to remember for the following year, I made the decision that I commit the time to updating the case and writing and ended up doing that writing the case this year. So to me, you know, when you deal with cases like apple, you know a lot of the changes and things that happen, both in the classroom as a result of what happens at the company and as part of your preparation in terms of teaching the case. Is kind of evolutionary. Is of most revolutionary. Yeah, but eventually, you know, with companies like this, you do reach a point where you've got to think about revising the product, and that's one thing I want to give as a really good tip, and I don't want to overlook this, I'm just looking at some notes I've got here, is that the importance of immediately after the class, taking down notes as an instructor H who's either taught this case a number of times or just new to it. All the great case teachers that I've seen makeup point immediately, even at the breaks, of writing down some notes about ways it could be done differently or different things to approach or something that didn't go so well. So I want to make sure that if we hit that point for those that are listening, because that's such a great tip that I don't want to overlook. So anything else that you make a point of doing right before class or during a break or right after the class as a process for case teaching? Yeah, yeah, I think that this is maybe a minor point, but I think a relevant one. I think regardless of how many times you've taught a case and regardless of whether or not you're the one that wrote the case, and sometimes I think people that write cases can be too overconfident in terms of their level of understanding with the material to invest the time before class to get ready, regret, regardless of how many times you've taught the case. So don't just pick the file up and walk into class. US remind yourself about the essential details of the case and the case facts and think about how you're going to manage the conversation with the student. And, as I said earlier the debrief after class, every time I teach a case, I sit in my office after class and make note to my teach on the front of my teaching plan in terms of things that I would adjuster do differently or things that I want to remind myself worked well and to do. And that regular pays off, because I've seen you teach. You've welcome to a lot of our team members from I be publishing to watch a teach. So I've seen it at work. As we wrap up today on the discussion, I want to come back to the writing of cases. Do you have anything that stands out to you that you wish somebody had told you when you were just starting to write cases? Any any tips for new case writers as they ventured down this road? I think that you, as a new faculty member, writing cases is a is a great way to first of all learn about management practice and if you're writing feel cases working with companies in terms of material or case development, it gives you a chance to be able to talk to managers about some of the issues that they're facing and it keeps you current and, you know, being able to and you can do that through your research, certainly, but writing cases is another way to be able to stay in touch with what's going on in terms of management practice. The second point is a writing cases helps you establish credibility with your students. Students pay attention to the material that's being used in terms of the case studies, and if your name's on the author list of the case study that they're using, it tells the students that you know you're doing work in this area. These chances are they're probably not reading your research and helps establish some credibility in terms of your familiarity with the subject matter and the material that you're using in class. Well, that's fantastic. Thank you so much, Frasier, for taking the time to speak with us and, moreover, working with our team on publishing cases and bringing cases to the class. I know when we get a submission from you, our team always enjoys the process, so thank you for that as well. It's my pleasure. Thanks for the great job that everybody to I be publishing, does and supporting the word that the faculty does in terms of writing and publishing cases. If you enjoyed today's episode, subscribe to Decision Point on spotify or wherever you listen. Be sure to check out the show notes for links to cases, resources and more. have any feedback, send us an email at cases at IV DOC A.

• Ivey Publishing

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• November 2023
• HBS Case Collection

Apple Inc. in 2023

• Format: Print
• | Language: English
• | Pages: 26

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David B. Yoffie

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• January 2024
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• Apple Inc. in 2023  By: David B. Yoffie

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Apple’s Strategy Bends the World

How Apple’s business tactics, partly driven by fear, affect the rest of us.

By Shira Ovide

This article is part of the On Tech newsletter . You can sign up here to receive it weekdays.

I’m going to put Apple and other technology giants on the therapist’s couch: To understand their motivations and actions, it’s helpful to examine their vulnerabilities.

I’ve been surprised this year that Apple mostly hasn’t budged as regulators and some app companies complain loudly about the downsides of the app system that Apple created more than a decade ago. The gripe essentially is that Apple abuses its control over iPhone apps to impose unfair fees and complexities on app developers. That’s the claim in a lawsuit that Epic Games, the maker of the Fortnite video game, has pending against Apple.

Apple says that it is right to exercise control over apps and collect commissions for some things that we do on our phones. But there’s also something else at work: fear.

Connecting the dots between Apple’s business predicaments and its choices helps us understand why the company does what it does — and by extension how those actions affect everyone, whether we own an Apple device or not. Apple’s strategy bends the world.

Why should Apple be worried? It is wildly successful and has so much cash that … well, corporate employees sit in desk chairs that might cost more than your sofa. Or your car.

But the reality is that sales of smartphones will probably never again have a growth spurt like the one in the 2010s that made Apple a superstar. Smartphones have become a necessity of modern life in many countries, like refrigerators , but there are fewer potential first-time smartphone buyers every year, and people are waiting longer to replace phones they already own.

(I’ll acknowledge that Apple has sold a bunch more iPhones and other devices recently . We’ll see if that’s lasting, or a pandemic-related blip.)

Apple and lots of people who keep tabs on the company don’t think it’s a problem if Apple has a harder time selling more iPhones each year. Instead, the company has shifted its strategy to make more money from the gadgets that we have in our homes and pockets — in the form of app downloads, subscriptions like Apple Music, AirPods headphones and other Apple products or services connected to company devices.

It’s a smart strategy that’s working very well, but also one born of necessity now that the peak smartphone era seems to be over.

There’s also a long shadow cast by Apple’s need to become more than the iPhone company. Would Apple, for example, be more willing to reconsider aspects of the app store if it weren’t so reliant on generating money from sources other than iPhone sales? And how much are Apple’s tactics changing all of the technology that we use?

The Vox writer Peter Kafka recently wrote that Facebook decided to start newsletters that people read outside of Facebook’s apps in part to avoid paying the fees that Apple demands from digital subscriptions sold inside its iPhone apps. The billions of people who use Facebook are affected by Apple’s strategy to squeeze more cash from apps.

Companies have also said that they felt forced to charge people money in their iPhone apps because of Apple’s rules. In short, those apps might be worse for users, because of Apple’s strategy shift.

It’s not unusual for the world around us to be shaped by companies’ business models and finances . And sometimes it works in our favor. Microsoft is giving Windows PC users access to more kinds of apps partly because it — unlike Apple — doesn’t need to make money from app fees, and Microsoft wants to thumb its nose at Apple.

We aren’t completely at the whims of big companies’ tactics to make money. But I find it useful to examine the ways that our technology choices are not accidents, nor are they purely driven by what we want.

Before we go …

A win for Facebook in a likely long war: A federal judge said that a Federal Trade Commission lawsuit that wants to break up Facebook lacked too many essential facts to move ahead . The judge told the government to try providing evidence that Facebook meets the legal definition of a monopoly, Cecilia Kang reported. DealBook has an analysis of the opinion from the judge, who also said that more than 40 states had waited too long to bring their own antitrust case.

Related: All of the antitrust investigations and lawsuits against Big Tech companies are terrific for lawyers , Cecilia and David McCabe write. One example: 51 lawyers from 21 law firms have appeared in court related to antitrust cases against Google.

Life is just fodder for online posts: Residents in a rural county in China dress up as old-style farmers and fishermen to stage scenes of a bygone China for local and foreign tourists to photograph and post online, my colleague Vivian Wang writes. The setups are elaborate, including burning straw to simulate mist.

Robot pets are meh but also promising: “They could become sophisticated enough to become their own category of thing — not a living pet necessarily, but not a glorified toaster either ,” says a writer for Gizmodo.

Hugs to this

This is a mesmerizing video of a herd of sheep , recorded from a drone over several months and sped up. (I spotted this first in the Garbage Day newsletter .)

We want to hear from you. Tell us what you think of this newsletter and what else you’d like us to explore. You can reach us at [email protected].

If you don’t already get this newsletter in your inbox, please sign up here . You can also read past On Tech columns .

Shira Ovide writes the On Tech newsletter, a guide to how technology is reshaping our lives and world. More about Shira Ovide

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Cultural Barriers and Conflict Negotiation Strategies: Apple’s Apology in China

Apple’s apology for warranty policies in china provides an example of how to overcome cultural barriers in communication.

By Katie Shonk — on January 9th, 2024 / Dispute Resolution

When dealing with a difficult counterpart, it helps to take a conciliatory approach to the bargaining table. While apologies necessarily involve moments of vulnerability, they can also open doors to value creation and strengthen the relationship you have with your bargaining counterpart. Let’s look back at Apple’s apology in China for its maligned warranty policies as it provides an excellent example of how to overcome cultural barriers in communication . In April 2013, Apple CEO Timothy D. Cook made the unusual move of apologizing to Chinese customers for his company’s warranty policy and promised to make amends, T he New York Times reports.

On International Consumers’ Day in China, the nation’s largest state-run television network criticized Apple for giving iPhone customers in China a one-year warranty, less than the two years required under Chinese law, and for charging consumers about $90 to replace faulty back covers on iPhones.

Other state media outlets joined in the Apple bashing, and the public outcry grew. China’s Industry and Commerce agency called for “strengthened supervision” of Apple’s activities in China. Chinese celebrities seemed to engage in a coordinated effort to pan the American company.

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How to Overcome Cultural Barriers in Communication: The Value of a Public Apology

The complaints against Apple coincided with pressure from the Obama administration on China to address computer hacking attacks on American companies, the Times reports. Some speculated that the complaints were a calculated campaign by the Chinese governments to boost Apple’s Chinese competitors. Apple products are immensely popular in China; the company earned $20 billion in revenues in China in the same year.

Apple initially failed to respond to the accusations against its warranty policies. Then, in an open letter released in Chinese, Cook admitted that his company’s lack of communication had led to the perception that “Apple is arrogant and doesn’t care or value consumers’ feedback.” The letter continued, “We sincerely apologize for any concern or misunderstanding this has brought to the customers.”

Speaking to the Times, Santa Clara law professor Anna Han called the public apology a “very Chinese thing to do” and predicted that Apple’s apology and promises to do better would “take the wind out of the [Chinese] government’s sails.”

In a 2009 negotiation research article, Professor Elizabeth A. Nowicki of Tulane University Law School suggested that, contrary to the conventional wisdom that your opponents in a dispute will use your apology against you, sincere, well-timed apology can actually be the key to keeping you out of court.

Nowicki found in a review of research on legal disputes that apologies can improve the odds of a settlement, reduce costs, save time, and decrease the fallout from damaged reputations and relationships. We described Nowicki’s research in detail in the article “Why Your Lawyer Could Be Wrong About Apologies” in the June 2010 issue of the Negotiation newsletter.

Carefully delivered apologies appear to restore dignity and trust in a way that sheer financial compensation cannot. This may be especially true in Asian countries where apologies are a time-honored tradition.

In more recent experiments, Professor William W. Maddux of INSEAD and his colleagues studied reactions to cultural barriers and apologies in the United States and Japan. The results suggest that in a collectivist culture like Japan’s, an apology can be an especially effective means of alleviating cultural barriers and conflict regardless of whether the apologizer is to blame.

What kind of cultural barriers in communication have you encountered? Share your experience in the comments.

Originally published in July 2013.

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One response to “cultural barriers and conflict negotiation strategies: apple’s apology in china”.

This article is just the opening step on a long and very important conversation. I wish the apology letter could be shared with us, so we can understand the nuances of preparing an apology for the Chinese culture…We could go beyond the “it is positive to have a public apology” to: how do we do it? what are the elements contained? time and manner of delivery? etc. I do believe that in conflict resolution we have progressed enough as to move from generalities to detailed prescription with a discussion of what works and what does not work where.

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Award winner: Apple Inc: Global Supply Chain Management

This case won the Production and Operations Management category at The Case Centre Awards and Competitions 2022 .  #CaseAwards2022

View the video of the award presentation on 27 May 2022 .

Author perspective

Who – the protagonist.

Tim Cook , Chief Executive Officer (CEO) and former Chief Operating Officer (COO) of technology giant Apple Inc .

As of February 2020, Apple Inc. had revenues of approximately US$265 billion making it the most valued company on the planet. Its lead product was the iPhone, with over 1.6 billion sold since it was introduced in 2007. To cope with demand, Apple had a complex supply chain of 200 suppliers located in over 800 production facilities, across 43 countries.

With the smartphone market starting to mature, challenges by new competitors and, according to critics, no game-changing new products in development, Apple needed to take steps to diversify from its dependence on the iPhone.

Apple were planning to launch a new suite of services including entertainment, news, video games and financial services, so Tim Cook needed to consider what changes should be made to Apple’s global supply chain to support its strategic objectives. What capabilities would it need as Apple’s business model continued to evolve?

This case is set in February 2020, 44 years after the company was founded.

Apple’s primary iPhone suppliers include companies in the US, China, Japan, South Korea, Switzerland and the Netherlands, but 90% of product assembly is done in China before being transported back to the US.

It would be difficult for Tim Cook and Apple to duplicate the capabilities and advantages offered by its Chinese suppliers, but their diversification from iPhones into wearables and services would provide additional challenges. New supply chains for different products and technologies were required along with content for entertainment and streaming services. As Apple’s business model evolved, Cook had to ensure the global supply chain continued to support it.

AUTHOR PERSPECTIVE 

This is the second win for P Fraser Johnson in the Production and Operations Management category for a case on Apple, following his win in 2016 . It is also the seventh award win for Ivey Business School.

Winning the award

Fraser said: “Naturally it is always terrific to be recognised in my profession by an outstanding organisation such as The Case Centre. With the many cases that are written each year in the operations management field, I was understandably surprised to hear that my Apple case was the 2022 winner of The Case Centre Award for my discipline.

“As a professor at the Ivey Business School, the ability to write cases that resonate with students and instructors is a critical aspect of my job and career. Writing cases that instructors want to adopt in their courses helps promote the use of the case method, which is incredibly important to me personally.”

Case popularity

He continued: “I think this case stands out for two reasons. First, it effectively describes the evolution of Apple as an organisation, through the good times and bad times, and how its supply chain strategy evolved and became a critical strength and capability. Everyone knows about Apple and the products that the company makes. The case makes students think about how Apple has been able to support its business and product strategies through unique supply chain capabilities.

“Second, the case is supported with a thorough teaching note. Effective teaching notes are essential in helping instructors deliver a great classroom experience with the case.”

Writing the case

Fraser explained: “First, this case is based on published sources. Gathering data from a wide range of sources is important. Accessing published articles, press releases, analyst reports and financial records are but a few avenues.

“Second, keep the case focused on a central topic and avoid extraneous information. It is easy to load the case up with interesting data, but it needs to be relevant to the issue(s) in the case.

“Lastly, have the case focused on a decision. Do not tell a story, the newspapers can handle that job. Students should use the issue(s) and decision, in the role of the protagonist, to focus their analysis. Without a decision in the case, students will not be able to properly structure their analysis and preparation.”

Case writing advice

He continued: “A case on a company with a well-known brand name helps, but there are two other important factors. First, the issue in the case needs to be interesting and relevant, which helps provide the basis for a good class discussion. Second, a strong teaching note helps provide instructors with thorough analysis and guidance on how to deliver the case in the classroom.”

Teaching the case

Fraser commented: “This case is one of the most popular in my supply chain elective. Apple is the largest company in the world (by market capitalisation) a brand that every student is familiar with – as a result students have views about the company, both positive and negative. Students can then relate their personal experience with the information in the case. It is an easy case to teach with a lot of discussion.”

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A Critical Analysis of Internal and External Environment: Case Study of Apple Inc.

Apple Inc. is a famous information technology firm in the global market. The organization has a wide range of products which consists of MacBook, iPhones, Apple TV, iPad and Apple watch. In this era of globalization with technologies, Apple’s users seek for unique performance products that are aesthetically pleasing as well as emphasize good product qualities. In 1976, Apple was established by Steve Jobs and his partners to develop modern technology products. In order to assess Apple’s strategic capabilities, Osterwalder’s Business Model Canvas is applied in this case study. There is several competitive analysis tools are written in this article including Internal Factor and External Factor Evaluation matrix, SWOT and SPACE Matrix, Boston Consulting Group (BCG) analysis as well as Internal-external (IE) analysis to evaluate Apple’s competitive intelligence. Throughout the report, every component in the evaluation model reflects the direction of how Apple overcomes the hurdles and how Apple could benefit by expanding their business in the international market. Lastly, Sun Zi’s Art of War is also being studied and included into business strategies of Apple. Keywords: Apple, Osterwalder, Factor Evaluation Matrix, SWOT, SPACE Matrix, Internal-external Analysis, Sun Zi’s Art of War

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Safety supervision aims to safeguard the overall interests of the corporation, and ensure its safety production together with sustainable development. It is the key to reducing accident rates, and safeguarding employees’ safety and corporate property. The establishment of safety supervision system requires specify strategies. However, it is difficult to determine such strategies in an objective manner under complex environments. Therefore, first, this paper combined an external factor evaluation matrix (EFEM) and an internal factor evaluation matrix (IFEM) to analyze the internal and external safety environments faced by X Group Corporation (XGC). Second, the strength-weakness-opportunity-threat (SWOT) approach was employed to qualitatively analyze and explore the alternative safety supervision strategies. Following this, the most attractive strategies were selected from alternatives by using the quantitative strategic planning matrix (QSPM), namely construction of the safety culture system, clarification of modes and organizational structure of safety supervision, and improvement of the safety performance evaluation system. These strategies were subsequently applied in the construction and improvement of the XGC’s safety supervision system. This study can provide reliable theoretical and methodological support for the establishment of corporations’ safety supervision systems.

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Apple’s Company Culture: An Organizational Analysis

Apple’s organizational culture is a key factor in the continuing success of its business. The consumer electronics company’s organizational or corporate culture establishes and maintains the business philosophy, core values, beliefs, and related behaviors among employees. This business analysis case shows that Apple has a work culture that motivates human resources to support strategic objectives for competitiveness. For example, the company’s cultural traits are aligned with the drive for innovation, which is a major factor that determines business competitiveness in the information technology, online services, and consumer electronics industries. With this company culture, business operations facilitate the fulfillment of Apple’s mission and vision . Through the leadership of Tim Cook, the company continues to enhance its cultural characteristics to maximize human resource support for business relevance in various markets around the world. Apple shapes its business culture and uses it as a tool for strategic management and multinational business success.

Apple’s company culture strengthens competitive advantages over other firms in various industries. The company’s products compete with the consumer electronics and online services of Google (Alphabet) , Samsung , Microsoft , Amazon , and Sony . Also, Apple TV Plus competes with the video streaming services of Disney , Facebook (Meta) , and Netflix . These competitors impose a strong external force that influences strategic management among firms in the industry, as illustrated in the Five Forces analysis of Apple Inc . As a result, cultural traits must reinforce the iPhone maker’s business competitive advantages through its workforce. It can be argued that Apple partially achieves this strategic objective through the effects of its organizational culture on workers’ behavior and job performance.

Apple’s Culture Type and Traits

Apple has an organizational culture for creative innovation . The company’s cultural features focus on maintaining a high level of innovation that involves workers’ creativity and a mindset that challenges conventions and standards, such as in consumer electronics design. Apple’s IT business depends on cultural support and coherence, which are determinants of competitiveness and industry leadership, especially in addressing aggressive and rapid technological innovation and product development. The following are the main characteristics of Apple’s culture:

• Top-notch excellence
• Moderate combativeness

Top-notch Excellence . Apple’s organizational culture comes with a human resource policy of hiring only the best of the best in the labor market. Steve Jobs was known to fire employees who did not meet his expectations. This tradition continues under Tim Cook. Such a tradition maintains and reinforces a company culture that promotes, appreciates, and expects top-notch excellence among the technology company’s employees. This cultural trait is also institutionalized in Apple’s organization. For example, the company has programs that recognize and reward excellence among workers in software design. Excellence is emphasized as a critical success factor in the business, especially in product design and development, which is a major growth strategy described in Apple’s competitive strategy and growth strategies .

Creativity . This cultural trait pertains to creating new ideas that help improve the technology business and its products. Apple’s management favors creativity among employees’ knowledge, skills, and abilities. This characteristic of the work culture enables the company to ensure sufficient creativity, especially among employees involved in consumer electronics product design and development processes. Creativity is observable in the design and features of iPhones, Macs, iPads, and other products included in Apple’s marketing mix (4Ps) . Along with creativity, originality is also culturally emphasized as a way of maximizing the company’s intellectual properties, such as patents for new mobile devices. In this regard, the organizational culture helps maintain Apple’s capacity to satisfy and exceed customers’ expectations and preferences.

Innovation . Apple’s company culture supports rapid innovation. The technology business is frequently appraised as one of the most innovative companies in the world. Based on this cultural trait, Apple trains and motivates its employees to innovate in terms of individual work performance and idea contributions for product development, design, and other processes. The work culture facilitates rapid innovation, which is at the heart of Apple’s operations management . Rapid innovation ensures that the company continues to introduce new products that are profitable and attractive to target customers in the global consumer electronics and Internet services market.

Secrecy . Apple has a secretive organizational culture. This cultural characteristic defines the MacBook maker’s human resource development and management practices. Secrecy is part of the company’s strategy to prevent theft of proprietary information or intellectual property, such as designs for the next generations of the iPhone. It is also a strategic management approach that enables Apple Inc. to maximize its leading edge against competitors. Through the company culture, employees are motivated and expected to keep business information within the technology business organization. This cultural trait is reinforced through Apple’s organizational structure (business structure) and related policies, rules, and employment contracts that prohibit the disclosure of information, such as technological breakthroughs in the company’s consumer electronics. In this context, Apple’s work culture helps protect the business from corporate espionage and the negative effects of employee poaching.

Moderate Combativeness . Apple’s company culture has moderate combativeness. This feature is linked to Steve Jobs and his combative approach to leadership. He was known to randomly challenge employees to ensure that they have what it takes to work at Apple. Today, under Tim Cook’s leadership, the company has been changing its corporate culture to a more sociable and a less combative one. Nonetheless, combativeness remains a major influence in the technology business. Apple’s business culture exhibits a moderate degree of combativeness that presents challenges that motivate employees to enhance their output.

Apple’s Organizational Culture: Advantages, Disadvantages, Recommendations

Advantages and Benefits . The combination of top-notch excellence, creativity, and innovation in Apple’s organizational culture supports the company’s industry leadership. The business is widely regarded as a leader in terms of innovation and product design, especially in consumer electronics. These cultural characteristics empower Apple and its human resources to stand out and stay ahead of competitors. This company culture enables success and competitive advantages, as well as the further strengthening of the company’s brand, which is one of the key business strengths shown in the SWOT analysis of Apple Inc . Creativity and excellence are especially important in the company’s rapid innovation processes for continuous competitiveness and business development despite aggressive competition with Samsung and other firms.

Drawbacks and Weaknesses . Apple’s corporate culture brings challenges because of the emphasis on secrecy and the moderate degree of combativeness. An atmosphere of secrecy can limit rapport among workers, while moderate combativeness has the potential to limit or reduce employees’ morale. These cultural issues can reduce business effectiveness and increase employee turnover. Apple Inc. can address this situation by modifying its organizational culture to reduce combativeness, but not necessarily remove it. This recommendation focuses on reducing the disadvantages of combativeness, without eliminating the benefits of combative approaches in the technology company’s operations. Also, Apple can integrate new cultural traits to keep the business relevant, given trends and changes in the information technology, cloud services, digital content distribution, and consumer electronics industries’ environment.

• Choi, Y., Ingram, P., & Han, S. W. (2023). Cultural breadth and embeddedness: The individual adoption of organizational culture as a determinant of creativity. Administrative Science Quarterly, 68 (2), 429-464.
• Apple Inc. – Inclusion & Diversity .
• Apple Inc. – Life at Apple .
• Apple Inc. – Work at Apple .
• Dyer, C. (2023). The Power of Company Culture: How any business can build a culture that improves productivity, performance and profits . Kogan Page Publishers.
• Zhang, W., Zeng, X., Liang, H., Xue, Y., & Cao, X. (2023). Understanding how organizational culture affects innovation performance: A management context perspective. Sustainability, 15 (8), 6644.
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International HRM Case Study: Apple Inc.

Apple hrm case study: abstract.

International human resource management has become a necessary undertaking in many multinational corporations. Globalization, a major driver of international trade, is one of the factors behind this development. Success in international ventures is significantly driven by the input of expatriates or international assignees.

In this paper, some issues relating to these assignees were highlighted. They include such issues as the various aspects of pre-departure training, recruitment, and selection criteria. Staffing strategies were also reviewed in this study. The author of this paper proposed a system of measuring return on international assignments.

The topics mentioned above were analyzed in the context of Apple Inc., a top ranking multinational corporation. The success of this organization is one of the reasons why it was selected for this study.

Key words: International human resource management, international assignees, multinational corporations, Apple Inc.

Apple’s HRM

In the recent past, there has been an increase in the number of multinational corporations operating in the world. Such companies are heavily investing in the global market. A number of factors have influenced the growth of these organizations.

They include dynamics of international trade, amalgamation of the financial markets, and human migration. Other factors include speedy movement of capital as a result of globalization. All these factors have facilitated trade on the international arena.

Human resource management entails the activities carried out by organizations to effectively utilize their human resource. Consequently, effective human resource management at the global level is a major determinant of success in international trade.

Human resource development at the international level has largely focused on the formulation of effective and highly skilled workforce. By doing this, individual employees and the organization at large can realize their ultimate goals of serving customers.

Apple Inc. is a competitive global company in the communications and electronics industry. It is a leading designer, manufacturer, and marketer of communications and media devices.

It is also involved in the manufacture and distribution of digital music players and portable computers. The company has operations in different parts of the world. It has an elaborate international human resource management system.

The current study addresses the element of international human resource management with regards to Apple Inc. Various aspects related to management of personnel in this organization are reviewed.

They include, among others, training of employees, deployment across the world, and return on investment. The author of this paper holds that effective management of human resource at Apple Inc. has contributed to the success of the organization.

Apple’s Experience in International HRM: Case Study

Components of pre-departure training.

Overview. According to Avril and Magnini (2007), pre-departure training provides expatriates with the knowledge and skills required to survive following their immediate arrival at the destined country of work. Essentially, employees going to work in another country require information on various aspects of the host nation before they leave home.

Some of the things they need to know include the culture and customs of the host country. They also need to be aware of the language and dress code appropriate to the new environment. In addition, international assignees need information on business etiquette in the new country (Avril & Magnini, 2007).

Information on verbal and non-verbal communication, taboos, rules, decision-making techniques, and business management structures should be provided to international employees during pre-departure training.

Culture and customs of the new country. Training on host country’s customs is essential in ensuring that the expatriates adapt to the local culture. It is noted that business operations would be negatively affected if the behavior patterns of the new employees conflict with the cultural expectations in the host country.

For instance, a US citizen working for Apple Inc. may be deployed to Saudi Arabia. Such an employee should be aware of how Saudi nationals regard alcohol. In addition, female employees would be expected to conform to the societal expectations with regards to their dress code.

Language. Language is an essential component of communication in international business. Expatriates and inpatriates require more than just basic knowledge on the host country’s language for effective execution of their assignments. In addition, they should be aware of non-verbal communication techniques. Such awareness would facilitate communication in foreign countries.

Business etiquette in the new environment. Business etiquette may vary between countries. In some parts of the world, governments regulate business policies. For instance, such elements as tax policies, power distance, and human resource management may differ from one country to the other (Katz & Seifer, 1996).

An expatriate manager at Apple Inc. would be required to understand the variation of such policies. Failure to comply with the new rules and regulations would most likely jeopardize the operations of the corporation in the host market.

Business management structures and decision-making techniques. Different countries adopt different approaches in relation to business structures and decision-making techniques. For instance, decision making in high-power distance cultures differs with that in low-power distance communities.

As such, a manager working for Apple’s branch in Korea should be aware of the best approach to adopt in directing employees. The same applies to a German employee working in Africa, where decisions usually come from the top management.

Rationale for Utilizing the Pre-Departure Training Components

Managers are expected to effectively handle employees from different cultural backgrounds. The ability of such managers as far as the employees are concerned affects the profitability of the company. People from different countries express their nationality and dress codes differently.

The approach used by international assignees when dealing with certain problems may also differ. Such issues as the need to interpret actions and comments, predict behaviors, and resolve conflicts may arise. As a result, focusing on the various components of pre-departure training would harmonize Apple’s operations with the reality in the host country.

Performance Assessment among Expatriates

Introducing assessment. Assessing the performance of expatriates is a major element in international human resource management. The performance can be reviewed using a number of criteria. Such criteria include determining strategy implementation and attainment of competitive advantage.

According to Caligiuri (1997), there are three criteria commonly used in evaluating expatriates. They include completion of foreign assignments, performance on the foreign assignment, and cross-cultural adjustment. The criteria apply to all employees irrespective of the operations of a particular organization.

Completion of foreign assignments. It is an important behavioral measurement. It is used in reviewing the results of tasks assigned to foreign employees. Success under this criterion is determined by the ability of the employee to complete their assignment without seeking for transfer to another country (Caligiuri, 1997).

Premature termination translates to failure in relation to the performance of the expatriate. In most cases, premature termination occurs when the expatriate requests for transfer to home country before completion of the assignment. The assignee may also be requested to return home before they have completed their work.

Cross-cultural adjustment. Adjustment to foreign culture also determines the success of the assignee (Caligiuri, 1997). Inability to adjust to the host country means failure in the assignment. Successful adjustment indicates that the employee is psychologically comfortable working and living in the new country.

Adjusted assignees are comfortable with the local culture. On their part, maladjusted employees find it hard to survive in the new environment. The failed employees may prematurely terminate their assignments (Suutari & Brewster, 2000).

Performance on the foreign assignment. Multinational corporations expect their employees to adjust culturally and remain in their foreign posts. In addition, the expatriates are expected to successfully execute their assignments. According to Caligiuri (1997), a large number of maladjusted foreign employees fail to achieve the envisaged outcomes in their work.

There are various measures of performance with regards to foreign assignments. They include establishing working relationships with the locals. Others include transfer of information and the language and cultural proficiency of the foreign employee (Caligiuri, 1997). The measures are in relation to the benefits of expatriates to the multinational corporation.

Recruitment and Selection Strategy for Apple Inc.’s International Assignments

According to Suutari and Brewster (2000), international assignments entail three discrete phases. The first is the pre-assignment stage. It involves the selection and preparation of employees for deployment.

The second is the ‘actual’ assignment. It involves the ‘actual’ stay of the expatriate in the new country. The last is the post-assignment stage. It is also commonly known as repatriation.

Recruitment and selection of expatriates is a multifaceted process. It takes into account both personal characteristics and interpersonal skills. Caligiuri (1997) postulates that most international organizations use knowledge of company systems and technical competencies in the selection process.

The strategy is the most suitable recruitment and selection criteria for Apple Inc. It is noted that measuring relevant cross-cultural and interpersonal abilities is a difficult task for many organizations. In addition, most expatriate postings rely on personal recommendations.

Such recommendations are derived from either line managers or specialist personnel (Suutari & Brewster, 2000). As such, Apple should rely on the proposed recruitment and selection policy. The strategy would reduce chances of failure in the assigned job.

Staffing Alternatives for Foreign Operations

There are several approaches used in resolving the issue of human resource in relation to international assignments. The strategies include ethnocentric and polycentric staffing approaches. Others are regiocentric and geocentric staffing strategies (Dowling, Welch & Schuler, 2004).

The ethnocentric approach involves filling all the key positions in the organization with local experts. The polycentric approach, on the other hand, proposes the use of host country’s nationals in managing subsidiaries. However, in this approach, key positions in the corporation’s headquarters are held by nationals of the parent country (Dowling et al., 2004).

The regiocentric approach is a mixed staffing strategy. Here, executives are transferred between regions. Operations of the company are divided according to geographical regions.

Apple should adopt the geocentric policy to address its staffing needs. The approach disregards the nationality and location of the candidate. It is appropriate for Apple Inc. since the corporation has a vast international experience and a global structure that is well developed.

Importance of a High Quality Mentoring System for International Assignees

Mentorship refers to a form of developmental relationship. In this case, an experienced employed assists less experienced members of staff in performing their tasks. The mentors can function as guides in the exploration of career interests. They provide support to international assignees deployed by multinational organizations.

Mentoring systems for expatriates can be formal or informal. The former describes established procedures and specified targets. The latter, on the other hand, is initiated whenever the assignees seek advice from their superiors or from external professionals.

A high quality mentoring system is very important to any multinational organization. It determines the success or failure of foreign employees. In most cases, the programs provide the management with an opportunity to support the assignees.

The support is especially important during departure or repatriation phases of the assignment. As such, the programs are powerful means of strategically retaining valuable employees with international experience.

High quality mentoring programs also help the employees to adjust to their new environment. It improves their productivity and overall performance in their new posts.

In addition, the programs provide continuous communication on changes in the company and the state of affairs back at home. As a result, the expatriates can effectively cope with transfers, expatriation, and repatriation.

The current global economic meltdown has led to cost constraints in most organizations. As such, it is important for organizations to have the right people at the right place. High quality mentorship programs are very essential in the management of talent and employees.

To this end, Apple Inc. employees should always have a mentor irrespective of their position in the foreign country. The mentors should supervise the assignee with a view to support their development.

They should assist the new employee for a given period of time. Prior to the assignment, the employee must undergo an extensive pre-departure training. The training will help them settle down in the host country.

Measuring Return on Investment in International Assignments

Every business undertaking requires a mechanism to determine its subsequent return on investment. The same applies to international assignments in multinational organizations. The companies should analyze the profitability or importance of international assignments to the parent organization.

Studies conducted with the aim of measuring return on investment with regards to international human resource have focused on numerical results of foreign deployments. In most cases, the costs and returns associated with the investment are used to determine its profitability (Caligiuri, 1997).

To determine Apple Inc.’s return on investment, one should take into consideration a number of factors. The various aspects of international human resource management would help in assessing the profitability of foreign employees. The factors include identification of the assignment’s purposes, cross-cultural training costs (Dowling et al., 2004), and compensation.

In addition, performance management and repatriation outcomes should be factored in. Calculation of return on investment would eventually be ascertained by analyzing the financial and non-financial costs and benefits of the venture. The costs and benefits are then linked to the expenditure incurred with regards to the assignment.

Apple Human Resource Management: Conclusion

International human resource management differs with domestic management of employees in several ways. Managing employees at the international level is characterized by different labor markets, varying management practices, and dynamic labor laws. Economic and other cultural barriers make international management of human resource a complex affair.

Managing international employees may differ from one organization to the other. However, according to this author, the underlying principles are similar in all organizations. As a result, effective management of assignees and their related assignments is a major determinant of the success of these international ventures.

Avril, A., & Magnini, V. (2007). A holistic approach to expatriate successes. International Journal of Contemporary Hospitality Management, 19 (1), 53-64.

Caligiuri, P. (1997). Assessing expatriate success: Beyond just “being there”. New Approaches to Employee Management, 4 (1), 117-140.

Dowling, P., Welch, D., & Schuler, R. (2004). International human resource management: Managing people in a multicultural context (4th ed.). Cincinnati, OH: Southwestern College Publishing.

Katz, J., & Seifer, D. (1996). It is a different world out there: Planning for expatriate success through selection, pre-departure training, and on-site socialization. Human Resource Planning, 19 (2), 32-47.

Suutari, V., & Brewster, C. (2000). Making their own way: International experience through self-initiated foreign assignments. Journal of World Business, 35 (4), 417-436.

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Home » Management Case Studies » Case Study on Apple’s Business Strategies

Case Study on Apple’s Business Strategies

Apple was founded by Steve Jobs and Stephen Wozniak in 1976;  Apple Computers  revolutionized the personal computer industry.   Apple Computers Inc is considered to be one of the innovators in the computer industry . It brought about different changes to the industry; these changes are still visible in the present.   The company’s products were used as a basis by other computer company’s in designing the specifications and physical characteristics of their product. It also serves as a meter of how products are designed. The company offers various products for the different market it targets. The products made by the company offer something different.

We can describe Apple’s business strategy in terms of product differentiation and strategic alliances.

Product Differentiation

Apple prides itself on its innovation.   When reviewing the history of Apple, it is evident that this attitude permeated the company during its peaks of success. For instance, Apple pioneered the PDA market by introducing the Newton in 1993. Later, Apple introduced the easy-to-use iMac in 1998, and updates following 1998. It released a highly stable operating system in 1999, and updates following 1999. Apple had one of its critical points in history in 1999 when it introduced the iBook.   This completed their “product matrix”, a simplified product mix strategy formulated by Jobs.   This move allowed Apple to have a desktop and a portable computer in both the professional and the consumer segments.   The matrix is as follows:

In 2001, Apple hit another important historical point by launching iTunes.   This marked the beginning of Apple’s new strategy of making the Mac the hub for the “digital lifestyle”. Apple then opened its own stores, in spite of protests by independent Apple retailers voicing cannibalization concerns. Then Apple introduced the iPod , central to the “digital lifestyle” strategy.   Philip W. Schiller, VP of Worldwide Product Marketing for Apple, stated, “iPod is going to change the way people listen to music.” He was right.

Apple continued their innovative streak with advancements in flat-panel LCDs for desktops in 2002 and improved notebooks in 2003. In 2003, Apple released the iLife package, containing improved versions of iDVD, iMovie, iPhoto, and iTunes. In reference to Apple’s recent advancements, Jobs said, “We are going to do for digital creation what Microsoft did for the office suite productivity.” That is indeed a bold statement.   Time will tell whether that happens.

Apple continued its digital lifestyle strategy by launching iTunes Music Store online in 2003, obtaining cooperation from “The Big 5” Music companies–BMG, EMI, Sony Entertainment, Universal, Warner.   This allowed iTunes Music Store online to offer over 200,000 songs at introduction. In 2003, Apple released the world’s fastest PC (Mac G5), which had dual 2.0GHz PowerPC G5 processors.

Product differentiation is a viable strategy, especially if the company exploits the conceptual distinctions for product differentiation.   Those that are relevant to Apple are product features, product mix, links with other firms, and reputation. Apple established a reputation as an innovator by offering an array of easy-to-use products that cover a broad range of segments. However, its links with other firms have been limited, as we will discuss in the next section on strategic alliances.

There is economic value in product differentiation, especially in the case of monopolistic competition.   The primary economic value of product differentiation comes from reducing environmental threats.   The cost of product differentiation acts as a barrier to entry, thus reducing the threat of new entrants.   Not only does a company have to bear the cost of standard business, it also must bear the costs associated with overcoming the differentiation inherent in the incumbent.   Since companies pursue niche markets, there is a reduced threat of rivalry among industry competitors.

A company’s differentiated product will appear more attractive relative to substitutes, thus reducing the threat of substitutes.   If suppliers increase their prices, a company with a differentiated product can pass that cost to its customers, thus reducing the threat of suppliers.   Since a company with a differentiated product competes as a quasi-monopoly in its market segment, there is a reduced threat of buyers.   With all of Porter’s Five Forces lower, a company may see economic value from a product differentiation strategy.

A company attempts to make its strategy a sustained competitive advantage .   For this to occur, a product differentiation strategy that is economically valuable must also be rare, difficult to imitate, and the company must have the organization to exploit this.   If there are fewer firms differentiating than the number required for perfect competition dynamics, the strategy is rare.   If there is no direct, easy duplication and there are no easy substitutes, the strategy is difficult to imitate.

There are four primary organizing dilemmas when considering product differentiation as a strategy.   They are as depicted below.

Five leadership roles will facilitate the innovation process:   Institutional Leader, Critic, Entrepreneur, Sponsor, and Mentor.   The institutional leader creates the organizational infrastructure necessary for innovation.   This role also resolves disputes, particularly among the other leaders.   The critic challenges investments, goals, and progress.   The entrepreneur manages the innovative unit(s).   The sponsor procures, advocates, and champions.   The mentor coaches, counsels, and advises.

Apple had issues within its organization.   In 1997, when Apple was seeking a CEO acceptable to Steve Jobs , Jean-Louis Gassee (then-CEO of Be, ex-Products President at Apple) commented, “Right now the job is so difficult, it would require a bisexual, blond Japanese who is 25 years old and has 15 years’ experience!”  Charles Haggerty, then-CEO of Western Digital, said, “Apple is a company that still has opportunity written all over it.   But you’d need to recruit God to get it done.”   Michael Murphy, then-editor of California Technology Stock Letter, stated, “Apple desperately needs a great day-to-day manager, visionary, leader and politician.   The only person who’s qualified to run this company was crucified 2,000 years ago.”

Since Jobs took over as CEO in 1997, Apple seems to have resolved the innovation dilemmas, evidenced by their numerous innovations.   To continue a product differentiation strategy, Apple must continue its appropriate management of innovation dilemmas and maintain the five leadership roles that facilitate the innovation process.

Strategic Alliances

Apple has a history of shunning strategic alliances.   On June 25, 1985, Bill Gates sent a memo to John Sculley (then-CEO of Apple) and Jean-Louis Gassee (then-Products President).   Gates recommended that Apple license Macintosh technology to 3-5 significant manufacturers, listing companies and contacts such as AT&T, DEC, Texas Instruments, Hewlett-Packard , Xerox , and Motorola. (Linzmayer, 245-8)   After not receiving a response, Gates wrote another memo on July 29, naming three other companies and stating, “I want to help in any way I can with the licensing.   Please give me a call.”   In 1987, Sculley refused to sign licensing contracts with Apollo Computer.   He felt that up-and-coming rival Sun Microsystems would overtake Apollo Computer, which did happen.

Then, Sculley and Michael Spindler (COO) partnered Apple with IBM and Motorola on the PowerPC chip.   Sculley and Spindler were hoping IBM would buy Apple and put them in charge of the PC business.   That never came to fruition, because Apple (with Spindler as the CEO) seemed contradictory and was extraordinarily difficult in business dealings.           Apple turned the corner in 1993.   Spindler begrudgingly licensed the Mac to Power Computing in 1993 and to Radius (who made Mac monitors) in 1995.   However, Spindler nixed Gateway in 1995 due to cannibalization fears. Gil Amelio, an avid supporter of licensing, took over as CEO in 1996.   Under Amelio, Apple licensed to Motorola and IBM. In 1996, Apple announced the $427 million purchase of NeXT Software, marking the return of Steve Jobs. Amelio suddenly resigned in 1997, and the stage was set for Jobs to resume power.

Jobs despised licensing, calling cloners “leeches”.   He pulled the plug, essentially killing its largest licensee (Power Computing).   Apple subsequently acquired Power Computing’s customer database, Mac OS license, and key employees for $100 million of Apple stock and $10 million to cover debt and closing costs.   The business was worth $400 million.

A massive reversal occurred in 1997 and 1998.   In 1997, Jobs overhauled the board of directors and then entered Apple into patent cross-licensing and technology agreements with Microsoft. In 1998, Jobs stated that Apple’s strategy is to “focus all of our software development resources on extending the Macintosh operating system.   To realize our ambitious plans we must focus all of our efforts in one direction.” This statement was in the wake of Apple divesting significant software holdings (Claris/FileMaker and Newton).

There is economic value in strategic alliances.     In the case of Apple, there was the opportunity to manage risk and share costs  facilitate tacit collusion , and manage uncertainty.   It would have been applicable to the industries in which Apple operated.   Tacit collusion is a valid source of economic value in network industries, which the computer industry is.   Managing uncertainty, managing risk, and sharing costs are sources of economic value in any industry.   Although Apple eventually realized the economic value of strategic alliances, it should have occurred earlier.

The following are some comments about Apple’s no-licensing policy.

“If Apple had licensed the Mac OS when it first came out, Window   wouldn’t exist today.” – Jon van Bronkhorst, “The computer was never the problem.   The company’s strategy was.   Apple saw itself as a hardware company; in order to protect our hardware profits, we didn’t license our operating system.   We had the most beautiful operating system, but to get it you had to buy our hardware at twice the price.   That was a mistake.   What we should have done was calculate an appropriate price to license the operating system.   We were also naïve to think that the best technology would prevail.   It often doesn’t.” – Steve Wozniak, Apple cofounder

“If we had licensed earlier, we would be the Microsoft of today.” – Ian W. Diery, Apple Executive VP, I am aware that I am known as the Great Satan on licensing…I was never for or against licensing.   I just did not see how it would make sense.   But my approach was stupid.   We were just fat cats living off a business that had no competition.” –   Jean-Louis Gassee, Be CEO and ex-CEO of Apple, admitting he made a strategic mistake.

A strategic alliance can be a sustained competitive advantage if it is rare, difficult to imitate, and the company has an organization to exploit it.   If the number of competing firms implementing a similar strategic alliance is relatively few, the strategy is rare.   If there are socially complex relations among partners and there is no direct duplication, the strategy is difficult to imitate. When organizing for strategic alliances, a firm must consider whether the alliance is non-equity or equity.   A non-equity alliance should have explicit contracts and legal sanctions. An equity alliance should have contracts describing the equity investment.   There are some substitutes for an equity alliance, such as internal development and acquisitions.   However, the difficulties with these drive the formation of strategic alliances.   It is vital to remember, “Commitment, coordination, and trust are all important determinants of alliance success.”

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Apple’s China sales tell a different story than what analysts have heard for months. Where is the disconnect?

Are the iPhone’s best days in China behind it?

That was the big question going into Apple’s quarterly earnings call on Thursday. By the time the call concluded, Apple’s stock price was up more than 6%, and CEO Tim Cook had repeatedly enthused about his “great view” on Apple’s business in China.

But despite Wall Street’s positive reaction to Apple’s results (helped by a massive stock buyback announcement), questions about the iPhone’s standing in China may only have become more complicated in the wake of the latest earnings. The company’s surprisingly better-than-expected results in China, and the disparity from what several prominent independent research firms had predicted, reveals a disconnect involving one of the most important pillars of the $2.8 trillion company’s business.

Greater China, which includes mainland China, Hong Kong, and Taiwan, is Apple’s third largest region by revenue, representing 19% of Apple’s total sales during the 2023 fiscal year. 

As tensions between the U.S. and China have increased over the past year, demand for American tech products, including iPhones, has fallen among Chinese consumers. Meanwhile, Chinese tech companies like Huawei are making headway on new smartphones and guzzling the market share Apple is losing. The Chinese government has supported this shift toward domestic technology, last year ordering state officials to stop using non-Chinese phones for work. 

Apple’s revenue in the region has declined on a year-over-year basis in five out of the six most recent quarters, and all signs pointed to more pain in the first three months of 2024 . 

In the beginning of the year, Apple’s weekly shipments into China declined by 30% to 40% year over year on a weekly basis, according to Ming-Chi Kuo, a renowned TF International Securities analyst known for his accurate insights into Apple’s business. 

“This downward trend is expected to continue,” he wrote in a January blog post. “Apple may have the most significant decline among the major global mobile phone brands in 2024,” he said.

For the quarter, market research firm Counterpoint estimated Apple’s iPhone sales in China were down 19% from the same time last year. 

It turns out that Apple sales in Greater China did indeed decline in the first three months of the year, coming in 8% below levels a year ago. But that decline was far less severe than Wall Street had been bracing for: Compared with the 13% decline in the fourth quarter of 2023, it was actually an improvement. Sales of iPhone, Apple said, actually increased in mainland China during the quarter (though it didn’t specify if the increase was from the previous quarter, or the previous year).

The surprise was enough to prompt multiple questions from analysts during their call with Apple executives. As one analyst on the call bluntly put it: “What are we missing?” 

To that, CEO Tim Cook wouldn’t give an answer, saying he couldn’t address numbers that Apple didn’t produce. “I can only address what our results are,” Cook said. “I can’t bridge to numbers we didn’t come up with.”

Cook said that the iPhone 15 and 15 Pro Max were the two bestselling phones in “urban China” during the quarter, and he recounted the “warm and energetic” reception he received from consumers in Shanghai when he visited and opened a new store in March. 

What’s really going on inside China

It isn’t immediately clear why Apple’s numbers aren’t more closely aligned with the independent research.

Between quarterly earnings reports, Wall Street analysts rely on independently collected data to gauge how a company’s business is faring. These research reports can include anything from supply-chain information to retail store inventory levels, gleaned from both official sources and leaks from insider contacts. While this data can’t tell the full story, it does give analysts a strong impression of what’s going on.

But the disparity between the third-party research reports and Apple’s report in Q1 left many investors and observers scratching their heads.

Apple reports revenue for China, while many industry analysts look at unit shipments, creating some room for divergence if prices change. Cook’s comments about the newer iPhone 15 models, including the 15 Pro Max, being top sellers in urban China suggests that the company may have benefited from higher prices even if overall units were down more sharply.

Will Wong, an analyst at IDC, which had projected a 10% unit decline in China iPhone sales, told Bloomberg that different methods of measuring pricing may have prompted some of the confusion.  

“IDC counted the street prices (i.e., the prices that consumers paid), while Apple is likely using another price level, such as factory price, in its financial report,” Wong was quoted as saying.

Following the earnings call with Apple executives, many of Wall Street’s equity research analysts appear to have sided with Apple’s version of the story. Analysts have largely revised their models to reflect a more favorable China business, according to their research notes published on Friday. Bank of America analysts called the China concerns “unfounded,” while analysts from investment firm Wedbush said they expect to see China sales turn a corner by June and show growth by September. 

​​“The worst is now behind Apple in China,” Wedbush analysts wrote. 

Apple’s overall revenue declined 4.3% to $90.8 billion during the quarter, which is better than analysts expected. Apple also beat earnings per share predictions, meeting last year’s number at $1.53. Executives announced its largest stock buyback of $110 billion, an increase from the $80 billion to $90 billion repurchase Apple has offered in recent years. 

But some analysts remain cautious. While the independent research reports may not have aligned with Apple’s results in China, UBS analysts noted that the iPhone clearly appears to have lost market share in China. 

“Peak China units of 50M in FY 22 is also not likely to be repeated given 300-500 [basis points] of share loss in that region,” UBS analyst David Vogt wrote in a note to investors on Friday, stressing that Apple is not “in the clear yet.” 

UBS, which has a neutral rating on Apple, doesn’t expect the company to sell many more iPhone 16 devices, which are expected to premiere in September, than iPhone 15s. This sentiment is partly because of lost market share in China, the firm said. 

And even as Cook talked up China during Thursday’s call, the company also appeared to be laying the groundwork for a future where China was less vital to its business. CFO Luca Maestri noted that other “emerging markets” like India, Saudi Arabia, Mexico, Turkey, and Indonesia were getting larger and in aggregate nearing the size of China.

“The gap as you compare it to China is reducing, and hopefully that trajectory continues for a long time,” Maestri said.

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