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SM - Apple presetation

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Hannah Strätz

on 19 December 2014

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Transcript of SM - Apple presetation

Apple's iPhone in China
Strategy 2012-2020

What are we talking about today...
Apple Inc.
Products and Markets
External Environment China
Internal Analysis
Corporate Level Strategy
Business Level Strategy
Alternative Strategies
Apple Inc. -
a successful story

founded by Steven Wozniak & Steven Jobs in 1976
1980 Apple products were already exported
some difficulty in early '80s...
...ends up in Apple without Jobs
The early years
John Sully & the others
Increases of sales & Apple's high performance
followed by big troubles
and switching men in responsibility

sales were good but what about producing...
$ 1billion in backorders in 1995
Apologizing for survival
1997: Steve Jobs is back on stage!

...and success came with him.
iMac - iPod - iPhone
Demographic segment
Economic Segment
Political/Legal System
Sociocultural Segment
Technological Segment
Global Segment
Wide accessibility of internet
Young generations are appealed to online activities
Growth consumption of premium products
Imitate brands and piracy
Fanatical behavior in flocks
Common characters of global technology sector
Government subsidy program of purchasing personal computer
fast developing technology and infrastructure of 3G
New technology of China Mobile
Earthquakes and tsunami of Japan
New investment in capital and infrastructure construction
Globally loose monetary policies
Apple's father died
Smartphone Industry
Task Analysis
Internal Analysis
Financial Analysis
Biggest population in the world 1,3 billion people
Demographic change
>91% are Han Chinese
Unequal income distribution
Interest rate: 6%
Inflation rate: 1,9% (avrg.: 4,26%)
Trade surplus of US$ 27,7 billion (09/2012)
Budget deficit of 1,2% of GDP
GDP (ppp) in 2011 US$ 11,29 trillion
Saving rate of 38%
Single-party government
No separation of power
all power comes from Communist Party

Legal system based on tradition
Western influences (civil law)
business law
Value Chain
Support Activities
Supplier Diversity Program

Technology Development:
Own R&D department
Increasing funds for R&D
Human Resource Management:
Corporate Culture
Special Recruit Program

General Administration:
A greener Apple
Strong cash position
Primary Activities
Outbound Logistics > Production > Inbound logistics > Marketing > Sales
SWOT - Analysis
Compatibility with other Apple products
Brand awareness
Compatibility with other
Apple products
Price – premium phone
Increasing net income
Late mover advantage
Political system as an uncontrollable risk
Patent protection rights
Fight for talents has just started
Apple Stores
Retail stores
Print Medias...
- outsourced - outsourced - outsourced - outsourced - outsourced - outsourced - outsourced - outsourced -
Target group
- characteristics
Customer behavior
- what do we do with a smartphone?
What is special to iPhone users...
Enjoy innovations
Like to have fun with technology
Like to be recognized as cool people or as people who appreciate cool things
1,3 billion Chinese...
Chinese vs. Westerners
differences in using a smartphone
requirements in local customization for the apps and contents in many aspects

For a smartphone to be successful among the large advanced segment of users in China, manufacturers must meet unique Chinese consumer needs
68% of surveyed smartphone owners say they
"cannot live without" their smartphones
Main competitors
4 elements...
Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.
Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad.
Long-term Objectives
In 2020 we hold a relative market share of 25% of the Chinese Smartphone market. On top, we offer the most innovative technology in this industry and area in order to serve our Chinese costumers' needs on a high level.
Short-term Objectives
In 3 years we will have opened 50 new stores in mainland China. These will be located in all Province capitals and metropolises along the coast.

Next year we can increase our profit in China by 170% compared to this year;
but our total profit increase for iPhone in China for the next 3 years
will be at least 260% compared to 2012.

Within the upcoming 18 months, we will have provided 3 Apps, which are specifically designed and programed for our Chinese customers, in order to give them a differentiated user experience.
Corporate Level Strategy
Further forward integration in China’s market
Expansion of Apple stores in capital cities of each provinces as well as more cities along the east coast
Acquire local marketing firms to adapt tailor-made marketing strategies for Chinese market

Horizontal integrations
Acquire local technology firms to develop customized apps and designs for Chinese customers
Business Level Strategy
Business people who use the same phone at work and in their leisure time

Offering a unique product that none of the actual competitors offer.
Targeting a niche group with low competition

The iPhone won’t appeal to a wide segmentation group anymore
Even though the product is highly focused it can still be subject to competition from new entrants and from imitation
Differentiation focus strategy
Overall Cost Leadership
Tight cost and overhead control—e.g. R&D

Offering lower priced products attract people with lower income level.
Therefore an increase in sales and profits can be gained as a short-term effect.

Loss in the reputation
Vulnerable to input price fluctuation
Easily being imitated
Long-term effect will be more negative due to the decrease in attractiveness to consumers
Middle & Upper income folks
value high quality
Private user
Professionals in creative jobs
People who desire innovative & fashionable designs
People who like to have fun with technology
Samsung Galaxy
gathered a huge force against iOS
open-source, free app
market leader
flagship of the Android alliance
huge, high quality touchscreen
light, slim design with streamline frame
most powerful hardware of the time
versatility of Samsung
Patent lawsuit
Apple won in the U.S.
Number of shops in mainland China
Samsung: 500+
Apple: 7
Intensity of advertisement/marketing effort
Samsung: high
Apple: merely exist
Competitive behavior
Industry Average
Huge potential market
currently low penetration rate
rapid growth
switch from 2G to 3G network
99% of the profit is devoured by Apple and Samsung
Competitor Financial Analysis
The black year of 2011
had 2 faces:

sadness and success
... what do you think?
BUS 3200 - Strategic Management
Instructor: Prof. LI, Ji
Group members:
12501891 Mesut Boz
12501433 Hannah Strätz
10004262 Chen Yi
10004823 Choi Shukyi
09050582 Zhou Wei Shu
12501530 Anna Bruhoej
11000791 Xu Tiancheng
*Interpretation: 1 = intensity of force is highest; 7 = intensity of force is lowest;
Market Development
Product Development
aim to develop this high potential market to obtain benefits for our whole company
Knowledge of entering new markets, brand name and the good business reputation will assist us
iPhone as driving force to establish the presence of Apple products in China
add features for Chinese customers
BCG - China

Products in global context
Mac - products
Cell phone market & related businesses are shrinking because of smartphones
Market barriers are not sufficient
Smartphone business is attractive
Threat of new entrants
Treat of substitutes
Threat of substitutes like tablets and conventional cell phones
Smartphone is a combination of these substitutes
Hardly to be substituted because of uniqueness
Power of Suppliers
Numerous suppliers of hardware e.g Foxconn
A few operating system supplier e.g Blackberry OS & Windows Mobile
Android dominats more than 50 % market share
Power of Buyers
Buyers neither organized nor buying huge amounts
Buyer group is widespread
Products are high differentiated
No backward integration by buyers
Rivalry of competition
Many Competitors e.g. Samsung, Nokia, HTC Huawei or ZTE
Enormous industry growth: 2011 sales inclined 129,4 %
High product & price differentiation
successfully establish a reputation as an innovator by offering an array of easy-to-use products
economically valuable, uniquely rare, and difficult to imitate.
Sustain competitive advantages
set high prices and command remarkable and higher-than-industry unit contribution margins.
outclass competition

entail significant costs
Product differentiation is indisputably a viable strategy especially if Apple exploits the conceptual distinctions for product differentiation. Those that are relevant to Apple are product features, product mix, synergies with other firms, marketable reputation.
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