The world has been digitalized and reduced into a global village. People are able to communicate and conduct business online. Apple Company is outstanding ensuring that this is possible through manufacturing of electronics and computer devices that facilitate communication through passing of information. The company has established itself all over the globe and has its operations across all the continents. It has however faced numerous challenges when trying to establish itself in international market. This is mainly as a result of competition from other companies and political factors and also geographical factors in new market environment. Taxation is one of political factors that the company face in new market environment. It should comply with the government policies in order to take roots in international market. To overcome all these challenges the company should be innovative for them to take market advantage and reduce competition from other companies. This is by ensuring they come up with new technology which is up to date and caters for the needs of their customers. The company should also do enough research on the business environment of the countries they want to establish themselves. This will help in identifying the potential threats to the stability of the business and respond to them in a professional manner. It should also comply with business registrations by government in new market environment.
Apple Inc. International Company
Apple is an American manufacturing company which deals with production of electronic, computers and also online services. The company was founded by Steve jobs and his colleagues in the year 1976. It produces a number of hardware products such as iPhone, tablets, TVs and watches. It also sells software’s such as iOS and many more. The company also has its business competitors who include Lenovo, Huawei, and Samsung, Del among others who produce computers and smartphones and therefore posing competition in job market. The company makes billions of monies from the sales they make annually across the world. The customers who use their products is mainly people in urban areas and also students in higher levels of learning who rely heavily on computer devices to facilitate their learning (Magnusson, 2019). The company however is trying to establish new market in South Africa but it is faced with cultural, environmental and political factors while establishing the company in the new market environment. This paper examines how the company can use international trade theories in order to deal with these issues and also the import and export theories and model of trade to be adopted by the company.
Apple Inc. is an international Company located in U.S.A, their headquarters are California. It was started in 1976 by Steve Jobs, Steve Wonziak and Ronald Wayne. It manufactures IPod, IPad, smartphones, tablets, computers and computers software’s. Its products are highly marketable all over the world. It aims at opening a new market in Africa most specifically in South Africa. Africa has been doing business with foreigners for a very long period of time. Africa, despite its exposure to International market has not been able to make good progress in economic and technological development due to poor leadership, corruption, political unrest, poor infrastructure and shortage of resources. However South Africa has emerged to be powerful and it is attracting many International companies to start new markets of their products there. One of these companies is Apple Inc. International trade increases the number of product that South African consumers will choose from (Park, 2021). This will decrease the cost of product through increased competition with China and other companies that manufactures these devices. South Africa will be a good market for Apple products because the population is high, hence ready market and it is also highly industrialized hence many companies in South Africa will purchase these devices to ease their management store data and also for communication purpose (Magnusson, 2019). Apple products are up to date, reliable and durable hence they will be appealing to their customers for the good services. The target groups in South Africa will be: students’ companies and people in urban areas. Students will use these devices to do their studies, attend online classes, and store their modules entertainment and luxury.
Apple International Company have to consider some factors that will affect their operation in South Africa. These factors will determine the supply and demand of their products. The factors include political, economic, cultural and environmental. They will directly or indirectly affect their market.
This refers to the influence of the government into the market. They influence the business through government policies, tax policies, trade restrictions, political unrest, competition regulation and use of import export regulations. Tax policies can greatly affect the Apple Company in South Africa. Increasing the taxes will result to Apple increasing the prices of their products. This will in turn affect the demand of these products because the number of people who will afford to buy these devices will decrease. High tax rates on imported goods may also affect the cost of Apple products. The company should comply with all tax policy to avoid the closure of its operation by the government.
Government policies also plays a major role on the type of market in a country. They are determined by political culture of the country. The policies are established to guide businesses. These policies influence interest rates rate. Low interest rate attracts more investment increasing consumers spending. Government enters into bilateral agreement with other nations to reduce barriers to business. The Apple Inc. should be flexible to be able to respond to changing rules and policies. Political stability in South Africa since the end of the Apartheid rule have been attracting many foreign investors. They are assured of their own security and that of their products. When the government is stable it makes business friendly policy that will promote all businesses without discrimination. Investors will also start their market in different parts of this country therefore expanding their market and making their products available for their customers.
Trade restrictions are of different types. Tariffs, licensing requirement and standards. Reduction of trade restrictions benefit consumers. These restrictions are put in place to protect the domestic industries by making imported goods expensive. The government also limit the amount of goods that are imported. The Apple Inc. needs to be aware of these trade restrictions, to apply for licenses to be able to operate in South Africa and also meet the health and environmental standards in order for it to carry to its operation effective.
These factors play a major role in determining the prices of products and services. They may affect the market directly or indirectly. They can also change the supply and demand of these devices because they affect the purchasing powers of customers. These factors are unemployment, inflation, interest rates, exchange and economic growth. Unemployment affects the market of commodities. When a large population in unemployed the amount of money they will be getting will always be directed to their primary needs like buying food, clothes. They will be unable to purchase the Apple devices hence the demand of these devices will be very low.
Higher interest rate lowers the income of consumers. This affects their spending because they will use a lot of money to service their loan and to keep it current. This will result to them spending less in buying other staffs like phones, laptops. This in turn will lower the demand and supply of these devices. Lower interest rates will increase the money supply encouraging consumers to spend. This will increase the demand and supply of these devices. It is good for the Apple Company to understand how these interest rates will affect their market.
Rising inflation makes local goods expensive and imports good cheaper hence attracting more customers. Hence the Apple Company should consider the inflation rate to be able to determine the prices of their product. High inflation will increase the demand and supply of Apple device. The economic growth of South Africa is highly developing. They find it necessary to integrate technology in their economy to boost these developments. This offers a ready market to Apple products.
The culture factors determine the trend of the population. For example; cultural barriers, age distribution among others. These deals with the norms, culture and values which are acceptable within a given country. Existence of cultural barriers limits people from using various products. The Apple Company should be aware of the cultural diversity in South Africa so that their products will be appealing to all regardless of their culture. The social status of the target group matters a lot. The Apple Company should produce cost friendly products which will be available at affordable prices by people from all social classes.
The products of Apple Inc. should be environmentally friendly. The materials used to seal these gadgets should be biodegradable. They should also educate people on how to dispose those devices when destroyed. Through this they will be taking care of the environment. Environmental factors such as weather, climate change may affect the market of these devices.
The international trade theories are simply different theories that tries to explain international trade. It is therefore a set of organize ideas and thoughts explaining about the exchange of goods and services between two entities and countries. They seek to provide an elaborate flame work and what businesses strategies to use and how they affect international trade. The theories however are classified into two; classical theories and modern theories.
These are the theories developed in the 19th century during the industrial revolution. The aim was to come up with an economic model to shape the growing international trade due to surplus production (Zhao, 2015). The theories however continue to make sense and shape business ideas in international market.
This was the earliest effort to develop and economic theory. It argued that the wealth of a country was determined by gold and silver that they possess. According to Magnusson, (2019), a country should increase possession of gold and silver through encouraging more exports than imports. In this case the apple company should increase the volume of the products they sell in international market in order to maximize profit. The volume of products they sell should be very high from the expenses they incur when buying raw materials to produce their products. This idea is called protectionist and many companies have embraced this idea where by they ensure they export greater quantities of their products more that the import of raw material and other essential resources (Zhao, 2015). This will help the company to grow and expand in the market environment. The government play an important role in protecting businesses. In this case the of south African government have introduced taxes in order to protect their local businesses. The company can consider negotiating with the government to reduce trade tariffs imposed on them to ensure that the company maximizes on profit and reduce situations where they lost a lot of revenue in form of taxes.
This theory was put forward by Adam smith in 1776 where he questioned the mercantile model. He provided his argument based on efficiency of a country in ability to produce goods than another country. According to him restrictions are not necessary and there should be free trade governed by market forces. Therefore, if a country is good in production than another country it is therefore better in that field and should specialize in it for mastery of skills (Patel, 2017). Apple Company specializes in manufacturing of computer devices such as iPad, iPhone and laptops. There are other companies within this market and are producing same products produced by Apple Company. The company should focus on specialization in order to come up with better products than their competitors to ensure they take the advantage in market environment. This will help them to build a good reputation to their customers and their business will prosper in international market and outshine their competitors. The people of south Africa have a diverse culture and they use a variety of products from different companies. In order to overcome this, the company should establish their market beyond these cultural issues to ensure that they dominate the market by making their products more appealing to attract more customers from all diversity. This will help the company to have the market advantage over the other companies.
These theories emerged after Second World War and were formulated by business experts such as professors which makes them different from classical theories which were profounder by economists. The argument of these theories is based on expansion of multinational companies
This theory was developed in 1961 by Steffan Linder. He argued that the countries that are at the same level of development have similar preferences. According to, Uddin (2021), this theory postulates that the company first produces for domestic consumption and when they explore in international market, their potential customers is similar with those in home country. Trade is therefore preferred to be successful in countries with the same economic standard and per capita income. Apple Company should first identify their consumer’s goods in their country in order to identify the potential customers in a foreign market. In this case most people who live in urban centers, students and companies are the most potential customer’s o Apple products. When establishing market in South Africa, the company should target people living in urban areas such as Johannesburg and Cape Town and Pretoria. This are two places with same customers like those in America. The urban areas in South Africa are near universities and students largely use the apple products. The largest number of south African people live in informal settlement areas such as slums and ghettos where they languish in poverty. These group of people is not even able to put food on the table to feed their families. They are however the largest population in the country and they are not able to get products from Apple because of their economic status. This is a challenged to the business because only a few populations will be able to consume their products.
The proponents of this theory are Raymond Verma a Harvard Business school professor in 1960’s. The theory argued that a product in market has a life cycle which has three stages, (Bazirova, 2013): new product, maturing product and the standardized product. The production and innovation of new product happen in the home country. The product undergoes the maturity stage and standardized stage where it is known by every person. Apple Company was started in 1976 in USA by Steve Jobs and his friends. During this period the Apple products were new in the market and therefore in the first stage of international market. The products reached the maturity stage where it dominated the market in United States. The Apple products have reached the standardized product stage where the products are known in foreign countries and also, they dominate their markets. These products have dominated markets in Asia, Africa and Europe. This theory however does not provide ways which a company can use to ensure substantial profit advantage in the global market. Inflation in south Africa is a problem where the import goods are made expensive in protecting local market. This lead to imports becoming expensive at as higher cost and discouraging many from consuming the import products. The Apple company should consider the inflation rates in order to determine prices for their product to attract more customers.
The theory was propagated by Paul krugman and Kewing Lancaster in 1980. The theory focuses on how multinational global companies can achieve competitive advantage against other companies in their fields (Zhao, 2015). Apple company faces global competition from other companies such as Nokia, Samsung and Techno. The company should develop a competitive advantage to ensure that they prosper in their business. It should always be aware of the barriers they will encounter when establishing a new market in a foreign country. Access to raw material is a problem likely to be encountered and therefore the company should come up with new strategies to apply in order to cope with this situation. The company should come up with unique business strategies and also their experience in other countries in order to outshine their competitors. This is by providing new technological advanced gadgets which is unique in the market.
The proponent is Michael Porter. This theory was developed in 1990. According to Porter (2011), a nation should focus on innovating and upgrading their industries in order to gain competitive advantage. The gaining market advantage for Apple Company depends on how innovative they become and upgrading their products for them to be able to dominate marker. There are four determinants on competitive advantage of a company in market. Local market demand condition, local suppliers and complimentary industries and local firm characteristics.
The company tries to identify the resources available in a nation in terms of materials and availability of labor. Apple Company should identify the availabity of resources required by the company. This is to determine the value of impact versus export. If there is enough labor and resources in the country will ensure that the company has sustainable competitive advantage in the market.
Home market is very important for the growth of every company. Before establishing a company in a foreign market, it is good to focus on the potential local customers. In this case the urban dwellers and students from higher institutions of learning are the local market for Apple products.
Every company requires support from industries that provide them with inputs that are necessary in the market. Apple Company should look at complementary companies that supplies them with required inputs to ensure sustainable complimentary advantage. This will help increase productivity.
This includes the structure of the industry and their competitors in the market. There are local companies that will provide competition to Apple Company. This healthy competition can lead to innovations in order to fit in the market (Porter, 2011). They are affected by government policies because the government imposes higher tariffs which is hinder healthy competition and hence giving advantage to a particular company over the other.
Imports are the goods and services that are purchased outside the country boundaries rather than consumption of the locally produced goods and services. On the other hand, experts are goods and services produced locally but sold to consumers in foreign countries. According to Simon, Schuster and Kasahara (2013), the export should always exceed the imports for the nation’s economy to grow. This means that a lot of foreign money is coming to the country. Through imports of electronic gadgets from Apple Inc. will be available to the people of South Africa. High level of ports of Apple products will indicate a growing economy hence the increase of demand and supply of those devices. The exports and imports grow in a healthy economy. If the country currency is weak, it will make imports very expensive affecting their demand and supply (Porter, 2011). The country currency therefore should not be weak to make imports available at affordable prices. This will make the Apple products market very low. High inflation will make consumers to spend low on imported goods and services as people will be lacking money to buy these foreign good so the will rely on domestic goods and services. Therefore, Apple Inc. should export the products to South Africa because the market is good, competitive and also it will be able to increase their sale. As they make the decision of exporting their products, they should put into consideration the transportation cost and also the taxes so that they can be able to set friendly prices for their products.
Apple Inc. needs to be innovative to maintain itself ahead in the competition. Innovating will be done through research and development of their products which must go hand in hand with technologies (Lan, 2021). Their products should be attractive and profitable, Innovation is used as a competitive advantage, new products will allow Apple to generate more revenues, penetrating market to ensure broad reach, Apple market keeps growing reach and lastly, it does not focus on specific market. They should sell goods and services that fit the consumer and the information technology industries (Park, 2021). The company adds more authorized dealers in different countries to increase their sales in the current market. The company also uses promotion through different social media platforms. Advertisement encourages more consumers to buy Apple products.
In conclusion, Apple International Company should consider the political, economic, cultural and environmental factors that can affect their operations in South Africa. Before establishing a new market, they should be aware of the international trade theories and be able to apply them in their operations. They can apply them to develop and maintain the new market in South Africa. Apple Inc. Have strategic objectives which enables them to maintain their market despite the competition. They maintain their stand through research, innovation, advertisement and production of goods which are more attractive.
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