(TIỂU LUẬN) assessment task 3 individual essay APPLE IN SOUTH KOREA COMPANY ANALYSIS

As mentioned above, Apple has used its OS X and iOS operating systems, which is easy usage and also a unique competence, help Apple gain customer loyalty and increase its brand image.. A

Assessment Task 3 - Individual Essay: APPLE IN SOUTH KOREA COMPANY ANALYSIS

Part 1: Background and competitiveness of Apple:

a Apple company profile:

Apple Inc is an American multinational technology company headquartered in California The firm has been considered one of the largest tech companies in the world (Ponciano, J 2019), which designs, develops and sells electronics, computer software, and online services Apple was founded on April 1, 1976, by Steve Jobs and Steve Wozniak, who brought the change of new software in electronic devices In 1984, Apple introduced a new product called Macintosh, which had never been in the market before Additionally, there were some problems between Steve Jobs and Sculley before the corporation of two Steves, which caused Jobs's departure from Apple Then, Apple had declined and its competitors (IBM or Microsoft) had risen in revenue and product quality (Rawlinson, N 2017) Finally, the return

of Steve Jobs to Apple has made this brand as it is today As mentioned above, Apple mainly sells electronic devices, computer software, and online services Specifically, the most well-known Apple products are Macintosh line of personal computers, the iPod line, iPad (tablet computers) and the iPhone

According to Mediakix, Apple has sold approximately 1,379,960,000 iPhone units worldwide

in 2018 and reached 1.3 billion in active iOS installations (Mediakix) At a glance, in 2019, Apple has expanded 506 stores in 24 countries, including 272 stores located in the U.S and

234 Apple stores internationally, such as Australia or South Korea Apple operates through operating segments: the Americas, Europe, Japan, Great China, the rest of Asia Pacific and other factors Additionally, Apple has used the online and retail stores to sell products to different consumers and enterprises The company distributes its product line through wholesalers, resellers, national and regional retailers

b Core resources and competitiveness of Apple:

Threshold capabilities are the need for one organization to meet the demand for necessary requirements from customers and compete with potential competitors in the given market Without those capabilities, the organization could hardly survive in the market (Kiran, M & Sayers I) To survive and become one of the largest electronics companies, Apple indeed adopted Threshold capabilities Apple’s tangible assets are Steve Jobs, unique design and retail stores Since Apple has been on top of the electronics industry, it is clear that the founder of Apple, Steve Jobs is a valuable asset to the company, who has a unique approach

and a clear vision for Apple Bill Gates had also stated that there were rarely people having a profound impact as Steve Jobs had (BBC 2011) Moreover, Apple has been successful in its programs and designs, thanks to professional programmers and designers OS X and iOS are two successful operating systems, making Apple stand out in the electronics industry In terms of retail stores, as mentioned above, there are roughly 507 retail stores in total By providing customer service in both online and retail stores, it helps Apple gain a right brand image and customer loyalty Apple’s retail stores, which are one of the critical resources, contribute largely to its success

Moreover, any firms still need to have their unique resources and capabilities, which could be

a valuable competitive advantage for firms In Apple, its unique design and program capability are one of the competitive advantages that no competitors imitate or obtain As mentioned above, Apple has used its OS X and iOS operating systems, which is easy usage and also a unique competence, help Apple gain customer loyalty and increase its brand image Apple’s programmers also provide new update iOS versions for customers to make their electronic devices better, compared to the old ones Apple products such as iPhone, iPad, iPod, and Macintosh line, have unique designs that bring Apple success and be ahead of the competitors Apple has come up with unique interface designs and focused on quality and different look for its products, make this brand can compete in the electronics market Another core competitive advantage is Innovation strategy iTunes is one of the innovation strategies of Apple, that brings Apple prominent in the music industry More to the point, each year, Apple has launched a new iPhone to catch customers’ awareness, maintain their loyalty and could increase profit According to UKEssays (2018), the company has only spent 3.7% of its revenue on R&D and preferred to focus on innovating the knowledge of employees Since using an Innovation strategy as a competitive advantage, helping Apple not merely differentiates itself from other competitors but it also increases brand image and properties Apple is one of the pioneering companies in creating new operating systems, unique features and interface designs, compared to Samsung, Nokia or LG

VRIO framework of some of Apple’s resources and capabilities:

Design & Program Retail stores Innovation Strategy

Part 2: Current political situation of Korea:

Multinational enterprises are defined as a firm that engages in Foreign Direct Investment Apple is a company that has invested in many countries, from developing to developed countries South Korea has one of the largest and most diversified companies in the world This country is known as the one that has increased its economy from one of the poorest to one of the most successful, rising GDP per capita in just one generation In fact, South Korea and Japan were inherently dissatisfied with each other, especially those related to the Japanese colonial period Most recently, Japan was upset when the South Korean court demanded Japanese compensation for forced labor during World War 2 (Salmon 2019) Tensions between Japan and South Korea erupted after July 1 when Japan said it would impose an export restriction on Seoul on the three most important high-tech materials used in the manufacture of semiconductor components and screens Corporations such as Samsung or

LG import 90% of this material from Japan (Huang, E 2019) Additionally, Japan has just removed Korea from the list of “White countries” of 27 countries with preferential treatment

on trade, this means that Korea will be deprived of the privilege of allowing it access to Japanese goods without having to go through cumbersome procedures In response, South Korea is considering restricting OLED display exports to Japan in retaliation (Ryall, J 2019) The wave of boycotts in Japan has risen, 23.000 retailers have pulled Japanese goods off shelves, and announced they would never buy products from this country

Apple is America-firm that has been influenced by the above political issues Firstly, a technological war has affected trade between Korea and Japan It has damaged many Korean

capabilities

Organized to

capture value

technology brands, including Samsung, SK Hynix, LG and even Apple As mentioned above, Japan restricts the export of essential components to South Korea, meaning that the export ban continues to be maintained and affects the supply chain of many electronic devices South Korea-Japan disputes that the risk of disrupting semiconductor supplies cannot be reached at a harder time for Apple Apple has struggled to stabilize its iPhone business amid declining sales, shipments, and profit The figure has dropped down, compared to Quarter 1

in 2019 (Appendix 1) Also, the search for semiconductor components and chips will increase the price of Korean Smartphone products Therefore, Apple will have a more competitive advantage in current Korea’s political situation, comparing to both price and quality On the other hand, in the Korea-Japan situation, the national pride of the Koreans will somehow increase, which was essential to Koreans in the Japanese colonization period (Chung & Choe 2008) That directly affects the volume of imported goods To be more specific, Apple will be less focused on the Korean electronics industry market; in other words, Koreans tend to purchase their country goods In terms of electronic devices, according to Appendix 2, Koreans prefer Android software over iOS, about 47.8% in September this year (GlobalStats) Therefore, since the Japan-Korea conflict, Apple may lose a certain number of Korean consumers, leading to its profit would be reduced

Part 3: MNE’s strategy in the host country:

After analyzing the current political in Korea, determining Apple’s strategy and entry mode decision is also necessary According to Harzing (2000), through Barlett and Ghoshal’s model, MNEs have been affected by the forces of global integration and local responsiveness, including Global (standardisation), International, Multidomestic (localisation) and Transnational Since Apple has made a differentiation in centralizing its domestic products to local customers' needs, it is considered that Apple is using Global Strategy, based on Barlett and Ghoshal’s model Furthermore, license and distribution agreement are two strategies Apple has used to meet local customers’ needs as entry mode choices, which Root (1987) has stated that an institutional arrangement can bring company products, technology, people skills, management or other resources into foreign countries

Strategy and Structure of Apple:

The primary strategy Apple has used is Global strategy, which is defined as a competitive strategy aimed at increasing profits on the basis of global cost reduction The way they chose this strategy in order to bring high customer value in Korea Through the help of this strategy, Apple has developed a strong market share in South Korea, approximately 28,3% in 2018 by making differentiation in cross-border service (Business Standard 2018) Compared to the previous years, Apple has been more widely accepted than before in South Korea According

to Scientiamobile (2018), iPhone X has been a top phone in this operation, with the number larger than Samsung products, which has proven that Apple has successfully targeted a certain number of Korean local customers In terms of brand value, Apple has made a differentiation in its products, operating systems and unique designs, making Apple remarkable in Korea's electronic industry market Apple's global strategy also provides Apple with competitive advantages that tackle the threats and challenges of the industry, such as Samsung, LG and SK Hynix Additionally, low imitations from other rivals would be a significant competitive advantage for Apple in South Korea However, Ghoshal (1987) has stated that in the context of Global strategy, firms may face such competitive risks due to the fact that the competitions response can take place in many different forms and in many different markets In other words, this threat could create opportunities for entrants to leap in and satisfy the empty needs of customers, thus creating a new market Accepting that Apple had strong competitive advantages, it was otherwise shown in Appendix 2 that Koreans prefer to use the Android operating system and that their company's products can not meet the specific requirements of each region, implying that Apple has not focused on the needs of Korean consumers According to Erramilli & Rao (1990), the lack of specific business information and knowledge has generated confusion and increased risks As a result, under these conditions, decision-makers are becoming more cautious about what assets Apple is introducing to this foreign market

Market entry:

According to Hill (2013), the diverse model of Dunning shows the acceptance claim of internationalization theory that it is a struggle to get a corporation to license its unique and know-how Apple has a closed environment that demands the highest quality consumer monitoring For these reasons, Apple has never licensed its product lines for sale through foreign market before, that means Apple follows the foreign direct investment strategy and

creates their own way to expand business to South Korea Since they developed an entry mode, Apple has used licensing approaches as a strategy for increasing its operations in Asia Pacific, which are perceived to be essential to Apple's sales (Rains 2018) Applying the licensing strategy, Apple applied control over its operation and strategically emphasizes and reduces risk factors for regulatory issues and restrictive investment barriers (Aulakah, Cavusgil & Sakar 1998) Moreover, South Korea is a country that has many risks due to the fierce competitors and its market has almost saturated Therefore, a distribution agreement with a local phone carrier is one of the most reasonable ways to enter South Korea A distribution contract requires less expense but may result in a conflict of interest that arises if Apple’s sales reach a certain level This approach gives Apple opportunities to test the market without spending assets upfront Hence, licensing and distribution agreements are two suitable solutions to enter Korean markets quickly

Nonetheless, these internationalization modes generate great rivalry on the Korean market because Samsung will have to shift its strategy to compete better with Apple Moreover, Apple may have recognized social, economic, and religious influences and issues that affect business success In terms of culture, Korea is a very traditional country, so the perception of welcoming others is an integral part of their daily lives This country is also known to have respected its cultural traditions; thus, considering that Apple has worked in Korea, it must be mindful of some of the cultural impacts in order to avoid upsetting the essential customs of the Korean people, despite their differences with those of the United States, which may increase the perception of its consumers and increase the reputation of Apple in Korea

Possible alternative actions:

Throughout analyzing and looking at how Apple operated in South Korea, it is clear that Apple has been successful and is struggling to enter this highly competitive market Moreover, Apple Inc's future lies in the growth of its core competencies to improve its expansion strategy (Blonigen 2001) As a result, managers are able to gain diverse perspectives on the effects of the chosen strategy and structure, consumer demands and cultural differences in order to make the needed changes and improvements to business strategies and retain the competitive advantages of Apple With regard to Apple's operation, there are still approaches that can be applied to solve some of Apple’s issues in consumers'

demand In order to respond quickly to the current Korean technological trend, Apple should investigate clearly what suitable technology devices or software Koreans are looking for Furthermore, the appropriate marketing strategies in Korea could make Apple more aware of and better image brands This leads to quicker adjustment to the needs of consumers, which offers Apple a better competitive advantage In addition, to gain competitive advantages, the best way to enhance brand reputation and increase consumer purchase intention is to act as a corporate socially responsible company to improve its CSR plan South Korea is the next country that Apple has operated since this brand announces to use 1000% clean energy to protect the environment in every product (Edward 2019) Nonetheless, these internationalization modes generate great rivalry on the Korean market because Samsung will have to shift its strategy to compete better with Apple Moreover, Apple may have recognized social, economic, and religious influences and issues that affect business success In terms of culture, Korea is a very traditional country, so the perception of welcoming others is an integral part of their daily lives This country is also known to have respected its cultural traditions; thus, considering that Apple has worked in Korea, it must be mindful of some of the cultural impacts in order to avoid upsetting the essential customs of the Korean people, despite their differences with those of the United States, which may increase the perception

of its consumers and increase the reputation of Apple in Korea

Part 4: Reference lists:

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Part 5: Appendix: