The report would essentially focus on analysing the mobile handset industry of Middle East with also conducting an evaluation of Apple Inc. endeavouring to develop a potential presence in the region. It would also focus on conducting both empirical and case based analysis regarding the right kind of corporate and business strategy that can be used by Apple Inc. for potentially competing with other mobile handset firms. Further, the report would focus on selecting and evaluating specific corporate and business strategies that can be put into use by Apple Inc. while operating in Middle East. Finally, effective recommendations are required to be rendered for Apple Inc. based on the inferences gained from the analysis made.
Analysis of the Mobile Phone Industry in Middle East
The analysis of the attractiveness of the mobile industry in the Middle East region would be conducted through the use of Porter’s Five Forces Analysis. The application of Porter’s Five Forces Analysis would contribute in understanding the bargaining power of the consumers, power of suppliers, existence of substitute products, internal rivalry of competitors and also the threat from the entry of new firms in the mobile industry of Middle East.
PEST Analysis of Mobile Phone Industry in Middle East
Political Impacts
The emergence of political instability and the continual threat from growing amount of terrorism activities in the Middle East regions affect the confidence of the mobile phone companies focusing on opening stores in the region. Threat imposed from terrorism activities in Middle East affect the flow of tourists in the region which in turn reduces the sales revenue for retailing service institutions in the region (GSMA, 2016).
Economic Impacts
Mobile phone industry in Middle East ideally contributes in generating potential economic opportunities like growth of employment which in turn helps in augmenting the economic value of the Gulf countries. However, regulatory and taxation policy changes introduced by the government of the Middle East regions would require the mobile phone companies to abide by the new regulations associated to rendering of digital and telecommunication services offered to the consumers (GSMA, 2016).
Social Impacts
The Middle East market reflects a growth in the number of users for different technological and telecommunication gadgets like Smartphones, tablets and also different mobile phone accessories. The younger consumers in Middle East are observed to be increased users of Smartphones in that the same helps them in easily accessing internet based applications needed for social networking and also conducting internet based purchases (eMarketer , 2015).
Technological Impacts
The mobile phone market in the Middle East regions of late reflects the emergence of different technology enabled networks like the use of LTE and VoLTE. It contributes in helping the mobile users gain the advantage of using the 4G network for conducting of HD calls. Development of new mobile technology in Middle East has enhanced the quality of making phone calls through the use of Smartphones (IT News Africa , 2015).
Consumer’s Bargaining Power
The current situation of the mobile market in the Middle East region reflects a downfall in the level of consumer confidence and generation of new employment reforms that potentially affect the mobile handset market. Figures reflect that the number of shipments of handsets reduced by around 8 percent during the second quarter of 2016 while the total number of shipments earned a reduction by around 15.9 percent (IDC, 2016). The consumers in the Middle East’s mobile market however reflect an increasing interest for high end Android devices reflecting new innovative features rather than updated models. The above information reflects that the consumer bargaining power in the mobile market of Middle East is quite high (Mutum et al., 2016).
Supplier Potential
Factors like reduction in consumer and government spending and also the rise of political stability affected the mobile handset market of the Middle East region. The above situation reflected the decline in the level of consumer interests from the high-end to mid-range devices (Steinbock & Noam, 2011). The current situation during 2016 reflects that the mid-range handsets of less than $300 accounted for 81 to 94 percent of the Middle East mobile market especially during the first quarter of the period (IDC, 2016).
Effect of Substitutes
The broadband market for mobile handsets and also the Smartphone market in the Middle East region are observed to face potential threat from the rapid development and growth of new networks like LTE Advanced and also VoLTE. Moreover, the development of the ‘Internet of Things’ commonly known as IoT contributes in integrating different devices and also in providing greater connectivity over a larger area. The development of IoT in turn has contributed in developing the Machine-to-Machine (M2M) interface that helps in integrating different digital gadgets like tablets and laptops with different consumer electronic devices. Growth in the deployment of M2M connectivity is taken to rise by around 30 percent along the period ranging from 2014 to 2020 reflecting its increased demand (GSMA, 2015).
Further, the mobile market in Middle East also faces increasing threat from the rise of counterfeit products consisting of handsets and accessories. Around 12 million counterfeit mobile products were found to be identified and seized by the Economic Development ministry during 2016 valuing at around Dh 327.4 million (Barakat, 2016).
Internal Rivalry
The level of competition between the players in the mobile handset market in Middle East is largely intensified by the growth in the availability of 4G LTE sets. The change in consumer demand for availing cheaper mobile gadgets in Middle East has further triggered the growth of the market for 4G LTE handsets in the region. Essential competitors to Apple in the LTE handsets market are identified to be Lenovo, Huawei and also Samsung. It is evaluated that the market for LTE handsets account for more than a half of the total market for Smartphones in the Middle East countries (IT News Africa , 2015).
Threat from New Entrants
The mobile market of key Middle East regions like Oman is facing potential threat from the rise of Mobile Virtual Network Operators or MVNOs. Moreover, the mobile broadband market also faces potential threat of different companies developing and using networks like Long Term Evolution or LTE, Voice over Long Term Evolution or VoLTE and High Speed Packet Access or HSPA networks (PR Newswire , 2015).
The internal strategic analysis of Apple Inc. would be conducted through the use of different models and frameworks.
The resource audit for Apple Inc is rendered in a tabulated fashion as follows.
(Jinjin, 2013)
Value
Apple continually focuses on the incorporation of innovation and creativity for developing effective designs for its iPhones, iPods, iTabs and also for other premium services like Apple TV. The optimal utilization of technology and other resources like manpower talent and needed designing and creativity skills has helped Apple in effectively competing with its rivals.
Rarity
The technological and process based knowledge used by Apple for designing the different telecommunication products and gadgets is evaluated to be potentially rare making it hard for other mobile companies for availing such in producing like gadgets (Jinjin, 2013).
Imitability
The creativity and innovative skills used by Apple for the development of iPhones, iTabs, iPods and iTunes make it difficult for other mobile companies for potentially imitating them in the production of substitute products. Difficulty in copying Apple’s designs, innovative and creative skills contribute in enhancing the competitive advantage gained by Apple in the mobile phone industry.
Nonsubstitutability
Apple’s focus on continually generating new type of digital and telecommunication products is evaluated to have made increasingly difficult for other mobile companies for generating substitute products (Jinjin, 2013).
The SWOT Analysis for Apple Inc. is underlined as under.
Strength
-Development and application of the ‘Think Different’ philosophy.
-Continuous focus on innovation and brand development
-Effectively aligned and monitored supply chain and distribution and logistics system
-Customer focused services
-Creative and innovative advertisements and marketing campaigns.
Weakness
-Lack of compatibility in Apple’s mobile technology
-Difficulty in sustaining needed profitability and revenue potential
Opportunity
-Growth of Smartphone users in the Middle East Market
-Increasing market for LTE phones in Middle East region.
-Growth of integrated mobile applications
Threat
-Losing consumer confidence and political instability in Middle East
-Growth of competition in the sector of LTE handsets.
Corporate Strategies for Mobile Firms
Formation of Strategic Alliances
Telecommunication companies venturing to enter the Middle East mobile market are observed to focus on the development of effective strategic alliances with existing telecommunication operators and companies operating in the region (Du, 2016).
Formation of strategic alliances like joint ventures, development of franchising and licensing collaborations, formation of strategically shaped cooperative agreements, research and development based collaboration, equity investments, forming mergers and acquisitions and also formation of cooperative agreements with firms in different international markets are identified to be effective corporate strategies that are focused on being undertaken by mobile handset companies for developing an effective presence in the Middle East markets. The company focusing on merging and acquiring existing companies in the international market focuses on gaining control over the assets, resources and business networks of the acquired or merged company thereby developing ownership rights for operating in the new market (Jinjin, 2013).
Collaboration between two or more firms is also generated through the formation of joint ventures, research and development based collaboration and also through the development of cooperatives. The same helps in the sharing of needed information for meeting of technological and other business objectives and also contributes in effective decision making in a collaborative and integrated fashion. Similarly, the handset companies can also focus on the development of franchising agreements with existing firms which would enable in generating greater market penetration with still having control on the pricing and marketing standards. Licensing agreements can also be generated for a limited period enabling the granting the licenses to develop new manufacturing potentials in the new market (Jinjin, 2013).
Application of Ansoff Strategy
The Ansoff Matrix for Apple Inc. is evaluated as follows.
Market Penetration
Apple focuses on generating greater market penetration through the generation of new iPhone models in a span of every one year. The new models are incorporated with effective camera, larger screens with HD features, developed net connectivity and processors. Development of new iPhone models ideally contributes in attracting and retaining potential customers in the larger target market.
Market Development
Market development activities of Apple reflect on the development of products like iPod Touch for the international markets. The iPod Touch is created by Apple where it is not enabled to make calls but stands as an effective replica of the iPhone device developed by the company. Further, iPod Touch would also contribute in serving the needs of consumers of having cell phone based carriers that control the use of iPhone (Wolinski & Coates, 2016).
Product Development
In terms of product development, Apple contributed in the development of the new product called iPod Shuffle. The iPod Shuffle contributes in acting as a new product solution for iPod customers that can be carried by customers to any location or region. iPod Shuffle is designed as a small and rugged device that can help customers not interested in carrying iPods and iPhones with them.
Diversification
The development of iTunes by Apple rightly contributed in helping the company meet the needs of a new target group of music lovers and enthusiasts. These new groups of customers potentially differentiated from the existing customer groups of Apple dependent on the use of Mac products and also iPhones and iTabs. Development of iTunes helped Apple in venturing in the music industry (Wolinski & Coates, 2016).
From the evaluation of the different types of corporate strategies that can be undertaken by mobile handset companies in its bid to expand in the Middle East market it can be effectively identified that Apple Inc. can rightly focus on formation of joint venture and cooperative agreements with existing mobile companies based in the region. The formation of joint venture agreements with mobile companies can help Apple Inc. in utilising the human, capital and technological resources and networks of existing mobile companies for manufacturing the right type of handsets as would help in meeting the demands and expectations of the Middle East consumers. It would also help Apple Inc. in enhancing the technological competence of its mobile handsets such that would contribute in meeting the communication needs of the regional consumers in the Middle East region. Similarly, research and development based collaboration with the technological companies based in Middle East would also help Apple in making new mobile handset models and also other mobile applications that would contribute in rightly develop customised technological products for the Middle East consumers. Along with development of technological competence, the formation of effective strategic collaborations in Middle East would also help Apple gain access to potential marketing and distribution networks for marketing its mobile handsets in the region (Vaidya, 2011).
Open Innovation Strategy
Open Innovation is identified to be an effective business strategy that needs to be undertaken by mobile companies endeavouring to gain an effective space in the Middle East market. In terms of Open Innovation mobile companies can essentially focus on co-working with innovation centres and spaces for enhancing the level of operational efficiency and also focus on promoting an effective digital culture. Further, development of an open innovation culture also requires the mobile companies to encompass the views of its different stakeholders like customers, supplier groups, and research and development teams and also evaluate the operational style and paradigm of its competitor firms (Grant & Wise, 2016). The business practice of open innovation ideally helps the mobile companies in reducing the research and development costs, enhancing operational efficiency and also in identification of new market opportunities. Further, the mobile companies also needs to develop the creative and innovative potential of its internal workforce such that the same contributes in development of effective apps for contributing in the development of education and employment programs for enhancing the manpower platform of the Middle East market. The development of apps for the education and employment market is taken to help the mobile companies in earning potential revenues (McKinsey, 2016).
Use of E-Commerce and Multichannel Retailing
Further, the Gulf Countries also reflect needed growth of e-commerce uses along the period ranging from 2015 to 2020. The same is reflected in the following illustration.
(ATKearney , 2016)
The above scenario closely reflects that mobile companies like other companies endeavouring to effectively venture in the Middle East markets needs to rightly deploy the electronic commerce and other multichannel platforms along with the opening of brick-and-mortar stores for potentially reaching its products to a larger number of customers and in penetrating the new market (Banda, 2016). Similarly, the use of the multichannel platforms like marketing through the use of digital gadgets and also through the development of kiosks would contribute in helping customers gain an effective view of the different products marketed by the company before ordering and purchasing them. Incorporation of click-and-collect tools would encourage the customers for ordering and purchasing through the use of Smartphones, Tabs and other digital interfaces and thereby collecting the same from the retail stores (ATKearney , 2016).
Cost Leadership Strategy
The cost leadership strategy can be effectively pursued by Apple Inc. for marketing its iPhones, iPods, iTabs, iTunes and other mobile accessories and gadgets in the Middle East market. The cost leadership strategy can be incorporated by Apple Inc. through integration of local suppliers that would contribute in generating needed support for rendering materials and also in assembling and manufacturing the devices for the consumers in the Gulf countries. Development of relationships with local suppliers and also in generation of local assembly and manufacturing units and also would help Apple in reducing the sourcing and assembling cost for producing the mobile and other digital gadgets for the regional consumers. It would thus help Apple Inc. in marketing its products at reduced prices to consumers in Middle East. Research and Development based collaboration with local designers and technologists would help Apple in rendering products with new technology features for meeting the emerging needs of consumers in the Gulf region (Mutum et al., 2016).
Appropriate Business Strategies for Apple
Apple to develop an effective presence in the Middle East market essentially focused on opening brick-and-mortar stores along two different regions like Dubai and Abu Dhabi. The opening of two retail outlets along popular malls in the specified regions is observed to potentially attract potential consumers ranging from residents to tourists. Apple focused on helping the Middle East based consumers gain access to different products ranging from Apple Watches, iPhones, iPods, iPads, MacBook products, headphones, Apple TV and also a host of other third party merchandises and other accessories. The reflection of increased consumer demand for Apple’s merchandises along the two newly opened retail outlets during 2015 ideally shows that expansion of retail outlets along the Middle East market accounts to be an effective strategy that can be deployed by Apple (Algethami & Diaa, 2015).
Apple in addition to opening greater number of brick-and-mortar stores also needs to focus on the incorporation of the electronic commerce and multichannel framework for effectively reaching its products to a wider market in the Middle East region. It is required to develop ties with local e-commerce partners for developing its e-commerce platform in different Middle East countries. Further, it is also required to focus on development of kiosks along different malls and shopping centres along with the integration of different multichannel platforms like development of apps for tablets and Smartphones for helping customers in both viewing and ordering Apple’s products (Jinjin, 2013).
Evaluation of the Corporate Strategy for Apple
The development of strategic alliances as identified for Apple venturing in the Middle East market like formation of joint ventures, collaboration on research and development fronts and other type of cooperative agreements is evaluated to generate potential benefits. Focus of Apple’s management in forming potential strategic alliances would help the firm in developing on its internal potentials and core competencies. The same would contribute in generating and enhancing greater value to the Middle East based consumers based on the generation of creative and innovative products at affordable prices and also of needed quality. Similarly, the development of effective strategic alliances by Apple in the Middle East market would also help Apple in rightly understanding and evaluating the needs, expectations and emerging demands of the Middle East consumer market and thereby focus on the development of effective applications and incorporation of needed technologies for meeting such (Das, 2012).
Again, the development of strategic alliances with Middle East based firms like the formation of joint ventures, strategic collaborations and cooperative agreements would rightly help Apple in innovating in a faster fashion. The same would contribute in the introduction of creative and innovative products in a faster pace and in close frequencies. Further, the incorporation of an agile supply chain interface through the deployment of RFID (Radio Frequency Identification) tags and Point-of-Sales (POS) machines along the different retail outlets and distribution centres with also the incorporation of ERP (Enterprise Resource Planning) software like SAP while operating in Middle East would help Apple in effectively understanding and evaluating changes in consumer demand and purchase patterns and thereby in responding in an effective fashion. It would help Apple in continually innovating and creating new mobile merchandises and accessories that would match the emerging tastes and needs of the consumers.
Formation of strategic alliances like joint ventures, research and development based collaboration and also other cooperative agreements would also help Apple in effectively managing the impacts of emerging business risks. Apple would gain needed potential in potentially accessing the limited resources base for development and manufacturing of new models for meeting the emerging needs of consumers in a cost-effective fashion (Delaney & Whittington, 2012).
Evaluation of the Business Strategy for Apple
Mobile handset companies are required to effectively incorporate multichannel and e-commerce marketing platforms for potentially marketing and promoting its brand among a larger customer base in the targeted Middle East market. The use of diverse channels like mobile and electronic marketing along with the development of kiosks along different consumer and tourist visiting points in the Gulf nations would help Apple in potentially marketing its products and also in generating needed brand awareness. Moreover, the use of the multichannel and electronic commerce based retailing activity would also enable Apple in enhancing the level of customer satisfaction through helping them in gaining easy access to a plethora of gadgets and accessories. The use of the multichannel retailing framework would contribute in enhancing the level of market share for Apple in the Middle East region and in generating greater market penetration. Mobile and electronic commerce based retailing activity also contributes in helping Apple work in a customer focused fashion wherein the above applications can be rightly integrated with social networking platforms like Facebook and Twitter for gaining of needed customer feedback and views regarding their experiences with the different products (Xu, 2016).
Social media platforms can be deployed by Apple in Middle East for marketing and promoting their products to a larger section of consumers. The social media platforms would also enable in acting as an effective medium for promoting word-of-mouth marketing in terms of representing the views rendered by different customers on the use of Apple’s digital products and gadgets. It would also serve in helping Apple rightly respond to the queries and complaints put forward by customers through using the social networking platforms. Working in a customer focused fashion would help in development of trusted relationship between Apple and the consumers based in the Middle East region. It would thus contribute in enhancing the level of business revenues and profitability for the company in the long run. Website, electronic and mobile commerce based marketing activities would also contribute in helping the customers view and sort between different products and gadgets marketed by Apple and thereby in making effective choices. It would thus serve in acting as a cost effective medium for Apple in promoting a wider assortment of products and accessories to the customers (Xu, 2016).
The above analysis potentially reflects effective recommendations for Apple Inc. in its endeavour to operate and develop an effective presence in the Middle East market. Apple Inc. is required to enter into strategic collaborations with different research and development firms and also to co-create and generate newer designs and applications through involving of designers, programmers and ethnographers that would work with its internal team for the development of new models to suit the needs of the Middle East consumer market. Further, Apple also needs to enter into cooperative partnership and agreements with other firms and marketing and distribution bodies for gaining access to potential distribution and logistics network for marketing its products to a wider number of consumers in the region. The incorporation of an agile supply chain model based on the incorporation of effective technological systems like POS, RFID tags and barcodes with effective ERP software also needs to be rightly carried out by Apple Inc. for effectively evaluating changes in consumer behaviour and shopping patterns and thereby in designing and marketing of consumer demanded models.
The use of the multichannel marketing and e-commerce platforms by Apple Inc. in an extensive fashion is also envisaged such that the same would help the firm in responding and in proactively acting in resolving queries and complaints of customers and in marketing of the different merchandises in a cost effective fashion. Further, the use of the social media platforms like Facebook and Twitter is also required to be carried out by Apple Inc. for both communicating and interacting with its customers and also in marketing its brand in the larger consumer market.
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