Analyzing The Business Environment Of Apple Australia

Industry Market and Current Trends

Discuss about the International Society for Professional Innovation Management.

Established in the year of 1967, Apple has emerged to be one of the most recognized American multinational technology companies, operating its business worldwide with unprecedented success (McManus et al., 2013). The organization, dealing with the production and sale of the consumer electronics, software and online service has expanded to different corners of the world, including Australia, where the organization has achieved enormous recognition and popularity in the consumer market. However, since the organization has been encountering tough competition from rival forces such as Samsung and Google, the organization is required to adopt a more organized approach towards the process of creating strategies for the organization. The following report intends to analyze the business environment of Apple Australia, current trends and statistics of its profitability, as well as the nature of competition, it is likely to face in the business market (Galloway, Albert, & Freedman, 2013).

A market is defined as an actual or even a nominal place which involves the purchase and sale of goods and services, and is primarily governed by the forces of demand and supply. The comprehension and a clear understanding of the industry market are highly essential as it helps an organization its own position in relation to the rival giants of the industry. The industry market evaluation helps a company gain competitive advantage over the rival organizations. As soon as Apple started expanding in other parts of the world, in the year of 2008, Apple was reported to have opened its first store in Australia. The growth of an organization helps in examining how far an organization has been able to compete in the competitive industry, and what are its future potentialities.  As soon as the organization started introducing the iPhone 6, the company started experiencing a remarkable hike in sales in the Australian market. The organization gained immediate success, by getting an approximate 20.7 % market share in the smart phone industry of the foreign market, and the share of the Android or the Windows has witnessed a shocking drop of 1.1 % in terms of the profitability (JohnstoneShan& McCarthy, 2016). However, in the Australian market, a research firm Telsyte has claimed that with the entry of new brands, (Oppo and Huawei) and with the situation of the falling Australian Dollar, the lower cost operators and the new entrants in the market are getting an upper hand (Golev, Werner & Matsubae, 2016). In fact, the Apple is found to suffer from a low rate of growth in the market, as it can also be explained through the diagram, shown below:

Macro Environment Analysis

Considering the above diagram, it is easily understandable that the IOS market is likely to lose its share to Google Android, which can be run on majority of the handsets, and hence can emerge as the most commonly used operating system. It is here that Apple might lose its position in the Australian market.

Profitability of an organization refers to the revenue earning capacity of an organization (Williams 2013). As far as the profitability of Apple is concerned, it should be noted that in the year of 2015, Apple recorded a sale of mere 3.4 million iPhones in Australia, as compared with the number of 4.0 million sales of different kinds of Android based phones being sold in the same market (Muller et al., 2015). Besides, Apple is also found to be encountering a strong competition from Galaxy 7, the major reason behind which is that the handset is also being sold, along with a virtual reality handset, and the sale of a handset, along with an accessory, promotes its popularity (Walla & Scheigger, 2017). Besides, the company has been continually offering innovative features to the consumers, as opposed to Apple, which s not providing much innovation that could distinguish its iPhone 6 from iPhone 5 handset.

An organization conducting its business in overseas market must ensure that it is well-aware of the external factors of the environment of the nation, so that it can draft the most effective strategy before launching a new plan or a project.     First of all, as far as the political factors are concerned, Australia has been facing challenges with the issue of political instability, and as a result, the production and distribution system of the products of Apple is likely to get affected in the Australian market (Grubert & Altshuler 2016). The huge taxation and tariffs is also a huge challenge, while operating in the Australian market, as a result of which the profitability of the organization must be high for future sustenance. Hence, the slashing of the price can be a challenging situation for Apple in the Australian market. Next, as far as the economic factors are concerned, Australian market boasts of a very strong economy, as a result of high GDP and per capita income, and hence the demand of the consumers will not cease, even if it slows down temporarily. However, the labor cost is very expensive, and it can hit the profitability of Apple Inc. operating in Australia. Among the social factors, it should be noted that the youth population is not very high, and hence the consumer market of smartphones and software is not as high as it is in the US market (Halloway et al., 2016). With respect to the technological factors, he governmental investment on the Research and Development activities (54%) has been soaring higher than before, and hence Apple can have a great scope of innovation in the market (Head et al., 2014).

Nature of Competition

Competition refers to the possibility of a product of a particular company to be substituted by the product of a rival company. This kind of substitution may occur because of low price or even high quality of the rival product being sold (Wagner & Hollenbeck). As an organization is operating in a foreign market, it must ensure that it is able to establish its superiority over the rival organizations, so that it can sustain itself in future. Herein lies the importance of organizational competition. Australia enjoys a highly favorable position as far as the market of the handheld devices is concerned. There has been a remarkable growth of 66.7 % growth in the sale of the handheld devices (Fogliasso & Williams, 2014). In fact the sudden demand of the handheld consumers in the Australian marketcan be demonstrated with the help of the research report of ACMA. It was being found out that by the end of the year of 2012 as many as 8.67 million Australians were in possession of the handheld devices (Heracleous, 2013). However, while determining the competitive forces challenging Apple in Australia, are Google, Samsung and Motorola. Since Apple operates its business in a diverse market, it has a variety of competitive forces. In the market of iPad, Amazon and Microsoft are the main rival forces, while in the computer operating systems market, Microsoft is a major competitor of Apple. Some of the new entrants in the market such as Oppo,are offering products at a much lower price, and yet the innovative features, such as improved camera resolution is offering something new. On the other hand, the same design and features of Apple may not be able to attract the consumer attention. Again, Galaxy Note 7, is also offering innovative features, such as water resistance and wireless charging. In a nutshell, Galaxy Note 7 is one of the major competitors of Apple in the Australian market.

Name of the Brand	Strength	Weakness
Apple iPhone	Better market recognition Availability in multiple colors More advanced iOS 10	More expensive Less RAM Storage capacity (2 GB)
Samsung Galaxy	Greater storage (RAM 4GB) Better camera resolution	Not too many color options Battery and overheating issues

A market segment refers to a group of consumers, or organizations with one or more similar characteristics, contributing to their more or less similar demand for a product (Theysohn et al., 2013). The market segmentation of any organization plays an important role, as it helps an organization in determining what its consumer market constitutes, and resultantly, which group of consumers should it try to address. Since the price of the Apple products are quite high, the target market of the organization mainly comprises of the Australians belonging to the upper middle class and upper class of the society (Piao& Kleiner 2015). The brand has always embodied a sense of sophistication, distinguishing its identity from the easily affordable brands available in the market. Accordingly, the youth population chasing after social status, obsessed with the ideas of sophistication, luxury and social acceptance, form an important part of the segment.

Market Segmentation

A target market refers to a group of consumers, whose needs and demands for products, an organization aims to fulfill through its production. The target market can be divided into two parts- the primary market segment and the secondary market segment. First of all, the primary market is the market segment of an organization that is considered by an organization as the most important market segment, which gives it the best chance to sell its products (Dizik, 2013). As far as the primary market segment of the organization is concerned, this group consists of a group of consumers who owe a very strong sense of loyalty to the brand. This group of consumers is well aware of the features and the benefits of the Apple products, and will continue to stick to the company even if the price continues to increase. The secondary target market refers to the market segment that consists of the second most important consumer segment, an organization intends to target (Dizik, 2013). The secondary market segment, on the other hand consists of the tech savvy group of consumers, mainly belonging to the upper middle class, willing to experiment with the novel design and advanced features of the product. Since Apple as a brand has been synonymous with the idea of novelty and innovation, these group of consumers are highly influenced by the high tech products offered by the organization. However, it should be noted here, that these group of consumers can easily switch their preference from Apple to other rival products, as soon as a substitute is available in the consumer market. On the other hand, the consumers belonging to the primary market segment are more likely to retain their loyalty towards the brand named “Apple”.

The level of involvement of a consumer refers to the extent a consumer conducts research, and the number of factors he considers before taking a purchase decision (Schiffman, 2013). As it is evident from the above paragraph, the primary market segment of the organization constitutes a group of consumers, who usually belong to the affluent strata of the society, who are being attracted to the branded value of the organization. This group of consumers will continue to exhibit their loyalty towards the organization. As it is already a well-known fact that the per capita GDP of Australia is much higher than the other countries, such as the United States, and hence the average number of consumers is not likely to face financial constraints, in purchasing the Apple products (Wang et al., 2015). As a result, the level of involvement of the consumers with the Apple products is quite high. There is no gain stating the fact that the buyers of Apple, a Mac computer or an iPhone, do not consider the products as mere electronic equipments. The Apple products form an important part of the self-expression and lifestyle of the consumers, and hence the products help to embody the social identity of the buyers. The degree of consumer involvement for a product plays a vital role in determining the profitability as well as long-term sustenance of the organization. Accordingly, the high involvement products are usually the ego-intensive luxury products, which cannot be afforded by all. The more expensive a product is, the more a consumer can be involved with its brand. In case of the Apple products, the average consumer demand has always been high, as a result of a hype created in the market. Hence, as even earlier mentioned by Steve Jobs, the organization does not require to rely overmuch on any kind of market research, as it busies itself with finding innovative strategies, that help in distinguishing the brand from its rival forces. Design and utility are undoubtedly important attributes that have been characterizing an Apple product, and contributes to the astounding revenue growth of the organization, from $8 billion to $180 billion, in between the years of 2004 and 2014 (Rivera, 2013). For example, iPhone 6 has witnessed a remarkable craze in the consumer market, and yet the phone has a lower resolution font, and lower capacity battery, and half as much a RAM than most of the other smart phones. Despite this fact, the research reports suggest that the consumers of Apple do not consider doing research before making future purchase. However, Apple products, being highly expensive are not likely to witness impulsive buying decisions from the consumers belonging to different strata of the society unlike Samsung. Hence, it is advisable that the organization keeps on emphasizing its brand value via its promotional method, that helps in drawing the attention of the high class consumers. Unlike the rival organizations of Apple, such as Samsung, HTC or LG, the organization does not consider the alternative of dropping down the price of its products. The organization has very selected group of consumers, who will keep on exhibiting a strong level of involvement, and hence the organization adheres to its own brand style. Even when other organizations are trying to satiate the consumer demand for larger phones, by introducing “phablets”, the Apple company refuses to produce anything other than smaller devices meant for one-hand operation. Thus, the decision-making strategy of the organization largely relies on bringing in the unique and most innovative features, rather than competing with the ordinary brands.

A position map involves a diagrammatic representation of the position of a product of an organization in relation to its competition (Yamada et al., 2013). The positioning map of Apple is being explained below:

As it can be seen from the above diagram, keeping into consideration the primary market segment of the organization in the Australian market, the Apple Company has positioned most of its products in the high price segment. The product, unlike its arch rival Samsung, adopts a premium price strategy, meant for addressing only a selected group of Australian consumers. High quality and high price are the two areas where most of the Apple products are being positioned in the market. The premium price strategy of Apple ensures its consumers a high quality user experience with exquisite products.

Conclusion:

Apple has emerged to be one of the most recognized organizations in the world, and the value of the organization can be easily ascertained by the stock price of the brand, which was as much as $728.35 million. In fact, it should be noted here that the Forbes list has ranked Apple to be doubly valuable as compared with other organizations, such as Google or Microsoft. As the organization seeks to expand in other parts of the world, it is important to conduct effective marketing audit that helps to analyze and evaluate the effectiveness of investing in the Australian market. Considering the growth of per capita income in Australia, and the pricing strategy adopted by Apple, in different parts of the world, it can be easily said that Australia is bound to enjoy a potential growth in terms of its profitability in the Australian consumer market.

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