Apple Success, Porter’s Diamond And International Product Life-Cycle Theory, Political Risk In Middle East

Why is Apple so successful?

Discuss about the International Business Compete in Global Marketplace.

One of the most common asked questions by most industry analysts is why apple company and its product iPod is so successful. Apple success can be traced as from the moment it created the iPod. It does not matter where you go globally, whenever you put an image of apple silver Macintosh symbol in front of someone, they are always familiar with this logo. Whenever one places their iPod for use in the presence of their friends, there is always a certain self-achieving feeling one gets. The apple company has done a lot of achievable efforts to build this company’s product image, therefore, making their products very intuitive and user-friendly. They have been successful in their iPod products due to the application of several global marketing concepts according to (Bajarin, 2012)

1. Production of products that are easy to use: the software engineers behind the implementation of iPod as one of the apple products, were driven a major objective of designing user-friendly products. all the apple products, iPod being on the front line are intuitive and easy to understand and learn. Every consumer in the global perspective looks for a product that will fully satisfy their needs but on the other hand, they consider the complexity of the given product. iPod is designed in a way that it has a user-friendly interface thus explaining its market success globally.
2. The iPod offers great customer service as well as in-store experience: the survey that led to the development of the idea behind iPod revealed that to get the greater part of a technology-related industry like the apple company has ventured in, one has to consider the technology target users are interested in. due to this, sell an apple product, iPod has gone high globally since the company considers customers interest and build several stores with highly trained personnel that really know and can predict what customers want. This explains why when you enter an iPod store, the salesmen will tend to ask you, “what would you like today” instead of, “how can I help you”
3. Apple only invents products that they can reinvent or make better: in a global market, a business can evenly succeed if its products are flexible in a manner allowing further improvement or product development. Apple the producers of iPod, do not invent new products or products category. They improve their existing ones depending on customer levels of satisfaction and feedback. The iPod was a development of the mp3 player in this case.

Differences between Porter’s diamond theory, and the International Product Life-Cycle theory

From its points of the target, this theory is termed as the theory of national advantage. It’s a theory mainly aimed at explaining the competitive advantages nations or groups tend to have from the availability of certain factors to them.  According to (Smith, 2010) porter diamond claims that a given country can generate for themselves new factor advantages. He gives an example of such factors advantage as, skilled labor, improved technology, and governmental support to a country economy. According to this theory, a country is economically advantageous if it possesses more of these factors than inherent factors like land.

On the other hand,  according to (Vernon, 1966)international product life cycle theory is a theory purpose to explain the trends and behaviors of international trade. Vernon claims that during the early stages of a product cycle, all labor and parts associated with given products originated from the area whereby the product was invented. The production systematically and gradually shifts away in the vent of the products being adopted in other nations or international world markets.

From the above theories, it can note the difference is the terms of trade. Taking an example of a country like united states, according the porters diamond theory, this country is known to benefit from factors advantage discussed in the porter diamond theory like the high levels of technology, therefore arguing in respect to this theory, products like personal computer are produced cheaply due to cheap labor and technology, therefore being cheap. In the case of the product life cycle theory, a point of difference comes in, whereby according to this theory, this product will only be sold at this cost during the initial stages of the product growth, when these computers will be adapted to world markets, production will gradually move from point of origin which is US and prices will change in way that US groups may end up buying at different price when they invented it. This example can be used to explain the difference that exists in the two theories. (Hill, 2007).

Currently, investors in middle east face global rise in political risk. The following are some of the political risks a company intending to invest in a profitable investment opportunity in the middle east may face.

1. Conflict and wars: middle east has been in the history books on the issues concerning inter-country wars, terrorism, regime instability and conflicts. Political violence a common issue in the middle These conflicts and wars greatly affect the business activities and investment negatively. They temper with the business environment and production decreases as well as returns. Thereby although there exist profitable investment opportunities in the middle east, conflict, terrorism, and wars may be risks of investing in the middle east. (Percy, 2018)
2. Existence hostile arbitrary laws: laws governing business and investment contracts in middle east e.g. Syria are hostile. This makes it very challenging for contracts to be enforced and therefore companies can quote force majeure clauses exposing both local and foreign investors and personnel in physical danger.(Levene, 2017)
3. Change on GCC bond yields which are no longer supported by the demand and supply balance.

For the gateway corporation based in the united states, it may be a risky step to get into a buy and sell agreement with a foreigner buyer on their goods. There are several ways that the business firm can use to build assurance the foreigner will pay for the purchased good. They include;

• Checking publicly available information; some of the foreigner customers have their business or companies profile published on social media streams. The news release section of the respective foreign buyer website, (if they have one) and information concerning them published in the website can be retrieved by use of search engine and thereby the gateway cooperation can ascertain if this buyer has some challenges that can hinder their ability to pay for their bought goods or service. It’s if the foreign buyer is a publicly traded company, then the better since it’s a requirement that they regularly publish file fact-filled reports and publish them for the public.(Moran, 2011)
• Require a credit application: it’s very important that before they complete the contract, the new foreign buyer completes a credit application that entails personal and basic details like buyers’ address, contact details, and tax identification number. Of more important in the application forms are the references from other sellers the foreign buyer has successfully transacted with and their details. This can be used to measure the creditworthiness thus assurance that they will be paid.

There exists several strategies and mode that investors can use to enter the foreign trade. One of the mainly used modes in the Acquisition of existing foreign firms as means of entering a foreign market. Acquiring existing foreign firms generally means taking over the ownership of other companies but in foreign countries. There are some advantages and disadvantages associated with the same.

• The acquiring firm benefits in that it easily acquires or obtains assets and the existing firm. Some of the assets that can be acquired include, the operating and trading licenses, credit cards divisions and brand networks depending on the type of the firm acquiring and the one being acquired.
• The acquiring firm has the advantage and the opportunity to manage the acquired assets and from property better than the previous firm managed. They acquiring firm tend to work on the previous reasons that led to the failure of the company and therefore have a better opportunity to succeed.
• They have the chance to make use of potential synergies between the acquired firm and other operations.
• Its advantageous to the larger community in that, if the acquiring firm can service debts that would otherwise be defaulted by the firm being acquired.

• The existence of uncertainty on profitability. Acquiring existing foreign firms are made to create and fully exploit synergies that exist between acquiring and the firm being acquired. The uncertainty in the synergies is challenging factor in this case.
• Acquisition of foreign firms leads to lost opportunities for shareholder and workers in cases where the taking over company deals with different new products and the process of production differs from the one the workers were trained for or familiar with.(The foundation for the european reform, 2017

References

Bajarin, T. (2012). Reasons Apple Is So Successful. techland time, 17.

Hill, C. (2007). International Business Competing in the Global Marketplace. Boston.

Levene, T. (2017). Security and politics add to the complexity of investing in volatile regions. Financial Times, 11.

Moran, G. (2011, February 22). How to Check a Customer’s Credit Worthiness: Know the risks and what to ask before extending credit to your customers. Retrieved from the entrepreneur: https://www.entrepreneur.com/article/218126

Percy, S. (2018). CONFLICT IN THE MIDDLE EAST IS AMONG THE MAJOR THREATS. The treasurer, 2.

Smith, A. j. (2010). The competitive advantage of nations: is Porter’s Diamond Framework a new theory that explains the international competitiveness of countries. Southern African Business Review, 1, 14.

The foundation for the European reform. (2017, May 22). The Economic Advantages and Disadvantages of Foreign Takeovers. Retrieved from The foundation for the European reform: https://europeanreform.org/files/New_Direction_-_Foreign_Takeovers.pdf

Vernon, R. (1966). product lifecycle. cambridge: adventure works for the press.