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Apple in China Case Solution
| Solution Id | Length | Case Author | Case Publisher |
|---|---|---|---|
| 2851 | 1429 Words (7 Pages) | Mary B. Teagarden | Thunderbird School of Global Management : TB0439 |
A Word File
The case study explores Tim Cook's recognition of China as a key market for Apple's expansion. Despite skepticism at first, Cook's management was successful in preserving Apple's financial stability and promoting innovation. It also highlights the Chinese customers' perception of the iPhone 5C as an expensive "cheap" phone resulted in fewer orders and a subpar retail customer response but with strategic repositioning, partnerships with significant carriers, and appeals to high-end consumers seeking luxury goods were the key drivers of Apple's success in China. Apple also had to contend with local and foreign manufacturers while adjusting to the special dynamics of the Chinese smartphone market. The case study further talks about the company's initiatives to create distribution contracts with Chinese telecom service providers. Finally, the case study discusses the expansion of domestic rivals, and difficulties contract manufacturers like Foxconn face, the fragmentation of the Chinese smartphone market, and problems with intellectual property leakage.
Following questions are answered in this case study solution:
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Why was Apple successful in China? What missteps did Apple make in expanding its market presence in China?
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What challenges did Apple face in China? How would you recommend they address these?
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What role did Tim Cook play in Apples success in China? Would you consider him an appropriate leader to guide Apple into the future?
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What accounts for Apples success in the Information and Communication Technology industry?
Case Study Questions Answers
1. Why was Apple successful in China? What missteps did Apple make in expanding its market presence in China?
There were many reasons why Apple was successful in China. First, Apple's success in China was largely due to the country's growing middle class and the high demand it created for the company's goods. The increasing spending power of the middle class has resulted in a significant customer base for Apple products. Apple's CEO Tim Cook recognized China's significance as a critical market for the company's growth. He employed a number of tactics to deal with the difficulties he encountered and seize the chances the nation provided, where Cook focused on improving inventory rotations, streamlining Apple's worldwide supply chain, and boosting earnings.
However, Apple did make some mistakes when trying to increase its market share in China. For example, the release of the iPhone 5C was one notable error. The iPhone 5C was created to be more reasonably priced and specifically targeted at the Chinese market to draw in budget-conscious customers. Since the iPhone 5C was only 15% less expensive than the iPhone 5S, Chinese consumers believed it to be an expensive "cheap" phone, leading them to consider investing in a higher-end device (iPhone 5S) that would confer more status. Because of this, the iPhone 5C's market share in China was lower than that of the iPhone 5S. Another mistake was how Apple's brand was perceived in China. The iPhone 5C received a muted response from retail customers because of Apple's inadequate consideration of the aspirational quality of its brand in China. As a result, Apple reduced orders to its assembly partners.
Additionally, Apple in China faced fierce competition from both national and international smartphone producers. These rivals posed a threat to Apple's market dominance by providing goods at lower price points.
Despite these missteps and challenges, Apple's strategic repositioning, partnerships with major carriers, and appeal to high-end consumers who desired luxury goods contributed to its overall success in China.
2. What challenges did Apple face in China? How would you recommend they address these?
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