Apple Business Strategy in China

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Apple Business Strategy in China

New York University

Fall 2012

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Team A

Jessica Aguirre

Lauren Challman

Lukas Karwowski

Manas Puhan

Partha Mitra

Overview

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High-level agenda

Product Lifecycle

Business Advantages in China

Strategy & Constraints

Question & Answer

Conclusion

Overview

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Why Apple ?

Founded April 1, 1976

Revenue US$ 108.249 billion

Net Income US$ 25.922 billion

364 retail stores in 13 counties

Estimated value US$ 626 billion

US$108 billion Growth in 2011

Largest publicly-traded corporation in the world by market capitalization

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Apple’s Growth in Greater China

Revenue US$ 7.9 billion

20% of company's net revenue

Up from 9% a year ago

There is tremendous opportunity for companies that understand China –Tim Cook, Apple CEO

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Market Share Of China in Tablet PC

78.3 % Market Share in Tablet PC

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Product Lifecycle

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Product Release

Product Maturity

I-phone sales

Stabilized market

Pressure to lower manufacturing costs

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Business Advantages in China

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Speed and flexibility of Chinese workforce

Tough for US employers to compete

230,000 employees working 6 days a week

Group atmosphere versus individual drive

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Cheaper Materials and Proximity to Supplies

Materials are all made in China

Cheaper and faster

Less waste

Less risk and challenges

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Cheaper Production Costs

More money in consumers’ pockets

Put back into their country’s economies

$6.5 billion in extra consumer value

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Promotes growth in Chinese consumer market

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Chinese Government Incentives

Tax exemption of 15% Chinese tax treaties growing

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Research and Development In China

600,000 engineering graduates per year

Salaries are cheaper

China’s Five-Year Plan to promote R&D

Relocation allowances

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Strategy and Constraints

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Outsourcing

Political

Reputation

Apple Response

New Opportunities

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Slow Movers

Google’s move to China

lessons

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Loose lips sink ships

In China, Apple runs a tight ship with no loose lips

FoxConn's Operational Methods

Security CardsFingerprint Recognition Scanners

Metal Detectors World Class Facilities

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Operational Tactics

Distributes projects among several manufacturers

Suppliers are brought

in at the absolute last minute

No reliance on any single supplier

Strict confidentiality with penalties

Assembly line workers have little clue on the finished product

Custom parts prevents reuse

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Apple leading the way

Stay Hungry Stay Foolish

Stay Globalized Stay in Business

Leveraging increasingly globalized economy

Adaptability and lack of complacency

Hidden opportunity and tremendous success

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Question and Answer

Contact:

Lukasz Karwowski: [email protected]

Lauren Challman: [email protected]

Jessica Michelle Aguirre: [email protected]

Manas Puhan: [email protected]

Partha Mitra: [email protected]

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New York University

70 Washington Sq South,

New York City, New York, 10012Image Credit: Apple Inc.