Answer Happy

A customer purchases an iPhone 6s at an iZenica store in New
Delhi, India
As the smartphone market in China slows, Apple has
taken a big step towards expanding its presence in India by
applying for official government permission to launch its first
flagship branded retail store there.
The move underlines a broader search for new growth markets for
Apple, at a time when some Wall Street analysts predict that iPhone
sales could fall this year, for the first time in the company’s
history.
The world’s most valuable business by market capitalisation
has steadily increased its operations in India over
recent years, but the long-awaited decision to open a retail store
is likely to be viewed as a clear statement that Apple plans to
expand more aggressively in the fast-growing Asian market.
Apple confirmed that it had filed an application to India’s
department of industrial policy and promotion, which, if accepted,
would allow it to open its first solo branded retail outlet.
Until recently, Apple’s relatively expensive iPhones have
struggled to compete in India’s cost-conscious electronics market,
winning a reputation as a prized status symbol among affluent
buyers, but at prices beyond the reach of ordinary consumers.
In the longer-term, however, Apple views India as the most
likely replacement for the booming sales in China that
have powered its rise over recent years. Analysts say smartphone
sales in China are levelling off, as are those in industrial
economies.
Apple Stores are consistently rated as the most profitable on
the high street, on a revenue-per-square-foot basis. Angela
Ahrendts, who left Burberry to lead Apple’s retail unit in 2014,
has been working with design chief Sir Jonathan Ive on a redesign
of the stores, in a bid to push them even further upmarket.
Apple’s move comes just two months after New Delhi eased tough
local sourcing requirements for foreign-owned retail stores, which
will give companies a longer window to set up an Indian supply
chain.
Previously, India required foreign-owned shops in India to
source 30 per cent of their wares locally within three years of
their initial investment.
India’s smartphone sector boomed during 2015, becoming the
world’s fastest-growing market for the devices. Roughly 250m
Indians own smartphones — a level that is expected to double by
2018, according to industry estimates.
Apple responded by bolstering its marketing efforts and shaking
up its distribution network last year. The company also launched a
major advertising campaign for its iPhone 6S last October, which it
sold mostly via online retailers and neighbourhood phone
stores.
Although the company has until now viewed India’s market as too
small and complex to sustain its high-end stores, it has
experimented with a few “store-in-store” mini-shops, in partnership
with local retailers.
The application is also likely to raise speculation that Apple
may soon begin to manufacture smartphones in India. Foxconn,
the Taiwanese contract manufacturer that makes most iPhones,
announced plans to set up an array of new factories in India last
year.
In China, Apple is midway through an aggressive expansion drive,
with plans to open about 40 Chinese branded retail stores by the
end of this year.
Any plans for a similar push in India face a number of
obstacles. Premium retailers in India often struggle to find
appropriate locations for their stores, and must grapple with a
range of awkward rules, including requirements to source some
products locally, rather than importing from abroad.
“Apple was rather cold to India until about three or four years
ago, but they are trying hard to catch up,” said Arvind Singhal,
chairman of Technopak, a retail consulting group.
“Opening stores is a good strategy to boost the Apple brand and
experience in India, although it may be that the stores are tricky
to open and end up making operating losses for a while.”
Apple declined to provide details on the timeframe for its
plans, or the size of its investments in India. News of its
application was first reported in the Economic Times, an Indian
business newspaper.
Additional reporting by Tim Bradshaw in San Francisco
Source: Crabtree, J. and Kazmin, A. (January
20, 2016). Apple applies to open own-brand stores in
India. Financial Times (online) (cited 23 January,
2016). Available
from<http://www.ft.com/cms/s/0/98b9c6b4-bf3b ... z3xulqq7X2>
Answer the following questions:
1. Using evidence from the case, identify Apple’s current
position within the Indian market for smartphones and provide clear
arguments to support your conclusions.
(30 marks)
2. Based on your analysis of Apple’s situation in the
Indian smartphone market, discuss its strategy in terms of Ansoff’s
Growth Matrix
(25 marks)
3. Evaluate the level of risk Apple confronts as its
presence in the Indian smartphone market grows.
(20 marks)
Total 75 marks
SECTION B (25 marks)
Section B: Answer ONE question from this section.
Section B questions are worth 25 marks each.
1. Understanding who you compete with and the bases of
competition are key issues in the development of strategy.
Explain how an organization might approach this aspect of its
strategy.
2. Critically evaluate the importance of Michael Porter’s
work to the strategy making process