Apple, Inc. Case Study essay

Apple,Inc. Case Study

Apple,Inc. Case Study

Apple,Inc. is one of the largest technological players. The company isvalued at $233 billion and enjoys the reputation of being the mostvalued brand in the world. Even with its dominance, Apple with itsproducts depends on the proper will of various market dynamics tocontinue down the path of financial success. China as an investmentdecision boasts a market share of several global companies, and Appleis no exception. Recently, the company moved to invest $1 billion inDidi Chuxing, a formidable rival of the San Francisco-based Uberwhich is struggling to gain ground in the China market. This move wasseen by many industry analysts as part of Apple`s greater plan in thefuture. There are various reasons to explain the move by Apple.

First,this move is seen as a way to gain a foothold in a market where itsproceeds from iPhone sales are dwindling. In its operations in themainland China, Apple has run into trouble with regulators, and thishas returned to hurt their sales in a market that are consideredsecond in iPhone sales by Apple. Also, the iTunes movie and iBookservices have also seen China suspend them in the country`s effort tocrack down on online media. The $1 billion investment by Apple in aride-hailing service serves to bolster the revenue flows in thisinternational market and also as a source of goodwill. Sales in Chinahave also been negatively affected by the slow rate of economicgrowth being experienced in the country. In fact, in March this year,Apple estimated that sales in China alone had fallen by a margin of26 percent compared to the year 2015.

Secondly,Apple introduced Apple Pay in China, but the service is yet to pickup the level of momentum that was anticipated at first by thecompany. This can be explained by the presence of fierce rivals whohave substantially established themselves in the market such asAlibaba`s Ali Pay and Tencent`s We Chat Pay. Didi aspires to becomethe fourth internet giant in China, and Apple is keen to support thisambition because it could work to their advantage. If Didi adds ApplePay as their payment option of choice, this could see Apple tap intothe more than a billion rides enjoyed by Didi. Such a move would helpApple return to its financial glory in China which is currently underthreat.

Applealso plans to launch autonomous vehicles. Investment in aride-hailing service serves as a strategy for Apple to test thewaters. Apple might be drawn to this investment by the fact that theystand to gain from Didi`s gold mine regarding ride-hailing and carusage. This could primarily inform their investment plans in theself-driving high-tech car that is in the offing. Another area ofinterest for Apple to benefit from is the map services. Given theubiquitous presence of Didi ride-hailing service in well over 400cities in China, Didi understands better the geographical market, andthis is conceivably a critical area in which the two partners cancooperate in. To venture into a new market, it is vital for a firm todetermine the consumer behavior first. In this case, Apple can useDidi to understand better the behavior of drivers as well as those ofriders before they embark on the process of launching theirautonomous vehicles.

Tomany, the $1 billion investment is seen as a drop in the ocean giventhe massive financial muscle that Apple can flex. On the contrary,this is not the case. The investment is a significant one because, inone way or another, it has financial implications on the part ofApple. The reason that Apple has remained resilient amid globaleconomic shocks is its strategy in investing in ventures that seemprofitless in the short-run. In perspective, Apple was engaged in asimilar venture in 2014 when it acquired Beats Electronics,headphones and music service provider. This deal proved worthwhile asit helped Apple to launch its Apple Music service. Regarding thelevel of interest in Didi, it will only be a matter of time beforethe world learns their real motivation. The existing theories andspeculations can also be supported by the future outcomes of the moveby Apple. For instance, if the partnership sees through the ambitionby Didi to become one of the large internet players in China, Applecould be pushed on to financial gain from their Apple Pay servicethat is currently suffering from fierce competition from Ali Pay andWe Chat Pay.

Therecent activities of Apple in the mainland China serve to demonstratethe fact that Apple is on a mission to diversify its sources ofrevenue. Reliance on iPhone sales is being re-evaluated to determineits profitability in the long run. However, current market trends,especially in large markets such as China, have made Apple rethinkits long-term plans in the technological industry. Perhaps it isbeing overtaken for a moment by Alphabet Inc., which is a Googleparent company as the most valuable brand in the world was a wake-upcall for Apple.

Theinvestment in Didi by Apple is an indication of the path the companywill be taking in future. This investment is heralded to attract theadoption of Apple Pay and other essential services in China. If thedata statistics from the Didi ride railing service are anything to goby, this will be one of the only most revenue generating venture forApple. China and nearby markets such as Thailand and Hong Kong willonly serve as incubation centers for this service which can then beadopted in other parts of the world. With economic challenges andother restrictions by the Chinese government regulatory bodies ononline medias such as iBooks and iTunes, this seems a worthy coursefor Apple to take. Supported by the fact that it only took a shortperiod for a deal to be penned down, Apple looks very much in therace to compete against online marketing giants such as AlibabaHoldings Ltd and Tencent Holdings Ltd. The big payoff is set to be inApple Pay.

Theother line of businesses that Apple appears to be rooting for is theadoption of autonomous cars to provide competition to the leadingexisting player, Uber. Uber has set foot in almost all parts of theworld, and it is currently enjoying dominance in the global market.However, this venture may not prove profitable enough for Apple thatis very determined to restore its technological dominance becauseUber has also shown interest in the autonomous vehicles. Thissituation is likely to cause intense competition in the market fordominance and make Apple lose sight of other prospects such as ApplePay. Basing on this, the most profitable venture for Apple, in thelong run, appears to be Apple Pay.

Inconclusion, Apple has many products in their pipeline but judging bythe company`s recent drop in market share value, it is important toconsider the fact that Apple`s main products are fast losingpopularity. The sales from the iPhone which accounts for most ofApple`s revenues and profits are said to have recorded a 26 per centfall in March 2016 compared to the year 2015. Given that its olderproducts such as iPads remain nothing but niche offerings, there is aneed for Apple to come up with products that will the samerecognition as the iPhone and the answer appears to be in the ApplePay service.