The expansion of companies is a frequent practice in business development, allowing for the development of new markets, increasing the size of the customer base, improving commercial potential, and scaling the field of influence. When a company successfully expands, it is guaranteed to increase sales and, consequently, profits, as well as gain development opportunities due to the emergence of new levels of consumer demand. It is evident that a company established in the United States must adapt its products and services to the demands of the Arab market, which creates the need for new areas of development for the business. In turn, such a need has a positive impact both on the company’s well-being — in case of successful expansion — and on the quality of the market. Opening new branches and adapting a company’s business strategies to the agenda of foreign markets requests the creation of new jobs and strengthening the R&D vector of companies, as well as bringing new taxes for the governments of the countries in which the business is introduced (Nieminen, 2019). Thus, the competent management of expansion brings excellent benefits to all stakeholders, which means that this phenomenon of the globalization era of civilization development turns out to be highly relevant and critical for the modern world.
This assignment examines the theoretical aspects and possibilities of expansion for Apple, a multinational company headquartered in California but with a strong presence in regions of the Middle East. This discussion includes the principles of operational management, the potential for possible errors and problems that management may encounter, supply chain management, and the relationship of competent SCM to Apple’s increased profitability. In addition, great importance is placed on exploring the potential of artificial intelligence (AI) to enhance a company’s competitiveness in the face of advancing technology (Dogru and Keskin, 2020). It is expected that deliberately ignoring the potential of AI carries with it a threat to the existence of the business since any production related to technology ultimately seeks to automate and optimize operational management.
Introduction to Apple’s Image
Apple is the most significant global player in the technology industry, representing a wide range of premium and budget products and services. Research shows that Apple’s flagship devices rank among the most popular mobile technologies in the world (Swider and Lumb, 2021). At the same time, there is evidence showing that Apple is the most recognizable company (IG, 2020). Finally, one cannot ignore the fact that this company is the most expensive in the world: data reports that by 2020, Apple’s total capital reached $51.41 billion (Szmigiera, 2021). All of the above leads to the unequivocal fact that Apple has a significant influence in the technology market, and in a literal sense, it can be stated that the company sets the trends of the industry segment. Many competitors, be it Samsung, Xiaomi or Huawei, are trying to replicate the company’s success by copying engineering and design (it is fair to say that Apple can also copy competitors’ patents), which means that Apple can be seriously called the opinion leader of the global technology market.
Among others, Apple has a strong presence in the Arab market, namely the Middle East, which includes Saudi Arabia, the UAE, Turkey, Israel, and other Gulf countries. The local technology market is indeed strategically crucial for Apple because of the high investment appeal of the Middle Eastern regions. The most advanced centers of international trade, be it the UAE or Saudi Arabia, attract billions of dollars of private investment and stimulate the development of high-tech solutions. This, in turn, makes it inexpedient to ignore Arab markets. A notable feature of the development of advanced centers in the Middle East is the fact that locals are well versed in digital technology and are really willing to pay big money for high-quality products that illustrate the wealth and prosperity of the owner. Apparently, this is the reason Apple captured a local market share of one billion dollars by 2018 and posted nearly 30 percent sales growth in the fourth quarter of 2017 (Arab News, 2018). Apple perfectly understands the logic of the average Middle Easterner and presents them with devices (whether an iPhone, MacBook, or iPad) that are not only fully localized to the local language but also support most local laws and requirements. Thus, there is no surprise in the tremendous success of the company in the market of the Middle East.
Principles of Operational Management at Apple
In its operations, Apple must adhere to several critical practices that allow the company to remain relevant, customer-focused, and increase sales. In addition, the principles described below improve the company’s competitiveness and facilitate more seamless expansion when needed. The first of these is a bias toward reality. Apple should produce products or services that are not aimed at solving highly specialized problems or challenges but aim to provide solutions on a larger scale. For example, if there is a demand in the community for improved camera technology on the iPhone mobile camera, Apple not only improves the camera module specifications but also introduces software updates and innovations that empower customers. A similar principle works with all solutions at Apple: any innovation is not isolated but associated with additional features. There is an important implication in this – managers must be careful not to take risks if there are significant threats. Much of this explains the restrained nature of the release of new functionality: with the need to upgrade devices and the system every year, Apple does not rush to add all the features at once, but instead works out every detail and implements them with restraint to avoid multiple bugs and vulnerabilities. The third crucial operational management principle that is critical in Apple’s case is organization. A company of this global scale cannot afford to rely on chance or intuition; instead, almost every corporate decision is calibrated and precise and planned in advance. In the production process, all elements are connected and consistent, which means that any reforms at higher levels will undoubtedly affect the smaller steps of the business.
One of the most fundamental principles of operational management, without which it is impossible to imagine a modern technological company, is the recognition of the importance of change. Today’s world is dynamic, fluid, and fast-paced – for this reason, adherence to conservatism and entrenchment without a focus on innovation is a failing strategy. This principle is critical for Apple because the company is the leader in an industry market whose consumers expect constant updates. In fact, buying a new iPhone 13 is becoming a less attractive investment by the day because, in less than a year, the world will see a new, upgraded iPhone 14: Apple appliances are becoming obsolete, and this is a consequence of the business’ deep commitment to change. On the other hand, Apple is a multinational enterprise, which means that the company needs to ensure the integrity and unity of all systems. In a rapidly changing world, achieving this result is only possible through rapid adaptability as a component of innovativeness. The company can quickly adjust operational management and optimize the use of resources and capabilities, thus maintaining stability and competitiveness. Another important principle of operational management at Apple is quality control. The company’s products have a worldwide image of technically sound, seamless technology that gives the user the best user experience (Haselton, 2017). Unlike direct industry competitors, Apple products do not glitch or break after several years, and software support for operating systems often exceeds five years. This quality is made possible by one important aspect of operational management at Apple: the company’s top managers are not outsiders interested only in numerical results but are knowledgeable individuals who have deep knowledge of the area they are tasked with managing (Podolny and Hansen, 2020). Related to this is another principle, which is accountability. Apple has a strict system of accountability in which every employee action is documented. This creates consistency in all internal processes and allows for different levels of responsibility.
Finally, a final operational management principle that is particularly relevant to this company is awareness of its customers’ interests. Evidence confirms that lack of customer interest is a serious threat to business organizations, as it increases the likelihood of not meeting the aggregate demand of the market (Tariq et al., 2011). Apple executives are very familiar with this principle, which is evident in the implementation of product functionality. With iPhones, MacBooks, iPads, or any other technology, the company collects data about the usage of its products, whether it is log files, search queries, or published content (Dvorak, 2021). Obviously, the company ensures complete anonymity and confidentiality of the information collected (so it is reported), which means the user can be confident in their cybersecurity. The collection and processing of big data are aimed at providing more accurate advertising requests and recommending applications and features suitable directly to the user. For example, for an Arab customer of Apple, it is obvious that the company will not offer the issuance of advertising requests from Europe. At the same time, the operating systems themselves are loaded with fine-tuning capabilities: if the user regularly takes few steps, Apple Watch will report this and offer advice. Such steps are extremely effective in increasing customer loyalty and retention, and that is why Apple remains the industry market leader.
Apple’s Operating Strategy
To summarize the above, there are key generalizations to be made about Apple’s operating strategy. The company strives to uniquely combine the advanced capabilities of inimitable design with the first-class practical resources of technological advancement to provide the user with a quality, attractive and state-of-the-art product. The company’s operational management is focused on capacity and process design, in which the company strives to upgrade its products or services systematically. This is also relevant in human resource management: everyone in the company is given the necessary and sufficient opportunities to maximize their contribution to Apple and to benefit commensurately from it (Wilkinson and Dundon, 2021). Management strategies are also evident in terms of retail store design. The company’s own sales branches are always minimalistic and spacious to ensure the main focus is directly on the product rather than the interior (Figure 2). At the same time, the company’s products are represented in partner stores around the world, greatly increasing the likelihood that customers from any country will buy the product.
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Finally, in discussing the company’s operational management, it is important to discuss the mechanism by which Apple sells value-added goods or services. The brand’s history includes many attempts to organize the supply chain to optimize production, and by now, the company is working with cheap labor from East Asian countries. Apple appliances are assembled from raw materials sourced from around the world in China, Vietnam, Malaysia, South Korea, and Singapore (Costello, 2021). Each of the countries contributes to the added value of the product, with China as the key assembly location having the least of these (Figure 3). However, the value of exports from China is meaningfully enhanced by inputs from incoming values. The most significant retail markup is made in the United States, and as a result, the customer buys the product at a significantly higher price than its cost of production. Notably, consumers are usually not willing to overpay for a brand, but in the case of Apple, the company was able to convince customers to pay a huge added value ideally, and it generally suits everyone. This example shows how the company’s primary operational management strategy is effectively combined with a marketing strategy to increase profitability from the business.
A similar strategy is appropriate for the services that the company provides. There is evidence that by 2021, Apple’s gross profit in services was up about 68.4%, with services revenue exceeding 24% (Trefis Team, 2021). The company sells overpriced product repair and maintenance services, and people buy this because they are afraid to take their expensive phones to questionable repair centers. Apple is also active in the streaming industry, whether it is Apple Music, iCloud, TV+, Fitness Plus, or News (Apple, 2020). Monthly subscriptions to these and other services generate serious profits for the company (Delventhal, 2021). All of this allows customers to get a quality product and Apple to maximize its profits.
Operational Challenges
However, it is the dynamism of the world that is becoming an important challenge, a struggle that is an important part of operational adaptation at Apple. One of the most pressing challenges is the COVID-19 pandemic, which has damaged supply chains. Because of the restrictions and demands of social distancing, the company has been forced to suspend office operations, which has affected productivity. In 2020, the most severe supply delays were felt, so key products were introduced in October instead of September as usual (Gurman, 2020). In addition, Apple continues to receive constant accusations of violating local laws, resulting in costs and having to pay compensation (Johansson, 2021). Finally, investors are known to be a key component of a company’s operational management. Investors, as direct sources of money, can influence a company’s actions with varying degrees of control, but Apple has decided to refuse to release sales data, which complicates investor relations (Edward, 2018). While the exact reasons for this decision have not been communicated, it is clear that investors are in a quandary because there are no exact sales figures from now on, and thus the return on investment is not entirely clear.
How the Operating Strategy Solves Problems
As the market leader, Apple faces many challenges every day that are paramount to remaining competitive. Solving these problems is part of the overall operating strategy. COVID-19, as the major problem of the past two years, required rapid adaptation to the new environment. To do this, Apple introduced night shifts at the Foxconn plant, which assembles appliances to make up for the lack of person-hours (Dormehl, 2021). This is part of a long-term strategy of adaptations and protections that requires operations teams always to assess the performance and productivity of plants. For example, Google, which also faced a supply chain disruption, decided to move production from South Korea to Vietnam (Jung-a, 2020). By comparison, it is clear that starting overnight shifts seems to be a less costly strategy than completely — albeit temporarily — relocating production. All in all, any operational problem can be solved in advance thanks to the strict accountability mentioned earlier. Apple knows exactly how many iPhones are produced every hour at each of their factories, allowing for tight control of shipments and time management. This is qualitatively different from, for example, Amazon, which has sold as many Alexa speakers in four years as Apple sells iPhones in six months (Sterling, 2020). In other words, Apple clearly understands the demand for its products and knows how to manage inventory. This may be due to the fact that CEO Tim Cook was originally the operations vice president in charge of inventory. One of the important properties of Apple’s operations is the obscurity of its internal processes: few pieces of evidences are authentically known, while most aspects need only be assumed.
In addition, Apple is steeped in the multi-million dollar production of devices that uniquely combine design and technology. Unlike smaller companies, Apple will easily refuse to produce an incredibly attractive and technologically advanced product that will be difficult to assemble in large quantities. In the current agenda, industrial designers have the most influence: engineering solutions are created under their concepts, not the other way around (Kahney, 2019). By integrating the internal “conflict” between designers and engineers, innovative solutions are created that stand out qualitatively from the competition. At the same time, Tim Cook clearly understands that the company’s most profitable product, the iPhone, which brought in 54.7% of total profits in 2019, may one day no longer be relevant (Delventhal, 2021). Competition in this industry is fierce, and more and more new mobile devices are emerging. Realizing this, Cook has invested in the creation of value-added services and services that are gradually taking a more significant niche in the company’s revenue slice. In this case, even if the iPhone as a major source of revenue ceases to be profitable, Apple has backup plans.
SCM Recommendations for Apple
Supply chain management is a critical component in ensuring that sales are smooth, seamless, and systematic. Apple has almost a benchmark supply chain, and many businesses are trying to replicate the success of the American firm (Shrum, 2018). However, as it is known, there are no absolutely perfect SCMs, and the company encounters systematic errors in one way or another. For this reason, three main recommendations for SCM strategy adjustments can be made for Apple. One of the most relevant ideas is to make the supply chain more flexible and adaptive, especially in a pandemic, as Cisco Systems (Cisco, 2021) does, for example. The company must learn from a global crisis that there are no guarantees that such an event will not happen again in the future, which could lead to a return to supply shortage problems. Consequently, Apple needs to create resource and inventory management buffer strategies now in case suppliers are locked out (Stiles, 2020). In addition, the company needs to invest in resiliency. Right now, the only steps Apple is taking in terms of environmental considerations end up rethinking the contents of the iPhone-only box and using recycled materials to make appliances. In this, Apple loses out on the environmental awareness of the rational conglomerate Nestlé (Eugénio et al., 2020). However, it is a fact that the number of silicon microchips in the world is limited, which means that one day the company will face a complete shortage of raw materials for the production of high-tech products (King et al., 2021). In this case, Apple is advised to either preemptively create a supply of valuable fossil materials or develop technologies for more optimized use of chips. At the same time, Apple can take care of complete recycling of used technology (on favorable terms for the customer) in order to recycle old chips. Finally, Apple has a central storage facility only in Silicon Valley, in California. From a marketing perspective, this strategy may seem right, but for practical reasons, centralizing the warehouse becomes a threat (Shrum, 2018). Any natural disasters or political decisions could block the viability of the central warehouse and thus become a crisis for Apple. Then, additional warehouses need to be created around the world, which would also save on the company’s transportation logistics.
Approaches to Quality Control Management
Operational management cannot exist effectively without quality control; otherwise, the very first retail shipment will demonstrate the failure of production in the company. For Apple, quality is a major priority because the current bar has already been raised quite high: releasing new products of poor quality would be the death of the business. One of the first approaches to improving product quality is to change the corporate mindset, which is focused on quality. Company employees must think positively and accept their responsibility to avoid corporate problems. Google is known to have the best quality-oriented corporate culture, so Apple managers can study direct competitors and borrow some of the useful aspects (HRD, 2021). This includes creating a training system for new employees, which is already true for Apple: A corporate developer academy has been launched in Saudi Arabia that instills Apple principles and standards in young engineers from the beginning of their careers (Fathi, 2021). Such a solution can be accomplished both offline and remotely, especially with the serious trend toward remote work. A large number of new company employees who have never visited the offices must follow high-quality standards. In addition, the product launch phase is preceded by a large number of tests and examinations, minimizing the likelihood of defective products (Figure 4). This qualitatively distinguishes Apple from Samsung, whose batteries in phones often explode (Peterson, 2016; Iahab, 2016). Such a preventive measure allows for a commensurate initial investment to save on warranty post-maintenance of goods sold and reinforce the perception of the brand as a supplier of quality.
Finally, an important role in controlling the quality of sold products is the provision of round-the-clock support and warranty service. This is reflected in the forced extension of free warranty services for appliances under consumer rights laws in several parts of the world, including the Middle East (Apple, 2021). Apple consumers are largely confident that the tech will be quality and long-lasting, and the only reason to change a phone is to upgrade it (Haselton, 2017). This is a critical phenomenon that Apple marketers and engineers have been able to instill in the minds of their customers.
Implementing Artificial Intelligence
It is impossible to strive to be a leader in an industry market if important market trends are ignored. Striving to remain traditional and conservative may be a good strategy only for private, small companies: in this case, customers appreciate the historicity and archetypicality of the establishment. Nevertheless, for conglomerates like Apple, abandoning artificial intelligence would unambiguously lead to the company’s demise. That is why Apple is rapidly developing this direction (Chang, 2021). Artificial intelligence based on big data processing has great potential in the company (Dwivedi et al., 2019). It can analyze customer behavior and suggest targeting actions, specifically to the user’s interests. In addition, AI can be used for AR and VR directions of creativity, which is especially evident in Apple’s activities in recent years (MS, 2021). At the same time, Apple is using artificial intelligence to anonymously automatically check content on users’ phones to combat pedophilia (Nellis, 2021). AI also has incredible potential for post-processing photos and videos: with this tool, image quality improves noticeably. The above examples are just some of the ways AI can help businesses.
However, AI is useful not only for commercial products but also for operational management, whether it is ITSM or ITOM. Machine analysis allows, for example, to track each employee’s performance, build KPIs, and make decisions about that employee’s future development in the company, as NASA does (Pyle, 2020). In addition, with AI, it becomes possible to clearly track, monitor, and manage all electronic records, conduct textual meta-analyses, and always access data seamlessly from anywhere in the world using appropriate levels of privacy (Dogru and Keskin, 2020). This greatly optimizes business processes and allows for more economical time management. For SCM, AI is of high value because it allows autonomous supply management, inventory analysis, and practical buying and selling strategies, including those related to pricing (Dogru and Keskin, 2020). However, despite its undoubted advantages, AI can be a threat, especially from a cybersecurity perspective. Artificial systems are not completely secure, so the threat of hacking is not ruled out (Buehler, 2021). It is also a vulnerability problem caused by the proliferation of deep fakes — with such a tool, the faces of key employees can be replaced in order to an imbalance within the company (Thomas, 2021). AI can also be biased in the case of processing bad data, which will affect output processes: such a serious mistake was made by IBM engineers, which resulted in AI giving erroneous advice on cancer treatment (Ross, 2018). Ultimately, artificial intelligence presents a great opportunity for business, but it also requires careful management.
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