Report on

Apple IPAD In India: Was There A Way Out?

Submitted by:

Karan pratap-1226114116

Mohammed Naseer khan-1226114117

Lalit Akhil pillala-1226114119

Sai surya raghava-1226114120

Malavika issar-1226114121

EXECUTIVE SUMMARY

India offers a wealth of opportunities for business expansion. Though the country maintains a large gap between the wealthy and the impoverished, India’s middle class represents a growing

consumer population expected to increase from about 5% of the population to 41% by 2025, an increase in middle class consumers from 50 million people to 583 million people. While India represents a vastly different culture from the U.S., Apple has significant experience

dealing with such cultural dimensions as organizational collectivism, high power distance, and a moderate level of uncertainty avoidance through its foray into both China and Japan

Apple has wrongly determined that India is an inconsequential market in the short-term. It is unrealistic, however, for Apple to believe that conquering the Indian market is a matter of waiting for several years until the country’s infrastructure is established and the demand for

Tablet PCs is more clearly outlined. Apple must consider India in its long-term perspective by investing there in the short-term or else it will not retain the option to enter the market more fully

at some indeterminate point down the line when it sees a more clear, complete picture of what the Indian market means in terms of financial potential and strategic opportunities. From a financial standpoint, India suits Apple’s long-term profitability goals because India does not

require Apple to reach everyone; rather, if Apple can penetrate even a small portion of the Indian market and create consumer value there, it will be targeting millions of new consumers with an

increasing amount of disposable income. From a strategic standpoint, Apple’s goal is to be among the industry leaders in the Tablet PC

market in India. This requires expansion through organic, internal growth and a combination of offensive and defensive strategies. Moving into India more directly and completely not only

enables Apple to take an offensive approach to gaining greater market share as it competes with Samsung and RIM in India, but also allows Apple to defend its market position in India by being present in the minds of competitors and consumers. As long as its competitors continue to expan,

Apple will not be able to defend itself from losing a foothold without a similarly comprehensive strategic investment in India. Apple’s plan in India needs to focus on three parts: bringing the

“Apple experience” to India through its Apple Stores and high-quality retail environment, integrating iTunes use by Indian consumers with its overall brand image and market penetration, and establishing an Indian distribution network through warehousing with the potential for

eventual expansion into product manufacturing.

Market for tablets - Indian scenario:-

The costs of doing business in India remain high as inefficiencies in infrastructure

and government bureaucracy creates greater operations expense. Another large barrier

to greater entry into India remains its poor infrastructure, primarily roads and electrical grids.

The cost to overcome these is significant, but few companies maintain the financial resources to

fund solutions to these issues Moreover, India offers businesses a significant amount of quality

human resources and a financial system that is responsive to international business transactions.

Both of these off-set some of the infrastructural costs of doing business in India. Looking at

the overall risk situation in India, the fundamental issues are bureaucracy and

political corruption Bureaucracy creates inefficiencies for businesses because the process of

setting up and running a business can take long amounts of time. In this case, political corruption

emerges as businesses aim to circumvent the regular way of doing business legally. For

American companies, the Foreign Corrupt Practices Act, a federal statute, embodies

Congressional intent to exercise jurisdiction where these companies engage in acts of bribery

abroad.

Apple’s key competitor within the Indian Tablet PC market is Samsung because they both sell within the same price and quality range. Each of these companies has established distribution

channels that run through web-based and brick-and-mortar authorized resellers, but Samsung also provides Tablet sales on its own e-store website.

Further, Apple and Samsung are both vertically integrated to the same degree. As of late 2011, both competitors offered two tablets for Indian consumers to choose from which offer similar product features: high-definition touch screens, fast web browsing

capabilities, interactive and customizable user-friendly home screens, accessory compatibility, remote connectivity, and media functions. Looking more broadly, all competitors within the

Indian Tablet PC industry—including Acer, Dell, HP, Motorola, RIM, Toshiba, and HTC—center their rival positioning around three key success factors: performance, portability, and price In terms of performance (Disk Size, Resolution, Battery Life), Apple’s iPad does exceptionally

well compared to its competitors and outpaces each of them when looking at an aggregated performance score comprising these three elements.

Apple is, however, in the middle of the pack in terms of portability: Samsung’s Galaxy Tab 7, Dell’s Streak, and Amazon’s Kindle Fire are all lighter than either of Apple’s iPads and offer a smaller display size.

RIM’s Blackberry Playbook leads the industry in terms of portability with a display size of 7 inches and a weight of just 400 ounces, only about 2/3 the weight of Apple’s iPads.10 to

establish awareness about the Apple brand and understanding about its products in a historically under-branded market.

Case Analysis:-

The fact that Indian consumers have felt a sense of being “product-dumped” by Apple as a

second-rate product speaks to Indian consumers’ desire for continued product development; for Apple, this means incorporating innovation and product line extensions into its functional

strategy in India. A final facet of Apple’s functional strategy pertains to its human capital and how it creates a competitive advantage: the in-store experience provided through Apple’s company-owned retail locations is vital for a product that is most effectively engaged through the

relationship that Apple has with its consumers.

STRATEGIC PLAN:

In order to avoid losing market share and to establish itself as a premier brand in India for both now and the future, Apple needs to expand more fully into India and commit to a physical

presence there for the long-term.

Apple Stores in India Without a retail presence in India, Apple is missing one of the key components of its value chain: customer service. Apple should enter India by establishing Apple Store locations throughout

India’s largest cities. Initially, Apple should open three stores: one in Mumbai, one in Delhi, and one in Bangalore. These are the three largest markets in India by population, and their dispersion

around three of India’s key regions (West Coast, Northern Inland, and the South) will enable Apple to gain a foothold from which it can begin to establish its own distribution networks. Within two years of opening its doors in these three markets, Apple should then expand into

Hyderabad, one of the wealthiest cities in India and its de-facto tech-hub, and Kolkatta, a large port city in the North-Eastern region of India. These two cities rank fifth and seventh,

respectively, with regard to most populous cities in India and are also among the top five most valuable Indian markets in terms of wealth, level of consumption, and overall awareness.

Distribution strategy:- One expensive cost incurred by Apple investing more fully in India is the transportation of its

goods from warehouses in the U.S. to India. This cost could be reduced if Apple instead set-up a warehouse in India where they could keep products for the Indian market in order to more easily meets consumer demand as more iPads are sold in India. This would also allow Apple an

opportunity to satisfy the requirement that at least 30% of the value of their sales must be sources from local firms. If Apple manages to set-up a warehouse and begins to construct its own Indian

distribution network, this is certainly an operational process that would add value and allow Apple to source locally. Moreover, creating local jobs in India will permit Apple to curry favour with Indian consumers as Apple becomes a broader employer beyond just its retail stores.

Further, Apple may be able to use this permanent physical occupation to investigate the possibility of moving some of its Chinese manufacturing operations to

India, a nation where intellectual property rights are concretely protected. India is well-known for being a tech-savvy nation with a large pool of workers. Also, the average age of an Indian worker is 23, while Chinese workers average 35 years of age. Oxon already has a facility in a

Special Economic Zone in Chennai one of India’s wealthiest cities. Lastly, several Indian companies are in the same business as Fox com and possess similar mass production capabilities,

including Bharti, HCL Technologies, and Reliance Communications.

Solutions of the case:-

1. Apple delayed the launch of iPad in India by nine months from its launch in the US. What may be the possible reasons for this decision?

More than half a million avid Apple fans have already tested it:-

In fact excess demand in that market is cited as the main factor behind the delayed launch elsewhere in the world. However, it’s not been without its glitches, with well publicized wifi

problems being a source of early frustration for some new purchasers.

More Accessories:-

Apple branded products were also scheduled for launch alongside the iPad but were unavailable

for the US launch, some of which are still on 2-3 week back-order including the official iPad case.

More Apps:-

in addition to many more compatible iPhone apps. New iPad apps continue to hit

the iTunes app store meaning that there will be an even greater choice awaiting the world when

the Apple puts the platform live around the world at the end of May.

What’s more, those apps that were developed on the iPad emulator will have been tried and

tested in the real word on real iPads for several weeks.

More Time To Save

An extra few weeks might just give you the extra earning time you need to save for a better iPad

than the one you thought you could afford. If you’ve already got the money burning a hole in

your pocket, enjoy the interest or keep saving and get ready to kit your iPad out in the best apps

and accessories when it finally comes home.

More Time to Consider Alternatives

The market is buzzing with news of alternative tablet offerings. This includes the Linux-

based WePad, launched in Germany this week, as well as speculation around Google’s entry

into the tablet market.

2. What are the various selection criteria Apple could have considered before

selecting the Indian market?

3. What are the potential threats that Apple could face in a country like India where it

is striving hard to achieve its global image as the market leader?

4. Apple’s product strategy is a global success, but it failed in India. Why?

First is a technology issue. In India, the market I’m most familiar with, the iPhone has

compatibility issues. That’s an amazing thing to ignore. Your product has to be aligned with the

context in which you are marketing it.

Second is a pricing issue. At its introduction, an iPhone cost about the same price in India as it

did in the U.S. (about $700). But the way consumer’s process price information is interesting.

A third reason is that people in India are used to an unlocked phone. Apple does not want people

to buy unlocked versions of its phone. But the moment there is a gray market where people can

buy another compatible version of the iPhone, Apple will be challenged.

A fourth reason—and this is personal speculation—is a misalignment of “softer” brand

attributes.

Conclusion:-

To establish the importance of proper market evaluation and selection tools that enable the

effective selection of markets, with a maximization of probability of achieving company objectives.

To demonstrate the significance of the commercialization of new product launches in new markets. Important decisions here include deciding when to launch, where to launch, how to

launch, how to address target markets, and how to introduce the product in each market. To demonstrate a fundamental fact — though a product might be the same, markets are

heterogeneous.