Introduction Apple Inc. is a company that has established itself as one of the telecommunication leaders in China. The company however faces fierce competition from other leaders such as Samsung and Lenovo. Through external and internal analysis of the company, one identifies several strategic issues that affect the companys performance. This paper will analyse these strategic issues and come up with a solution to the issues.PEST Analysis(P)oliticalChina, having a communistic form of government means that there are heavyrestriction in areas like the internet, their press, reproductive rights,freedom of assembly, and the freedom of religion as well. Internet companieslike Google and Facebook have faced a lot of restriction (Apple, 2016). This hands apple acomparative advantage over these companies since Apple mainly deals withhardware.(E)conomicalThe Chinese economy is a favourable one to Apple since it continues to boom and hence elevating the national income, consumer spending and employment. In fact, in the first quarter of 2012, Chinas GDP increased from 7.2981 trillion dollars to 12.382 trillion dollars indicating a 7.9% increase (Bajarin, 2014).(S)ocialMobile phones are ubiquitous and Apple is doing incredibly well in chinasince their gadgets are attractive and pricy. This could be supported by thefact that the Chinese people love electronic gadgets (Chiang, 2013). The IPhone is astatus symbol in social circles in china.(T)echnologicalMany industries are making fast improvements in China and other parts ofthe world and this is especially more vivid in the electronics industry where Appleis making significant strides. Apple has shown its ethical consideration ingreen marketing (Darlin, 2006). In fact, theychanged their packaging to a lighter weight product to reduce emission duringtransportation.Porters generic strategy for Apple in ChinaDifferentiation is about creating a product that is unique in its ownway and hence creating a unique value that makes the consumers prefer it toother products that are less differentiated and they will be willing to pay apremium price for it (Akan, et al., 2006). Apple has alwaysused product differentiation leadership. Apple does not rely on cost leadershipstrategy to compete, they persuade their customers to become loyal to the brandand charge them a premium for it (Miller, 1988) (Porter, 1980). Apples products arebased on quality, design, stylishness and greater customer service, whileoutsourcing actual manufacturing to trusted Original Equipment Manufacturers(OEM) allows Apple to differentiate its products from its competitors (Pretorius, 2008).Apples internal organizationSWOT analysis(S)trengthsApple is a worldwide brand that has been the leaders of innovative andhigh tech products like the iPhone, the iPad, iPod and the MacBook (Forbes, 2016). They a well-knownglobally and has a large marginal value. Apple also has a large segment ofcustomers loyal to the Apple culture. They also have a strong R&Ddepartment and a large market share in China (Rein, 2012). Finally, they havea unique product differentiation and a strong placement in education segment.(W)eaknessesOne of the weaknesses that Apple is faced with include the fact thatthey have experienced very poor sales from iTunes store based on a known factthat the Chinese are customarily unwilling to pay for intellectual property (Einhorn, 2013). Another weaknesswith Apple is that without constant innovation to set itself apart from itscompetitors, their gadgets just appear to be overpriced.(O)pportunitiesOne of the opportunities for Apple is market penetration into theChinese cities as their population increases in urban China. Another is thatthere is growing demand for green and energy sufficient products and apple hastaken the green route by reducing the weight of their products and packaging toreduce emissions during their transportation (Lin, et al., 2012). The booming Chineseeconomy provides an opportunity for Apple to open more retail stores since agrowing economy reflects into employment, a higher national income and hence ahigher individual spending which means business for Apple.(T)hreatsApple is highly dependent on consumer purchase, which means that in theevent of low or no sales, losses are experienced. The opposite is also true.The other threat is the fact that the industry that Apple operates in is highlycompetitive with new entrants coming in with new or differentiated productsevery often (Hitt, et al., 2008). There is also thepressure of constant innovation. Without innovation, companies becomeirrelevant very fast in this industry (Chang, 2010). In the Chinesemarket, imitation patent and copyrights infringement remain an imminent threatto any player in this industry. The other threat is that having manycompetitors in this industry means that there is a constant pressure to reducethe price. The table below shows the price ranges of Apple products which arehigher compared to those of local products.Fig 1. Prices of Apple products in China. (Voigt, K., 2012.).Michael Porters five forcesThe Porters five forces of competitive position analysis provides aground for assessment and evaluation of the competitive situation and strengthof a business organization (Miller, 1986) (Porter, 1985).Rivalry among existing competitorsIn China, Samsung and Lenovo are Apples biggest competitors. Even thoughApples products are highly differentiated in terms of design and functionalitiesfrom the competitors products, the two competitors have a strong presence inthe market (Apple, 2016). This competitiveadvantage that Apple enjoys can only be sustained by constant innovation.The threat of new entrantsThe presence that Apple has in smartphone and personal computers industryin China is valuable, rare and very expensive to imitate. A potential entrantin this market would require to not only have significant resources, but alsobe very innovative to win a market share over.The threat of substitutesChina is well known for her shrewdness in the electronics industry. Theplayers in this industry are creative and have diverse products in terms ofquality and price as well. This therefore means that there are varioussubstitutes for every market niche (Georgieva, 2016). Apple still managesto press on and maintain these threats to a medium. Their products are highquality and pry and are targeted at the growing Chinese middle class and youngadults.The bargaining power of the suppliersThere is competitive pricing among the suppliers of hardware since themarket is highly saturated. This therefore means that the suppliers have lowbargaining power (Yoffie & Kim, 2010). Apple employs adifferentiation strategy that requires that the firm to ensure that thesuppliers provide very high quality components hence driving the supplier costup.The bargaining power of the buyers.There is a high bargaining power of the consumers in China. This comesfrom the fact that there are very many competitors and substitute in thatmarket. However, Apples brand of unique and highly differentiated productsinsulates or protects Apple from the price sensitivity (Bajarin, 2014). Apple also enjoys avery large segment of loyal customers in China, who remain so regardless of thecompetitors prices or products.Fig 2. Apples porters five forces Strategic options that would solve Apples issues in China There are different strategies that apple could adopt in order to dealwith the different issues it faces in the Chinese market. The Ansoff matrix isa strategic planning tool that provides some strategies that Apple can adopt tosolve their strategic issues in China (Ansoff, 1957). The matrix is madeup of four strategies, two of which are applicable to Apple Inc. The twostrategies that could be applied on Apple China include market penetration andproduct development. Market penetration The market penetration strategy is a strategy that is usually used by organizations to develop the offerings that the company provides to its customers in their existing market. To do this, the company usually seeks to increase their market share in their current market segments (Ansoff, 1957). To increase the market share, companies sell more of their products and services to their current customers as well as find new customers within their existing market. A company seeking to use market penetration can increase their present sales in the existing market by using aggressive distribution and promotion (Aaltonen & Ikävalko, 2002). The aggressive distribution and promotion can be done by decreasing the product prices, merging with a rival in the current market, increasing promotion and distribution support, and refining the existing products. Apple Inc. in China is being faced with the problem of localcompetitors. These local competitors are a threat to Apple since they sell theirproducts at a lower price. To support local industries, the Chinese governmentusually imposes great importation tariffs on foreign companies operating inChina while being lenient on the local companies (Bradford & Duncan, 2000). This way the localcompanies are usually able to provide their prices at a cheap price. Forinstance, Lenovo is a luxury brand in China which offers competition to AppleInc. since they are in the same category of luxury brands (Helal, 2015). However, the priceof a Lenovo phone that has the same features as those of an iPhone may notmatch since Lenovo sells its products at a cheaper price. Apple can implement astrategy that involves decreasing its prices to try and compete with the LenovoCompany in China (Chang, 2010). To ensure they havereduced their prices without getting any losses, Apple may lay off some of itsworkers and adopt outsourcing as strategy to cut the costs. After cutting thesecosts, the company can manage reducing the prices of its products withoutsuffering great losses (Team, 2012). The market penetration strategy through price decrease is advantageousto Apple Inc. since the company will have the ability to compete with localcompetitors such as Lenovo based on prices and this way they will be able toimprove their market share. However, the strategy is also disadvantageous insome way. First, the local companies in China are usually known for their greatimitation (Voigt, 2012). This is a problemthat has been affecting Apple greatly. By reducing the prices of its products,Apple will not be able to produce high quality and innovative products thatcannot be imitated by other companies (Chang, 2010). Therefore they willsuffer this problem more and therefore they may end up losing the market share,they were aiming at increasing. The second strategy that could be used in helping apple solve the strategic issues it faces in China is the product development strategy (Ansoff, 1957). The product development strategy is where an organization chooses to create new services and products in an existing market with the aim of achieving growth. The strategy involves increasing the range of products available in the current market (Allio, 2005). Achieving the increase in product range can be achieved through greater investment in research and development, acquiring the rights to produce another persons work, joint development with ownership of a different firm that can access the companys distribution brands or channels and buying in product and branding it. Apple has faced great problems in the Chinese market from localcompanies imitating their products and therefore lowering their market share inaddition to destroying their reputation of selling quality products. To solvethis problem in addition to the problem of competitors, the company can adoptthe product development strategy. There are different ways through which theycan adopt the strategy. The most appropriate approach to adopting this approachis investing more on research and development (Alexander, 1985). These qualities maybe so complicated for the Chinese companies to imitate and therefore thecompany will have solved the problem. In addition the company could continueinvesting in Research and development in order to keep up with the changingtechnology. This will help them avoid the risk of product obsolescence andremain a leader in the technological world (Bajarin, 2014). An example of asituation that investment in research and development would have been helpfulis when they were creating the iPhone and iPads (Heracleous, 2013). With greaterinvestment in research and development, the company would have realized thatthe two are incompatible with the flash technology which is a technology thathas become so popular to the consumers. The lack of great research whendeveloping these products will affect the company since people choose to go forproducts that are compatible with the flash technology (Sadler, 2003). This will thereforeaffect the sales potential of the iPads. This strategy is advantageous for the company since it will help withthe problem of imitation and competitors that affects the company. The strategyhelps the company gain a competitive advantage by producing products that areinnovative and that or of higher quality. This way the company gains a greatermarket share. However, the strategy has a problem in that it does not provide asolution to the price competition problem (Johnson, 2005). Investing more onresearch and development may lead a company into selling their products at ahigh price since they are of quality and they have used greater resources.Therefore the company will find it hard competing with the competitors in termsof price of products. Considering the two strategies that can be applied by Apple Inc., theproduct development strategy is better off and should be the one implemented.Although the market penetration may be great in solving the price competitionproblem, the company may end up losing their market share due to imitationsfrom other local companies (Ireland, et al., 2011). The productdevelopment strategy on the other hand is appropriate since it offers a companycompetitive advantage considering it increases the quality of products (Johnson, et al., 2011). In addition, thestrategy will help Apple Inc. in China solve the problem of imitation by localcompanies. Through research and development, Apple will come up with productsthat are hard to imitate. This way the company will be able to increase theirmarket share since the people will not go for the cheap imitated products asthey will not be available (KVN, 2013). Fig 3. Strategies to increase Apples competitive advantage in China (Rein, S., 2012)Implementation of the product development strategy to Apple Inc. For the whole process of strategy formulation to work, there has to bestrategy implementation. In a research conducted by Mintzberg (1994), most ofthe strategies that companies formulate are usually not implemented. Accordingto the study, almost half of the organizations do not usually conduct strategyimplementation (Thompson, 2001). These organizationsfail to carry out strategy implementation despite the clear importance thatexists with this particular area. The potential value of a strategic plancannot be realized and captured if a company does not carry out sufficientplanning and implementation (Atkinson, 2006). For theeffectiveness of the product development strategy planned to be effective, itneeds to be implemented. The implementation of the plan needs to be donesufficiently to ensure the real value of the plan is realized and captured.The first step that should be used in the implementation of the strategy is identifying the activities that will be carried out in the process of implementation (Bryson & Bromiley, 1993). One of the activities that will be involved in the implementation of the strategy is educating the shareholders and the employees on the need of the new strategy. In order for a strategy to be successful, the employees need to understand why there are changes in the strategy (Johnson, 2011). The other activity that would be important in the implementation of the apple strategy is creating a team that will handle Research and development. Although Apple may already have a department that handles research and development, there may be need that more human resources are allocated to the department since the company will allocate more capital in the department to ensure its efficiency (Brenes, et al., 2008). The new human resources to the department may also need to be educated on how to carry out activities in the department. Apple is a company that mainly focuses on the culture of differentiation. Therefore with the implementation of the new strategy may need a change in the culture. It is important to ensure that the culture of the company is shaped to fit the needs of the strategy (Kono, 1994). A corporate culture that supports the strategy usually leads the organization into working hard towards the achievement of the strategy objectives. One important thing that should be considered during the implementationof a strategy is that there is need for a rewards or incentives that should bedirectly linked to the strategy and the strategys objective (Okumus, 2003). Various studieshave proved that people tend to work harder towards the accomplishment of astrategy when there are rewards or incentives linked to the strategy. Forinstance, in the implementation of the apple strategy, people can be offeredincentives based on the innovative ideas that they may come up with afterconducting extensive research. This will create constructive competition amongthe employees in the research and development department. The implementation of the product development strategy in China shouldnot take more than three months. Delay in the implementation of the strategymay be a problem since the company continues to lose market share. Everyactivity in the implementation process should have a certain timeline to ensuregreat approximation of the timeline. For instance, the training of the newrecruits in the research and development department should take two weeks andthe monitoring of the implementation should take three weeks. For the monitoring process, the suitability criteria can be used tomonitor the implemented strategy. This criterion will be used to evaluatewhether the product development strategy implemented by Apple Inc. in Chinaaddresses the main opportunities and issues that the company faces. There are however problems that may occur during the implementation ofthe product development strategy by Apple in China. One of the problems thatmay occur is resistance to change. People may be accustomed to the culture ofinnovation that may be resistant to change to the new culture. There may alsobe the problem of implementation going beyond the set timeline. The timelinewill just be approximated and during implementation certain problems may arisethat may cause the timeline to extend. Conclusion Apple Inc. is a company that has established itself as one of thetelecommunication leaders in China. However there are strategic issues thatexist preventing the company from achieving its full market potential. Throughdifferent internal and external analysis of the company, it is easy to identifythis issues and come up with a strategy that solves them.ReferencesAaltonen, P. & Ikävalko, H., 2002. Implementing strategies successfully. Integrated Manufacturing Systems, 13(6), pp. 415-418.Akan, O., Allen, R. S., Helms, M. M. & Spralls, I., 2006. Critical tactics for implementing Porters generic strategies. Journal of Business Strategy, 27(1), pp. 43-53.Alexander, L. D., 1985. Successfully implementing strategic decisions. Long range planning, 18(3), pp. 91-97.Allio, M. 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