SUSTAINABLE CORPORATE STRATEGIES

ASSIGNMENT 3

CHALLENGES OF GLOBALISATION IN APPLE.INC

BY
DEVAYALINI. M(18MBR014)
Introduction

Today the world has become a global village where each and every thing is inter linked. The
concept of global village or global merger is based on the grounds of globalization. But
today, the globalization is growing by leaps and bounds.

To give understanding about the concept of globalization, its advantages and disadvantages
on the economies of the world especially on the business world, a multi-national corporation,
Apple Inc., is selected.

Globalization

The most unified definition of globalization explains that it is a concept in which the different
economies of the world amalgamate or unify with each other by reducing the barriers like
tariffs of international trade, fee related to export and quotas on the imports. The
globalization focuses on maximizing the economic efficiencies of the countries that are
related to the wealth, products, services, manufacturing, supply chain, labor etc. by
developing and fostering international relations ,understanding and competition. It specifies
the processes and operations that can be utilized by the economies, cultures and businesses
with the help of different modes like communications, supply chain activities, distribution
networks etc

The term globalization is very ³ closely associated with the term economic globalization: the
integration of national economies into the international economy through trade, foreign direct
investment, capital flows, migration, the spread of technology, and military presence.
globalization is usually recognized as being driven by a combination of economic,
technological, socio cultural, political, and biological factors´.

The tremendous increase of globalization has significant impact on the countries around the
globe and the people living there. It has transformed various businesses like Detroit’s Big
THREE or Bangalore to IT hub from small to large enterprises. It has played vital role in the
increased prosperity of the world since 1950¶s which has now spread from United states and
Europe to the regions like China and India, which were considered formerly as poor countries

Apple Inc.

Apple Inc. is an American based multinational company whose stocks are listed in the New
York Stock Exchange and NASDAQ (National Association of Securities Dealers Automated
Quotations) under the symbol AAPL. The company specializes in the design, development
and manufacturing of electronic equipments like computers, software and smart phones. The
hardware related product line of the company is well known to everyone; including iphone,
Macintosh and ipad and ipod respectively. While there are multiple range of software’s
offered by the company to its customers that ranges from operating system to the
entertainment and educational based software suits.

The company was established in 1976 and was incorporated in the early year of 1977(Apple
Inc., 2011). It was first established as Apple Computer Inc. but later on, by mutual
agreement, the company founders removed the world computer from its name in order to
show their expansion strategies in the other consumer electronic products and markets. The
company has due to varying reasons like its business strategies, operational philosophy,
unique design and distinctive marketing campaign has achieved a distinct market position and
reputation in the global electronic industries. This unique market position is due to its loyal
and devoted customer base and its brand equity, especially in the markets of United States.
The company is listed as one of the most admired companies in the United States and in the
World for four years. It has also received lot of criticism from the people which is mainly
related to its business practices, relationship with supply chain partners and its impact on the
environment.

Business Strategy

Apple is currently working on the differentiation strategy by putting unique elements in the
design and development of its products. The differentiation strategy is defined as a strategy
that aims to develop the products and or services that have unique characteristics that are well
liked by the customers and are valued by them. This strategy enhances the market position of
the companies with respect to their counterparts.

Apple Inc. strives hard to provide excellent usage experience to its customers by offering
innovative products in terms of hardware, software products as well as other offerings. The
company is using its ability to design unique products and operating systems etc. with its
integrated business units and design units. The success of the company in the global markets
is due to its extensive focus on the market research and development for the development of
its products and services. With reference to its business strategy, the company is in a
continues process to build and advance the robust platform that can enhance the listing of
third party content like mobile phone apps, games etc on its online stores or its iTunes store.
Moreover, the company strategies also involve the expansion of its distribution network in
order to improve its global reach by providing high quality products and services with
after sales services to their customers. Therefore, the company is positioned uniquely in the
markets to offer superior and integrated digital technologies and productivity solutions.

Markets and Distribution

The customer segments of the company are divided into various categories. The needs of the
main customers markets it caters are of small and medium businesses, education sectors,
large corporations, government departments and other related markets. In order to meet the
needs and wants of these consumer markets, the company is utilizing direct and indirect
distribution channels including online sales services, retail stores and direct sales force as
well as third party sellers, retailers etc. Using direct sales contacts with the customers is,
believed by the company, leveraging its product sales and has demonstrated as an advantage
to the company over its competitors. In order to maximize its sales and to make sure that the
buyers are receiving high quality experience, the company is in a process to expand and
improve its existing channel distribution network

Competition

The company faces aggressive competition from the other market players. The top three
competitors of Apple Inc. in United States are Fujitsu Technology Solutions (Holding) B.V.,
International Business Machines Corporation and Media Net Digital Inc. respectively. The
needs of the markets it caters are highly competitive in nature due to the ever changing and
advancing technological environment and the rapid introduction of new technology based
products. The main competitors of the company are following cost leadership strategies by
reducing the prices of their products or by maintaining low profit margins to maintain their
market share. There are various forces that can impact the business and profitability of Apple.
These factors may include the marketing mix ± product, price, place, promotion strategies,
product performance, the quality and reliability of the product, innovative designs as well as
the availability of up to date software services. Currently, the management of the company is
focusing on the expansion of its business markets related to the smart phones and other media
and communication devices. Therefore, it is expected that the competition in these markets
will tend to increase for the company.

Moreover, some of the competitors of the company have number of resources which they can
utilize against the company to provide the product and service offerings related to Apple at
little or no margin and, worst for the company, can collaborate with one another to offer
the business and consumer products and services similar to Apple’s products at low price
range.

Products and Services

Apple is currently using in house manufacturing system for the production of all of
its products. All the products like Mac, iphone, ipad and ipod etc. are designed, developed
and marketed via its main manufacturing hub which is located in the USA.

The company is outsourcing the production of some of its product parts to the various
international and national supply chain partners; subcontractors. Some of the components of
its products, ipod, are outsourced to its subcontractor in Hong Kong from where it is sent to
the outsourced production plant of the company

Some of these components are of high cost. While the other products like hard drive and flash
memory etc. are sent to the other companies or outsourcing companies like Toshiba in Japan
or Samsung in Korea. Large number of its components is of low cost. The metal components
of the products are made by the outsourcing unit in Taiwan called Foxconn and the plastic
components are products by the outsourcing units in Singapore. Finally these parts are
assembled in the China and then transported to its sales outlets across the world.

The company offers various deals on the events like Christmas, Saint Peter’s day,
black Friday etc. these offers are then expanded on a global basis. For instance, the company
offered a customized deal on the black Friday event last year for its customer base in the
United States. This specific deal was expanded for the European countries. This event was in
the mid of the year in the United States while in the European countries it was in the
November. This globalized offering increased the sales of company products not only in the
US markets but also in the European markets.

Outsourcing Plants

It has built its integrated manufacturing and design facilities in the various countries
for example in California, Singapore etc. This global network allows the company to develop
and launch the products in its markets of America, Asia and Europe. It produces its products,
for example ipads, in the Shanghai, China which has given it a cost saving advantage and
lead to the increased profitability for the company. But on the other hand, this outsourcing
has increased the downsizing and unemployment rate in the home country.

As these outsourcing plants contribute to the success of the company in the global markets
but these also have some issues linked with the manufacturing of its products. Some of the
outsourcing plants managed by the company are showing troubled situations for Apple.

The company has released its supplier responsibility report in which it has specified the
unethical practices performed by its suppliers. One of its suppliers had employed over forty
minors at the outsourcing units. Moreover, the suicide cases at Foxcon plant and the waste
release issue at one of its ³Wintek touch screen facility´ has badly affected the company
operations and its global image. The global manufacturers like Apple, Dell etc. and various
others are vulnerable to the practices performed by its subcontractors. These unethical
practices are accounted on behalf of the company and therefore have created problems and
hindrances for the company in the global markets.

Conclusion

The economy of the world has now become free from any boundary. All the countries are
now considered integrated with one another as one global market for carrying out various
activities like trade, relations, etc. At one side globalization is well appreciated and defended
as a harbinger of large numbers of opportunities for the countries and corporations while on
the other side anti globalization groups dislike this process that there are certain people who
are not able to take part in this process and therefore faces the negative impact of on their
economies, lives and businesses
Every process or function has positive and negative impacts associated with it. If the
globalization has so many positive influences on the world economy and trade, it also has
some negative impacts on the social, cultural lives, and it has increased disparity within the
people.

There are many critics that are continuously expressing their views against globalization. But
the point to be considered is that it gathers the information about the global markets and
companies to operate. On the basis of this information, the companies can excel in the
markets by engaging into strategic acquisitions, developing markets etc.