The Key Globalisation Impacts on Apple's Operations - Case Study Example

School: Topic: INTERNATIONAL BUSINESS Lecturer: Question Based on the NYT article, the other indicated readings, and your own research around how Apple has developed as a company since the return of Steve Jobs in 1997, discuss the key impacts that globalisation has had on the company’s operations. Since the return of Steve Jobs to Apple in 1997, what became apparently different was the company’s approach to the global market. This is because until the coming of Steve Jobs, Apple’s international market was mainly able how to take existing products to new markets outside of the U.S (Markoff, 2011). This approach to the global market however had its own limitations. For example it was the company that dictated for the international market, what it needed to buy from Apple. Again, the international market did not have much choice in becoming the first users to new types of products. That is, Apple used the international market of offload most of its older products so that it could make way for new products to be introduced into the American market (Robertson, 2011). With the coming of Steve Jobs however, this approach changed as the international market was actually put at the centre of the company’s inventions and innovations. That is, instead of giving the international market what the company wanted to offer, there was enough research to know and understand the needs of the international market together with what the American market wanted. This way, the inventions that were made such as the iPod were made to meet the international demands. It is not surprising that with Steve Jobs at Apple, the company could now boast of a global market, where it is reported that nearly twice as many people outside the U.S were employed when the iPod was invested as those employed in the U.S (Freeland, 2011). In essence, the company positioned itself to take advantage of globalization. Once the global positioning was guaranteed through the approach to innovation which was research-led, Apple started developing very quickly. More to the company’s own approach to innovation was the technology based platform that Apple was offered as part of globalization to enhance its business growth. For example Bhagwati (2004) reported that the advent of electronic commerce (e-commerce) peaked around the early 2000s, making it easier for the company to be connected to the international market through the internet. As the elements of e-commerce provide, the company did not necessarily have to have a lot of offices across the globe before it could sell to the international market. Rather, a secure internet platform where consumers across the globe could come to be part of the company’s experience was all that was needed to ensure that the company was making a lot of sales. Another impact of globalization that was advantageous to the company’s operations was the fact that as a result of globalization, parts of the world that were considered developing or emerging markets could easily become part of the technological revolution and advancement that was taking place in developed economies like the U.S (Wolf, 2004). By implication, because of the advancement in technology in emerging markets, Apple could be assured that when it introduced its products to places like China, Philippines and Mexico, its products would not be considered alien to the ordinary consumer in those parts of the world. In actual fact, because of the effect of globalization, technological innovations were then a new breed of consumption in those emerging markets. Question 2 Describe the key developments in international trade and direct foreign investment illustrated by the case. Do they support or contradict the key theories of international trade? One model that helps to explain how Apple’s international trade and direct foreign investment supports or contradicts key theories of international trade is Ansoff matrix. This is because the Ansoff matrix provides alternative corporate growth strategies that may be used by global firms like Apple. Based on the matrix, it would be found that a firm always has the option of choosing from strategies based on existing markets, new markets, existing products, and new products. Comparing Apple’s U.S market to the international market, particularly those in China and Philippines as reported in the case, it would be said that there are as many as three of the options that apply to these international markets. Firstly, Apple had the option of using these international markets as new markets, based on which it could undertake market development with its existing products or diversification with its new products (Sean & Jennings, 2013). True to this, Apple introduced the new iPod invention to these markets and after the iPod had successfully been traded, it engaged in direct investment for other products (Freeland, 2011). Secondly, with reference to existing products, Apple saw the international markets as a good place to start direct foreign investment with. When referring to the product lifecycle theory, it would be noted that one important corporate strategy that any company can take as part of international trade is to find new markets where its existing products which have come to the decline stage of the cycle can be considered relatively new (Koene, Vogelaar & Soeters, 2002). For Apple, China and Philippines were two such countries it could implement this principle of international trade. In essence therefore, it was a step in the right direction that Apple used direct foreign investment in international markets as a means of selling off its existing products which had got to the decline stage of the product lifecycle. One important justification which was clearly showed with doing business in China and Philippines is the fact that Apple could take advantage of the cheap labor in those countries. As stated by Freeland, Apple engaged a bottom-line benefit with gains from cheap foreign labor. Meanwhile, the fact that there is cheap labor is one important determinant for international trade (Maccoby, 2004). Lastly, it can be said that Apple’s international trade support theories of international trade as Ansoff matrix propose that for new products going into new markets, companies could rely on diversification as a corporate growth strategy to ensure competitiveness (Sean & Jennings, 2013). In the case of Apple, the major approach to diversification was the shift from the production of conventional computers to iPods. IPods were introduced as music playing devices which had a competitive advantage with its portability. Because of the change in business model from conventional computers to iPods, more than half of the American iPod jobs were said to be relatively poorly paid and low-skilled (Freeland, 2011). But as American employees are mostly looking for the best values from productivity, Apple could not consider America a very good marketplace for expanding the production the iPod. It was for this reason that Apple looked to emerging markets such as China and Philippines where low pays are accepted as a result of low skills of employees (Koene, Vogelaar & Soeters, 2002). Question 3 What ethical issues does the case highlight? If you were a manager of an ethical investment fund, what corporate social responsibility measures would you expect from Apple? Explain why you would include or not Apple shares in your funds investment portfolio. Reading through the case, there are two major ethical dilemmas that arise. The first has to do with how appropriate it was for Apple to choose international markets as against the U.S market where it employeed only half as much as it did employ in international markets. This issue becomes an ethical dilemma because U.S is the parent country of Apple and so if there were any opportunities for growth, it was expected that these opportunities would first be made to merit those in America before or than those in international markets. What makes the issue more critical is the fact that the setting of the case was around 2007 when the America was experiencing financial meltdown. Any opportunities created through employment with the invention of the iPod were therefore going to be a way by which the company would have contributed to the strengthening of America’s economy (Dedrick, Kraemer & Linden, 2009). As corporate ethics provide, it is always important that the people who are immediately around a company benefit from its operations and one way to do this is through enhanced employment (Maccoby, 2004). In line with this first ethical issue, if I happened to be an ethical investment fund manager, I would not include Apple shares in my funds investment portfolio. The reason for this assertion is that including Apple would have made the company have undue advantage over investors by reaping from where it made no conscious efforts to sow. The reason saying this is that Apple had not invested in the American economy as much as it was in a position to do and so did not merit the American people’s investment. The other ethical issue has to do with Apple’s approach to doing business in the international markets. As clearly highlighted in the case, one major reason Apple found the markets in China and Philippines as advantageous was because those places the company could pay less for labor (Greenland, 2011). Meanwhile, the issue of employee benefits remain one of the most seriously infringed aspects of corporate ethics (Gupta, 2010). In most cases, well endowed global firms such as Apple who are in the position to paying the right and most deserving benefits to employees refuse to do so with the excuse that employees are unskilled or have limited qualification. Meanwhile there are always people other skilled employees who could be employed and given deserving benefits. The latter situation is what justifies the ethical inaccuracy with what Apple did. Based on this second ethical issue, a recommendation that will be made for Apple is to focus more on the provision of social responsibility which would ensure that the company gains the goodwill of the local people. As far as corporate social responsibility is concerned, it will be recommended that Apple will not have to focus on just one area but on all three pillars of corporate social responsibility including environmental, social and economic. This means that the company ought to show great commitment to the environment whiles ensuring that the welfare of the local communities is taken good care of. It also has to ensure responsible use of its incomes, especially by ensuring that there is fair trade and equity at the workplace. References Bhagwati, J. N. (2004). In Defense of Globalization. New York: Oxford University Press. Dedrick, J., Kraemer, K. L. & Linden, G. (2009). “Who profits from innovation in global value chains?: a study of the iPod and notebook PCs” Industrial and Corporate Change. Vol. 3 No. 2, pp. 23-29 Freeland, C. (2011). How the iPod explains globalisation. http://www.nytimes.com/2011/07/01/world/asia/01iht-letter01.html Gupta, D. A. (2010). Ethics, business and society: managing responsibly, Los Angeles: Response Books. Koene, B. A. S., Vogelaar A. L. W. & Soeters J. L. (2002). “Leadership effects on organizational climate and financial performance: Local leadership effect in chain organizations”. Leadership Quarterly 13, pp. 193-215. Maccoby, M. (2004). “Narcissistic Leaders – The incredible pros and the inevitable cons”. Harvard Business Review, Vol. 82 No. 1, pp. 92-101. Markoff, J. (2011). “Apple’s Visionary Redefined Digital Age”. The New York Times, October 5. Accessed April 23, 2015. http://www.nytimes.com/2011/10/06/business/steve-jobs-of-apple-dies-at-56.html?pagewanted=all&_r=0. Robertson, J. (2011). “Steve Jobs: Businessman, innovator, visionary”. The Christian Science Monitor, October 5. Accessed April 20, 2015. http://www.csmonitor.com/USA/Latest-News-Wires/2011/1005/Steve-Jobs-Businessman-innovator-visionary. Sean T. H. & Jennings P. L. (2013). “Leader Ethos and Big-C Character”. Organizational Dynamics Vol. 42 No. 1, pp. 8-16. Wolf, M. (2004). Why globalisation works. London: Yale University Press. Read More