International Business Studies of Apple Inc - Assignment Example

International Business Studies By Question A general definition of the word globalisation is a global growth towards have an integrated financial, communication, trade and economic systems. Bhagwati (2004, p 3), defines economic globalisation as integrating the national economies into the international economies via direct foreign investments, trade, flows of workers, short-term capital, humanity and technology internationally. In US, many are against the benefits of globalisation as it mostly acts against its people. Benefits of globalisation such as the low consumer prices tend to be outweighed by the large number of job losses and low earnings in US. The iPod gives a precise role that Apple Inc plays in the world of globalisation. This would be evident in terms of the number of people employed by the company in US, and other parts of the world. Another key figure to examine is the amount of money paid to the employees in and outside US. Freeland (2011) found that in 2006, iPod managed to give employment to twice as much people outside US as compared to those working in US. Despite US being the home country for IPod, 13,920 employees are from it while 27,250 employees hail from outside the country (Freeland, 2011). Many other people work under the Apple contractors outside US increasing the number of those employed indirectly significantly. In the beginning, Apple used purely US resources to manufacture its goods. This included the workers and engineers. The decision to go overseas came at a time when the company was struggling and had to take strict measures to survive. It could be noted that many companies at this time had already started overseas production. The choice of China as a good manufacturing location for Apple was because of the availability of cheap labour. Chinese workers were willing to work for long hours at a more reasonable wage as compared to the US workers. Globalisation has had a significant influence on the Apple products. This could be noted by studying the companys technology quality as it plays a significant part in the success of a product. The chart below indicates the spread of Apple globally. To Apples advantage, the move to China has proved profitable, as the country has provided the right investment prospects. China has maintained the unique structure and inputs in achieving the quality of the products. It should be noted that in China, Apple has utilised the benefits of outsourcing in that third party companies, under Apples specifics, manufacture the goods. Apple has the control to ensure that the products are of high integrity. In conclusion, the Apple globalisation has mainly benefited the company and the countries in which most of the manufacturing takes place. It should be noted that despite most of the employees originate outside US, most of the money is paid to American employees. Apple maintains good engineers to ensure that the technology remains of good quality, which is vital to its success. Globalisation has proved to be of great help for the success of Apple as a company. It is through it that the company manages to produce quality goods affordable and the same time access markets throughout the world (Apple, 2013). Question #2 International trade refers to a situation where there is an exchange of goods and services between two countries. International trade has increased since World War 2 because of the relative peace, development of technology and reduction in trade barriers. Foreign direct investment refers to a situation where one country maintains ownership of an entity produced in another country. In many cases, that this situation prevails is because the host nation may lack the technology, capital, or the resources to realise a comparative competition in the international trade (Kojima, 2010, p8). Trade theories have been used to explain the manner of trading between countries and companies in international trade. The common trade theories are: i. Vernon’s Product Cycle ii. Resource Internalization iii. Transaction Cost Economics iv. Dunning’s eclectic paradigm v. Internal Organizational Perspectives Apple has used most of these theories in moving to manufacture its products overseas. The Dunning’s eclectic paradigm is quite evident in the Apple case. Apple does not make iPods in China directly. They supply their technology to particular companies that produce on their behalf under its strict supervision. Apple takes most of the profits home as they are entitled to the largest rights to ownership of the products. As a company, it has done outsourcing in countries that have minimal legal regulations to increase their profits. In China, Apple enjoys low taxations, production and trade costs. Apart from the advantages in the low cost of production, the company has maintained the quality of the products. Apple has exploited the benefits of direct foreign investment by moving the manufacturing to China. As mentioned above, the working environment is to its advantage as the production cost is way below that in US. The company exploits the availability of skilled engineers who are cheaper as compared to American engineers. Technology is a significant input in production that influences international strategies while making a foreign investment. This because it contributes to the global pricing policy. In terms of technology, China boasts of producing just as quality products as those in other parts of the world. The same quality of technology produced in China is much cheaper as compared that produced in the US. Apples move to China is in line with the requirements of International trade. Key motives that push businesses to internationalise are the presence of opportunities due to international peace and stability, the reduction of trade briers and technology development (Vernon, 1966, p 198). Company motives that contribute to internationalisations are the presence of profit-making abilities, business growth, the host government policies, access to markets and resources, and cost reduction (Friedman, 2006). Apple saw the possibility to expand and grow extensively outside US. China has enjoyed peace for many years creating a healthy environment for conducting business. The government policies concerning trade in China are much friendly as compared to those in the US. The raw materials used in the making iPods are available cheaply in the required quality. Most of the financial benefits go back to the US since the most paid are the American engineers (Freeland, 2011). Question #3 Every business entity is obligated to uphold ethical responsibility when dealing with their employees, suppliers or consumers. Apple as a company has put up a measure to ensure ethical practices when dealing with the employees and customers. It has four basic principles that act as the backbone of integrity. These are confidentiality, respect, honesty and compliance (Apple, 2013). In its website, it has outlines the responsibility and the legal frameworks for one to follow in the event one feels the rights are breached. The code of business applies to everybody relating with apple throughout the world (May, Cheney & Roper, 2007). Freeland (2011) states that most of the payment paid to the workers goes to the American engineers. Thus, Apple employees from outside US have to share the smaller ratio allocated for them. It should be noted that twice the number of employees hail from outside US. It is evident that most of the employees are underpaid. This is one of the reasons that made Apple move production overseas. Chinese employees work for long hours while receiving small payments (Wopschall, 2013). Apple minimizes the cost of production to increase the shareholders profits. Wopschall (2011) argues that what the company does to its employees outside the US violates what is stipulated in the ethics section of their website. As a manager of an ethical investment fund, I would expect that Apple take care of the needs of the employees. It is evident that the employers, especially those in the Asian region, contribute significantly to the success of the company. Apple should improve their working conditions and ensure that they work minimum hours to boost their health and working conditions. It would not harm the company to increase the number of employees in those regions. A country like China with a population of about 1.3 billion has enough people to avail the required labor (Apple, 2013). As a manager, I would include the companys share in the funds investment portfolio. Including the shares would increase the level of social responsibility of the company. The shareholders would have to insist on ethical practice as their money is at stake. This would enable the company to be creative and expansive when dealing with the issue of moral responsibility. In most instances, shareholders look at their interests by maximizing profits without putting ethics or social responsibility in mind. Managers should look at the ethics and social responsibility every time they make decisions and not when the shareholders intend to benefit from the case in question. Including the shares in the investment fund would yield more profits for the shareholders prompting them to consider ethics and social practices in the firm. This is because the main reason for the shareholders to ignore the ethical issues to maximize their profits. With more funds, the Apple company could increase workers instead of forcing the employees to work for long hours overtime. References Apple, 2013. Apple Supplier Responsibility Reports. [Online] Available at: http://www.apple.com/supplierresponsibility/pdf/Apple_SR_2013_Progress_Report.pdf [Accessed 31 March 2015]. Bhagwati, J. (2004). In defense of globalization. New York, N.Y., [etc.], Oxford University Press. Freeland, C., 2011. How the iPod Explains Globalization. The New York Times, 30 June. Friedman, T. L. 2006. The world is flat: the globalized world in the twenty-first century, London, Penguin. Kojima, K., 2010. Direct Foreign Investment: A Japanese Model of Multi-National Business Operations. New York: Routledge. May, S. K., Cheney, G. & Roper, J. 2007. The debate over corporate social responsibility, GB, Oxford University Press. Vernon, R. 1966. International Investment and International Trade in the Product Cycle. The Quarterly Journal of Economics, 80, 190-207. Wopschall, C., 2013. Business Ethics Case Analyses. Apple Inc.: Severe Employee Abuse (2011), 11 April. Read More